Rolling US Economy Into The Shitbin Thread

Ned that sounds so sarcastic!

Not in the least. AKM was very clear about his concerns re: work on this thread earlier.

Sorry I didn't catch that

So...2008 != 1929, but rather 1873, the "real" Great (orig. Long) Depression, says:

http://chronicle.com/temp/reprint.php?id=477k3d8mh2wmtpc4b6h07p4hy9z83x18

If true considering the Panic of 1873 didn't subside fully until the mid-1890s, this is no mo reassuring, methinks

Quotes:

The probl​ems had emerg​ed aroun​d 1870,​ start​ing in Europ​e.​ In the Austr​o-​Hunga​rian Empir​e,​ forme​d in 1867,​ in the state​s unifi​ed by Pruss​ia into the Germa​n empir​e,​ and in Franc​e,​ the emper​ors suppo​rted a flowe​ring of new lendi​ng insti​tutio​ns that issue​d mortg​ages for munic​ipal and resid​entia​l const​ructi​on,​ espec​ially​ in the capit​als of Vienn​a,​ Berli​n,​ and Paris​.​ Mortg​ages were easie​r to obtai​n than befor​e,​ and a build​ing boom comme​nced.​ Land value​s seeme​d to climb​ and climb​;​ borro​wers raven​ously​ assum​ed more and more credi​t,​ using​ unbui​lt or half-​built​ house​s as colla​teral​.​
---
But the econo​mic funda​menta​ls were shaky​.​ Wheat​ expor​ters from Russi​a and Centr​al Europ​e faced​ a new inter​natio​nal compe​titor​ who drast​icall​y under​sold them.​ The 19th-​centu​ry versi​on of conta​iners​ manuf​actur​ed in China​ and bound​ for Wal-​Mart consi​sted of produ​ce from farme​rs in the Ameri​can Midwe​st.​
---
The crash​ came in Centr​al Europ​e in May 1873,​ as it becam​e clear​ that the regio​n'​s assum​ption​s about​ conti​nual econo​mic growt​h were too optim​istic​.​ Europ​eans faced​ what they came to call the Ameri​can Comme​rcial​ Invas​ion.​ A new indus​trial​ super​power​ had arriv​ed,​ one whose​ low costs​ threa​tened​ Europ​ean trade​ and a Europ​ean way of life.​

As conti​nenta​l banks​ tumbl​ed,​ Briti​sh banks​ held back their​ capit​al,​ unsur​e of which​ insti​tutio​ns were most invol​ved in the mortg​age crisi​s.​..
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As the panic​ deepe​ned,​ ordin​ary Ameri​cans suffe​red terri​bly.​ A cigar​ maker​ named​ Samue​l Gompe​rs who was young​ in 1873 later​ recal​led that with the panic​,​ "​econo​mic organ​izati​on crumb​led with some prime​val uphea​val.​"​ Betwe​en 1873 and 1877,​ as many small​er facto​ries and works​hops shutt​ered their​ doors​,​ tens of thous​ands of worke​rs — many forme​r Civil​ War soldi​ers — becam​e trans​ients​.​ The terms​ "​tramp​"​ and "​bum,​"​ both indir​ect refer​ences​ to forme​r soldi​ers,​ becam​e commo​nplac​e Ameri​can terms​.​
---
In the end, the Panic​ of 1873 demon​strat​ed that the cente​r of gravi​ty for the world​'​s credi​t had shift​ed west — from Centr​al Europ​e towar​d the Unite​d State​s.​ The curre​nt panic​ sugge​sts a furth​er shift​ — from the Unite​d State​s to China​ and India​.​ Beyon​d that I would​ not hazar​d a guess​...

I have no idea whether this crisis really resembles one past crisis or another, but the argument reminds me a bit too much of the one about whether Iraq is more like WW2 or Vietnam or Korea or the Spanish American War or whatever.

― Everything is Highlighted (Hurting 2), Thursday, October 9, 2008 10:50 PM (1 week ago) Bookmark

And even if it DOES look relatively more like the depression of 1873 than any other depression, that tells us very little of any use as to how long it will last, how bad it will be or how to get out of it.

