Rolling US Economy Into The Shitbin Thread

hahaha

joel stein needs to be eviscerated

he IS right about w'burg, though ... and $200+ jeans o_O

though i cringe @ the thought of "puritan chic"

ayo tracer hand re: discussion on nationalization:

(W)hen you nationalize the entire banking system, who, exactly, are these “new owners” who are buying the cleaned-up banks supposed to be? And what investor is going to be interested in putting up money to acquire a bank that has to compete with nationalized, and therefore subsidized, banks (since the government presumably won’t be able to privatize all at once).

whole things is worth reading

Unemployment rate in my state (Oregon) officially jumped one full percentage point, from 8% at the end of November to 9% at the end of December. State officials said they expect that figure to be corrected later and they think it may actually be higher.

Yo! Up 1% in one month! Maybe more. We are accelerating into nosebleed territory here. Viscera slamming into spinal columns and all that.

one of the guys who swore in with me today told me he took a pay cut for the govt job because both of his cousins and like three other well-to-do professionals he knows personally have been laid off. this is the DC area! that's not supposed to happen!

Lamp is his argument really that there's a "moral hazard" in the govt running insolvent banks - that the US govt will jump to declare banks insolvent just so it can get its filthy mitts on em? i can't believe this is true - the US govt is uninterested in running banks longterm, as far as i'm aware. any talk of nationalization is short-to-medium-term at most.

i think the reason we keep hearing about this is that americans are a little miffed at putting up billions and nobody even gets added to the board! we put up billions and are still somehow in this position of begging the banks to lend.

i.e.

http://www.ritholtz.com/blog/2009/01/nationalize-now/

some have proposed this idea as well (if only temporarily).

friend of mine her husband works at phillips and hasn't done diddily squat the last week or two as there are no new orders coming in. :-(

friend of mine has been fired (and if she doesn't get a job soon, will lose her house).

:-( shitty times. but for how long? "expert" was quite certain it'd only last a year or two. bell curve ahead? hope so.

I think the "expert" is flat-out guessing about how long this recession will last. It may technically end in "a year or two", but I think it will start as a painfully weak recovery that barely qualifies as the "end" of the recession, and only because the economy isn't actually shrinking. It will probably stay shrunken for a while.

One valid indicator to watch is when housing prices stop falling and maybe even blip up a small amount. Until this happens, we aren't at the bottom, yet. The economy may bump along the bottom for quite a while before it genuinely turns up and grows again. When unemployment falls for three or four months running, things will be looking up again.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a.sLr8sp1UBM&refer=home

Prices of houses aren't going down at all here, in fact they still remain the same. Crazy.

not going down in hackney much either

“I’m hoping 300 stores is enough, and that they’ve done what they need to do,” said Patty Edwards, a retail analyst with Storehouse Partners in Seattle. “Slow drip, even in coffee, isn’t necessarily the best thing. Sometimes you just need to get the pain over with.”

I say that instead of this let's start cutting away at the dead wood that are "retail analysts".

www.economist.com/displaystory.cfm?story_id=12972083

Excellent article, placing the global savings glut at the heart of the story. Interestingly, it argues that better regulation or macroeconomic policies would actually have had little effect, and that these imbalances will remain unless specifically tackled.

not going down in hackney much either

Zoopla says down 18%. Having said that Zoopla says houses round our way (in the unfashionable East Midlands) are down 16% and a house down out street just sold for what sounded to me like silly money. I think there's still a lot of variation from street to street, house to house. Friend of mine in the business says they've had more interest this month than for a while, general feeling that even if houses go down another (10/15/20/who knows%) there are bargains to be had now. Not scientific or anything obviously.

HOUSE PRICES DOWN TO LEVELS NOT SEEN SINCE 2005

I'll buy in @ 1997 levels.

Spend first, ask questions later.

“The first rule of technology investment is you spend time understanding the end user, what they need and the conditions under which they will use the technology,” said Craig Settles, an industry analyst and consultant who has studied broadband applications in rural and urban areas. “If you don’t do this well, you end up throwing millions or, in this case, potentially billions down a rat hole. You will spend money for things that people don’t need or can’t use.”

Dozens of programs included in the stimulus measure could entail a similarly complicated cost-benefit analysis. But with Congress and the White House intent on adopting the economic recovery package by the end of next week, taxpayers are unlikely to find out whether these programs are great investments or a total waste — or something in between — until long after the money is out the door.

