Bits Bucket For October 23, 2008
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The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
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China: all bets are off
The economic miracle has been halted in its tracks
Michael Sheridan in Hong Kong
FROM Hong Kong to Shanghai, shuttered factories and laid-off workers tell a tale of how the world credit crisis may end the Chinese export miracle and pose the greatest threat to economic reforms since they began in 1979.
Bankruptcies and unemployment are climbing, while political pressure is mounting from the left on policymakers. Some officials are openly challenging the export-driven model that led China to stack up foreign reserves of $1,800 billion (£1,060 billion). There has been little effort to cover up the distress, perhaps because of rivalries between factions of the Communist party.
China Central Television, for example, recently broadcast a report prepared for the cabinet saying that 67,000 companies have gone bankrupt in the first half of the year and 20m workers have lost their jobs.
http://business.timesonline.co.uk/tol/business/economics/article4925762.ece
Symbiotic shut down time?
how good for the US news that they can focus on the hardship in China instead of the troubles in their own country
Same story here in Europe, hardly any mention in the news of the (coming) huge layoffs in Europe, but plenty of coverage for Chinese toy/furniture makers going bust as a result of the exhaustion of the worlds only Super-consumer.
We’re all in this together, man! Does anyone think the financial crisis is looking so serious and protracted that it may become necessary to postpone the upcoming election until it is resolved?
Bush calls nations to summit on crisis
Economic meeting in D.C. to come at awkward time
By Sheryl Gay Stolberg and Mark Landler
NEW YORK TIMES NEWS SERVICE
WASHINGTON – President Bush will convene leaders of 20 nations in Washington on Nov. 15 for an emergency summit to discuss the economic crisis, the White House said yesterday. But the session, coming less than two weeks after the presidential election, could put Bush on a collision course with his successor.
My brain hurts.
An emergency suggests if we don’t deal with it *now*, worse things will happen. A long, protracted “crisis” suggests we’ve got nothing but time to deal with it. (And therefore, no actual emergency.)
Bush is probably looking to protect his “legacy” (ha, ha, ha) and perhaps screw over successor. He strikes me as liking the idea of being a king, but he’s already “redeemed” the family name by making 2 terms. He’s probably ready to get rid of the job.
I think he has already called Obama and McCain about starting early.
of course this is not a US initiative; Shrub had to agree, otherwise the convention would have proceeded without the US. I think there could be a huge collision between US and foreign interests, related to matters like the ratings agencies, bonuses for WallStreet, offloading debt/risk to foreign investors/central banks and other unfair economic practices.
The public is smelling blood and I don’t think the US will get away without punishing some companies and individuals that were deeply involved in causing this worldwide crisis.
“That is a defeat for the strong-currency policy urged on China by US Treasury secretary Hank Paulson, who boasts of his leadership ties forged during 70 visits to Beijing on behalf of Goldman Sachs.”
++++++++++++++++++++++++++++++++++++++++++++++++++++
I wonder what else was ‘forged’?
A Divine Image
Cruelty has a human heart,
And Jealousy a human face;
Terror the human form divine,
And Secresy the human dress.
The human dress is forged iron,
The human form a fiery forge,
The human face a furnace sealed,
The human heart its hungry gorge.
–William Blake–
“I wonder what else was ‘forged’?”
The signature of the American citizenry.
Votes don’t count for much compared to the tsunami of FIRE money flooding into the political system…
Yeah, that is my question, too.
Men in Washington often speak with forked tongue.
Big Banker have all skins. Little Joey have no skin to wear, and perish in the winter cold.
Others like Little Joey, have no skins, whole city, no skins, down the road a hundred miles and still no skins. Many others perish in the winter cold.
Big Banker sees more opportunity.
Man in Washington say ” Give every frozen corpse a skin in the name of ObamaNation!”
Washington make Law. But Big Banker still hides his skins and treasure. He says a corpse does not need a skin. He will suffer ObamaNation most surely.
Another Man in Washington says every man should give two skins. First he is shouted down, and then he is gunned down.
Well then I guess we know who’s in charge now.
Big Banker hides his green rectangles under mattress.
Hmm…
The wheels coming off of the Chindia economy when US and European consumers notice they’re broke. What a shock!
EU consumers haven’t noticed that yet, could take 1/2 to 1 year to set in. Workers in government and big multinationals are fully expecting the government to guarantee their job and their mortgage. And in most EU countries the housing ATM is still working, although the withdrawal limits are a bit smaller than they used to be.
We just returned from a Mediterranean cruise and it was apparent that things had slowed down in Italy since our vacation last year. The crowds were noticeably thinner in the tourist hot spots like Capri, Venice and Florence. I noticed that some small boutiques where I had previously shopped had gone out of business. The expensive restaurants were empty mid-afternoon while the tourists stopped instead for a quick inexpensive panini or pizza. Everywhere we went, the owners of the small establishments seemed to be out soliciting customers. I’m certain that the downturn is being felt already in these areas.
You’re visiting very late in the season. When did you go last year?
Where’s that “decoupling” that the talking heads were incessantly vomiting this past year?
Hey Black Swan,
My wife wants me to take her to Italy. Perhaps you could recommend a reputable tour company, hotel, etc.
Thanks
Charm & Relax.
Check out their website for Italy
Italy is the easiest country in Europe - it’s like a big freakin’ Disneyland. Just get a Frommers and go.
What do you do with 20 million hungry young chineese?
When I was young, it was said that the Chineese still had the largest horse cavalry the world had ever seen. I guess now they have the capacity to make a few billion of those Fisher Price horsies.
20 Million? They have a Billion people…that has now had a taste of blood ( Higher standard of living ). How will they act, or demand if having to go back to the old standard of living? ….much less if going hungry?
—–
Also: Heated debate on CNBC about those censored Treasury documents that was approved for 2 banks. It’s our tax money that is being spent that is censored…Kinda eery as they looked like CIA files that were blacked out…not that the Treasury isn’t currently doing it’s own black ops.
Grab Siberia?
RE: Grab Siberia?
Absolutely, Yogurt.
The idea is not far-fetched at all.
Read an article awhile back, one of the major crisis in Chinese demographics is the current estimated 20/30+ million surplus of young men, ages 18 to 25 who cannot find females with which to establish households.
The result is a lot of anti-social behaviors not accommodate to a smoothly functioning culture and society.
The gender imbalance is attributable to the one child population control programs implemented in the 80’s & 90’s,
whereby females fetus’s were aborted because a male was a better choice to provide for old age social security.
So, now what do you do with 30 million of disruptive single male 20-somethings?
You chop ‘em up in an invasion of oil and resource rich Siberia.
And once thing’s get started, why not throw in another 100 million (Germany put 40 million into the field in 1940) for a country with 1.5 bil people and counting.
Invasion for resources is nothing new to the Far East.
That’s a 130 million man army or 13,000 infantry divisions!
You can haul out the nukes on this one, baby!
Remember in the final battle it’s “the Eagle and Bear” vs. “the Dragon”.
Invasion for resources is nothing new to the Far West, either.
RE: Invasion for resources is nothing new to the Far West, either.
Yup-”Battle of Britain” sure got them Limey’s a lot of aluminum ME 109 airframes to smelt.
My BIL works about 3 out of 5 weeks in Guanzou (sp?) for a large tech manufacturer. He told me last weekend he sees no evidence of slowdown at all.
Maybe the slowdown is going from dolt simple fabrication and progressing up the food chain?
Buy what China buys? What if they stop buying? Anybody still interested in USO?
“My BIL works about 3 out of 5 weeks in Guanzou (sp?) for a large tech manufacturer. He told me last weekend he sees no evidence of slowdown at all.”
That’s not surprising given how technological gadgets are still selling like hotcakes (iPhone anyone?). But the real slowdown, no doubt, is in the useless crap which garnishes the shelves of every store in this country.
What good economic books are you reading these days? Right now I’m reading “Confessions of an Economic Hit Man.” If even 20% of it is true, no wonder so many countries hate us.
I’m re-reading “The Richest Man in Babylon”, an oldie, but a goodie…
I never get tired of that book. A great read.
Ooohhh…that one has been on my list for a while. Maybe I’ll get it for Christmas this year. Mostly I just read textbooks, but I am slowly working on “What has government done to our money” by Murray Rothbard. I’ve had it for over a year and never read it, I decided to pick it back up about a week ago. It’s small so I should be able to finish it during Christmas break if not before then.
So, what’s it say?
King, here’s a snippet: The 5 Laws of Gold, from the book mentioned above…
I. Gold cometh gladly and in increasing quantities to any man who will put by not less than one-tenth of his earnings to create an estate for his future and that of his family.
II. Gold laboreth diligently and contentedly for the wise owner who finds for it profitable employment, multiplying even as the flocks in the field.
III. Gold clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling.
IV. Gold slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep.
V. Gold flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trusts it to his own inexperience and romantic desires in investment.
Thank you for your response, but my question was directed to “In Raleigh”.
Your post just happened to get between his post and mine.
Oh, by the way, cash is king.
As in Charles I, perhaps?
the original debthead…
Having recently visited Place de la Concorde I am very familiar with what can happen to kings. It is a cautionary tale.
Hard Times by Terkel.
The Limits of Power by Baecivich.
Not exactly an economics book, but I’m almost finished reading “Web of Debt” by Ellen Brown. I must say it is a fascinating read.
“The Revolution” by Dr. Ron Paul
Checked out these from the local university library, but haven’t started reading yet:
“The Case Against the Fed”, by Murray Rothbard
“Economics in One Lesson”, by Henry Hazlitt
“The Case Against the Fed”
I just finished that. It was okay but it will be mostly review for you. There was nothing earth shattering. I’m reading 1929 - The Great Crash. Just scratch out the dates and you would think it is running scorecard on today’s mess.
Sure does seem like it. That’s why this paragraph from the book concerns me:
Pg. 113 The singular feature of the great crash of 1929 was that the worst continued to worsen. What looked one day like the end proved on the next day to have been only the beginning. Nothing could have been more ingeniously designed to maximize the suffering, and also to insure that as few as possible escaped the common misfortune. The fortunate speculator who had funds to answer the first margin call presently got another and equally urgent one, and if he met that there would still be another. In the end all the money he had was extracted from him and lost. The man with the smart money, who was safely out of the market when the first crash came, naturally went back in to pick up bargains. The bargains then suffered a ruinous fall. Even the man who waited out all of October and all of November, who saw the volume of trading return to normal and saw Wall Street become as placid as a produce market, and who then bought common stocks would see their value drop to a third or a fourth of the purchase price in the next twenty-four months. The Coolidge bull market was a remarkable phenomenon. The ruthlessness of its liquidation was, in its own way, equally remarkable.
Every guy who ever bought a stock, thought he was getting a bargain.
Every FB that ever bought a house thought they were getting a bargain.
I just started reading “The Panic of 1907: Lessons Learned from the Market’s Perfect Storm.” One could argue that the lessons were NOT learned, unfortunately.
RE: What good economic books are you reading these days?
-”Crash Proof” by Peter Schiff
-”Bad Money” by Kevin Phillips
-”American Theocracy”-Kevin Phillips
I am very unpopular in social venues.
This is normal.
Most people are fools and it’s impossible to have an intelligent conversation with them on economics or finance.
Yeah. That’s why I come here when I can.
Most of my neighbors are good people but our conversations tend to focus on cats. *sigh*
Maybe you should talk to the cats instead. About your neighbors. In my experience, cats are serious gossips. Plus they have exciting love lives.
My cats dream of starring roles in feline-y movies…
“In my experience, cats are serious gossips.”
Our cats will keep their mouths shut, if they know what’s good for them.
Talk to my cat? That would make me look nuts. It’s like thinking was a housing bubble a couple years back, renting after owning a house, and not having cable TV because it’s big old waste of money.
Oh wait…
The cat and I will be having a heart to heart tonight.
You can talk about the upcoming cat-astrophe. Make sure it doesn’t get cat-atonic about it though.
Schrödinger’s debt cat bounce?
RE: Talk to my cat? That would make me look nuts.
Arlo talks to Ludwig all the time…rather humorously too.
You guys do know that all those anti-social unintelligent spoolheads are out there cancelling your intelligent votes…
you guys (and gals) slay me;
absolutely slay me !!!!
thank you for the much-needed humor.
have an intelligent conversation ??
Amen to that….Just a hour of economic or political conversation with a few friends in southern Michigan and I completely understand why a guy like Bush got elected and even more significant re-elected…I love my dear friends but the bottom line is that they are ignorant to the facts and are not interested in discovery…They rely totally on their pastor or their neighbors for “The Truth”…Its quite scary really…
They rely totally on their pastor or their neighbors for “The Truth”
Am I the only person who thinks that fundamentalist Protestantism has become a bad parody of the pre-Reformation Catholic church?
The whole point of the Reformation was that people should think for themselves.
The old Catholic church did produce great art and music, at least.
‘pre-Reformation’ is just a fancied-up way of saying Dark Ages, isn’t it?
30 generations going nowhere, fast.
In order for people to “think”, they must first have the capacity. Not everyone is going to go against the grain. They are just sheep.
The reason of the failure of the Enlightenment should be reasonably obvious.
The reason of the failure of the Enlightenment should be reasonably obvious.
As equally obvious, the failure of Romanticism, then. And the rise and twisty turnings of Modernity.
(When you underestimate “people” as a whole, just be sure not to misunderestimate.)
(whoops, meant Modernism.)
Agreed.
The counter-reaction to the Enlightenment is broken too.
But we got a lot of pretty art, music and literature out of it.
But we got a lot of pretty art, music and literature out of it.
yay! (^.^)
I agree. Would you believe I have multiple panicking friends who think it would be a great idea to take all their money out of stocks and buy a house with it? How stupid is that?
I believe anything about sheeple these days.
one of my family members was talking last week about using the money in her savings account to buy a home (at the highest price in 400 years), before the bank goes bust and all savings disappear into thin air. At least it is a step up from ‘everything is great, no reason to worry about anything’.
–Anthology of Modern Poetry
–The Ultimate Mushroom Cookbook
–Western Washington Wetlands regulations manual from D.O.E
–Ghost Towns of the Pacific Frontier by Lambert Florian
–Rum Punch by Elmore Leonard
My type of gal!
I have a recommendation for you, Olympiagal:
The Summer Book, by Tove Jansson
“This brief novel tells the story of Sophia, a six-year-old girl awakening to existence, and Sophia’s grandmother, nearing the end of hers, as they spend the summer on a tiny unspoiled island in the Gulf of Finland. The grandmother is unsentimental and wise, if a little cranky; Sophia is impetuous and volatile, but she tends to her grandmother with the care of a new parent. Together they amble over coastline and forest in easy companionship, build boats from bark, create a miniature Venice, write a fanciful study of local bugs.”
(no link, just google it).
Thank you. Gonna’ get a copy on eBay right away.
Speaking of being “very unpopular in social venues”…
I have a friend who started calling me the grim reaper 6 or 8 months back… I wore it proudly as a badge of courage.
He hasn’t used it in the last few weeks, now that I think about it…
Don’t just sit there!
Get a scythe and show up for Halloween with a bottle of wine or three in your Ferrari.
RE: Get a scythe and show up for Halloween with a bottle of wine or three in your Ferrari.
His place in local Halloween lore would be established for the ages, LOL!
Any book by Kevin Phillips is a good read.
“Curious George goes to the hospital”
An all time great
Mike
I agree. The Man in the Yellow Hat…what a hottie.
One of my other favorite kids’ books is: Jerome the Frog. It’s about this frog. I also like ‘The Roly Poly Puppy.’ I have those right on my bedside table, along with the Critical Area Ordinances draft and some candy, for if I wake up in the night.
‘Preparedness’ is my middle name. So is ‘Ann’.
I was a teenager when I really first got ahold of children’s books. I was enchanted by the bright colors and nice simple stories. Darling little puppies and so forth.
