All this mess is caused by houses built from 4X4s and drywalls? Even termites are amazed.

Virginian,No. This mess was brought on by greed and unregulated busisness. You can thank your government for lack of oversight and indeed interest until it was too late to stop the disaster. Capitalism without limits does not work except for those few who are at the very top of the wealth pile. For the rest of us, it is indeed hollow.

Dr. Roubini is right. They are hiking all fees to make up for this loss:Citibank has hiked all kinds of fees! Starting 6/30/08 the new Smith Barney commission rate will apply to all trades in Citibank accounts.

To refresh your memory: Bernanke: \"There\’s No Housing Bubble to Go Bust\" October 27, 2005!!!!!!!!http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html

Incidentally, state and local governments are raising user fees, too, in an attempt to make up for tax revenue shortfalls precipitated by falling real estate values. In Florida, the state is looking at a 10% across-the-board cut in funding for all branches of government. Counties and municipalities are cutting deeply into all services and, e.g., starting to charge admission fees for the use of local parks and other amenities formerly covered with tax dollars alone in an effort to avoid shutting down those amenities in their entirety. Pretty sad, and I suspect this only portends greater pain to come.SWK

So how will mortgage brokers, banks, broker dealers, monoline insurers, rating agencies generate revenues and profits now that this slice & dice scheme has unraveled?The answer to this question came to me this morning as I was reading a newspaper account of plans to reform incapacity benefit (being \"on the sick\") in the UK – where more than $16 billion was spent last year and where about half the claimants aren\’t disabled as most people would understand the term. I found myself editing the article to reflect the circumstances of corporate welfare as the central banks and treasuries of the world bailout the banks:[A]n expert has warned the Government it will need to create tens of thousands of jobs in Britain\’s former [banking] heartlands if it is to get anywhere near its target of a million off [banking] and back to work.[London Banker] of [RGE Blogging] told the broadcaster even job creation schemes may not be enough. [London Banker], whose team have just interviewed more than 3,000 [bankers] for a major research project, warns nearly two thirds of [bankers] have no skills or qualifications at all.The [blogger] discovered that in the [banking] hotspot of [the Berkshire broker belt] – where nearly one in five of working age population is \"on the [bank]\" – more than three thousand new jobs would have to be created. Across the [southeast of England] 35,000 new jobs would be required.Employment & Welfare Reform Minister Stephen Timms said he did not believe getting people \"off the [bank]\" would lead to an increase in the unemployment figures as those on [corporate welfare of bank bailouts] simply shifted from one benefit to another.

@LBI likes carrying coal to Newcastle, er…Sheffield.

I assume the recession is over after this article. No doom and gloom anymore. After having lost a little fortune listening to your advice, the only thing I can say now is: Thank you, Prof. Roubini!

Dr. Roubini, you mentioned a little while ago that you would address whether the current stock market advances are anything more than a bear market rally. When can we expect your views?Many thanks for a terrific blog.

Banks will try to make it up in 25-30 % interest, better not take out any loans the SHARKS teeth are out. Higher rates means higher defaults.Just pass on any credit offers.

the public will believe the most preposterous story – so long as the price is going uphttp://www.prudentbear.com/index.php/archive_menu?art_id=5024

NR, from your post you are really staying … how will banks and shadow banks survive? It is obvious that they will have to write-down most of their bad debt. Why not allow them to do this over time and off-balance sheet rather than have taxpayers pay for these extremely shady deals? It’s an accounting move but one that would spread the write-downs over time.I would be interested to hear what others think of this as an alternative to the F-D bill.

