Rolling US Economy Into The Shitbin Thread

*wink wink* maybe i already have *wink wink*

whoa awesome!

there's a tiny apartment building on the corner of bergen and like the railroad tracks that appears in my dreams, asking me to buy it, and in my dreams, i have the money

this slideshow james fallows posted is pretty awesome

tags: depression, recession

i meant to ask this earlier but o.nate what do you think about forcing investment banks to go back to being private partnerships? basic argument in favor is that it limits their ability to take risks and attract (excess) capital and that it allows firms to avoid runs on their stocks and become stuck in a confidence spiral

Useful, slides, tom.

Anyone else worried that the haircut involved in the US banking recapitalisation is too little or that the British one is too much?

wheeeeeeeeeeeee

i posted those slides like sooo long ago - but i dont hav special embedding mod powerz noooo

http://nymag.com/daily/intel/2008/10/matt_taibbi_and_byron_york_but.html

Matt Taibbi and Byron York Butt Heads Over Whether McCain Deserves Blame for the Wall Street Meltdown

I was here to post that. wow pwnage.

M.T.: In point of fact I'm talking about the 262-page amendment Gramm tacked on to that bill that deregulated the trade of credit default swaps.

Tick tick tick. Hilarious sitting here while you frantically search the Internet to learn about the cause of the financial crisis — in the middle of a live chat interview.

B.Y.: Look, you can keep trying to make this a specifically partisan and specifically Gramm-McCain thing, but it simply isn't. We've gone on for fifteen minutes longer than scheduled, and that's enough. Thanks.

M.T.: Thanks. Note, folks, that the esteemed representative of the New Republic has no idea what the hell a credit default swap is. But he sure knows what a minority homeowner looks like.

B.Y.: It's National Review.

ouch

in the meantime, wkiw:

http://gawker.com/5063337/the-secret-pleasures-of-dr-doom

A lot of people said the same things that dude said around the same time, including my mother-in-law.

prob not w/quite s much precision tho

http://media.tumblr.com/jgWRGzmqQf3igj4c15UYLbS3o1_500.jpg

Frankly, it's a little fucking early to be handing out medals.

Indeed.

So I trust everyone had a nice Monday. This is Wednesday, however.

Bob Herbert is such a weak-ass columnist

challops. his dignified quiet objection can get pretty tired or obvious, but he's also right most of the time, and sometimes he says things that need to be said.

so, dow down 8%

I've always joeked that my industry (media production) is always in a recession and if you're already in a recession, things can't get much worse. This series of events, however, had me keeping a concerned eye on things until someone pointed out that the 1930's could be considered to Golden Age of Hollywood. So if history is willing to repeat itself, I'll be happy to join.

pretty sure people will continue to get sick, so i'm feelin' fine

Yeh, it's time somebody invented a whole new genre of music for us to be bores about in 50 years, a la Jazz.

Nikkei promptly headed for the bottom immediately after opening, down 10% in the first 45 minutes.

I fear we have reached the horizon where rational action, in itself, will lead to further catastrophe, because in this environment rational action demands liquidation of assets and the hoarding of cash.

the hell with cash, I need to hoard tools, skills, land, and intoxicants.

also seeds and guns

oh look nikkei's down 10 percent again.

how many 10 percents do they have?

achilles vs tortoise

http://upload.wikimedia.org/math/9/b/e/9be700e893958b7691036065ac2d18dd.png

no whammies no whammies

up is down, down is up - buying is the new selling! and vice versa!

i meant to ask this earlier but o.nate what do you think about forcing investment banks to go back to being private partnerships? basic argument in favor is that it limits their ability to take risks and attract (excess) capital and that it allows firms to avoid runs on their stocks and become stuck in a confidence spiral

I think that one good thing about the private partnership structure is that management tends to own a bigger stake in the company- they have "more skin in the game" (not sure the etymology of that, but seems to be the popular phrase on CNBC and elsewhere) - and it's not quite so easy to cash out. And so they have more incentive to take the long view. I think these problems could probably be solved at public companies by more thoughtful compensation policies. As far as the increased ability to attract capital at a public firm, I think that would be a good thing - the main problem in this crisis wasn't that the banks had too much capital- it was that they had too little capital and too much leverage. It was that excessive risk-taking, motivated by distorted compensation policies, that led to these problems. The problem of having a run on your stock is possibly another argument for a private partnership, but that's only the most visible sign of a company's woes - not the underlying source of the problems - having publicly traded stock may contribute to some difficulties in a crisis, but it doesn't cause the crisis.

This tends to be the argument for partnership in any industry. John lewis, an employee owned retail chain over here, is renowned for both it's low staff turn-over, conservative business plans, and high profits.

I would like to see retail banks and insurers return to a co-op/mutual structure, for much the same reason; to align the interests of the bank with those of the users.

yah totally our current system encourages waaaay too much risk - one year you take ridiculous risks they pay off and you get a hundred million dollar bonus - the next year those risks sink yr company and you get a hundred million dollar golden parachute

meanwhile a hard working american - me to be specific - asks for a measly $1m of the total $700b bailout and no one even has the courtesy to return his calls

You forgot to promise to spend beyond your means, jho.

i do that already! just take a look at my balance sheet over here - my actions totally warrant a bailout

http://jeffreygoldberg.theatlantic.com/archives/2008/10/aigs_ceo_to_shareholders_later.php

http://www.earth.columbia.edu/worldeconomy/

Thanks for that I shall be watching via webcast.

More than half of China's toy exporters have gone bust so far this year.

http://news.bbc.co.uk/1/hi/business/7675552.stm

Dow is in the green so looks like we should just close this thread up; shitbin avoided

i wont trust it until republican politicians can again say the 'fundamentals of our economy are strong' and still be elected

More than half of China's toy exporters have gone bust so far this year.

Wait, WHOA, what, really? Holy fuck!

I am hoping that the OECD/G7 leaders have the cojones to roll out some good old fashioned keynesian deficit spending, preferably on the green infrastructure we need to survive. We've stopped the rot but the banks are not going to get the system going again, so let's kick things off by doing some good.

http://www.nytimes.com/2008/10/17/business/17bank.html?hp

otm

More than half of China's toy exporters have gone bust so far this year.

I'm surprised at this, but only to the extent that it's possible to go bust in China. Never been myself, but heard tell of entire streets filled with shops selling some useless item, e.g. western wedding dresses, and no customers nor any discernable demand - and yet lack of even the slightest shot at profitability matters not due to some weird alchemy or other (Niall Ferguson recently described the place as not so much capitalist as Stalinist, which chimes)

An interesting theory on why the Lehman bankruptcy was so damaging. He basically argues that the UK lacked some US Depression-era broker-dealer regulations that limited the damage in the US, causing UK hedge funds (and the European arms of US hedge funds) to get royally screwed:

http://brontecapital.blogspot.com/2008/10/why-lehman-mattered.html

Never been myself, but heard tell of entire streets filled with shops selling some useless item, e.g. western wedding dresses, and no customers nor any discernable demand

this happens anywhere in the world as long as overhead is low enough. Suburban/rural strip malls in America can be almost as ridiculous; I still remember Douglas Adams' encounter with a Gym Socks and Free Range Chicken kiosk somewhere in Africa

"We need money to pay for our housing and food. We have been waiting for a few days now. The government said they will solve this problem in three days. Today [ Friday ] is the third day and we have had no reply from them."

welcome aboard BEEYOTCH

http://i35.tinypic.com/2mxgy2d.jpg

lool

OPEC is cutting output. I would think that with economic pressures as they are, moves to inflate oil-prices will be self-defeating.