I mostly learned to read from the Scriptures, old faded National Geographics, and lurid Fu Manchu trash full of truth serums and wicked plotting Orientals.
Actually, come to think of it, that explains a lot.
Yertle the Turtle (my dad was GREAT at reading this one)
Horton Hears a Who (contains most of the ethical principles a very young child needs: stick to your guns against peer pressure, work hard, evey little effort helps, really big strong people should protect little people)
I’m partial to “Go Dog, Go!” myself. I especially like the part with all the dogs lounging in the tree…….
I like the dogs sitting around the table playing poker. I’ll see your bone and raise you a HELOC…
Word, dog!
I LOVE ‘Go Dog Go’! That book is probably why I drive so fast!
Now I understand…
i am reading “the forgotten man”…sorry don’t remember the authors name.
i am only 2 chapters in. has anyone else read it…just wondering what yall thought of it if you had.
Reminiscences of a Stock Operator
My favorite.
The Prince by Machiavelli
Another favorite.
Here here. Quite the instruction manual. I think it puts “The Art of War” to shame, but I haven’t completely finished either one, so YMMV.
I found ‘The Art of War’ difficult. I thought ‘Jeeze, lay off the Oriental inscrutability and tell me how to kick someone’s bum, for heaven’s sakes.’
Is what I thought. But of course, I’m simple and iggerant.
Penthouse- Letters…now those are some good reads….
I just finished “Money Changes Everything”, which is a collection of essays about different people’s relationships with money. I couldn’t relate with any of the authors, as the emotions expressed ranged from uncomfortable (even when the author was trying to convince the reader otherwise) to downright unhealthy.
One essay was from a 9/11 widow with a young son. She had received insurance settlements as well as donations after her firefighter husband died in the towers. Her mother-in-law found that the lady (daughter-in-law) was eligible for an additional $10K claim and wanted it for herself. She then sent her widowed daughter-in-law the bill for her motor home’s mortgage payment, saying if widow daughter-in-law couldn’t pay it, mother-in-law would have to sell it (boo-freaking-hoo!). Widow paid it! (I wouldn’t have paid.) Widow is subsidizing her neices college savings too. With so many hands in her pocket, it becomes pretty clear that its not going to be there in the long term.
This book is fiction, in my opionion, dressed up as non-fiction. No way that the puppet player episode in Indonesia is credible, and from that point on, not much was credible. All situations seem fabricated. My opinion - reviews at Amazon are along these lines.
Which book are you referring to?
Was responding to In Raleigh, about ‘Economic Hit Man’.
Curious George, I think.
I am reading “The Forager’s Harvest” and “The Alaskan Bootlegger’s Bible”.
I’m reading “Hiking in Arches National Park,” “Hiking in Canyonlands National Park,” “How to Be A Slacker and Get Rich Anyway,” and “How to Make People Hate You without Even Trying.”
Actually, the only thing I read these days is HBB, when I can.
Speaking of Arches National Park, I highly recommend “Desert Solitaire” by Edward Abbey if you haven’t already read it.
They had a public reading of it here in Moab last weekend, different people took turns, they read the whole darn book.
I didn’t go, I was too busy enjoying being solitary out in the desert.
Abbey was a true independent thinker and many of his predictions about our society are coming to pass. BTW, I really enjoy Doug Peacock’s writings, one of Abbey’s friends (inspiration for Hayduke). “Walking it Off” is also a good commentary about our society and war.
The Alaskan Bootlegger’s Bible
What’s it about? I’m interested…
It is about the ancient art of providing some of one’s own indulgences. Handy if you are off grid, so to speak.
Good recommendation, I’m gonna add it to my christmas list. Whisky is definately on my list of DIY’s, it’s on a very short list in fact, although will have to wait at least until spring (due to school).
Winemaking has been rewarding so far, and I’m looking forward to an array of flavors from the wine I’ve got going now; pineapple, strawberry, muscadine, some other variety of grape I found by my house but don’t know what it is (and which tastes freaking awsome already), blueberry, blackberry, apple cider (tried some of this already, it tastes like sh!t but I’m giving it time).
A hobby I would highly recommend.
I like to experiment. The worst ever thing I tried was making Rhubarb wine. AWRGGGGG! So I tried to distil it. ACKKKKKKK!
I was just looking at a rhubarb recipe the other day that seemed interesting…
Grad school is kicking my @ss on having free time, but I really want to make some pumpkin (spiced with cinamon) before its gone and onion (which I intend to use for cooking) soon while they are cheap.
Don’t know if I’ll get to it…
One other thing, in the book I have about winemaking (geared towards fruits and other things not just grapes) the lady says that vegetable wines take longer to get good.
If you wind up with a wine from veggies (like the rhubard) that’s not so good, you might do well to let it age for 2-3 years and try it again.
I stick to making beer, myself. It’s as easy as making tea, only wayyyy more fun, and everyone wants to come over lots more.
I decided to read it after watching part of an interview with the author on YouTube. The author, John Perkins, says in the 1960s he was recruited to be an “economic hit man.” His job was to visit third world countries and way overestimate the benefit of projects such as dams, electrification, etc. He’d lie about the economic benefits in order to convince their governments to borrow tons of money from the World Bank and others. The borrowed money would then be spent on these projects, which of course, went to US contractors.
The contractors would make tons of money and then later, the country would hopefully default on their loans, allowing someone to make more profit - all at the expense of the natives. They were promised wonderful benefits and rarely saw them. Then they were on the hook for these huge loans for projects they frequently opposed to begin with.
If the economic hit men were unsuccessful in getting a country’s leaders to agree to borrow for the project, the “jackals” would be sent in to stir up trouble by causing riots - or assassinating the uncooperative leaders. Military force would be used as a last resort.
The author worked for a private contractor, that way the US government couldn’t easily be blamed. He said the system was set up after WWII, when someone figured out this was a sneakier, cheaper way for the government to force other countries to obey, without having to invade.
Is it all true? I don’t know. It sounds plausible. If even some of it is, then I can see why so many people in other countries hate us and blame us for their problems.
The author blurred the line between fiction and nonfiction and lost his credibility in my eyes. In other words, after 35 pages, did not believe a word that he wrote.
Too bad W didn’t read this book, I have always thought there were cheaper and much easier ways than invading Iraq.
W doesn’t read books. In fact, he eschews the daily newspapers. He has
Karl Roveother people tell him the news.I never know what to think about that ’cause I don’t read dailies either. Me thinks the journalists are just bitter.
RE: Is it all true?
Hopefully not, especially if there’s an eternal Hell waitin’ at the end of the road for some people.
I often wonder about this when I turn a steak in the oven with the heat on broil.
“Hopefully not, especially if there’s an eternal Hell waitin’ at the end of the road for some people.
I often wonder about this when I turn a steak in the oven with the heat on broil.”
The Christian “Hell” is a hoax, a ‘fig-newton’ of the imagination designed to control the masses.
I’m going to tell Satan you said that. And I’m going to leave a post-it that you deserve extra roasting, because you were dismissive. So there, Mr. Pot Roast With Gravy Man!
“Confessions of an Economic Hit Man” is an excellent book. This book opened my eyes about this country. I have been cynical ever since.
Reader beware! You won’t ever look at this country the same after reading this one.
Krugman’s “The Great Unraveling” is another excellent book.
Why bury myself in a book while an epic unfolds in real time? Oh, the drama.
Manias, Panics, and Crashes: A History of Financial Crises
by: Charles P. Kindleberger, Robert Aliber, and Robert Solow
It’s an excellent read.
The other book I’m reading is the latest Thomas Friedman book “Hot, Flat, and Crowded”
Finally got “The creature from Jekyll Island : a second look at the Federal Reserve” by G. Edward Griffin last week. I’ve been on the hold list for it at the library since April.
Started reading last night about how several NY banks, and also our government, provided some of the financing for the Bolshevik Revolution. Sadly, I’ll probably have to return it before I’m done. Thought about keeping it late, but there’s 26 people waiting for the one copy that my library system has.
I had trouble getting that one, too. Still haven’t managed to get a copy.
Good luck to you on getting through it in time!
Are you Missing the Boom? — David Lereah
Dow 36,000 — Glassman
Chicken Little Soup for the Soul — Dr. Doom
-Intelligent Investor, Ben Graham (I am 8 months in, and 2/3 through :()
- Blink: The Power of Thinking Without Thinking, Gladwell
-Predictably Irrational, Ariely
-a biography of Marie Antoinette (note: she didn’t say “let them eat cake”, some Arabic princess did. maybe.)
-wordy shipmates (on order)
-collected comic strips of Tove Jansson
-housekeeping vs. the dirt by Nick Hornby
-an Indian cookbook, forget the name, but black-eyed peas with coconut milk & savoury Goan crepes is the page I’m on!
I cannot believe that nobody mentioned Charles MacKay’s “Extraordinary Popular Delusions and the Madness of Crowds”. How can you resist a title like that? It even has “The Tulipomania” in it!
Chairman Zandi sez the gov’t has to fill in the equity hole for underwater owners - so they can go out and shop again.
How much will it take before the ratings agencies are so thoroughly decredited that the whole industry will have to start over?
Yeah, edge, I saw Zandi being interviewed on C-Span one morning just as the 750 billion welfare program for financials was getting cranked up. What a smug, humorless prick without any sense of responsibility. And there he was, identified with Moody’s Economy, one of the lying sack ratings agencies that was a big playuh in this whole mess. I really was completely dumbfounded that the interviewer hadn’t a clue about his role as a mouthpiece for the Goldilocks economy. He should be tarred and feathered, not held up as some sort of prognosticator.
palmetto,
It’s been a pretty typical “transformation”. Speaking of which..! ( Where’s Stephen Roach? ) One of the early whistle blowers that suddenly couldn’t see a problem?
Here’s what I keep wondering? Why haven’t people like Rich Toscano and Ben Jones been offered positions? Who knows the bubble better? Who’s been tracking it longer? Who could possibly have a better track record of predictions? Nope, we’ll continue putting our faith in the very same people that dropped us off at the (1) keg party in town that was already in the process of being busted!?
Oh and “One Market Under God” is a good read if you’ve the time.
One of the early whistle blowers ??
I think Jim Rogers was one of them also…He quietly disappeared from the Saturday morning FOX program some time ago…
scdave,
Always liked Jim. When Stephen Roach was Chief Econ. at BofA he addressed subprime and the “RE Boom” as early as 2003. Remember, BofA stopped making SP loans in 2001. In fact, that’s probably one of the reasons they were even in a position to take on CW and Merrill.
( They weren’t already b@lls deep in it )
But I’m perfectly serious, I see absolutely no reason that Ben and Rich shouldn’t be consulted for their expertise. While we’re at it I’d love to discuss creating an archive of “Best of” posts ( complete w/ dates ) to flaunt before Congress, BB and HP.
“why haven’t people like Rich Toscano and Ben Jones been offered positions”
I did notice that Thornberg is now on some Calif State Council of Economic Advisors or similar name, reporting to state CFO whomever. Will it help? Naaah. Nothing against Thornberg, I just don’t believe there is a Solution that will be what people want it to be.
Maybe Ben J will tell us one of these days what he WOULD do if in a senior policy position in DC. Mainly though, he tries to tell us what we as individuals should not do…there will be survivors, let’s be among them.
az-lender,
Don’t get me wrong, I’m a big fan of Peter Schiff as well as John Talbott ( formerly of Merrill ) but Ben and Rich I guess are more of the hands on type guys.
Btw, I haven’t been to Euro-Pacific’s website in some time. How is Peter fairing performance wise? I own a few Bear Funds ( and they haven’t done all that well ) Anybody know?
DinOR: I think Schiff has been doing extremely bad performance wise lately, with his pro-euro, pro-gold stance. What he writes makes sense usually, but like many people who saw this coming his advice didn’t work out well IMHO.
Jimmy Rogers, same story; his long commodities, short dollar position must be hurting. In Europe we have several of Jims RICI funds (commodities, energy, agri etc.) and they are all at their lowest value in more than three years. Might look a bit different in US$, don’t know about that. These funds did better than the general stock market over the same timeframe, but staying out of the market would have been even better …
nhz,
Yeah, I actually called and got confirmation from a BM, Peter is down TOO! In ways I feel a LOT better because I’ve been yelling from the rooftops since at least 2003.
Yet for all our defensive measures, the simple best advice was… to *not be leveraged in real estate or purchase additional real estate period! Somehow I was hoping for more of a “win”? Just saying “I survived the RE/Credit crash by building a financial “bunker” doesn’t quite cut it for me.
No one needs a “crash event” to take our few precious belongings and hunker “under ground”. It feels like surviving a nuclear blast. Sure you “survived” but everything is contaminated and all the people are gone. Whoopie!
DinOR:
I don’t think anyone could have predicted all this, that is the problem; nowhere to hide.
I had to sell my home in 2001 because of tax changes, and at that time thought the Dutch housing market was ridiculously overvalued (after a 350-500% price runup in the previous ten years). But people who purchased in 2001 did extremely well, while savers lost money every year due to low rates and inflation courtesy of the ECB. Home values more than doubled again from 2001-2008 for +/- 1000% gains, and are holding up well despite the current turmoil.
If most of the bullmarket housing gains are erased, the Netherlands will be bankrupt. People who wisely stood aside will loose big time whatever happens. Most of the stupid debtors will walk away relatively unharmed (bankruptcy means little over here), after living far beyond their means for many years. They had a great party and the neighbours can clean up the mess they made.
I’m fixin’ a hole where the rain gets in
and stops my mind from wondring
where it will go-o-o-o…
You might be fixing a hole but I get by with a little help from my friends.
“Now I know how many holes it takes to fill the Albert Hall.”
Lucy?
“Lucy?”
A day in the life…
More like Helter Skelter…
Check out the Foo Fighters (old WWII term for UFO fighters).
Any quiet moments I have turns to, I wudda, shudda, coulda. CNBC is great for stop thought. Hey the committee just started, Greenie’s up.
fill in the equity hole for underwater owners ??
The mother of all bailouts is comming in 2010 IMO….It will come in the form of loan forgiveness along with fixed interest rates well below market lets say 3% to “Keep People In Their Homes”…It just sickens me to think about it…
Wasn’t the $300 billion Hope Now BS from the summer supposed to be an “incentive” to banks?? How would another $40 billion help??
http://www.cnbc.com/id/27333199
Apparently the Fed chairman is signaling a willingness to drop unlimited amounts of cash out of helicopters until the financial markets are fixed.
P.S. Game theorists refer to this sort of action as a credible threat.
Rumor has it the most Benjamins one can load on a Sikorsky @ one time, is just a measly $50 Million or so, but hey…
Flutter Happens
aladinsane,
Think… “SkyCrane” ( obviously the Sea Stallion ( H-53 ) isn’t going to cut it? )
I think you’d get a lot more bang for your buck delivering the lucre via fixed-wing military aircraft, whilst upwardly mobile…
Rumor has it the most Benjamins one can load on a Sikorsky @ one time, is just a measly $50 Million
Maybe the $1,000 bill will make a comeback?
“Maybe the $1,000 bill will make a comeback?”
If the Fed’s not already designing it, they soon will be. And a $10,000 note in a year or two, and a $100,000 note a few years after that.
Signaling? As if it’s a mystery? He wrote a book about it clearly stating his views on the matter, what do you need a picture?
picture? a chart of the FED balance sheet says it all; the helicopters are dropping their loads all over the country (at least at those places with plenty of multi-millionaires / billionaires). No need for a ‘credible threat’ any longer, if people still don’t get the message they never will.
W/o convincing action, the threat to print is not credible. Signaling makes it credible.
If there was all of the sudden, a whole bunch of papermoney floating around the economy, people might get suspicious…
The mouse clicque has a much more efficient delivery system, wouldn’t you say?
I remember when I was a kid some new store in town dropped coupons from an ariplane all over town. People thought it was a novelty. Now they’d get fined for littering.
‘Now they’d get fined for littering.’