Voters Around the World Unhappy With Income Disparityhttp://www.nakedcapitalism.com/ May 19 — The Financial Times reports on a FT/Harris survey found a surprising consensus across eight countries in Europe and Asia, as well as in the US, that increasing income disparity was undesirable. Not surprisingly, respondents favored increasing taxes on the rich. Of course, this poses an interesting conundrum for politicians, given the sway of multinational corporations and Big Finance. As Jean Colbert observed, \"The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.\" And those at the top of the food chain know to hiss loudly. So unless the public at large figures out how to get more vocal, any moves to address these sentiments are likely to be symbolic.And the survey participants appear to understand that dynamic well. For the most part, they expect inequality to worsen in the next five years.From the Financial Times:Income inequality has emerged as a highly contentious political issue in many countries as the latest wave of globalisation has created a “superclass” of rich people…According to the latest FT/Harris poll, strong majorities in five European countries – ranging from 76 per cent in Spain to 87 per cent in Germany – consider that income inequality is too great.But 78 per cent of respondents in the US, traditionally seen as more tolerant of income inequality, also think the gap is too wide….For the first time, the FT/Harris poll surveyed opinion in Asia. In China, which has experienced three decades of helter-skelter development, 80 per cent of respondents think income inequality is too great.However, Japan recorded the lowest figure of all countries surveyed, with 64 per cent….Note that Japan has one of the most equal distributions of income if you believe the UN Gini coefficient ranking, although the CIA Factbook Gini points to a very different conclusion. But the Japanese are keen observers of very small status differences (the legacy of having once had extremely strict sumptuary laws), so their sensitivity to income disparity is considerable

The policy alternatives in the post-housing-bubble world are painfully unpleasant. In my view, the least bad option is for the Federal Reserve to print money to help stabilize housing prices and financial markets. Yes, use reflation to soften the pain for Main Street and Wall Street…While there is a substantial risk that inflation may rise for a time – this would be the policy goal – monetization is more easily reversible than nationalization of the mortgage market.

Consider a narrow river valley below a high dam, such that if the dam burst, the resulting flood of water would drown people for a considerable distance downstream. When attitude pollsters ask people downstream of the dam how concerned they are about the dam’s bursting, it’s not surprising that fear of a dam burst is lowest far downstream, and increases among residents increasingly close to the dam. Surprisingly, though, after you get to just a few miles below the dam, where fear of the dam’s breaking is found to be the highest, the concern then falls off to zero as you approach closer to the dam! That is, the people living immediately under the dam, the ones most certain to be drowned in a dam burst, profess unconcern. That’s because of psychological denial: the only way of preserving one’s sanity while looking up every day at the dam is to deny the possibility that it could burst.And earthquakes, tsunamis, monsoons, cyclones, droughts. All have minute but telling signals like the Tangshan quake. Very discreet hard to tesselate, but very-much-there demonstrables of distress. One cannot know with assurity whether the next movement will be a tiny slippage immediately restored to tranquility or \"the big one\".

…more news from the fraudulent food chain – As Spain cracks down on illegal construction, thousands of houses could be bulldozed…Over the past decade, developers built about 100,000 illegal homes in Spain, and consumer advocates say thousands of those are now threatened with demolition as regional governments try to deter clandestine construction. The crusade may discourage the foreign buyers who fuelled Spain\’s housing boom, deepening a slump that began last year.\"The problem is very serious,\" says Rafael Pampillon, an economics professor at the Instituto Empresa in Madrid

Well, some of them will replace their toxic waste with liquid assets from the Federal Reserve and use them as a collateral to gamble in commodities.Then, if due to a recession, we have a commodities bust, the Federal Reserve will not own only houses, rental properties, and automobiles but also oil, gold, silver, sugar, wheat, etc. It will have a well diversified portfolioThis is obviously already happening now. What better bet than buying commodities with Fed-fed bank money. Of course that will lead to the terminal state of a currency, a spiralling that cannot be stopped.Curiously enough, the currency issue is never really addressed by serious US economists. Not even by our Great Nouriel!We all know the meaning. The US have an agenda about their currency. Not the right one.

@ Anonymous 14:25:21Please remember to cite to your source when quoting:http://www.atimes.com/atimes/Global_Economy/JC19Dj01.html (M. Hutchinson, \"Sorry, I Wasn\’t Pessimistic Enough,\" Asia Times, 19 March 2008)Thanks,SWK