The proposals for expanding broadband service offer a particularly useful case study because the potential benefits of wider network access are indisputable. And yet, supporters cannot simply wave away the potential pitfalls, including the fact that it will take at least until 2015 to spend all the money on infrastructure to deliver the service — vastly limiting the stimulating punch."

not that legislators shouldn't be cautious about all this, but it's fun to replace "stimulus" and its synonyms with "iraq" and pretend like it's 2002-03 and that they'd been as circumspect then.
interesting discussion here on cyclists versus structuralists here ~
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/30/AR2009013003116.html

we're fucked

http://www.nakedcapitalism.com/2009/02/bad-bank-assets-proposal-worse-than-you.html

i actually agree with you re this geithner proposal, dan. it's a total muddle -- it doesn't satisfy anyone (not the folks who just want the troubled banks to eat their losses already and let the chips fall where they will, and not the folks who just want to nationalize the troubled banks and be done with it already) and it may very well prolong this whole fucking mess if these "guaranteed assets" go tits up AND gum up the federal fisc with even more shitty worthless assets. even the "sweetener" of limiting executive compensation appears to be lacking in substance (e.g., what about stock options? funds stashed in retirement plans?) it actually makes the "bad bank" idea look GOOD.

i don't want to get all morbs here, and my opinion may change if/when more details become available. but if this is "bipartisanship," it's for the birds.

not to mention that debt backstopping -- which is what was done to bail out Citigroup and Bank of America, and which appears to be what the debt guarantees are -- haven't WORKED. investors are even LESS willing to buy their securities after they got the fed money.

despite the reference in that post to the IMF study, the empirical data for what we want to do is scant. We are getting ready to throw MASSIVE amounts of money at a problem that a) we barely understand, b) we have no historical models to adequately base our actions and c) is probably bigger/more complex than we all imagine. The poster is a little hard on the Obama administration (given the rock/hard place situation) but acting on impulse with almost no due diligence for the banking situation and overall stimulus package continues to frighten me. As usual, we're going to get what we pay for but in this case, the whole world will probably suffer.

like pigs at the trough. Or in this case, the teet.

http://online.wsj.com/article/SB123369271403544637.html?mod=todays_us_page_one

U.S. Rep. Marcy Kaptur (D., Toledo) is advocating homeowners threatened with foreclosure exercise squatter's rights in trying to stave off the loss of their house.

"I'm saying to them possession is 99 percent of the law; you stay in your house," Miss Kaptur said yesterday, continuing a crusade she started several weeks ago in Congress and CNN picked up Thursday night.

She said she believes that many so-called predatory and subprime loans -- those made to borrowers who did not qualify for a conventional mortgage -- may have been illegal.

She urged homeowners not to panic and leave their home just because they receive a foreclosure notice from their lender, and she said they should demand that the mortgage-holder produce a mortgage audit.

"I say to the American people, you be squatters in your own homes. Don't you leave," she said during a speech in Congress earlier this month.

i don't want to get all morbs here...but if this is "bipartisanship," it's for the birds.

But I just added a wing to the treehouse!

Don, the private economy just got through misinvesting multiple trillions of dollars in soggy tissue paper. They stuffed so much good money into rat holes that for the foreseeable future the entire globe is going to be starving for the cash to pay for important, necessary obligations and debts - the ones that put food on your table, clothes on your back and electricity in your house.

I agree it would be nice to get good value for the dollar as we post huge new national debts, but the worse alternative would be to let the real economy starve and bring a few hundred million more people to beggary in the process.

It can't be repeated too often - the private economy, the titans of business, the wizards of finance, the MBAs and people in power suits, the CEOs and CFOs fucked us blue. They screwed up to the tune of almost killing the whole economy.

Who you going to turn to now? The gov, bad as it may be, is at least partly accountable to you. You seen any titans of industry in breadlines lately? Can you vote them out of office?

turn to harry markopolous, for starters. the hearings on the sec's madoff-related shenanigans is full of relevant insights about how we got to this point. for dealing with the privileged boy's club for so long, dude should get a medal and a high-ranking financial oversight post

"welcome to 2009"
http://www.sprott.com/pdf/marketsataglance/MAAG.pdf

Just fingering the yahoos and yelping at them is something a lot of people can do. If Harry Markopoulos can pump a trillion dollars into the economy in the next 10 months, or give people an alternative way to honor their contracts and debts that does not involve using money, then I would turn to him to get us out of this mess.