I remember in my tiny elementary school in my tiny town in Utarr, there was this custom in one grade where you would write information about yourself, tie it to a helium balloon and release it. Like a message in the bottle kind of thing, but lacking water (this is Utarr, after all) we had to make do with helium balloons for dispersal. I remember was a wee lass watching with awe as a giant cloud of bright gaudy balloons rose and then dispersed to the west…very exciting for me. (Of course, I was a country girl and didn’t get out much.)
Then one year the practice was suddenly suspended, and the reason given was that the balloons went for hundreds of miles and ended up in the ocean where sea-turtles would eat them and be harmed.
Well, duh! If’n IIIIII was a sea-turtle I’d surely go for a brightly colored deflated balloon under the assumption I was eating a new and exciting kind of jellyfish. In fact, I often do that anyhow, and I’m not even a sea-turtle.*
What was my point? Oh, yeah, I remember now: I was on the beach a month ago, walking along and what should I find? That’s right. A knotted up little rubbery wad of garish balloon! Probably it killed a sea-turtle and then washed up on the beach. Probably that bit of toxicity even came all the way from Utarr, where this bit of toxicity all the way from Utarr picked it dutifully up and put it away for safe disposal later.
Kids, don’t feed balloons to turtles. That’s bad.
*That part’s silliness. I don’t really eat balloons. Much.
In Utah, the odds that a balloon released from a small rural town will end up landing in some remote pinyon-juni stand, never to be found, I would think is about 95+ %. I’m basing this on the Wayne Co. stat that I always hear, that 97% of the land here is public, only 3% private.
Of the remaining 5% that make it out, I would say that 70-80% of that group would wind up in a midwest cornfield, ultimately to be plowed under by one of them big harvester thingies.
‘Of the remaining 5% that make it out, I would say that 70-80% of that group would wind up in a midwest cornfield, ultimately to be plowed under by one of them big harvester thingies.’
You’re just saying that to make me feel better, and less like a turtle-killer. But thanks, I’ll take it.
Every summer whilst backpacking in the High Sierra, I bring back around a dozen mylar balloons that ran out of helium up high…
They look so garish and out of place, sparkling plenty.
You’re just saying that to make me feel better, and less like a turtle-killer. But thanks, I’ll take it.
It turns out you are turtle killer. After all, someone at a public school said so. You can never trust these Internet posting types.
However, I’m far worse. I’ve had children and occasionally used dispoable diapers on them. (Not now, they’re too old. Also, the diaper was not used at the time I used it.) These will stay in landfills long after most radioactive waste has decayed into lead.
So in terms of hating the planet, I’m waaay head of you. A couple of turtles just doesn’t compare.
Don’t feel bad - I saw a reference to a recent study that said cloth diapers were worse for the enviroment than disposable.
W/o convincing action, the threat to print is not credible. Signaling makes it credible.
Fair enough. But if there are any doubters left in the room, they just aren’t paying attention.
Don’t feel bad - I saw a reference to a recent study that said cloth diapers were worse for the enviroment than disposable.
Yeah, I noticed we used just gobs of water in cleaning those cloth ones. It seem liked a toss up, but I was too cheap to go with disposables, so there you have it.
It turns out the only truely environmentally friendly activity is decompose on a seed in the dark. (From a Dilbert strip). We’d do that but, we have too many seeds and it seems unfair to choose.
From dropping cash out of helicopters, to schoolyard helium balloons, to the environmental impacts of disposable vs. reusable diapers, to existential musings about voluntary human decomposition, all in one quick thread.
I think we HBBer’s have some ADD issues amongst our other strange tendencies.
‘I think we HBBer’s have some ADD issues amongst our other strange tendencies.’
We just had a terrific discussion about ADD just the other day! Everybody on here has ADD! You must have missed it. Perhaps you were out chasing bunnies through the forest or something, anyway, what I was saying, was…hey! Look! A moth! I gotta look at it, back in a second!
LOL
Not sure what I was doing, but it wasn’t chasing bunnies this time. After the new neighbors moved in next door with their 3 dogs and 4 cats, the bunnies aren’t around anymore. Got some cool pics last year of bunnines munching on alfalfa in our front yard, though.
Speaking of alfalfa, did you know that alfalfa works great as a way to keep the bunnies out of the lettuce and spinach patch? Once the alfalfa is up, they won’t bother eating anything else. And it adds nitrogen to the soil, which helps offset the effects of the diapers… See this all makes sense.
A pile of turds trumps a couple of turdles.
Who cares. The sooner the banks untangle from housing, the faster and deeper housing will collapse. If it takes bailouts, so be it but I want to see this housing pig bleed.
RE: I want to see this housing pig bleed.
Exeter-
You should see the Beantown Glob.
Ya just can’t believe the demented editors which slap this pathetic rag together.
On the upper front page-they’ll run a couple bars boo-hooing about the disasterous housing market and lousy economy, usually followed by some sob story about some minority sub-primer losing their digs in Roxbury or Dorchester
The on the lower section they run, their “Envy me you pathetic losers-I’m rich” stories about the new Mandarin Hotel with it’s $650 per night room rates and $14 million penthouse condo’s, with the developer carping about how this type of uber-rich digs makes Beantown an up and coming “INTERNATIONAL CITY”.
Meanwhile a few blocks away some 17YO gang-banger sprays an apartment complex with semi-auto gunfire and wounds a couple of pre-teens.
You couldn’t dream this stuff up if you tried.
Boston is getting very violent.
We still haven’t had a one-day crash in the stock market. Just one mini-crash after another.
Capitulation and a 33% one-day drop at S&P from 900 to 600? Or is it S&P from 600 to 400?
Yep, capitulation still hasn’t occurred. Instead, the slow, painful descent continues.
Patience, grasshopper.
Yep. Huge, one day crashes cause panic and too much “what’s the stock market doing today” air time. They aren’t happy events for TPB or J6P. Everyone is doing their best to avoid those.
And yet we must correct, so it will be in the little daily corrections and high volatility as we’ve seen. It’s hardly worth watching day to day market indices because the other than the overall trend (down), the market is going to react even more unpredictably than usual.
If the idea is to avoid panic, an annoyingly slow capitulation is better than a fast one.
Between trading rules designed to short circuit big selloffs and the ever-vigilant PPT, is a large one-day crash even feasible?
The election is moving forward as scheduled. In spite of unprecedented events, there won’t be a “3rd Term” nor even talk of a 3rd Term.
The market has NOT shut down. If you want to sell, you are free to sell. No one is holding anyone captive.
British Prime Minister Brown has invoked Anti Terrorr Laws against Iceland. Holding all Icelandic holdings captive. Icelanders: “we are not t’s”. How to explain that to children.
http://www.indefence.is
Except in New York City…
large one-day crash even feasible?
My thought also Bear….
“The public debt transaction, then, is very different from private debt. Instead of a low-time preference creditor exchanging money for an IOU from a high-time preference debtor, the government now receives money from creditors, both parties realizing that the money will be paid back not out of the pockets or the hides of the politicians and bureaucrats, but out of the looted wallets and purses of the hapless taxpayers, the subjects of the state. The government gets the money by tax-coercion; and the public creditors, far from being innocents, know full well that their proceeds will come out of that selfsame coercion. In short, public creditors are willing to hand over money to the government now in order to receive a share of tax loot in the future. This is the opposite of a free market, or a genuinely voluntary transaction. Both parties are immorally contracting to participate in the violation of the property rights of citizens in the future. Both parties, therefore, are making agreements about other people’s property, and both deserve the back of our hand. The public credit transaction is not a genuine contract that need be considered sacrosanct, any more than robbers parceling out their shares of loot in advance should be treated as some sort of sanctified contract.”
Repudiate the National Debt
If you haven’t already seen the documentary “From Freedom to Fascism” by Aaron Russo, it reveals some interesting facts that question the constitutionality of the personal income tax. The film made me want to quit my job and work strictly on a cash basis. However, my wife disapproved.
Those wives. Jeeze. Always coming up with some silly objection or other. ‘Get off the roof in your bathrobe,’ ‘Why is that doily on your head’, ‘No, you cannot have a cup of warm butter mixed with sugar for dinner’, ‘Get a job’, on and on and on…!
That’s why I don’t have one of them wife thingies. They’re unreasonable.
That warm butter and sugar thing sounds good. Do you have a recipe?
My pirate friend tells me you can cut the butter and sugar with a little hot rum…pirate wives are quite understanding and are not very strict about dinner, so long as it contains a little Vitamin C to prevent scurvy.
(My pirate assures me that rum is an excellent source of vitamin C, although white rum is a little less nutritious than the brown variety.)
Commie!
How is it communist to respect the personal property of the “tax payer” against those who conspire (government and government creditors) to loot the tax payer?
We all know that the debt will be repudiated via hyperinflation and that will harm everyone and not just those who aid and abet the government in plunder.
If nothing else this is good enough reason for one to avoid buying treasuries because they are essentially investing in the future plunder of the taxpayer and all interest comes at the expense of your grand children.
A moral compass can put a real cramp on ones investment strategies when treasuries are one of the “safest” investments in the short term.
RE: Comrade Chevez…
NO JUICE FOR YOU!
Coming to your town next!
http://news.yahoo.com/s/nm/20081023/wl_nm/us_venezuela_electricity
LOL, interesting story. Not an unusual series of events in countries where nationalization is all the rage. A cautionary tale for the US.
Don’t forget state and local debts and pensions.
There will be a choice between funding these and schools, roads, transit systems, health care, Social Security, and the miliary, and soon. What call would you make?
No government funding for schools, roads, transit systems, health care and social security is my preference; however, if we must have government and there must be taxes, government should NEVER be allowed to tax future generations without representation!
Maybe you want welfare schools, but your children who see how bad they are don’t want welfare schools… why should they pay your debt?
Besides, every argument you make for these “good things” must first disregard all morality and adopt a “utilitarian” approach. You must give up all private property rights for the “good of the whole” and must not complain when someone with a gun steals from you because they are starving or want to support their pet charities.
The thing I found insightful about the article is that those who buy government debt are complicit in the robbery of future generations to pay them interest.
No government funding for schools, roads, transit systems, health care and social security is my preference; however, if we must have government and there must be taxes, government should NEVER be allowed to tax future generations without representation!
So, how do we enfranchise future generations? One idea I had a long time ago, was to allow parents to cast votes on behalf of minors. So, if you had five kids, you would actually cast six votes on election day…
That way, at least there would be “some” representation of children’s rights (and AARP couldn’t walk all over everybody).
What’s so special about “one man, one vote” anyway? Other than the fact that “that’s how we’ve always done it.” It seems to have its flaws…
I would bet a big cut back in the military….
I would bet a big cut back in the military…
I would hope your suggestion is followed up on. Or, at a minimum, cut back on the pension and VA benefits of those who are no longer in the military. There is so much double-and triple-dippin’ goin’ on that it’s insane.
People shouldn’t be drawing retirement benefits when they’re still in the workforce. At the same time, people shouldn’t be drawing disability benefits when they are still in the workforce. But both of the above happen with great regularity. Our government largesse knows no bounds…
One other suggestion which probably doesn’t yield big bucks in the grand scheme of things, but would serve to drive home a point:
How about cutting the pensions and health benefits of former Congresscritters and Senators? These people have lived in a priveleged world for far too long…
These people have lived in a priveleged world for far too long ??
Common…They worked hard for four years (1 Term) to qualify for a pension @ 50 with full benifts…:)
Dan: Right on. There is a very basic problem with the whole concept of national debt, or even long-term corporate debt or pension plans for that matter.
Very simply, A receives goods and services from B, and promises that C– a third party who is not consulted in the matter! — will pay B for those goods and services.
This whole arrangement goes completely against the common law concept of a contract, which requires a “meeting of the minds”– an uncoerced agreement– before any party can be held liable.
http://www.palmbeachpost.com/business/content/business/epaper/2008/10/22/a6b_homebuilders_1023.html
“Every time they make a prediction, the reality has been worse than they said,” noted Dennis Morrison, an independent builder from Rustburg, Va.
“Every time they make a prediction, the reality has been worse than they said,” It’s obvious he’s never read the HBB, no reality could ever be as bad as some of the outcomes predicted here!
What’s the difference between a pit bull & a hockey Mom?
Neiman Marcus!
http://www.neimanmarcus.com/store/catalog/templates/silo.jhtml?itemId=cat000001&parentId=cat000000&siloId=cat000001&icid=topNavcat000001
The governor of Alaska is a hockey mom, while the Republican VP candidate is a pit bull.
And John McCain is the proud father of both
Pretty expensive lipstick on a pig.
She’s just stimulating the economy…
It’s an “image” thing according to the NYTimes:
http://tinyurl.com/5t4dl5
(I didn’t know John Edwards got $400,00 haircuts)
Yeah, it will be great to have Barack O. and Joe B. at the helm. My favorite proposal is an income tax credit based on mortgage interest paid. It is about time that residential housing and associated loans received some favorable tax treatment.
Foreclosures up 21 percent from year ago
Thu Oct 23, 2008 8:42am EDT
By Ilaina Jonas
NEW YORK (Reuters) - Foreclosure activity in September rose 21 percent from a year earlier but fell by double-digits from the prior month as some state laws slowed the foreclosure process, according to a monthly report by research firm RealtyTrac.
…
Most significantly, a California law that requires lenders to make contact with borrowers at least 30 days before filing a Notice of Default (NOD) took effect in early September. The state saw a drop 51 percent from the previous month, according to RealtyTrac. That helped drive the national rate down, given that California accounts for close to a third of monthly U.S. foreclosures.
So I guess Calif will see 100% MOM rise in NODs next month!
Who was it again who suggested less regulation was needed a few years back?
Greenspan calls for more regulation, ’shocked’ by crisis
By Rex Nutting
Last update: 9:00 a.m. EDT Oct. 23, 2008
Comments: 26
WASHINGTON (MarketWatch) — Former Federal Reserve Chairman Alan Greenspan said financial companies and markets should be more heavily regulated to prevent a repeat of a “once-in-a-century credit tsunami.”
Shocked I tell ya! Just shocked!
Your’e right! Who could have seen this coming?
and the rest of what claude raines said: shocked, shocked that there is GAMBLING going on in here
I loved seeing him being shamed today. Every time he tried to shovel the BS he was cutoff. Nobody wants to hear his bullshit anymore. The man was always a zero IMO.
Idiots following idiots. That is the story of Alan Greenspin.
He has a serious case of cotton mouth, i wonder what kind of Med’s he’s taking?
‘I loved seeing him being shamed today. Every time he tried to shovel the BS he was cutoff. Nobody wants to hear his bullshit anymore. The man was always a zero IMO.’
I love it too. I seriously enjoy it.
Notice how he did not say once in a hundred years or even once in a lifetime?
Greenspan is a libertarian. I believe he is honest when he said he is shocked by the failure of banks to regulate themselves. Being a Fed Chairman is not a sign of intelligence, just connectedness.
Let’s see if he can dig deeper into his libertarianism and understand why it can’t work in reality. Though I am confident he can’t.
Judging from his near-mea culpa in the MSM today, he is a lot less libertarian than he used to be.
He believed “banks” would act in their best interests?
“Banks” are logical constructs, they’re not physical things. The only physical thing in a bank are the people and the plant.
The executive teams absolutely acted in their best interests - they made out like bandits and walked away!.
I’m stunned at the abject ignorance exhibited by Greenspan and his rationale for less regulation on the financial industry.
I have a very hard time believing what he said. He’s either falling on his sword for someone or the truth is much more cynical - namely he was just maximizing profits for his compatriots in the financial industry.
I just can’t believe Greenspan would pretend to be so stupid. Stupidity is not something he was ever known for.
Bugs: “eh, what’s with the suitcase Daffy?”
Daffy: “Hey Bugsy, well this is actually Foghorn’s power point presentation”
Bugs:”eh, why is Foghorn wearing a tie?”