@ Guest 15:00:14>Why do you advocate bailing them out? Please do not resort to \"all the following smart guys say so.\" when you answer.From Dr. Roubini\’s post of 15 May 2008:\"Very few reflected on the substance of this proposal and its strong economic logic that would benefit borrowers, lenders and even the government as the fiscal cost of no action (a systemic banking crisis that would trigger a costly fiscal bailout of banks given deposit insurance) is much higher than the potential modest fiscal cost of this proposal.\"The story is simple: many homeowners are underwater (have negative equity in their homes) and/or are unable to service their mortgage payments. Given that mortgages are mostly non-recourse loans millions of such homeowners will walk away from their homes and/or end up into an avoidable foreclosure. Freezing reset of interest rate on mortgages is not enough; when economic agents are unable to pay (insolvent) debt relief is both unavoidable and necessary. A disorderly workout of unsustainable debts make everyone – borrowers, lenders and the government – worse off.\"I think he\’s stated his reasons clearly enough. It\’s fine if folks disagree with Dr. Roubini\’s reasoning and conclusions on this point — I happen to agree with him myself — but it\’s inaccurate to suggest that he\’s arguing for a \"bailout\" simply because \"smart guys say so.\" SWK

So how will mortgage brokers, banks, broker dealers, monoline insurers, rating agencies generate revenues and profits now that this slice & dice scheme has unraveled?… I liked that,[London Banker of RGE Blogging.

Many years ago, a popular book, \"I\’m O.K., You\’re O.K.,\" introduced the general public to Transactional Analysis, a theory that categorized human behavior as child-like, parent-like, or adult-like behavior. I am struck by how many recent posters on this blog object to Dr. Rounini\’s call for government intervention based on parent-like appeals to the need for punishment of perceived rule-breakers who should be taught a lesson, rather than evaluating the issue rationally and dispassionately under an adult-like cost-benefit analysis. I never thought it was a good idea to cut off one\’s nose to spite one\’s face, and I\’m less concerned with others getting an unfair break on their mortgage payments than I am with the potential consequences for me and my family in the event of a catastrophic and disorderly unraveling of the broader economy. Just as our legal system is based on the principle that it is preferable for a hundred guilty men to go free than to convict a single innocent man, I think it\’s better to let a bunch of cheaters get an undeserved benefit than to allow responsible citizens to suffer in a vain attempt to teach the former a lesson about right and wrong.SWK

\"So how will mortgage brokers, banks, broker dealers, monoline insurers, rating agencies generate revenues and profits now that this slice & dice scheme has unraveled? \"Turnpikes…Look at Citi…You give worthless paper to FED, get cash in return and outbid everybody to get a 75 year lease on a turnpike, so a state\’s billion dollar deficit can be fixed…and you get the tolls flow… http://www.bloomberg.com/apps/news?pid=newsarchive&sid=admrfq7LQUiIIn the land of economic wonder, bailouts lead to miracles…in this case turnpu…er…ikes

@ Guest on 2008-05-19 15:27:00You wrote: \"What Congress is expressing with FD, at the very least, is the voice of surrender, the voice of compromise, the voice of defeat. FD says we need to give up some of our heritage and principles so that we can have some temporary momentary comfort — it is so serious, they say, we have to eat the seed potatoes rather than planting them.\"I would argue that our heritage is one of very little principle with regard to large businesses and corporations. The workers and taxpayers are always left to pay for the greed of the wealthy. That is the American way. It has always been. Your anger is not aimed at the correct target. Look to your current president, his republican-led congress of 2002-2006 and the corporate media if you want to preach. The immoral, greedy, arrogant and letcherous leaders who run business and government have let you down. Show us your words are not hollow – VOTE THEM OUT!!!!

Prof. Roubini has called this mess accurately and helped some from catching falling knives. Some intervention is needed to prevent an all out collapse. Anyone who owns any real estate at all doesn\’t want a free fall collapse!

Mortgage brokers share in this mess to be sure, but just remember, that no mortgage broker wrote any of those underwriting guidelines and no mortgage broker approved any of those loans. They sold them, sometimes they were fraudulent, but the guidelines so liberal, they really didn\’t need to be.My opinion is most of the blame lies with the borrowers who took loans they knew they couldn\’t afford and are now crying about it. Why would the media go after their viewers……mortgage brokers are easy, no (decent) association/lobby or spokespeople (or advertising $) like the banks. Just mom and pop shops for the most part. Many are already out of business, even the honest ones (they do exist). Risky lending is about dead, about 95% of the loans that were part of this problem are long gone.

