Rolling US Economy Into The Shitbin Thread

http://dealbreaker.com/2008/10/wtf-just-happened-to-charlie-g.php

So, okay. The "Closing Bell" team of Dylan Ratigan and Melissa Lee just cut to Charlie Gasparino who supposedly was going to give us some information on "turmoil" at Merrill Lynch. Those of you watching, though, know that didn't happen. We don't have a clip-- someone, anyone, for the love of No Sleeves and his BoFlex, send it to us now-- but paraphrasing, I shit you not, it went like this:

Ratigan: Charlie, what have you got?
Gasparino: What have I got? That's almost Zen-like.
Ratigan: Yeah...so give us the story.
Gasparino: What have I got? What have I got? What have I got?
Lee: Charlie, just tell us!
Gasparino: What have I got?
Ratigan: Charlie, we've got limited time.
Gasparino: What have I got? What I got is shoot for the capitalism.
Ratigan: 'Shoot for the capitalism'? What?
Gasparino: What have I got?
Ratigan: Okay, not really sure what just happened there.

clip

lol

How does (prolonged) deflation occur in a debtor nation?

If I read Roubini's argument correctly, it will occur because the world will continue to loan to the debtor nation (in this casse, the USA), as if it were a sound credit risk, no matter how massive the debt becomes. The USA will not be able to monetize the debt, because the markets will swiftly build inflation hedges into credit contracts, nullifying the monetization.

This assumes that the USA will not sink into insolvency under the debt burden, forcing a repudiation of its Treasury debt obligations, but rather it will accept the discipline of higher taxes in order to remain solvent.

Currently, this seems a liklier assumption than the USA's repudiation of debt, but personally I wouldn't stake my life on it. We've all been fed such a load of rubbish about taxes and economics by the Republicans that five or ten ot twenty years down the road the US population could end up overruling fiscal sense and demanding tax relief, even in the face of fiscal ruin.

Won't any prolonged deflation/disinflation period in the US turn all other western debtor nations into mini-Icelands? Massive inflation and potential currency collapses across Europe?

A lot of the dollar collapse theories seem to be based on its cessation as a reserve currency, but this seems an idea that only makes sense if decoupling were to have happened. The credibility of the euro is surely badly damaged - and there feels a lot more to crawl out the woodwork for the euro yet.

Still think any deflation is likely to be a transitory stage (and any turn towards inflation could be violent and extreme) but I'm still sitting on the fence as far as the US is concerned re (de/in)flation (could stay like this anywhere between 24 hours and 24 months?). As far as Europe goes I don't see how deflation can happen and I don't see how anyone would want any of their currencies

I think the euro remains attractive because of the disorder behind it. There is a diversity of direction and regulation behind it which seems to result in it hedging against itself. Think of the diversity of different fiscal and regulatory regimes within the euro zone. I think some of the attraction of the euro in the last year or so has been that although it is unlikely to surge like some of the more unified economies such as the US, Japan or the UK neither is there likely to be a big run on the economy like there has been in these countries. I can see the euro being the reserve currency of refuge in troubled times because of its structural weaknesses.

you would both do well to listen to that radio show i posted; it would disabuse you of the idea that the euro will become the world's reserve currency (mainly because europe doesn't want that role)

I don't have that idea. Right now I think it is more likely that the Euro will disappear than become a reserver currency

im psyched this thread has settled into a nice doomsday type atmosphere

ah sorry K - i misread your "stuff crawling out of the woodwork" sentence

http://i36.tinypic.com/28jec6v.jpg

Dow no like "socialism"?

jobs no like "socialism"

dow is down almost 5% right now tho

woooooooooooooooooooooooooooooooooooooooooo

RIDE THAT PONY

slim_pickens.jpg

we gonna die

lol u guys have JOBS

:-/

Uh... not all of us.

what he said

My mom spent miles on me to get home for Xmas after I joked a few days ago that I had about the same odds of getting a job between now and Xmas as McCain did of winning the election. I think that bummed her out twice at once. :(

http://www.craigslist.org/about/best/nyc/16786310.html
^
rolling economy into the shitbin

Jesus, at least it's not full-time.

http://img143.imageshack.us/img143/6347/citizensoldierwv8.gif

http://assets.comics.com/dyn/str_strip/000000000/00000000/0000000/200000/50000/5000/500/255546/255546.full.gif

Nov. 10 (Bloomberg) -- The Federal Reserve is refusing to identify the recipients of almost $2 trillion of emergency loans from American taxpayers or the troubled assets the central bank is accepting as collateral.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aatlky_cH.tY&refer=worldwide

This is standard central bank policy, it stops people panicking about the health of firms being rescued, and causing Bank runs. Britain didn't do things in secret for a while an this caused the Run on Northern Rock.