Daffy: “We’ve been invited to the Cheney-Shrub “Financial Economic Global Solve Everything Money Related Summit”
Bugs: “What is Foghorn’s presentation topic?”
Foghorn: “well, see here son, it’s one I’m an expert on…”How to walk like a rooster and keep your tail feathers high!”
Bugs: “where is it being held at?”
Daffy: “Well Bugsy, the directions say it’s being held at the “Shadow” side of the Washington Monument…10AM EST”
Bugs: “eh, what’s for Lunch?”
Foghorn: “Free Range Chicken & Lame Duck Soup”
Daffy: “page 86, Daffy gets blasted again!”
Greenspan-He said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a “state of shocked disbelief.” And Greenspan also blamed the problems on heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt
Yep, do you think that maybe the rating agencies bribed by financial institutions and the financial institutions that aggressively marketed this gold painted crap might have had anything to do with it you worthless POS. Do you think that if you and others in our gov had pointed out and corrected the conflicts of interest and stopped the criminal activity that maybe this wouldn’t have happened. I’m not for public executions but I might be in favor of a public flogging for this criminal. I hope congress takes a look at his investments during the last couple of years to see if he really was shocked or if he has been talking out his A##.
Regardless of his whether his ignorance is real of feigned, given the substance of his publicly expressed views on interest rates and subprime on the way up and the importance of him understanding these subjects given his position, it is horrifying that he is allowed to give congressional testimony on derivatives and securitizations. The only testimony he should be giving is his deposition in US v. Greenspan.
One of the problems facing our financial system is that the foxes are guarding the hen house. Judging from the names that have been floated as possible Treasury Secretary successors to Hank Paulson, the lack of highly qualified outsiders, and the flow of FIRE money into campaign coffers, it seems likely this policy regime will survive into the next presidential administration.
As long as private monies are funding politician’s campaigns, public monies will be returned to the financiers.
2 constitutional amendments to fix America:
1. All public campaigns for office will be financed by public money. Anyone going around the rule will be shot for treason.
2. The federal government will maintain a balanced budget except in times when Congress has declared war or 2/3 of Congress declares a state of emergency.
No doubt that the next administration will not substantively change the system. Obama or McCain.
1. All public campaigns for office will be financed by public money. Anyone going around the rule will be shot for treason.
A majority in the House and Senate vote for that one right after someone sneaks something funny into the Congressional water supply.
The fact that top managment would screw shareholders as well as workers might not have been such a “shock” if Greenspan had thought seriously about their pay packages.
The same sort of people are in control of government, and even non-profits. Our social institutions are being drained to death by self-dealers, and our future with them.
http://www.msnbc.msn.com/id/27335454/
no more mondays by dan miller.. good read for those of us searching for a better life outside the rat race..
On a side note I just booked my next adventure.. something a college buddie and I do every year from christmas till late january. This year headed to Argentina, brazil,Uruguay . Each time we travel it’s a different local. We are the cheap hostel gang.. like slach and veder from the att commerical..
We always look for cheap beers, adventure and great real estate. It’s been over 8 years since my last trip to brazil so I am looking forward to seeing the big changes in the country. Last time I was down they it was a 4:1 ratio dollars to reals which made beers about 30cents and hangovers 2 days long. I could have purchased a beach hotel for $280,000 at the time. I am really looking forward to seeing the economy of argentina.. I never made it down as the last time the economy crashed and it was pretty rough.. sounds like it’s going to be the same this time. Each trip we find that we must defend our american status and always try to prove we are not all bad.. this time it may be harder to prove our case. I will send updates as I really like to see what I could buy in each area.. If anybody has info or wants info I will send a report back..
Not sure where I saw this line but I still laugh-
I spent my money on coke and whores the rest I wasted!
sounds like fun! have a great trip.
Hey Beach, where are you headed in Brazil. Was there in Jan and spent 2 weeks driving the coast north from Rio. Going back with some friends in Jan to spend some time Floripa. Doing a little surfing. I love Brazil and the Brazilian people. Happy group that loves the beach, music, dance and food. Although it is more expensive I think you will enjoy as most Brazilians now live better. Plus they do like Americans. And the Brazilian woman are easy on the eyes.
yea I here ya about the women.. got married lasted about 10 minutes.. thank god for the prenup.. I spent time in Sao Paulo, campinis, ubatubba, rio, porto suggoro, bahia, foz, and north.. not much in the south but plan to this time. Yea the people are great.. I taught english to kids from 12-20 for something tod do and to meet the locals. I really like brazil but the girl thing was tough took a year to untangle the mess but was worth the adventure. Have you been to uruguay and the beach there? I heard it’s better but I have to see with my own eyes..
Don’t forget your gold AMEX card.
Sh!t they’ve gotten to her and she really IS being paid as a spokeswoman!
Hey, I haven’t even got MINE yet, though it’s in the mail!!!
(notice the implication at how cool I am…going to be.)
ROTFLMAO!!!
Equities are holding their own again today. Not so much for gold.
Decline in gold price so far today at an annualized rate (assuming 252 trading days, 7 hours of trading per day of which 2.5 hours are elapsed thus far, and exponential, not linear, trend projection):
((710/(710+25.50))^(252*7/2.5)-1)*100 = -100 pct.
Sorry if any of my assumptions are flawed (especially the obviously flawed assumption that the rate of decline so far this morning could continue for a full year).
Professor, I agree with you, I am trying to understand the posts here that are touting gold as though it is the ultimate insurance. To me it is about timing and long term value and Gold has not held well for the last 30 years. To me the notion of human pursuit of shiny metal as a store of value is an outdated notion that only holds up in a return to the stone age scenario.
Yes I believe that gold can have some value in an economic collapse, but in the modern scientific age, it is no more magical than any of the other elements on the periodic table, value is simply relative to overall supply and demand. As for the unavailability of gold, it seems that you can still buy gold with delivery from many sites including APMEX.
Also consider the following from Bloomberg - Gold May Pay Only in Case of Maximum Despair
Gold, by the way, is taxed as a collectible — whether you buy it in the form of coins, ETF shares or an interest in a pool account. Your tax rate on long-term capital gains would be 28 percent, compared with 15 percent on other assets. Only a significant price gain (or currency collapse) redeems your bet.
This is why I buy and sell for cash at the local coin store. Gee, come tax time I can’t find any receipts!
definitely flawed, the rate of decline quickly reversed into more than +100% yoy annualized gains
And yet when I checked at APMEX yesterday they had no monster boxes of silver maple leafs to sell.
Deflation first, then inflation.
What are the chances I’ll be able to hit the sweet spot?
Dude,
You will have a good shot at it.
Most people who bought into the recent PM mania didn’t have the experience of significant losses from the last one. Disillusionment will keep many of them out of the game next go.
Cause doing the same thing expecting different results is…….., well you know.
What would be your estimate for the time frame between PMs arriving at and bouncing along a bottom, and the government being forced to fire up the printing presses to avoid default?
If the latter happens before the former, then the sweet spot is an instant in time, very hard to hit. If the former precedes the latter, the sweet spot could drag on for months or years.
BTW, I’ll probably be buying yen, PMs, and land if I feel the time is right.
dude,
I’m not that smart, but this whole change thing has been like watching grass grow. I’m not betting on an overnight explosion of the entire civilization. Simple observation; the value of all assets are falling pretty much together. EVERYTHING was bid up on debt. Stand back and let it run its course, there is still a lot of downside potential. Inflation isn’t going to affect you until that stops, is my thought. It took decades for this phoney economy to boil over and it will take (it is already taking) years to unwind. It will lie in a coma for a while after that. You are not going to need split second timing, you will need cold clear thinking.
Best scenario is that you have the stamina to wait until there are few other buyers for the specific things you want. Most people don’t have any savings. If you do, it’s hard not to blow it. Be patient. Take the time to decide exactly what you want to end up with.
There is also that sweet spot between buying a house and getting divorced for not buying a house.
Patience is a virtue, most of the time. You would think nesters would have a greater share of this quality.
and then there is that sweet spot after buying the dream house that will finally make the spouse happy, after all else has failed, and it doesn’t, and she leaves, and you sell the house, and you find a woman who is already happy, and she doesn’t need a house to be happy, she just wants to share her happiness with you, and she does, and you are happy.
BTDT
‘…after buying the dream house that will finally make the spouse happy, after all else has failed, and it doesn’t, and she leaves,…”
SIL and hubby have owned three different houses since my wife and I began renting the place where we live. House no. 3 was not a charm — the loan was more than they could afford if they had stayed together, and since they split eight months ago, they have not been able to sell at anywhere near their remaining mortgage balance.
Is this the same SIL (or was it your sister) who you mentioned a couple of years ago?
Very sad. Sure hope they do not have any kids.
Considering gold is up +25 from its low (around when you made your calculation) I would say that we are looking for 100% growth… =P
Dan,
To the moon? $800 to kiss $700 in just two days. 30% off. I know, it’s only a flesh wound.
Been saying since Iceland that markets will close for the coming devaluation. Expect a major haircut on your paper fiatscos in the bank, if you can even get to them.
Oct. 23 (Bloomberg) — Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said.
http://www.bloomberg.com/apps/news?pid=20601087&sid=appqOCRR4JMU&refer=home
This is definitely the most dire prediction Roubini has made.
Too bad he can’t get over his Keynesian mind-shackles. He’s a super smart guy for an academic.
There was a fascinating interview on NPR last night w/ some of Roubini’s students at the Stern School of Business. (Sorry — can’t find a link…)
watcher, I appreciate your dilligence in saving and preparation. However, exactly what do you hope to do with all of your gold treasure? How will it protect you from a currency collapse in the United States?
I think one of the biggest assumptions in the goldbug world is that in this MODERN age, the United States has been a major force of stability (this is not political, if you are rooting for the destruction of the US, then you would probably not agree) and if that source of stability is removed than we plunge into a very different world, uncharted, unknown and very likely dangerous. Only the US and Russia possess the power to destroy the world in 30 minutes, that in of itself creates a unique situation. China is rapidly growing in power, but has no where near the military projection power of the US. The US fading into insignificance would spare no one as a new world order rose up, and it is unlikely that those arrogant Westerners would be protected or living in luxury simply because they had a chest full of gold ducats. It is far more likely that someone would simply steal them from you rather than trading for services.
I once read a Dave Ramsey book that my ex-landlady (the one who went BK) had laying around. He claimed that gold has never worked in dire economic situations as a viable currency. I’m assuming he researched this (or maybe his assistant named Suzanne)…
I do think it would be good for bribes, though.
I’m thinking about testing this theory out next time I get pulled over for speeding.
“Can I just pay you now, officer, instead of sending i through the mail, it’s a bit unwieldy…”
“I once read a Dave Ramsey book that my ex-landlady (the one who went BK) had laying around. He claimed that gold has never worked in dire economic situations as a viable currency. I’m assuming he researched this (or maybe his assistant named Suzanne)…”
While his perma-bullishness on stocks and real estate (long term) leaves something to be desired, Ramsey’s insistence on doing whatever it takes to be debt free and save for rainy days would serve anyone well. His focus on new cars/toys as one of the biggest obstacles to prosperity is spot-on. We know where most of that MEW went.
Dave Ramesy also has everyone dump their long term money in mutal funds (12%! It’s proven!!) and completely ignored the housing bubble.
Gold is good as a bribe in moments of economic/political chaos. Apparently, a great deal of Jewish gold made into German hands during the Holocost. For speeding tickets, on a bright sunny day, not so much.
I’d add France, Britian, and China all have the capability to destroy the world in 30 minutes, and add that India, Pakistan, Israel, and perhaps South Africa and Brazil all can be a significantly destabilizing force toward world destruction by at least going regional.
And who the heck knows what the DPRK is up to…
So if they half your cash do they also half your debt ??
Kinda creepy about an hour ago as I clicked on the article ,and it was removed! …came back 30 minutes later, and it was update #2….any differences?
….anyway as to the TEOTWAWKI scenario, of course it won’t matter, but once again having at least 10% in PM is a great Ins. policy, or just believe in the undying power of FED notes.
I am missing the threat that is worrying the handwringers at MarketWatch.com. It appears the market is taking a breather from the selloff. In fact, judging from the fact that the indexes all miraculously returned to the flat line after a big selloff on the opening bell, it looks like the PPT is back on the job after a much-needed recent vacation.
October 23 2008 10:15 A.M. ET
Bulletin
U.S. fixed mortgage rates fall sharply
Early gains are under threat
U.S. equity indexes begin near flat on heels of latest swan dive. Japan benchmark at lowest level in more than five years. Europe also hit.
Generally when high economic muck-a-mucks are talking to Congress on Capitol Hill, the U.S. stock market is remarkably resilient.
U.S. fixed mortgage rates fall sharply ??
Personally I think that would be a possible fix…If you could offer fixed rates around 3%-4% with minimum 10% down I think the inventory would be absorbed through both owner occupant and investors…I know if I could borrow 30 year money @ 3% I would be in play….
We can certainly expect disruptions of business as usual in regards to where we shop for food and other needs, as financial turmoil takes it toll, but will it start out minor and get bigger over time, or just forget the minor part and go big from the get-go?
China appears to be reeling, and must raise prices on all the junk they make, just as the end-user (that would be us) is going broke and isn’t buying hardly anything, as our collective garages are full of their efforts, but our savings are empty.
the good news is that wages are rising in China at a very healthy pace; I was quite surprised to hear what income workers make in some of these factories. Totally incomparable to 5-10 years ago, and probably close to Eastern Europe wages etc. Look around on the streets and you see the wealth revolution for the ordinary citizen is rolling along just fine.
of course, the workers in real US managed factories probably get a bit less than acceptable wages.
Will layoffs and factory closings I predict another revolution will be rolling along soon.
Once they have a taste of city life, its hard to send them all back to the farm.
I wonder how many of them CAN go back to the farm.
Yeah, and WHAT farm? That tainted pile of tailings laced with a couple dozen dead miner’s bones? That farm?
One of my friends works for the port association in WA and he came back from a trade junket to China with the most frightening tales of ecological horror you can possibly imagine. I ’bout barfed just hearing the first few. I’m strengthening my psyche before I listen to any more.
a trade junket to China with the most frightening tales of ecological horror you can possibly imagine.
Yeah. It drives me bonkers to read some other economic sites that presume that China’s economic expansion is endless and our recovery will come from them.
I sit there and think: A billion people? With limited natural resources and farmland? Whose government decided to forgo any sort of environmental controls so our Wal-Mart junk would be as cheap as possible? With some of the highest cancer rates on the planet? And a totalitarian government? That China?
As much as I’d be afraid of social unrest here, I can’t imagine being stuck in the Middle Kingdom. Not to mention all that destruction. Time, as always, changes and clears the environment but it’s doesn’t help the animals, plants or people living there now.
“We can certainly expect disruptions of business as usual in regards to where we shop for food and other needs, as financial turmoil takes it toll”
I’m highly sceptical about dire doom-and-gloom predictions… Unless there’s a war inside US, I wouldn’t worry too much about availability of food and staples.
People made do just fine even during the worst days of hyperinflation, attempts at military coups, and tanks in the streets of Moscow. There was always food and water and necessities, barter economy sprung out, and before you knew it, bad times were gone.
Apparatchik,
There are major differences between Soviet Russia and here.
Nobody really owned anything, and there was never really anything to buy back in the day, so when it collapsed, it didn’t have far to fall, but we are like a polar-opposite in comparison to them in oh so many ways…
People are resilient. I find it hard to believe that Americans will just curl up and die instead of surviving. Not gonna happen.
People will make do, and bad times shall pass. Even in total societal collapse, there will be those who prosper and rebuild. And IMO the ones rebuilding and prospering will not nesessarily be guys with a pot of gold.
Hunkering down and hoarding are a different skill set than building and growing. I’m very much into hoarding myself, LOL, but I wish I had more of enterpreneurial and risk taking skills instead. Those will be much more important if all the dire predictions come to pass.
Great post, NYchk. Awesome.