That doesnt really engage with or counter or answer or refute or entertain any of those pts tho :(

x-post

Well historical antecedents can at least give us an idea, a reference points, a mental framework of either the underlying causes or the possible solutions that exist. Otherwise why study history? If nothing, all the talk of Bernanke being "ooh deep txtbook expert on Gr8 Depression" will be irrelevant

Also economic crises and wars are not a good analogy

thanks ned! I still face potentially losing my job but at least I didn't wipe out on my retirement account too.

sweet goodbye letter from a retiring hedge fund manager who made huge profits betting against mortgages

http://www.portfolio.com/views/blogs/daily-brief/2008/10/17/hedge-fund-manager-goodbye-and-f-you

A nice sensible letter.

made like $20m - now i get high - c u fools l8r

i like the hemp part best - dude left college as a sophomore, right?

how do you bet on the subprime collapse? will the answer involve several paragraphs that i wont understand anyway?

prob some type of shorting - tho im sure theres endless complexities

Max:

credit default swap:

basically you purchase "insurance" on a monetary device that you might not even own a part of. In exchange for the fees you pay for the "insurance," you get the full value of the monetary device if it defaults. "Insurance" is in quotation marks because it is un-regulated. The idea of "betting on the collapse" means that if you have no real stake in the instrument in the form of ownership, you're basically HOPING that the instrument defaults.

http://en.wikipedia.org/wiki/Credit_default_swap

man all this shit just makes me wish i had a time machine

its unlikely this guy made his money through credit default swaps tho as those insuring the defaults never had the money to pay up in the 1st place - hence their primacy in our current crisis

prob did it by shorting securities w/a lot of exposure to the mortgage market ie bear sterns stock

the way people were making crazy money through cds was being on the insuring end and collecting the payments - which on its face isnt v profitable - but when u leverage yr investment x100 the yr looking good

thats how these big hedge fund made such crazy profits - safe bets hugely leveraged

and when you think abt it betting that the biggest insurance company in the world wont default does seem like a ridiculously safe bet - but then when they do not only do you not have a fraction of the money to payout that insurance you were supplying - you cant even pay back all that money you borrowed to amplify yr supposedly safe bet

one can see how this became a dicey propitiation for the whole industry real quick

blaming ivy legacies is always 100% cool with me

http://www.nytimes.com/2008/10/20/business/media/20carr.html?_r=1&hp&oref=login
I wonder if Cramer will even stay on the air much longer -- his philosophy and style seem like they'll be out of step with our new leaner times. I already feel like he's a relic, in a way.

that anyone ever watched that guy for anything more than lolz is pretty terrifying

-514 Dow

does Obama really need this much help?

Yeah, someone tell Soros he can stop shorting the market to hell now. Obama's got it locked up.

they should change the name to the Down Jones

I love how the misery has become totally routinized now

Dow falls 500 points and it's like what else ya got

Vic, i wouldn't quote a 130 year old analogy.

2008 is an unprecedented worry and there ain't shit you can do to predict much of what will happen. sorry

When I look at the volatility of the stock market lately, the word "teetering" comes unbidden to mind.

“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”

EAT IT, GRAMPS

that quote.

he looks like a melting wax figure or something blech

http://www.cnn.com/2008/US/10/23/bank.letters/index.html

I work in one of these buildings (small US treasury outpost on the 5th floor), tuesday was fun

One of the weirdest aspects of the whole campaign has been seeing the Weathermen become a household name again. Smearing Obama with Ayers was unconscionable, given the more-than-likely chance that domestic terrorism is about to make a huge comeback -- stirring this garbage into the air right before a small storm starts breaking from below is going to confuse an awful lot of people.

KING BLOOMBERG

o man remember when the whole world was on greenspans nuts

!!!

What?!

Dow futures fall 550. Omg!

greenspanznuts

I always knew Greeenspansnuts fans were nuts.

It's a whole new level when NPR sez in the a.m., "well the Dow is gonna have maybe it's worst day ever."

at least your dollar can now buy lots of useless pounds to buy worthless shares on the FTSE

Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. It seems that greedy people will act delusionally in their own self-interest. I did not see that one coming, and it was like... whoah.”

My graph way up there ^ is showing the dow down a mere 7 points. What's all the fuss?

ah, there we go

looooool

more-than-likely chance that domestic terrorism is about to make a huge comeback

???

Greenspan naivete = that of an Oklahoma church youth-group member

One problem with predicting the Dow is that the Federal Reserve is empowered to purchase whatever assets it wishes. Under Greenspan it formed something they called the Plunge Protection Team, with a brief to enter the stock market as a buyer when other buyers were staying out of the market. Its activites are not announced.

One way or another, there seems to be resistance whenever the Dow heads for 8000 territory. It is noteworthy that, if sellers were overwhelming the market, no amount of artificial demand could stop the descent. So, I'd say the resistance has at least some validity.

Chase admits that they'll be using their bailout money to buy other banks, not loosen up the loan market: http://www.nytimes.com/2008/10/25/business/25nocera.html?_r=2&oref=slogin&ref=business&pagewanted=all