@ Afa 10:50:57As I noted in an earlier post, I think it is perfectly legitimate to debate the merits of Dr. Roubini\’s position that the costs of the intervention he proposes would be less than the costs of a disorderly breakdown of the financial system. My point was simply that much of the criticism posted in the last week or so seems to involve little more than emotional, if not illogical, arguments advanced by way of highly charged rhetoric (\"surrender\", \"appeasement,\" etc.). Your comments, by contrast, address the premises of the cost-benefit analysis underlying Dr. Roubini\’s proposal.SWK

There is no free lunch in the freedom business. If you wish to remain free, you must be accountable for your actions. If you take risks, you must be prepared to accept the consequences of those risks. My desire to hold lenders and borrowers accountable stems not from a desire to punish nor from an emotional appeal to fair play. It is simply to preserve the only mechanism we possess to maintain individual freedom. Acceptance of paternalistic government bailouts for lenders and borrowers promotes a plantation mentality that invites a permanent reversion to an infantile dependent state of the individual. There are ample cases where this is appropriate, such as national defense and domestic security. To move individual or coporate finances into this sphere of reduced freedom is a grievious loss indeed of the worth of the individual. This consequence is easily predictable and not the result of an emotional illogical response. That comes later, when the realization of what has been lost sets in.

@Guest from The Financial Times: “As Jean Colbert observed, \"The art of taxation consists in so plucking the goose as to get the most feathers with the least hissing.\" And those at the top of the food chain (multinational corporations and Big Finance) know to hiss loudly. So unless the public at large figures out how to get more vocal, any moves to address these sentiments are likely to be symbolic…And the survey participants appear to understand that dynamic well. For the most part, they expect inequality to worsen in the next five years…”I would say that 75,000 people (NYTimes) showing up to hear Obama in Portland last night, plus the additional 15,000 unable to find room, shows that the public is figuring out a way “to get more vocal.” For Obama or not, his pull indicates that people want change.The Economy is now Issue Number One in the presidential race – driven by gas and food and utilities and health care—i.e real inflation not mythical statistical inflation. No wonder people are reneging on their mortgage payments. McCain is going to solve our economic burdens by boosting the age limit for Social Security (how brilliant) and with Hillary you get her advisor Robert Rubin, bailout specialist for Goldman Sachs.I guess Joe Six-Pak just failed to “Get Used to It” and is starting to hiss.

@SWKDebating the nominal financial cost, as if it is the exclusive determinant, is wrong-headed. Certainly embracing the moral ambiguity so prevalent today and adopting stop-gap measures to forestall the inevitable fall in RE might seem the least socially harmful measure. But, what is argued by your intellectual opponents is not using financial greater good as barometer. The argument for holding all contract parties to strict terms is the basis of the US Republic. Our three branches anchor this state ONLY when they establish and obey law WITHOUT even slight compromise. Short term financial wellbeing might be preserved with the outlined palliatives, but the long-term injury to our democratic structure would be irreparable. Any organization which hopes to survive must insist on the hard rigour of obedience to principle. Without it, fast corruption and extinction. Law has its sacrosanct position because all players know that final judgment is outside their own power…and that precedent, and arduously conceived decisions determine our time-tested principles, and guide justice to true verdicts. Our ultimate and highest executives, legislators, judges are the supreme defenders of the faith. Backsliding, special accomodation, insider favours, winks and nods have meaning only if the defenders lose true belief and alloy their uprightness. The FD proposal is just another ruse for some to avoid consequence of error and to impart the larger suffering of such error upon one\’s innocent peers. Better to preserve principle, and bear a season of universal suffering, than make everyman his brother\’s keeper, and lose mandate of heaven. You see, its all been tried before.I fear SWK that your outlook is in the majority however. And as all statesmen feared a mob who would vote themselves to prosperity by the confiscation of the substance of the minority–I fear your adoption of the FD folly will be adopted by the USA. It may preserve its pretended wealth but surely lose its soul. We may already have arrived there, anyway.