People will make do, and bad times shall pass. Even in total societal collapse, there will be those who prosper and rebuild.…until we run out of oil, or water, or arable soil, or effecive antibiotics…
You’re more optimistic about our fellow man than I. About the first time the supply trucks don’t make it to your local WallyWorld, watch the great ignorant morph into the great terrified.
Got toilet paper?
NYchk:
Here is what i feel in NYC lots of stores closing in Sunnyside, a good size spanish bar last week was open for 3-4 years plenty of room for a band …..2 more buildings in Long Island city with for sale available rental
I notice more cops writing parking tickets, and having tow trucks ready to tow the cars at 4:01pm on queens blvsd.. no parking 4-7 pm rush hour..
Alladin sane
sitting here with the David Bowie cd of the same name…
It’s aged rather well, hasn’t it?
Finally, somebody found you out!
Filed under: “McSame: I’m a maverick, I’m a “reformer” …that’s why I have 93.7% of the Cheney-Shrub campaign “operatives” on my election committee”
“…McCain has cut off all communication with Mike Murphy, the chief strategist of the ‘00 campaign and a longtime friend and adviser to the candidate. The reason — McCain sees Murphy’s criticisms of his current campaign as a “betrayal.”:
“…Murphy’s latest critique of his former boss is a post on Time’s Swampland blog offering sarcastic potential responses to the news of Palin’s $150,000 makeover:
“I saw the RNC statement on Gov. Palin’s $150,000 clothing bender on the RNC’s tab. This caper is gonna make for a long day at the office for the good folks at the RNC/McCain press operation. Thought I’d offer a little help in a humorous vein; some other possible spin lines for the RNC.
1.) What you sneering critics in the liberal MSM fail to see here is… a Jobs Program! Saks floorwalkers, cashiers, a team of sweating porters to haul the merchandise from the store to the motorcade… chiropractors to treat those porters. Sarah Palin knows how to create jobs!
2.) What’s the difference between a Pit Bull and a Hockey Mom? You can feed a pit-bull for 483 years with 150 grand.
3.) Still cheaper than Mitt Romney’s hair products. We’re saving money here…
4.) William Ayres is a terrorist!
5.) New ad slogan: “Clothes for Gov. Palin? $150,000. Time machine to go back two months to late August and ask what the Hell were Schmidt and Davis thinking when they cooked up this idea and sold it to McCain? Priceless.”
http://www.huffingtonpost.com/2008/10/23/mccain-cuts-off-murphy-cr_n_137130.html
Say what you want about Mitt, but at least he can afford to pay for his own clothing and hair care.
Does his clothing make women think he is ‘hot’ ?
Why do you think they wear those magic longjohns?
Do they take them of when they shower?
Heckfire, no. Satan might pick that exact minute to visit, and then where would you be?
In the shower with Satan, I guess.
And with no magic fibers to repel the Nefarious One, ‘cept maybe a soapy washcloth.
You know what, my favorite sister wears ‘garments’. This’d be Rachel. I raised the rest right, to be like me, but Rachel is stubborn and wilfull and persists in being a Mormon. She does it to aggravate me, I know it.
Anyhow, when she was out visiting me last summer she was doing an underwear wash and I thoughtlessly tossed in a bright red bra into the mix in the washing machine and it leaked dye all over, so that she extracted a load of pink magic undies. She was dismayed, because the rules are, garments must be WHITE. White and pure. My contention was that pink dainties would repel the forces of evil as good as white ones, surely. Furthermore, a couple gaudy sequins and some tassels would double the effectiveness and scare off all sorts of demons and such. It works for MY underwear, don’t it? Sure! Does Satan hang out at Chez Olympiagal? (That’s rhetorical.) Maybe He does, actually. And if He does, He likes my pretty underwear.
But she refused to be convinced. That girl is really irritating sometimes, in her refusal to listen to sensible talk. Plus, she has dumb underwear.
I’d never marry her, myself.
Hey, I just thought. ‘In the Shower With Satan’ is a TERRIFIC band name! Huh? Huh? Yeah!
I’ll make a note of it, for in case I ever form a band.
If I could get Satan to hang out here, I’d ask him or (Him) to help with the cleaning.
I’m pretty sure, though, that Evil Forces do care about the color of your underwear. I saw it in the Bible or maybe on a flyer. Or maybe I just made it up.
Anyway, they (the Evil Forces) also care if the underwear is clean. Or maybe that’s what the what the paramedics care about when extracting your body from the car accident. I forget.
I think the “take home message” from this thread is that you should shower in your magic long johns which must be white lest you be unprepared for the Forces of Darkness. Also do not wash your underwear at Chez Olympiagal’s.
You gals/guys crack me up (I say guys also in case Satan was in on either post)!!!
Vermonter, losty, you are both so wise I can hardy believe it. I am going to cast aside all my philosophy books and only pay attention to your wisdom from now on. I mean it. I can’t believe it’s taken me this long to find enlightenment. It must have been one of those ’spiritual tests of worthiness’ thingies.
“Everything is but illusion.”
-Rama Coawpai
“Remember gavagai.”
-Thomas Quine
And he has executive hair.
When was the last bald man elected President?
“When was the last bald man elected President?”
Didn’t George Washington wear a wig?
Their index is biased towards the change in value for the low-priced end of the national housing market, because it only considers homes up to the conforming loan limit (which used to be $417K, but now is $729K in high-priced coastal markets). I am not sure how they adjusted their methodology to reflect the increase in the conforming loan limit, but perhaps this was not necessary: Since the OFHEO index is a repeat sales index (like Case-Shiller/S&P) and home prices are generally falling, there may be very few repeat sales for homes that sold in an earlier period for below $417K then sold again for between $417K and $729K after the increase in conforming limit.
BULLETIN
U.S. HOME PRICES DOWN NEARLY 6% IN PAST YEAR
U.S. home prices down 5.9% in past year, FHFA says
By Rex Nutting
Last update: 10:15 a.m. EDT Oct. 23, 2008
WASHINGTON (MarketWatch)– U.S. home prices fell 0.6% in August and 5.9% in the past year, according to the Federal Housing Finance Administration, successor to the Office of Federal Housing Enterprise Oversight.
P.S. This index has tended to understate home price declines relative to the Case-Shiller/S&P over the course of the housing bust thus far.
this is a general problem with most of the housing indexes worldwide, they are totally worthless if you don’t know the details of their accounting. They usually underestimated the price runup and will probably underestimate the crash as well.
I’m seeing the same here in Netherlands, with numbers for the price runup from about 1990 ranging from +190% (biggest realtor organisation), +250% (Ministry of Truth), +400% (Kadaster, official home sales registry) and 600-1500% (my own observation from many repeat sales in the area). I can explain most of the differences between these numbers by all the statistical manipulation and flawed accounting that is going on, but most people just look at these index numbers and don’t care what is behind it.
Just 6% down, what are people worried about?
Governor backs federal aid for struggling homeowners
Use money to buy loans, he says
By Michael R. Blood
ASSOCIATED PRESS
October 23, 2008
LONG BEACH – The federal government should move swiftly to enact a second economic stimulus package to help teetering homeowners or face another possible crisis – banks stuck with a massive stock of vacant homes, Gov. Arnold Schwarzenegger said yesterday.
This is what irritates me. We’re proposing giving help to underwater homeowners which is essentially a wealth transfer from poor middle America states to wealthy East and West coast states.
It’s about time the governors and Senators from the midwest and south (excluding Florida) start telling the terminator he doesn’t need any darn help.
I grew up in Oklahoma and moved to DC about 14 years ago. People here (on average) are so much wealthier than those back where I came from. The schools (both secondary and primary) have a ton of more money. The roads are nicer. Why must taxpayers in Oklahoma help out a FB in DC who probably makes 3 or 4 times their income?
Some Senators have started looking at it this way. We need more.
After all the passage of myriad reverse-Robin Hood programs that implicitly tax young families who can only afford to rent in order to funnel monies into the hands of presumably-wealthier home owners (and by extension, to the lenders who loaned them the monies to buy houses they cannot afford), will another bailout eventually be enacted to help struggling renters keep their financial heads above water?
Wall Street Journal
* OCTOBER 23, 2008, 10:53 A.M. ET
FDIC’s Bair Suggests Guarantees for Loans
By DAMIAN PALETTA and MICHAEL M. PHILLIPS
WASHINGTON — Federal Deposit Insurance Corp. Chairman Sheila Bair suggested the government give banks a financial incentive to turn troubled loans into more-affordable mortgages.
Just 10 days until the state paychecks stop coming, if we don’t come up with the do re mi…
If we start bailing out states on an one-by-one basis, it’s gonna get messy.
we are already into bailing-out-countries in Europe, so why bother with failed states …
“or face another possible crisis – banks stuck with a massive stock of vacant homes, Gov. Arnold Schwarzenegger said yesterday.”
Thought that’s what was going on right now.
So Ahnold, why should we bail out zose “struggling homowners”, when zay are nussing but azzholes anyway?
Don’t be a girly-man and walk away…
People don’t want the houses, they want the equity. Offer them a 40 or 50-year fixed rate refi mortgage. Watch seven-eight out of ten FBs walk away anyway.
Offer it @ 3% and I am “All In”….
Kim, I put a patch into the white house for you.
Are you there? Go ahead. repeat statement.
Hell yeah. The only reason people are stuck in homes verses stuck in stocks is it takes too much time to sell. Stocks are wiped out in days.
Nobody could have foreseen the tsunami.
More Business news ShareThis
Greenspan: ‘Credit tsunami’ to have severe impact
By Martin Crutsinger
ASSOCIATED PRESS
6:42 a.m. October 23, 2008
WASHINGTON – Former Federal Reserve Chairman Alan Greenspan told Congress in prepared testimony Thursday that the current global financial crisis is a ‘once in a century credit tsunami’ that policymakers did not anticipate.
Right. Nobody.
C’mon, old man, you did to bail out the balance sheets of the banks from the Internet bust, and they partied, took their bonuses and went home.
This is trying to sugarcoat your legacy which is already in tatters.
“Whoever controls the volume of money in our country is absolute master of all industry and commerce…and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.”
James Abram Garfield, 20th President of the United States. Within weeks of releasing this statement President Garfield was assassinated.
So perfectly stated! Thank you, alta.
Someone here posted a link to a PBS interview on Taleb and Mandelbrot on what they think may happen next. Their “views” were extremely dired, the worse since the revolution, not just the Great Depression. But if you read the wordings they use carefully, they were permeated with “I hope not”, “I don’t know”, “Possibly”, etc. Sounds like they were hedging their bets a great deal and I am not convinced they even believe their worse fears will be realized with any type of certainty. On the other hand if you read what Roubini says (who called for 2 years of recession in the US and unemployment going to 8.5% - 9% but not nearly as pessimistic as Taleb & Co), he has little such hedging words in most of his statements and sounds with a lot more convictions.
It’s a matter of “most likely” versus “worst case.”
I thought “I don’t know” was precisely the point. Financial models are all based on past observations to predict the future. If it turns out those past observations were meaningless, then any models to predict the future are meaningless as well.
Taleb was using his imagination rather than historical numbers/correlations to imagine a path to a horrific global crash. I thought it was a direct counter to everyone who is constantly saying, “it’s not going to be another GD”. How do they know it won’t be?
The point being, no one can know.
Also, I like hedging words. Anyone who proclaims to know with certainty where the market is going scares me.
Further more if you are expecting much worse than you are publicly predicting then there will be no need to use “hedging” words. Anyone who confidently says “it will be this bad” can do so because they think there is a very high probability it will be worse.
Does anyone here honestly think we can avoid hyperinflation, pay off our debt, and return to a constitutional republic? Does anyone believe the government will not grow bigger, concentrate more power, and move toward world government?
If you expect increased government power/control then you must expect revolution, violence, very high taxes, at some point.
In many ways saying it will be like the old revolution with its Continental hyperinflation may be right on the mark.
we can avoid hyperinflation ??
I dunno…I just can’t get my pee brain around this idea of Hyperinflation..I am in the deflation camp I think..Re-pricing off all asset classes…
they are both academics, and this is just the common way academics speak about this kind of subject. Both Mandelbrot and Taleb know from their own theories that we are in uncharted territory, and anything could happen (not necessarily ugly, although the chances of a really bad outcome are probably bigger than ever before).
Hmm, the actions taken by the FED and the rest of the world’s central banks are an attempt to cushion the blow.
Taleb and Mandelbrot are not saying that this may be a black swan - it is a black swan. What they are saying is that we may not have the systems to effectively deal with it due to the size, the sensitivity, the extreme efficiency, and supercharging of the global system. It is a real bad car crash and at very high speed.
The idea is simple: Impulse is a change in momentum. So, say we are in a car crash at a reasonable speed - 45 to 50 MPH - and the airbags deploy, the crumple sections crumple, and the seat belts hold. We have changed our momentum as much as if we had not had those items. We had a serious crash and survived with minor injuries.
Now, let’s say we are doing better than 100 mph in the same crash. We have a much higher momentum to deal with. The safety stuff may or may not work because the momentum is much higher and could overwhelm the system. We could die and will suffer serious injury.
The FED cannot stop this and is only trying to spread it out and cushion the crash.
Inefficiency has is uses.
Roidy
How can it be a Black Swan if people on Ben’s blog have been talking about it for 4 years??
I would call it an Inconvenient Swan.
I hate the phrase ‘Black Swan’.
A ‘Black Swan’ to me is something that smart, balanced people see coming a mile away but the wheelers and dealers of the world attempt to ignore until it bites them in the ass.
Is a ponzi scheme collapsing a ‘Black Swan’? Don’t think so.
it is not about one Black Swan, it is the issue that if there is one there may be a lot more of them around the corner.
This is also where Mandelbrots fractal/chaos theory provides insight: the system is currently in an unstable state, outside the parameters that can describe/predict its course. Actions to cushion the blow might as well have a reverse effect, the system is unpredictable when using the old mindset (like the one the FED and 99% of economists are using). The problem is not that we are crashing at higher speed than normal and have too much momentum; problem is that where we are now, airbags, brakes etc. are no longer functional.
Tumbling dominoes and highly destructive positive feedback loops also immediately spring to mind.
“Death or even serious injury may result.”
The Chineese have been writing this warning on things for years.
Don’t Fall Down
Backspace to the last “/” and hit enter for more “warnings on things.”
I used to be quite the horseplayer back in the day, and playing the ponies was all about the odds…
The odds of getting out of this financial situation are 50 to 1, which doesn’t mean we are without a chance, but we are strictly longshot material~
That’s why Taleb & Mandelbrot were vaguely optimistic…
At least five Chase banks hit with letter threats
http://www.reuters.com/article/topNews/idUSTRE49J8F620081020?feedType=RSS&feedName=topNews
!snark on!
In related news, CNN/Fox News instant survey polling showed that an overwhelming majority of Americans thought that this new effort by the Treasury would have a positive impact in terms of “dealing with” the financial crisis.
!snark off!
This viewpoint sounds vaguely familiar… Has Reich been reading our posts? (I am personally happy if he has!)
Bailout
Maybe ‘too big to fail’ is just too big
Robert Reich
Taxpayers are bailing out huge Wall Street banks because their collapse would spell doom for the financial system. But commentator Robert Reich thinks it’s odd to also allow those companies to consolidate and get even bigger.
He has a good point about the counter-productive aspects of large organizations (though I disagree that anti-trust law is the solution).
Now if he would apply his insights to the federal government, he’d be awesome.
“Today, Bleier predicts oil will fall to as low as $50 a barrel in early 2009….
“There was too much money allocated” to commodities and now “that trade is coming unwound,”…… reiterating a prior view that speculation (vs. fundamentals) was entirely responsible for the rally ……”
http://finance.yahoo.com/tech-ticker/article/100364/He-Called-the-Peak-in-Oil-Now-Bleier-Sees-50-Crude-in-Early-%2709?tickers=FCX,XOM,AGU,POT,GLD,OIH,COP
Does it amaze anyone this now comes to light. Oil basically was the final death nail to the economy.