I got an email from a good friend at a hedge fund last week. He's a *very* moderate guy, and he had this to say:

"The one thing that I disagree on is that for all the talk of making Tarp II diff from Tarp I, I don't really see it happening. An aggregator bank still just takes bad assets from a bank in exchange for capital. If you pay market, the banks will be insolvent, so they won't participate. If you pay above market, you're basically just injecting capital in to the banks, which is what they did in Tarp I. Why are they scared of nationalizing? Citi is an insolvent bank - wipe the equity, take the company, remove the bad assets, put the remaining good company back in to the public markets, repeat for the next insolvent bank. If they try to let a Citi (or maybe evan a BofA) earn their way out of this we will end up with huge parts of the banking system in zombie mode, a la Japan. That would be very bad and will only prolong the pain."

http://www.thenation.com/blogs/jstreet/405216/will_geithner_and_summers_destroy_the_us_economy?

http://www.thenation.com/images/people/christopher_hayes.jpg

love that dude

Washington is a place with its own distinctive folkways, characteristics and worldviews. Herein we seek understanding.

There are moderate guys at hedge funds? (Honest question, I thought they were all 'screw the rules, we're special!' people.)

There are moderate guys at hedge funds? (Honest question, I thought they were all 'screw the rules, we're special!' people.)

you gotta pay the bills, man.

and my earlier criticism of TARP II still stands -- though whether we could've expected better at this juncture is a legitimate topic for debate IMHO.

Netflix CEO has the #1 priority right -- tax the rich:

Please Raise My Taxes

President Obama should celebrate our success, rather than trying to shame us or cap our pay. But he should also take half of our huge earnings in taxes, instead of the current one-third.

Then, the next time a chief executive earns an eye-popping amount of money, we can cheer that half of it is going to pay for our soldiers, schools and security. Higher taxes on huge pay days can finance opportunity for the next generation of Americans....

Of course, it’s galling when a chief executive fails and is still handsomely rewarded. But with the concept of “tax, not shame,” a shocking $20 million severance package would generate $10 million for the government. That’s a far better solution than what we have today, not least because it works with the market rather than against it.

Another advantage is that it would also cover the sometimes huge earnings of hedge fund managers, star athletes, stunning movie stars, venture capitalists and the chief executives of private companies. Surely there is no reason to focus only on executives at publicly traded companies.

warren buffett's been saying the same thing for decades ... and HE has president obama's ear, to boot.

former g n' r bassist has the #2 priority right --

http://www.playboy.com/blog/2009/02/appetite-for-investment-duffonomics-1.html

I have never been keen on executives getting golden parachutes; I’m more apt to give them a golden shower.

(adjusts crystal ball, peers at it myopically, clears throat)

Now that GM and Chrysler are on life-support and the Fed Funds rate is roughly 0.13% and unemployment is racing up at a zippy pace and US state governments are announcing huge revenue shortfalls and Citibank and Chase are basket cases and Wall Street has handed out its 18 billion in bonuses and the Republicans are comically slapping their heads, hooting and gesticulating at Obama for wanting to spend money fixing things, I thought it might be interesting to predict the Next Big Thing for the economy. Just for funsies.

I'm thinking the news media will soon be earnestly discussing the problem of "zombie banks" in a big way. And both small and large retailers will be closing up shop in droves, leaving lots of empty storefronts and big boxes to litter the landscape, naturally adding fuel to the unemployment wildfire.

By April (May at the latest) there will be articles on how tourism is flatlined and the airlines are backing their way into repeat bankruptcy. Someone will notice that Las Vegas has developed a bad limp and a worrisome cough. The stock market will enter a second capitulation and DJIA 8000 will no longer be the floor, but a happy memory.

Easiest prediction: the Republicans will blame Obama and demand huge tax cuts.

http://timeswampland.files.wordpress.com/2009/02/joblosses26091.gif

(if you're squinting, the blue line is the 1990 recession, the red line is 2001, and the green line is the jobs already lost in the last 13 months.)

we gonna die

yikes! I think I'll stick to my wine, 30-Rock & sweet, sweet denial.

i guess i'll keep pretending i like my job

^^^^^^^^^^^^^^^^^^^

should just be in denial about the whole thing but it's hard. :-(