\"equivalency adjustment under the equality clause of the Constitution!\". Nice…the definition of slippery sloped unintended consequences. Where do you draw the line on special favours when it comes to indebtedness? How can you pretend at any shred of fairness/parity if you do not consider every class of asset? How do you go back to land of the free, home of the brave, life, liberty, pursuit of happiness if you are forever hampered with the rear view mirror knowing any crisis in which you have not participated will have eminent claim upon your labours and accumulations. You will forever carry a haunted feeling that a despotic government may come to strip and usurp your saving, whether justified or not. Let us the rename this FK bill the BLACK MARIA WEALTH PRESERVATION INITIATIVE or Geheimnis Stats Polizei Most Patriotic and Benevolent Homeland Residence Assistance program–or more succinctly, Bullshit for the self-serving and short-sighted. Eat, Drink, and Be Merry will go to steroidal heights as any durable property will come to be viewed as an Albatross upon one\’s neck.

Fleck: HELOCs: The New Subprimeby CalculatedRisk on Home Equity Lines of Credit (HELOCs) May 15, 2008http://calculatedrisk.blogspot.com/2008/05/fleck-helocs-new-subprime.htmlFrom Bill Fleckenstein\’s Daily Rap: HELOCs: The New Subprime (Here is Fleck\’s Site for the Daily Rap):Note: excerpted with permission.The following is from Fleck\’s source: \"The Lord of the Dark Matter\" \"A couple of us tuned into Dexia\’s conference call yesterday, looking for clues on HELOCs. We got plenty, and they were important. In February Dexia said the absolute worse case loss for their monoline subsidiary FSA was going to be $125 million. Yesterday, they added $195 million to that. The reason given on the conference call for the poor guidance is that the servicer on their wrapped HELOC portfolio, Countrywide, had such a backlog that FSA didn\’t get the news that delinquencies were skyrocketing until very recently.There is no doubt that US mortgage servicers are swamped right now, but I think there is a bigger story here, which ties in with BAC quietly announcing their HELOC loss estimates have gone up from a 2.0% to 2.5% range to \’over 2.5%.\’ Servicer backlogs could well be the reason why so many CEOs and CFOs are running around telling investors they are not seeing deteriorations in HELOC delinquencies.The truth is their data is wrong. The market has, obviously, taken the view that the worst of the writedowns are behind us, and if anything it\’s now just a macroeconomic problem we face. I think that\’s dead wrong. We\’re now entering the phase where the macro impacts earnings, but also the stage where real cash losses start to hit the banks (subprime and Alt-A is primarily a mark-to-market issue, but HELOCs are going to be large, outright losses). Once WAMU, WFC, BAC and JPM start to get data through on how rapidly their HELOC portfolios are deteriorating, watch the losses pile up. I\’m talking realised losses, not mark-to-market writedowns.\"emphasis and link addedWatch HELOCs closely! Fleck\’s source nailed subprime last year, as an example on January 30, 2007: Turning to the subprime industry, once again I heard from my friend who has been staggeringly accurate. He continues to feel that things are about to really get worse. In an email to me, he wrote: \"Scratch and dent loans are killing everybody. Bids that were 92 or 93 are now low to mid-80s. It is a bloodbath, and is pressuring even strong companies to buckle. NO ONE is making any money in the market right now. We are at a point of no return for many. The next two weeks will be wild.\"Note: A wild two weeks indeed as subprime blew up in early February.

We are in august company, my dear Watson.Clue #1: @Written by London Banker on 2008-05-19 10:56:57: A Google on \’whose team have just interviewed more than \’Clue #2: @Anonymous on 2008-05-19 11:14:50: SheffieldProf. [London Banker], It\’s a pleasure, honor and privilege to read your views on this board.Best,Print First Ask Questions Later.

Even Marketwatch begin to recognize.http://www.marketwatch.com/news/story/governments-numbers-racket-about-blow/story.aspx?guid=%7BF91A0843%2D69B4%2D4C0C%2D92CE%2DB835D9907945%7D&dist=TNMostRead\"A Wells Fargo economist shook his head in disbelief: That report isn\’t \"worth the paper it was printed on.\" Most economists are quiet, working for the conspiracy.\"But the question is: Who is buying all this stocksßit and boost the indices?

\"anyway why do you have to associate mkt movement and a recession\"you are clueless, aren\’t you? because market movement is best indicator of economic activities. and it is pointing to recovery now. anyone wants to argue against that?

NR was foolish to make his recession call; now his failure is complete!