It’s my understanding that Obama has been consulting with Dr. Reich.
FWIW, at least Obama is seeking the advice of some qualified individuals. I really like Robert Reich and his philosophies; he has some good ideas.
OK, who is going to lend us the $trillions we need to maintain our lifestyles?
Russia’s stock market has collapsed. Falling oil prices have caused an emergency OPEC meeting. China has soaring unemployment. Europe is in recession.
Who does that leave?
a lot of funny money has disappeared; now people can start worrying about more important things than granite countertops, second homes, a third car or fifth luxury vacation for the year … that does have its good side for sure. Good lesson for all the completely spoiled youngsters too (even in China this seems to be a serious problem).
just imagine we could go back to the wealth levels of the fifties/sixties
me and you.
We may in fact be headed for a lower standard of living…time to dump the Lexus and buy a Chev or Ford and hunker down @ home…Get under the radar…Some are going to be very angry…
How ironic, in the middle of this credit crunch-crisis-debacle or whatever that the election is being stolen through a loosened credit card verification system.
http://minx.cc/?post=276395
On the credit crisis front, given the lower SIFMA and LIBOR rates, I had three deals price this week. They were on hold for months. Also got some bonds remarketing that had been laying around for weeks. I know must of you see it getting worse, but this is better than it has been for awhile. Im not jumping 100% into stocks, but I am reducing my dollar cost averaging on the dips remaining time horizen for going to 0% to 80% invested (which is my equity max) down from 18 to 12 months for my retirement accounts. House fund remains in cash equiv.
I apologize in advance if this is a duplicate link:
http://www.bloomberg.com/apps/news?pid=20601103&sid=aR9OGpC4jjao&refer=us
From the story:
“A new law in California, which accounted for 27 percent of the foreclosure filings in the third quarter, helped slow the process in September as notices of default dropped 51 percent compared with the previous month, RealtyTrac said. In North Carolina, default notices fell 66 percent last month after lawmakers required lenders to give homeowners an additional 45- day notice.
In Massachusetts, filings rose 465 percent in September from August after a law was passed requiring a 90-day notice before foreclosures could proceed, RealtyTrac said. ”
Does anyone have info on why the new laws in Cali and NC made for a decrease while the law in Mass caused an increase?
Who does that leave?
You and me. They will take 50% of the value of our saved dollars. The average man on the street won’t understand the theft until it is too late.
fortunately for the average man, he has no dollars left that can be robbed, he only has debt. So who does that leave?
How’s gas in your area? Salinas, CA this am price at local station $3.94/gal for the bottom grade.
Westchester County, NY blew through the $3/gal floor to 2.95 yesterday. Diesel fell through the $4.
A week ago-Fairfield County, CT- Gas, 2.75, Diesel 3.75.
Albany, NY has dropped $.50 this past week to $2.93 this a.m.
Fargo ND, $2.39
$2.65 on Sunday here in Jax, FL.
$2.55 for 87 down from 4.00 just a few weeks ago. My family is saving $200/month from this fall in prices. Too bad there is no cheap way to stock up / hedge.
“Too bad there is no cheap way to stock up / hedge.”
We were in Corpus Christi, TX in 1997 for a few months and gas was 75 cents per gallon! Hubby and I hated TX but loved those gas prices. We talked at length about “stocking up” before we left.
Here in Annapolis, MD gas is $2.65 and seems to drop daily.
2.97 for regular in O’side. Cash price.
Did you change your name again? Stop doing that, you’re confusing me!
3.15 in the Rogue Valley
3.50 - 3.75 here…
2.27 for regular grade in Wichita.
Cheapest appears to be $2.85/gal in metro Phoenix. I kind of liked seeing some of those behemoths staying parked for weeks at a time.
$ 6.70 in Netherlands (down from about $ 10, mostly thanks to the recent euro exchange rate crash).
$2.839 per gallon of low octane fuel in SW PA.
Gas in Newark, NJ was 2.50 this morning.
1.01 per liter or 3.82 per gal in New Brunswick Canada
I paid $2.889 for 93 octane this morning (stupid six-cylinder Jetta, unfortunately no 91 octane north of Boston and 89 just leads to misfires).
IIRC 87 octane was $2.689 a gallon.
Gassed up this AM at 2.59.
Nasdaq breaking through the floor. Probably leads the way down. Watch for increasing volume. Oh, the huuuumaaaanteeeee!
Whatever happened to that plan somebody had??
There was a plan?!?
I guess I missed it.
BWAHAHAHAHHAHAHHAHAHAHAHHAHHHHHHHHHHHHHHH!!!
Oct 21 — Vol = 2.122 B
Oct 22 — Vol = 2.589 B
Oct 23 — Vol = 1.434 B thus far (1:31 est)
Oct 10 close was 1650, capitulation. Yesterday’s close 1615. Today?
Oct 10 intraday low was 1542.
Current 1563 vol 1.471 (1:40 est). Brewing battle between bulls and bears.
1552 vol 1.641 (2:09 est) We’re nearing the crumple zone.
1544 vol 1686 Blow the whistle, Hank.
I would like to discuss a much bantered about idea: the attempt of Governments to remove/reduce risk from the market. To me, all of the government interventions from the last 40 years, the New Society of Lyndon Johnson, and all of the Republican/Democrat programs that followed have led us up to this current mind-set; that Government has the capacity to remove risk and responsibility from the marketplace, and, therefore, I do not need to worry about failing economically. For everything from my food (Food Stamps/WIC), health care (Medicare/Medicaid), and now housing. Government has become the provider of last resort, and…..so why should I worry? I am a theoretical “Free Marketer” who believes that the market, when left alone, does a better job of allocating resources, rationing “utility”, and correcting problems. But we have not had a free market for a very long time now!!! We have market intervention from every angle and political persuasion, and that, it seems to me, is the ultimate problems. And yes, I have benefited from many of these programs (student loans, primarily). However, I incurred a significant amount of debt to create a business, and stayed out of the housing market to avoid making a poor buying decision, and I am very sure that there will not be a program to reduce my business associated debt.
So back to my original point: if the participants in the market believe that all risk has been mitigated or removed, then said particpants are likely to pursue very risky pursuits. The costs of which will be born by the “risk-mitigator of last resort”, which in our case is our government. This appears, to me, to be where we are today. Off loading all of our individual risks to the government; which, in reality, is just deceiving ourselves into thinking that the government is someone else, when, in fact, the government, financially speaking, is still just us!
And believing in the laws of economics, much like I do the general laws of science, this cannot end well!
This feels very much like flying at 35,000 feet, in a Boeing 747, and having the Captain come over the PA System and say, “sorry folks but we are out of fuel, but, we have the worlds best glider pilot in the cockpit, and, we are confident that he/she can probably bring us in for a relatively safe landing. You probably will notice a few bumps and jars, as we land, and it might be a bit frightening. But we should all be alright. This Boeing 747 is the world’s safest aircraft, and we have been through tough flights before. We will come through this one just fine, too”!
My mind hears what is being said, but my heart just does not believe it!!!!
Having taken a number of glider flights, I can assure you that landing is the scariest part. A Boeing with 300+ million people on board (or is it 5+ billion?) would be a bit frightening.
On a 747 with no engines, a controlled crash is the best you can hope for.
I think a controlled crash is the best we can all hope for right now.
747 with no engines, a controlled crash ??
Only in a perfect Scenario…It’s a falling rock with very limited ability to slow it down and if you can’t slow it down you are toast…You just can’t put one of those puppies down @ 200 knots even on a runway…
Ever hear of the Gimli glider
That was a 767.
November Surprise?
I know it’s hard to think 2 weeks out, but what sort of economic tomfoolery gets unleashed after the election is over?
Lad, I’m more worried about the economic tomfoolery BEFORE the elections…
The State of New York has already decided to have a special legislative session to admit we are screwed, jack up taxes, and cut services.
Expect more “confessions” around the country.
tomfoolery gets unleashed after the election is over ??
I don’t know but if it does not go well my bet is Barrack is going to get the blame…I think that may be the “Big Picture” plan with the GOP all along…Throw McCain under the Bus (Did it before may as well again) and prep the pit bull for a 2012 run…
Regarding Federal economic “policy” (I use the term loosely), the only time they’re ever likely to do anything remotely sensible, which might also result in some greater short term pain, is in the first few months after the inauguration.
Whoever makes it in, I expect something toward this end. Particularly if O is elected and Volcker really has a say moving forward. But anyone who really knows isn’t talking.
That’s why I’m not making any major financial decisions or committments before mid next year, at the earliest. The PTB are all committed to further trillion-dollar level attempts at tweaking, but no one really knows just what is in store, and it’s likely to be completely different from whatever they’re saying now. I’ve stopped paying attention to the campaignspeak.
In either event, my ongoing bet is that the POTUS 44 is a one-termer. Too much bad news coming, no way of not getting mired in the muck.
Do the Volcker! Do it now!
Late last night PB responded to my querry:
“Will this be the crisis that finally eliminates the Keynes/Friedman economic models so favored by the government?”
Can you offer a superior alternative?”
Yes.
In the US, the money supply is not exogenously determined by the monetary authorities.
I recommend:
Nicholas Kaldor “The Scourge of Monetarism” 1986
Thx for the lead…
I have know clue what you two are talking about but I am ordering the book right now….
http://www.avpress.com/n/23/1023_s1.hts
Students take to streets in Walk to School Month event
“Parents are permitted to park at Christ Our Savior United Methodist Church, at the corner of 50th Street West and Avenue M, so their kids can walk to school or be there to pick them up after school.”
I’m very sorry for the wayyyy off topic post, but this has to be the most foolish “save the planet” story I’ve ever seen.
It’s probably a “save the budget” story. They wanted to put a “positive spin” on it.
http://contraryinvestor.com/mo.htm
The other consumer confidence survey, foreign investment capital.
It would be interesting to have data for Aug.-Oct.
HBB friends, I grew up in the mythological cowboy culture (mythological cause they’re usually neither brave, handsome, nor any of that stuff John Wayne liked to portray). Anyway, my dad, a rancher, had a few old cowpuncher friends, and I recall them talking around the kitchen table over coffee, and they’d sometimes discuss life during the GD.
It wasn’t that big of a deal, they grew their own food, money was scarce, but they knew how to repair things and make do. Don’t get me wrong, it wasn’t a picnic, especially when you needed to buy something and had little cash, but they actually did OK. They used the resources around them.
I think of everyone in the cities, and what will they do, with few resources around them? Not trying to make a case for another GD, but people are starting to get nervous and thinking more about things they should be thinking about anyway as a matter of course, growing a garden, that kind of thing. I think we’re going to have to become more self-sufficient, learn how to do things our grandparents took for granted. I think Olygal will do fine, she sounds like she has a lot of skills.
Anyway, most people have very little knowledge of how the economy works (or doesn’t) and what role they play in it, but at a certain point it becomes a huge confidence game, excepting the part of it that is actual production (witness the huge salaries of CEOs, their level of production/knowledge certainly doesn’t merit their compensation). Stock market volatility and doom and gloom articles become self-fulfilling prophesies, and these, coupled with an underlying sickly system, can create a downward spiral.
What’s my point? It’s a question that, if you can answer, will solve many mysteries: why do people gravitate toward doomsday scenarios? Is it hardwired into our genes? If so, all societies are possibly doomed to eventually fail.
My theory is that general unease is the underlying basis for a society where people can’t/won’t/don’t take care of themselves, aren’t self-sufficient. Contrast a wild coyote with a domestic dog, which is most likely to grovel at the feet of someone who feeds it? Do you think the coyote worries about eating every day? Yes, it does, it stays on its toes, and the dog doesn’t, until its person is late home from work one day…
My dad’s old buddies were like the coyote, they could take care of themselves. They were somewhat interdependent at times, but they were generally very self-sufficient. Many Americans are now more like little lapdogs that bark and whine at every new noise, always worried about everything, needing dog whisperers (shrinks) and new toys and anything that can bring illusory security…and afraid of their own shadows.
If you’re worried about the economy and future, start doing something about your own ability to be happy. This isn’t, in my book, hoarding food or weapons, it’s learning how to take care of yourself, growing a herb garden in your windowsill sort of stuff, repairing your own plumbing sort of stuff. We need each other’s skills, that’s what a society is all about, but we also need to have skills of our own. And believe me, shopping and watching TV are NOT skills, honest.
OK, rant off.
Disclaimer to the above rant: I was at a friend’s watching HDTV (or whatever the one exclusively about housing is called). Had no idea such levels of depravity even existed. It really shook me up.
Cable TV shakes me up too. It’s so *unreal* for lack of a better word. (like this is “real”, I suppose). Sitting a suburan track house with the windows blocked off by curtains watching whatever is on HGTV is just weird.
And I agree with you 100% about what self-sufficient means. Survival (being a coyote) is knowing that you know how to learn to do things. Both my husband and I know how to do plumbing and sewing and grow plants. We know that we survive when we don’t have what exactly what we need and how to “make do” because we’ve *done* it. We don’t wait around for someone to “save” us.
Note no firearms or 10 years of food storage are necessary for any of that.
If i have enough to eat at home then I don’t have to keep grocers busy making profits.
I don’t have to run to the market to pick up one thing and come home with many things.
It’s about resisting temptation.
this is the part I really worry about in this crisis, not the financial issues (together of course with the political/military fallout when these things get out of hand).
Being mostly self sufficient is not an option in todays society, certainly not in huge parts of Old Europe and the big US agglomerations. I’m pretty sure even most farmers in my country are not self sufficient and would be in trouble very soon when electrical power, water, fertilizers, etc. are no longer a given.
Like the lapdog, I don’t think people choose to be this way, they were bred by their masters (politics and media) to be the sheeple they are now. I doubt they are too insecure, I think the problem is first of all that they don’t see the real danger when it is arriving (like the lapdog who welcomes a thief in the home). Maybe this is different in the US, but in Europe people are still extremely optimistic about how government is going to work everything out for them, that this crisis is irrelevant for their wealth and wellbeing, etc. They simply don’t see it coming.
There has been some discussion in my area lately about a similar issue with potential flooding (I’m in the part of Netherlands below sea level, where many people lost their lives due to flooding in 1953). In 1953 most people instinctively knew how to deal with an emergency, and help themselves. Nowadays, people would await instructions by email, or try to use a cellphone to call the government for help and wait until the helicopters arrive to pick them up - ain’t gonna happen. According to the latest prediction, Dutch sea levels are high enough to break the dikes within 30 years from now - but nobody is worried, everything will be OK and even if not the government will provide flood insurance
I volunteer at a local museum and it’s very common to have motorists come in quite lost, as their GPS has failed them in some capacity, and they haven’t a clue where they are…
I started driving 30 years ago, and my GPS (road map) was very seldom needed, and spent 99.9% of it’s time in the glovebox.
How did we get so dumb?
I have often wondered why so many people buy these things. Other than taxi cab and UPS drivers, who really needs them?
My truck doesn’t have GPS and I refuse to buy one. If I don’t know where I’m going or can’t read a map, I shouldn’t be going anywhere.
I love maps, the physical kind, not some overpriced POS that requires monthly fees and leaves you stranded when it’s battery dies.
My friends keep giving me GPS’s as presents. I never use them, just give them away (after being grateful for their generosity, of course).
Now I’m wondering if they weren’t secretly hoping the batteries would go dead when I was way out back o’ beyond…
A whole new perspective on the dang things.
My friends keep giving me GPS’s as presents.
Maybe it’s your name, Hinty McHinterson
Perhaps I will change my name to ella hungry, or ella broke, or ella iscoldlikescashmere and see what happens…
I guess because evolution is no longer working for humankind (or maybe only in a perverse way, that is heading for extinction).
I’d be willing to bet 90% of most folks today can’t read a compass or a map. Around my neck of the woods, newbies take their boats offshore and navigate with GPS, they rely solely on the technology and never take a compass bearing once they leave the inlet. Talk about dumb!