We're renovating at work and I keep having nightmares where we fall into the red and don't get credit to finish the construction work and the place gets shutdown half done.

Worst case scenario this would make a pretty comfortable squatting place I suppose!

i plan on squatting in one of the 1m half finished condos in brooklyn!

It looks like the banks are about done folding - for now. The stock market has nearly found a trading range, even if it is still as volatile as fuck. The next shoe to drop seems to be unemployment, which has been rocketing up in the past two months and it seems like there's no end is in sight.

In a few months, if unemployment gets high enough, this could have a spillover effect on credit card debt and we could see another round of financial panic. That's why the gov is so nervous to get another stimulus package moving through Congress. That, plus the shuddery thought of GM declaring bankruptcy.

You mean the I-banks? There are going to be dozens of small banks that fail in the coming months.

I disagree also that the trading range has been established--the economic fundamentals are still shit and the volatile nature of the market smells like impulse buying/selling. If that's a range, it's huge and unprecedented and worrisome...the impact of global recession is going to take months to impact.

Also, the AIG re-bailout is fucking unreal.

We still haven't seen the CDS problems seep through the market, that is a gordian knot of liabilities. Like the 80s Lloyd's names who never realised that they might one day have to shell out for liabilities after taking all that lovely money, but much, much worse as it spreads very widely.

I agree that the idea that the financial system or the economy have been stabilized or can be made stable in the next six months is a pipe dream. I just expect that the big stories in the next three months will be unemployment spreading like a bad stain and Christmas retail business dropping off the table. Once we get those facts established, stocks will not stay where they are today; they'll drop some more. Banks will also take more hits.

The gov's going to be burning through money like jet fuel trying to patch things up. This should at least slow down the collapse, which is a worthwhile goal. A slower collapse will cause less wreckage. Poor Obama, stuck trying to deal with this megamess.

naw he's in the perfect position - got job security and will be hailed a savior when things turn around

btw anyone disagreeing w/krugman and reich as far as what needs doing

http://www.nytimes.com/2008/11/10/opinion/10krugman.html

http://tpmcafe.talkingpointsmemo.com/2008/11/09/the_mini_depression_and_the_ma

I perfectly agree that we need a huge public-works stimulus.

One of the problems of the recent housing bubble was the misallocation of trillions of dollars to build enormous houses that no one can really afford to live in. That misallocation cannot be undone, sadly. We're stuck with that shit for decades.

If we rebuild our roads and bridges and energy infrastructure, we'll create real wealth, not the image of wealth. I suppose we can carve up some of the McMansions into weird multi-dwelling makeshifts, but really that's a piss poor answer to a problem that has no good answers.

Krugman forgets to mention that a lot of people in the WPA were building stuff like railroads and making a pittance. Will millions of Wii-swilling riding mower addicts have the stones to do that kind of work?

FIND OUT NEXT WEEK

btw anyone disagreeing w/krugman and reich as far as what needs doing

i disagree with reich only in that i do think tax cuts are necessary for lower-income workers but yeah i def agree with the basic premise that the initial amounts being talked around are way, way too low. compared to the stimulus package the chinese have just put through it's obvious we're going to have to increase the size of gov't spending dramatically.

still kinda worried about what that means lol macro outlook tho

Will millions of Wii-swilling riding mower addicts have the stones to do that kind of work?

lol I dunno if millions of soon-to-be unemployed retail workers are really all that into riding mowers and nintendo

certainly not when you consider that riding mowers require gasoline and Wii requires a living room

have played outdoor wii fwiw

How do you swill Wii?

Oh wait EW!

drinkability

michael lewis knows how to tell a story http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?tid=true

we gonna be repeatedly knocked unconscious and subsequently revived

Has anyone read Michael Lewis' "The Real Price of Everything"? I'm looking for an introduction to economics as a present to a student, and I need something as readable as possible

OMG the handout line is going to grow long after GM sucks at the teet (again.)

IK, I haven't read that, but Michael Lewis is basically awesome