“I will grant you your wish,\’\’ Fannie Godmother said. “You will have money to buy new castles.\’\’ http://bloomberg.com/apps/news?pid=20601039&sid=aXf.l14aZp4U&refer=home

Crisis over? Not yet, write Whitney and friends: Credit Crisis Will Extend Into 2009, Oppenheimer Says (Update1) By Luo Jun May 20 (Bloomberg) — The U.S. credit crisis will extend into and even beyond 2009 as banks will write off more than $170 billion of additional reserves by the end of next year, according to Oppenheimer & Co. estimates. “The real harrowing days of the credit crisis are still in front of us and will prove more widespread in effect than anything yet seen,\’\’ analysts led by Meredith Whitney wrote in a research note today. “Just as strained liquidity pushed so many small and mid-sized specialty finance companies to beyond the brink, we believe it will do the same with the U.S. consumer.\’\’ Whitney, together with Kaimon Chung and Joseph Mack, cut earnings estimates for U.S. banks “significantly\’\’ due to “strained liquidity resulting from shut down in the securitization market\’\’ and on expectations that banks may take provisions of $88 billion in 2008 and $96 billion in 2009. Banks and securities firms worldwide amassed almost $380 billion of writedowns and credit losses following the worst U.S. housing slump in a quarter century, according to data compiled by Bloomberg. At least $35 billion of additional writedowns included in their balance sheets weren\’t deducted from reported earnings, regulatory filings show. Whitney, 38, correctly predicted on Oct. 31 that New York- based Citigroup Inc. would cut its dividend to shore up capital after mortgage-related writedowns. Shrinking Consumer Credit The analysts cut their estimates for 2008 earnings for Bank of America Corp., Citigroup, JPMorgan Chase & Co., Wachovia Corp. and Wells Fargo & Co. by an average of 17 percent, and reduced their 2009 estimates by 20 percent. In all, the banks earnings will be 72 percent lower than the Thomson First Call consensus forecast, Oppenheimer estimates. Banks have become reliant on securitization markets to fund consumer lending, Whitney said. With that market shut down in the wake of the credit crunch, banks will struggle to match the funding from their own balance sheets, she added. That will remove about $3 trillion of liquidity from capital markets by the end of the year, and banks\’ losses will worsen as consumers will be unable to repay debt with fresh loans, she added. “As the securitization market remains effectively closed for most asset classes, we believe more consumers will face the threat of default and banks will simply face far higher loss rates,\’\’ Whitney said in the report. U.S. regulators\’ plans to boost oversight of the credit card industry will force banks to raise borrowing rates and cut the amount of credit available to consumers. Whitney estimates about $2 trillion of credit card lines will be removed by 2010, cutting the credit available to U.S. consumers by almost half.

Are we in a suckers\’ rally, professor? You are a miserable money manager, you don\’t know much about investing, really. You were criticizing the FED for the moral hazard, now you are promoting something that is even more unacceptable to the good citizens, so what\’s behind your apparent contradictions? America is going down and down with those socialistic measures, short term stability will be replaced with long term pain. This country\’s best time is over.

There is nothing \"socialistic\" about the sort of governmental intervention in markets proposed by Dr. Roubini. Socialism, by definition, refers to the ownership and control of the means of production by the state. Advocating government intervention in a market economy is simply not equivalent to advocating a planned economy. Despite the shrill cries of radical free market adherents, I imagine most Americans still believe that the government has some legitimate role in defining and enforcing the basic rules of free markets, and in stepping in when necessary to ameliorate the consequences of its failure to do so.SWK

After having lost a little fortune listening to your advice, the only thing I can say now is: Thank you, Prof. Roubini!Be careful interpreting any comments on this site into a direct financial strategy. This is just an economics blog. There are many interesting comments and insights. But it is very risky to translate thoughts here into investment strategies. Opinions are one thing. Real money is something else. Investing requires a careful approach and good money management.PeteCA

\"Oil over my $128 bust price! LOOK OUT BELOW!!!! US economy in BIG trouble if prices stay thi selevated\"I\’ve been wondering the same thing.About a year ago, it was a big deal to speculate on whether oil would reach (and hold) at $80/BL. People were speculating that oil might go to $100/BL, but only on the premise of a war between the US and Iran. Look at things now! Oil is closing on $130/BL and we don\’t even have a major new war occurring in the Middle East (although we came very close 10-14 days ago). It does seem as though the market is putting in a forward price for a conflict between the USA and Iran. It also looks very much like America has lost its \"bully leverage\" to coerce oil producers to hold down their costs.But the real question is … just how high can these oil prices go before US industry (and transportation) really crumples under the weight? A year ago, most \"experts\" were saying that $100/BL would be a real hurdle for the economy. Well folks, we\’re 30% above that now. PeteCA