I was riding with a cousin of mine who was using his GPS which was barking out annoying things like “right turn 1/4 mile” or some sort of crap. Anyway, he was glued to the thing as if he were watching Christ reappear, and I said “hey you’re passing the place!”. He proudly said “nope, it says this turn right here.” Sure, pal. The “turn” took us into a dead end which forced us to turn around and drive back to the entrance which I had pointed out to begin with. He said something like “hmmm, that’s kind of weird”. Weird? How about not even using one’s own two eyes to search for a business? Of course, he has all the latest gadgets known to man, but he has to move the family four times a year for not paying rent.
This is what I teach newbie dj before the touch a record a or cd
Map reading 101, and how to tune their radios to the local news stations so they can learn to understand the traffic reports
Why waste time on someone who gets lost easily and is late to a surprise birthday party?
I rode somewhere with someone the other day and they had a GPS that they turned on to impress me, because evidently some girls are impressed by guys with costly gadgets. Not THIS girl. The situation degenerated rapidly, with me and the GPS shouting profanities at each other. Jeeze, what a crass and uncivilized GPS. Plus, it couldn’t find dive bars for crap. What good’s a GPS if it can’t find good dive bars? And is a bossy B*tch, to boot?
I mean, at least THIS bossy b*tch knows where the good dive bars are. Really, I ask you…
NHZ, my great grandmother was from Holland. I often wonder what kind of life I would’ve had if she hadn’t come to the US.
Thanks Lost,
I grew up in the same kind of era. Dad passed down lots of survival skills and mindset. My orientation was more Adirondak than Prarie, but all you say applies.
Skye
Mindset, that’s the KEY concept here.
My mom’s new toyota has a built in gps.
She has no idea how to use it, but then vhs and microwaves really stump her too.
I think most Americans deeply hate their over medicated-reality tv watching-chinese junk buying-fast food eating-worthless lives. Hence the strong desire to see the festering creation that they’ve helped create collapse.
Oh damn, here I go being positive again.
When I graduated from college (finally), I got a high-paying job in high-tech in Boulder, Colorado. I bought a nice house, a nice car, the whole American dream. Ate out all the time, no time to cook. Spent my weekends messing around with my horses trying to escape the life I’d created (not really realizing it at the time, though).
I finally wrangled a low-paying job back on the Western Slope (ironically, in economic development), took my horses and sold everything else. I was so happy to get outta that lifestyle that I cried half the way home.
Inspirational. Seriously.
not really growing my on garden but i have always been surprised at folks that have very picky diets (my wife included).
i know people that want eat anything and i often wonder what they would do when SHTF.
me on the other hand…many times my lunch would consist of
- vienna sausages on crackers with hot sauce.
- bolgna and cheese crackers.
- been soup.
- potato soup.
- block of cheese, cornbread and buttermilk.
- bowl of black eyed peas or collard greens with cornbread.
- bowl of boiled rudabega with pepper sauce.
and i truly do love those types of things. i guess the love may come from the nastalgia…growing up in the mississippi delta…watching my grandfather.
i guess i am just a simple man. i got like a 10k bonus at work and my wife asked if there was anything special i wanted to buy. i told her ‘hell yeah…call of duty 5 comes out in november. (thats like a $50 video game for those who don’t already know).
picky eaters have always baffled me though.
- been soup.
bean there myself
I’m kind of fond of bean soup, especially homemade. I’d half to be pretty hungry for Vienna Weenees.
Lots of sodium and saturated fats in many of those foods you listed, which don’t do a body good. Live off hotdogs and cheese long enough and, well, you may not live long.
My fav is has-been soup, the kind you forgot was in the frige and finally find it when everything else is gone and you’re now hungry enough to eat it.
picky eaters have always baffled me though.
I am picky about how food is prepared, but I like pretty much every kind of food. I never understood writing off a whole food. Like, if someone doesn’t like olives. I think, ‘all olives, really?’. There are so many kinds! I am quite curious, though.
Many years ago, as a little one, my best friend loved marmite. And I just couldn’t believe anyone could eat it. It’s like yeasty seawater molasses. But, every few weeks, I still couldn’t believe that it could be so bad and she still loved it. So, I would ask for a bite of her toast. And, after about 4 months, I kinda liked it, and now I lurve it. I stubbornly want to enjoy all food. (Well, except most offal and crickets and blood pudding - I don’t want to know).
(My marmite conversion is quite similar to my low key obsession with understanding macro-economics. I have very little familiarity with it and I can’t believe I am interested, yet I keep trying, too.
Lost in Utahs song
“… See now, Newbie, that’s the thing you do
that drives me up a tree
‘Cause no matter how I rant at you,
you never let me be! “
ROTFLMAO!!!
Sung to the tune of that old Joe Walsh song, Life’s Been Good.
Hey Lost,
Last night, I removed a big ol’ hairball from my bathroom sink plumbing. Took the trap out and cleared the main with a nice manual auger. Does that count? Truth be told, I paid a plumber (not named Joe) $200 to do the exact same thing about a year ago. Only had to watch him do it once!
High five!! I really admire that.
Me, when things get rough like that, I just move.
I was in Amish country 2 summers ago and, even at that time, thought, “Boy these people’s lives won’t skip a beat when the coming fallout happens.” I dig that “live simply” lifestyle. I live relatively simply, but I am certainly no farmer.
I used to love visiting the Amish country with my relatives back east. Haven’t done it in over 25 years (I was just a boy). There is a lot to be said for the simple life, especially in this stressful day and age. I’d love to be a farmer, but it’s expensive to get into if you’re not born into it, especially considering the bubblicious prices on land.
Somewhere along the way most Americans forgot how to be self sufficient. I believe “illusory security” played a role in this. Why should a man learn to grow a garden or even plan space for one if he only needs to go to the grocery store a block away for tomatoes? Why should he learn to start a fire if turning that dial on the wall makes heat come out of the registers?
I don’t know how to raise a steer or a pig. I can’t shear a ram or a ewe. I can’t turn raw wool into clothes. But I know people who can and I can learn these things from them. I can hunt. I can fish. I can grow a garden and I can put up vegetables. Most importantly, I can do hard work and not die in the process. I suspect that most people, when push comes to shove, are far more capable than they believe themselves to be. They just haven’t been tested.
Our families, friends, and neighbors are our greatest assets. I may not particularly like my neighbor but if he needs a helping hand I will be there for him.
Well, reading this thread made me hungry, so I just called out for a pizza.
I have a work tsunami, so must participate via audio listening. This is yesterday’s offering:
Can We Rescue Homeowners?
http://www.onpointradio.org/shows/2008/10/can-we-rescue-homeowners/
After the banks, there stand millions more homeowners facing foreclosure. If they go down, the battered housing market — and maybe the whole economy — goes with them. But bailing them out — block by block, house by house, loan by loan — presents all kinds of hazards, moral and otherwise…how do home prices find a real bottom?
One of the guests: Daniel Alpert. This is what the New York Times has to say about him:
Here’s his idea: Pass a law that encourages homeowners with impaired mortgages to forfeit the deed to their lenders but allows them to stay in the homes for five years, paying prevailing market rent. Under the law Mr. Alpert envisions, the lender would be forced to accept the deed, and the rent. After five years, the homeowner-turned-renter would have the right to buy the home back, at fair market value, from the lender.
There are so many things I like about this idea that I hardly know where to begin.
http://www.nytimes.com/2008/10/18/business/18nocera.html?pagewanted=2
Uh, oh…11:03 pacific time, stocks in a freefall. DOW down 182 in a matter of minutes. Will the PPT show?
S&P broke 875 — watch out below.
Nasdaq about to melt through Oct 10 lows, 1542
It did it! It did it!
1536 vol 1.743 and increasing.
Yes, Nasdaq and S&P leading the downward charge. “To the bowels of despair we go!”
The buyers are coming. Let’s see how long they last. This is pivotal.
It was a great knife catching effort. Nasdaq closes at 1604 vol 2763. Three days down with increasing volume and new lows. Unless there is a “flaw in my free market perception model”, we might be going down sideways. What a rush!
DOW down as much as 275, but PPT efforting mightily, drawing stocks back to negative 180 territory. But bears prove hungry and persistent wrenching DOW back to -215. Who will win this seesaw battle? Stay tuned!
Just remember, the PPT owns the printing press…
And they’re putting forth a mighty effort.
Yeah….nice recovery there at the end.
DOW finishes up 172. The PPT, I mean bulls, win running away. It turned into a rout, really.
Bear, thanks for the daily update, enjoy it (since I have no stocks).
Bubble-era favorites are going down in flames. I smell the onset of capitulation.
No, not Peet’s!!!
Oh well! Maybe I can buy the coffee cheaper.
ge broke 18……going to ten year lows.
cut rates!!!
more liquidity!!!
“This suckers goin down”
GE Wizz.
They threw away a lot of great businesses (my customers) over the past few years. Not interested in making great stuff. More interested in playing poker.
It’s not really GE, they just kept the name.
Im starting to pull forward my last years private pingbacks, I hope this works.
——-
Re: 5 themes for the 4th
Voz,
You know I cannot delve into any kind of detailed, statistically or scientifically-based assessment of what is so at the moment. So this is all gut:
–The old models don’t seem to work. This is akin (in my thinking) to whatever principle states that just in observing something, you alter its outcome. Plus, I think it would be worth having a pipe session on what the implications are now that information (good, bad, ugly, and MISLEADING) is readily available to all, in terms of how it impacts the models.
–Confusion, complication, and complexity may have become
commodities, at least from the perspective that they create jobs for government, wealth managers, real estate lawyers, psychologists, hookers, and travel agents.
–On Tech: Keep in mind, the dot bomb happened partially because people overspeculated on what could be done with the internet. Now that we know, it seems that technology plays may be less risky. We know what a chip is going to be built for, for instance. Back in the day, we really had no idea why we were building e-commerce websites…except that everybody else was doing it (online groceries? What the f-ck?).
Well, just thought I’d contribute some Monday afternoon mental
meanderings. Hope you guys don’t find my comments too frustrating.
Bone
——
Greenspan (from todays hearing): “……a flaw in the model that I perceived is the critical functioning structure that defines how the world works.”
Translation: He couldn’t conceive that it could be a problem, therefore it wouldn’t be a problem.
I don’t know what stuns me more……that he is that stupid, or that arrogant.
Like stagflation, he’s just starrogant.
I think the best term is hubris.
Why is everyone mad at the clown, he just did what they told him to do, and blabbered nonsense like he understood. Ever wonder why nothing he said made sense?
He can’t actually retire, because he’d fall over without that hand up his ass.
Pretty amazing considering that about 1000 individuals are elected to run this government and about 10,000 or so are appointed to do the same. Seems that we should be able to replace them fairly rapidly and easily. If anyone wanted to do that job. I mean how hard could it be given the level of success that we have seen lately?
Could we replace the board of directors and executives of the Fortune 500 with monkeys who throw darts?
The savings in salary and benefits alone might exceed the cost of any bad decisions. And if we keep the monkeys from playing golf together, perhaps they wouldn’t all make exactly the same bad decisions.
Remember, though, what monkeys do when thrown a football…
-An HBB cautionary tale.
H*mp them?!?
It would be more fun if the monkeys were throwing sh#t.
latest news
[$INDU] Dow Jones Industrial Average up 233.45 to 8,752.66
Home-builder stocks crushed after earnings reports
By John Spence
Last update: 3:06 p.m. EDT Oct. 23, 2008
BOSTON (MarketWatch) — Home-builder stocks were down sharply Thursday after two of the industry’s largest names reported significant quarterly losses that contributed to fears that a housing recovery could be some time in the future.
I personally Blame the Short Sellers!!! time to call a hearing with Chris Cox to get to the bottom of this unfair destruction of the Home Builders Stock! Lol!!!!!!
Pulte shares drop on housing slump
A recovery in housing may be hastened if the government passes a $20,000 tax credit for all homebuyers, Dugas said. A tax credit “should contain no repayment provision,” he said.
http://www.dailyherald.com/story/?id=244851
This is just shocking!! why dont they just suggest the government buy the F-ing homes for people!!!
Do I hear $50,000? $100,000.
This is disgusting.
Talking sh*t is easy.
Multiplying 110 million households by $10,000 takes only a little longer.
Not happening.
What I want to know is, how does one qualify for free monies without doing something risky and dumb (like buying a home when their prices are dropping at double-digit rates)?
I don’t know what it is, but today is the first day that all of this switched from being exciting to troublesome. I was going to enjoy watching a lot of fools get skrilled, but I guess we’re all going to have to eat some cake.
Any suggestions on how to obtain more schadenfreude? I was enjoying the buzz, but I’m starting to realize the keg is gettin’ low.
I just print a 3 year chart tracking my stocks, marking the day last year when I baled out…..I missed a little upside last fall, but I can live with that.
Example…one unnamed stock (of my former employer): Sold last year @ 57/share. Got to a little over $70 last October, Today’s close? $11.30, or thereabouts.
Other than my job, I ain’t sweating nothing right now.
“You’re young and you got your health, what you want with a job?”
-Evelle, Raising Arizona (1987)
What some HGTV. Especially My House is Worth What? or Property Virgins.
oops What = Watch . = ,
Can’t the credit market see that the worst is over now, as the DJIA is rising again?
latest news
[$INDU] Dow Jones Industrial Average up 233.45 to 8,752.66
European credit spreads jump to record highs
Russia outlook sours, pessimism on global economy grows
By Laura Mandaro, MarketWatch
Last update: 1:54 p.m. EDT Oct. 23, 2008
SAN FRANCISCO (MarketWatch) - Gauges that track the risk of European and Asian corporate defaults spiked to record levels Thursday as the outlook for the global economy dimmed and emerging markets came under increased strain.
Credit-default swap indexes compiled by data provider Markit surged through previous record wide levels “amid pessimism over the economic outlook,” said Markit vice president Gavan Nolan in a report.
European credit spreads are worsening rapidly.
I think the fat lady has finished warming up and is getting ready to sing.
Fliegt heim, ihr Raben!
Isn’t a really big sucker rally written into the script here somewhere, before the lady sings the blues?
We had that on the Monday after the “bank capitalization plan”.
C’mon, keep up!!!
Gas this am was $2.94/gal and at 1pm same station with tanker unloading it was up to $3.01/gal. This is going to be fun to watch.
How dead is it?
I just had lunch with a friend that has a back-hoe and does construction work, as well…
He’s had 2 jobs in the past week, digging graves with his back-hoe for horses that passed away.
I never really gave it any thought what a p.i.t.a. it would be to dispose of Mr. Ed…
Take it from personal experience, horse-ownership from cradle/stall-to-grave burns more time and money than about any hobby you could possibly name. We could have put two kids thru college on what the ex- pi##ed away on horses.
People can’t GIVE horses away right now…….
Well, you shoulda. And you gushing on and on about water all the time, too! A decomposing mass the size of a horse is no joke far as contamination to ground water supplies. Think of the bacterial load.
Let’s just hope these two giant graves was not upslope of you, alad, else you’ll be posting your ‘Gold R Us’ thoughts betwixt bouts of serious puking and other dramatic unpleasantness.
I prefer goldfish funerals…
All drains lead to the sea…
I’ve buried two horses now. I still have two, but both are pretty old. It’s sad. One was buried in a pasture I was leasing and that then was sold later. I had a long talk with the new owner and he built his house where it wouldn’t disturb the grave. I think he was a bit worried about having a horse ghost running amok in his house, from the way he acted. Would’ve made for a unique story, though.
Eaton Vance, Deerfield Sell Loans, Unwind Saps Credit
The S&P/LSTA Leveraged Loan Index posted a negative 6.15 percent return in September, almost double the previous record loss of 3.35 percent in July 2007. Leveraged loans, those rated below Baa3 by Moody’s and lower than BBB- by S&P, have lost more than 17 percent this year through Oct. 14.
Investors and bankers are gathering today in New York at the Loan Syndications and Trading Association annual conference where the featured topic for discussion is “Where Do We Go From Here? Contemplating the Future of the Leveraged Loan Market.”
Bloomberg
I just hope more Tax dollars are Not included in their Contemplations!
Didn’t someone ask yesterday how long till gold dropped below $700?
METALS STOCKS
Gold tumbles to below $700 as fund sale continues
By Moming Zhou, MarketWatch
Last update: 4:31 p.m. EDT Oct. 23, 2008
NEW YORK (MarketWatch) — Gold futures fell Thursday, at one point tumbling 5% to below $700 an ounce for the first time in 13 months, as fund liquidation and the U.S. dollar’s rise continued to pound the precious metal for a third straight session.
P.S. Don’t worry — this is only the paper price (oops — the price of gold is denominated in dollars, which are made of paper…)
Pecunia bellum omnium contra omnes
Sounds like a mumbled version of “cash is king”?
Punk’d!!!
Efforts to alleviate the woes of the U.S. housing market, which started the world crisis, continue, with the Bush administration weighing a roughly $40 billion proposal to help “forestall” housing foreclosures, according to a report in the same paper
I just had to look up that word. What a clever use of it in that paragraph..see below
dictionary results for: forestall
Dictionary.com Unabridged (v 1.1) - Cite This Source - Share This
fore·stall /foʊrˈstɔl, fɔr-/ Pronunciation Key - Show Spelled Pronunciation[fohr-stawl, fawr-] Pronunciation Key - Show IPA Pronunciation
–verb (used with object)
1. to prevent, hinder, or thwart by action in advance: to forestall a riot by deploying police.
2. to act beforehand with or get ahead of; anticipate.
3. to buy up (goods) in advance in order to increase the price when resold.
4. to prevent sales at (a fair, market, etc.) by buying up or diverting goods.
110 million housesholds x $1,000 = $110 billion.
Help = $40 billion.
I rest my case. Let’s go drink a beer.
Cool roller coaster ride for bond traders. I think the train just did a double loop…
Someone on TV just said if they don’t rescue homeowners then it will be a country full of pitchforks.
All of this is to calm the masses, and keep prices high.
It’s hard to believe this is america.
it will be a country full of pitchforks.
oh, great. another bubble.
Methinks the Fed is hell-bent to implement a metals and grains led price advance across the grid to devalue the dollar by ninety per cent in three years.
That’s how they do things upstairs.
Now, granted, I’ve only been saying this since yesterday.
Yep, Gold was driven down under $700 this morning.
It’s $725 after hours now.
Don’t forget the Summit…wonder if they have anything besides run the printing presses faster???
How does this help even the Fed?
This puts household budgets into even more severe strain, thus causing foreclosures, and driving the price of houses even lower.
It’s called a “budget constraint”.
Did you think before you blurted?
I didn’t say it’s my idea.
Just see if the metals and grains don’t start creeping up.
Let the politicians handle hunger and cold.
The Fed is here to handle your money.
This is part of the trouble, I’ve tried asking, albeit sometimes sarcastic, how and why gold is still a good investment. And usually I get weird fringe conspiracy theories better suited for a Lyndon LaRouche publication rather than the often well reasoned posts on this blog. Perhaps I should stop asking the question as it seems to inflame rather than bring thoughtful discussion.
Looking at the 10 year chart for Gold, it sure looks bubble like with that parabolic increase in the last couple of years, not unlike the growth and collapse in the early 80’s. Why is it “different” this time?
Very simple…
Very soon, the U.S. Dollar might only have value within the country, as nobody will want them outside of our borders. (curiously similar to Soviet Bloc currency 1940’s-1980’s…)
Gold on the other hand, is the lingua franca financial instrument that speaks all languages in much of the world, in a world that’s not going to dance to the beat of the buck, much longer.
OC,
Gold is never an investment, if you are thinking of returns. It earns nothing. It is supposedly held as a “store” of wealth. It has an advantage over owning land, in that you do not pay RE taxes on it. It has a disadvantage in recent years, as a small percentage of people buy it to “get rich”, while a large percentage won’t agree to make that happen for them. The small percentage is taking a thrashing at present.
The Bible warns against hoarding gold, rather to invest your money productively. Something to consider.
My dog saw sweet baby Jeebus in a tortilla the other day.
Does that mean the price of gold will go up?
I think he also p00ped on the steps of the church the other day. He was just depositing his best wishes for the sweet hereafter (and a quick hello to the Three Stooges.)
Quick! What does the book say about that? Will my dog be there after the Rapture?
Blue Sky, Thank you for the explaination, it was very helpful and very politely written. It makes it clear to me now.
Alad, don’t agree with you, but thank you for the thoughtful reply. I do appreciate your courtesy. I wish you the best in your investing endeavors.
Financial Times
‘I made a mistake,’ admits Greenspan
Alan Greenspan, the former Federal Reserve chairman, said the credit crisis had exceeded anything he had imagined and admitted he was wrong to think that banks would protect themselves from financial market chaos - 21:26
Financial Times
Goldman Sachs to cut 10 per cent of workforce
By Greg Farrell and Francesco Guerrera in New York and Chris Hughes in London
Published: October 23 2008 19:14 | Last updated: October 23 2008 19:14
Goldman Sachs, a holdout against the trend towards big job cuts in the financial sector, is planning to cut 10 per cent of its workforce in response to the worsening economic environment in the US and abroad.
Paging NYCityboy, paging NYCityboy.
How are those million-dollar condos holding up.
(And for those not “in the know”, they fired them before the “bonus season” which is announced around mid-Dec or so.)
That should put a cheer on the streets for New York.
On the flip side (har-de-har, I made a funny), I feel a sudden outpouring of sorrow for what will inevitably happen to NYCityboy’s liver after this joyful news.
Hic.
The only worse thing than being Irish is being Irish and drunk.
(N.B. And this is truly along the documented heraldic lines, I could lay claim to BARD of that land, were I so inclined or disposed, so to speak. Check out bards, O’Daly and Ireland in a google or dogpile.)
By all ye presents; now hail King Kash!
I rent.
From Bloomberg,
GE and its General Electric Capital Corp. finance arm registered as users of the Fed’s Commercial Paper Funding Facility, spokesman Russell Wilkerson said today in a telephone interview. The company hasn’t set an amount that it plans to borrow, he said.
“This is a way for us to demonstrate our support for what the Fed is doing, which is providing all-around liquidity,” Wilkerson said. “
Also,
GE Chief Financial Officer Keith Sherin told investors Oct. 10 that GE, the world’s biggest maker of jet engines, power-plant turbines, medical imaging equipment and locomotives, was studying the terms of the plan, even though the company didn’t need help financing itself.
At this point the entire non-sheeple people of the world said,
Yeah right, pull this leg and it plays jingle bells.
I’m at work today and person 1 tells me we should start buying 1oz silver coins every week to collect it will be fun he used to do it.
I tell him you can’t there’s none for sale outside of Ebay and 21 dollars an oz is too high considering the trashing spot silver price is trading at. Person 1 does not believe me so starts calling dealers in Phoenix, no silver no gold none. Person 2 and 3 come by and person 1 is incredulous so calls dealer again asks all kinds of questions dealer says buyers are hoarding gold and silver. Person 2 thinks its a joke and asks who shot the kennedys , person 3 who listens to am radio all day gets all worked up.
I tell them they should read Blogs and learn somthing
How this will end? badly I expect.
Tokyo down 5%.
Who h*mped the pooch? Will Nikkei close below the 8000 barrier?
C’mon, Nikkei, let’s go party; c’mon Nikkei, let’s go party!
Yesterday the Nikkei staged a late day rally, and one of the reasons cited was that they got whiff of a new Fed plan to help with foreclosures.
So, the question is - how much more mileage can the PTB get with the “plan-a-day” approach?
Sony.
latest news
Japan’s Nikkei falls under 8,000-point level in afternoon
PETER BRIMELOW
Bottom may be in sight
Commentary: Stocks are getting into the range of historic lows
By Peter Brimelow & Edwin S. Rubenstein
Last update: 12:12 a.m. EDT Oct. 23, 2008
NEW YORK (MarketWatch) — Stocks retest their lows. But a bottom may be within sight.
It’s been 18 months since we last looked at the broad stock market relative to its long-run total cumulative real return — that’s adding in capital gains and dividends, and adjusting for inflation.
When we last did this, MarketWatch editors wrote the headline: “Stocks may rise a bit more, but must eventually come down.” See Feb. 23, 2007 column
They were right! The Dow Jones Industrial Average was then 12, 647. It peaked at 14,164 last October, before getting down to (gulp) 8,543 Wednesday night.
We say “they” rather than “we” because we’ve been running this chart regularly since 2003. It consistently showed that stocks, after a classic top in 2000, had not retreated to a classic low.
N225 closes at 7649.
Russia closes market for a week. SPX Futures limit down!
Dow futures limit down!
latest news
Nikkei 225 ends morning session down 4.9% at 8,046.99
Gold’s recent slump bewilders investors
World Gold Council points to fund liquidation, stronger dollar, stock markets
By Moming Zhou, MarketWatch
Last update: 4:13 p.m. EDT Oct. 23, 2008
NEW YORK (MarketWatch) — Gold is often seen as an investment safe haven whose price tends to rise when the economy falls into troubles, but its recent slumps have defied conventional wisdom.
Gold futures hit a historic high above $1,000 an ounce a few days after Bear Stearns was taken over by J.P. Morgan Chase & Co. on March 14. But in the recent round of crises triggered by the collapse of Lehman Brothers Holdings Inc., gold has fallen to below $700 for the first time in 13 months. The metal has so far lost nearly $170 this month.
‘Investors worldwide are selling everything, including the kitchen sink, and gold is no exception.’
— Peter Grandich, Agoracom
The reason, according to analysts at the World Gold Council, is that the latest bout of the credit crisis has been deeper and more far reaching. Funds were forced to sell desired assets such as gold to meet margin calls, while weakness in European economies lifted the U.S. dollar, which then pushed dollar-denominated gold prices lower.
“The fact that gold did not head higher during the current leg of the crisis seems to reflect a combination of the rise in the dollar, deleveraging of commodity positions, sales to meet margin calls, and the unwinding of the long gold, short dollar trade,” wrote Natalie Dempster, an analyst at the WGC, in a research report released Thursday.
It’s really quite simple; People need cash.
Cash: The Ultimate Solution to one’s financial woes.
seems like just yesterday the river of denial just spilled over the
banks as the tsunami of debt overwhelmed the slaves.
but, hey….Im the f-cking optimist of this group. or, is that the
instigating realist.
welcome to the Banana Republic of the United States.
THOMAS KOSTIGEN’S ETHICS MONITOR
Harsh reality
Commentary: The real tragedy of this financial crisis is that people will die
By Thomas Kostigen, MarketWatch
Last update: 8:25 p.m. EDT Oct. 23, 2008
SANTA MONICA, Calif. (MarketWatch) — The harsh reality of the economic fallout isn’t that Joe the plumber can’t buy his business or that people’s retirement funds are being lost or that unemployment is rising; the harsh reality is that people will die.
This is inevitable.
Not to be too glib about this tragedy but Americans are just far too optimistic about everything, even irrationally so, and the system has led down down this primrose path. On the other side is the harsh end of Economic Reality™ which no amount of Keynesian money-priming can change.
+1
Global slide show of U.S.-bred economic havoc:
Newsweek
It’s a MAD MAD MAD MAD Economic World
by Katie Paul and Lily Huang
Job losses accelerating, and the worst is ahead
Unemployment claims rising faster than expected; White House warns of `rough ride’
By MARTIN CRUTSINGER AP Economics Writer | AP
Oct 23, 2008
Unemployment claims, already well into recession territory, are rising even faster than expected, leading economists to warn Thursday that the worst is yet to come.
As the Labor Department released bleak new numbers on the job market, Goldman Sachs, Chrysler and Xerox all announced they were cutting workers by the thousands, adding to the woes of an economy beset by tighter credit and wobbly banks.
The government said new applications for unemployment insurance rose 15,000 last week to a seasonally adjusted 478,000, above analysts’ estimates of 470,000. Jobless claims above 400,000 are considered a sign of recession.
BUSINESS
The Money Man
Meet Ben Bernanke, Depression scholar, unlikely superman.
By Michael Hirsh | NEWSWEEK
Published Oct 18, 2008
From the magazine issue dated Oct 27, 2008
My judgment call: When the dust settles on the bubble, the Democratic congressmen of the past 15 years will prove to have been among the key culprits in creating the bubble.
JUDGMENT CALLS
Robert J. Samuelson
Good Times Breed Bad Times
We suffer cycles of self-delusion, sometimes too giddy and sometimes too glum. The next recovery usually lies in the ruins of the last recession.
Published Oct 18, 2008
From the magazine issue dated Oct 27, 2008
…
When things go well, everyone wants to get on the bandwagon. Skeptics are regarded as fools. It’s hard for government—or anyone else—to say, “Whoa, cowboys; this won’t last.” In this respect, the tech bubble and the housing bubble were identical twins.
As the housing boom strengthened, lenders overlent, builders overbuilt and buyers overpaid. Existing home prices rose 50 percent from 2000 to 2006. Lending standards weakened. Investment bankers packaged dubious loans in increasingly opaque securities. But bankers—to their eventual regret—kept many bad loans themselves. Almost everyone assumed that home prices would rise forever, so risks were minimal. Congress was complicit. It allowed Fannie and Freddie to operate with meager capital. They were, in effect, giant hedge funds backed by government. Congress also increased the share of their mortgages that had to go to low- and moderate-income buyers, from 40 percent in 1996 to 52 percent in 2005. This blessed and promoted subprime mortgage lending.
From Bloomberg:
“South Korea’s Kospi Index plunged 11 percent, its biggest decline since September 2001, as Samsung sank 14 percent.”
“The Nikkei 225 dropped 9.6 percent to 7,649.08, some 40 points away from its lowest level since 1982. The Kospi capped its worst week since at least 1987, dropping 20 percent, as South Korea’s economy grew at the slowest pace in four years.”
“Financial markets have crashed and are out of control,” said Yuji Ogino, an executive director at Meiji Dresdner Asset Management Co., which manages the equivalent of $28 billion in Tokyo. “This crash is different from anything I’ve experienced since getting into this business in the late 1980s and it’s hard to find ways to ride out the situation.”
Roubini is very bearish:
“We’ve reached a situation of sheer panic,” Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. “There will be massive dumping of assets” and “hundreds of hedge funds are going to go bust,” he said.
“Systemic risk has become bigger and bigger,” Roubini said at the Hedge 2008 conference. “We’re seeing the beginning of a run on a big chunk of the hedge funds,” and “don’t be surprised if policy makers need to close down markets for a week or two in coming days,” he said.
S&P futures down 6.5%
That’s the “lockdown limit”. That means no market-makers are putting out bids.
Watch out below.
Russia shuts market oct 28
NY Times in financial trouble?:
http://www.alleyinsider.com/2008/10/new-york-times-nyt-running-on-fumes
“Not sure how it came to this so fast, but the New York Times (NYT) is approaching the point where it will have to manage its business primarily to conserve cash and avoid defaulting on its debt. This situation will only get worse as advertising revenue continues to fall, and it will be very serious by early next year.”
“The company has only $46 million of cash. It appears to be burning more than it is taking in–and plugging the hole with debt. Specifically, it is funding operations by rolling over short-term loans–the kind that banks worldwide are cancelling or making prohibitively expensive to save their own skins.”
“At the end of the quarter, cash and cash equivalents were approximately $46 million and total debt was approximately $1.1 billion. The Company’s current source of short-term funding is its revolving credit agreements under which it had approximately $398 million in borrowings outstanding at the end of the quarter.”
“So that’s why the company raised the possibility this morning that it might default on its debt. More likely, it will have to start selling assets.* At some point, it will also likely have to undergo a major restructuring.”