Prof. Roubini has called this mess accurately and helped some from catching falling knives. Some intervention is needed to prevent an all out collapse. Anyone who owns any real estate at all doesn\’t want a free fall collapse!The truth is that an all-out collapse is not going to happen. Home prices are dropping rapidly because we\’re coming off a vastly inflated bubble. They have to drop. If people just left the free market to act on its own, you would actually see things restore themseloves in the quickest amoint of time. Of course there would be major pain and disruption, but the free market woild get the \"bad news\" over with as quickly as possble. After that, new buyers would re-enter the market and things would start moving again.All that\’s happening right now is just a vast and elaborate game to save the assets on the Wall St banks. These banks, assisted by their friends in the Fed and the Treasury, are doing everything possible to set an artificial base price for US housing. They only care about minimizing their losses – or at least slowing the losses until they can pass off the bad debt to someone else (the US taxpayers). But none of these schemes wil lwork because houses are bought by the US consumer. And the US consumer is up to his/her eyeballs in debt, with no increase in wages (in fact … real wages going down!), living costs skyrocketing, and houses still very unaffordable. So the whole game adds up to nothing. As I\’ve said before on this blog … it is really the banks vs. the people. PeteCA

\"Oil over my $128 bust price! LOOK OUT BELOW!!!! US economy in BIG trouble if prices stay thi selevated\"there you have it, the only threat to economic growth is inflation not deflation. it is not housing bring down the economic, it is threat of inflation.

There is nothing \"socialistic\" about the sort of governmental intervention in markets proposed by Dr. Roubini. Socialism, by definition, refers to the ownership and control of the means of production by the state. Advocating government intervention in a market economy is simply not equivalent to advocating a planned economy. Despite the shrill cries of radical free market adherents, I imagine most Americans still believe that the government has some legitimate role in defining and enforcing the basic rules of free markets, and in stepping in when necessary to ameliorate the consequences of its failure to do so.SWKWritten by kilgores on 2008-05-20 09:18:56Your definition of \"Socialism\" is only correct if applied broadly. Some advocates of Socialism favor selective nationalization of key sectors within a mixed-market economy. Social Democrates believe that some type of central-planning structure is beneficial to the collective good, that free-markets left to themselves have the effect of exoloiting and appropriating the wages of the labourer.My view takes kindly to Ludwig Von Mises\’ view: Middle of the road policies lead to Socialism.Guest,The stock market is not a very good discounting mechanism in my eyes. When was the last major downfall seen in advance by the equity market? Did not many investors lose lots of money during the tech-bubble burst? They didn\’t see that one coming. Just go back and read the media transcripts and papers during that time, and you will clearly see a great deal of complacency. Those trsting sheeple back then lost a lot of money, but the smart money was long gone.I predict you\’ll be eating crow soon,Guest.

http://www.bloomberg.com/apps/news?pid=20601109&sid=aCFGw7GYxY14&refer=home\"Hedge Funds in Swaps Face Peril With Rising Junk Bond Defaults \"A long but a good material to read.

\"The stock market is not a very good discounting mechanism in my eyes. When was the last major downfall seen in advance by the equity market? Did not many investors lose lots of money during the tech-bubble burst? They didn\’t see that one coming\"gee, if you don\’t know how to chart, then don\’t complaint that market is not a good discounting mechanism. market is perfect indicator. you need to know how to read it right. like i said follow the trend until is not. man, you are pathetic.

“Average Jane” (above) is the increasing trend when the government becomes dishonest. When someone signs a contract with a company or a government and later finds a minute clause meant to deceive, in his mind his side of the contract is neutralized. That’s the sort of contract the American people entered into with Social Security, i.e. the people pay into it all of their lives, later to find out that the treasury is not going to pay them back in, say, 1963 dollars but in 2008 dollars with fabricated cost–of-living adjustments. In addition, the government failed to hold the money in trust as contracted: it spent it.It’s the same situation with many companies: everything is going to be fine, you’re working hard – even into the night — but at age 64 the company gets Congress to dissolve its pension obligations or to replace them with low-funded 401(k) matches. Or, the company simply dissolves itself and gears up elsewhere. This is violation of contract.When did most of us ever have a lawyer write the contract to buy a house? The other side has teams of lawyers writing its contracts with every type of protection imaginable for themselves, but not necessarily for you. Later, they come to you and say, ‘Well, you didn’t see this little clause…” Or, your credit card company increases the interest rate it charges you — midterm… America has departed a long way from Benjamin Franklin’s “contract society”. Average Jane says she was reared right: When you work, give 100 percent. Honesty is the best policy. A penny saved, is a penny earned. Never a (dishonest) borrower or lender be. Do unto others as you would have them do unto you…With Frank-Dodd, the taxpayer is getting another rewriting of his contract with government — a bailing out of irresponsible lenders and bankers with his money…The indignation grows.

I asked the question: When did most of us ever have a lawyer write the contract to buy a house?And ptm had already answered it: Social Property Transfer works by bringing buyers and sellers of property together who then form a private agreement in the form of a contract drawn up by a lawyer. By cutting out the bank or building society totally, the vast profit made by the Lender in form of interest can be distributed between the two parties.All I can say is “Wow”! Isn’t real free-market ingenuity wonderful!!

PPT has staved off dow down 300 points and we now have a double bottom in place for the day-watch for them to crush oil and rally sotcks green by the close…you gotta love \"free\" markets\"…

London Banker, are you Professor S. F ? My my, we got 2 economy professors on this board, from New York and London with 2 perspectives! Thanks London Banker!

@ little saver: “Banks have become reliant on securitization markets to fund consumer lending, Whitney said. .”To our detriment, the Federal Reserve banking cartel doesn’t really need our money anymore. It is creating its own—out of thin air – hence the negative low interest rates on savings. It is a sobering thought that the government can operate, even at its current level, without levying any taxes whatever, except for the fact that it wants a redistribution of income. As G. Edward Griffin said, “ All it (the government) has to do is create the required money through the Federal Reserve System by monetizing its own bonds. In fact, most of the money it now spends is obtained that way.”Griffin, of “Who’s Who in America” and well known for his research on difficult topics, says, “If the idea of eliminating the IRS sounds like good news, remember that the inflation that results from monetizing the debt is just as much a tax as any other, but, because it is hidden and so few Americans understand how it works, it is more politically popular than a tax that is out in the open.“Inflation can be likened to a game of Monopoly in which the game’s banker has no limit to the amount of money he can distribute. With each throw of the dice he reaches under the table and brings up another stack of those paper tokens which all the players must use as money. If the banker is also one of the players – and in our real world that is exactly the case – obviously he is going to end up owning all the property. But, in the meantime, the increasing flood of money swirls out from the banker and engulfs the players. As the quantity of money becomes greater, the relative worth of each token becomes less, and the prices bid for the properties goes up. The game is called “monopoly” for a reason. In the end, one person holds all the property and everyone else is bankrupt…“Unfortunately, say Griffin, “it is not a game in the real world. It is our livelihood, our food, our shelter. It does make a difference if there is only one winner, and it makes a ‘big’ difference if that winner obtained his monopoly simply by manufacturing everyone’s money…”

Who says London Banker is a \"HE\"? Perhapse a \"SHE\"!!!

As for London Banker, let’s not rule out: hermaphrodite! …or anatomically incorrect Barbi/Ken doll. …or even Yeti, Space Alien, Chimp & Ghost. …or even Bernake himself!!!I’m beginning to think he/she/it is neither London, nor Banker! Not in a box, Not with a fox. Not in a house, not with a mouse. I will not eat green eggs and ham, I will not eat them Sam I Am!!!Miss Americap.s. Look… up there in the sky. It’s a bird, NO! It’s a plane, No! It’s SuperLB Let the superheroes bloggers have their secret identities folks.

IMHO, it’s time to talk in excess, to be radical. The system of government we developed on these shores would have had us all rolling in wealth by now except for the money managers who are not satisfied with a wealth transfer of 5%, or 20%. They want it all. They justify their greed by saying “If we don’t do it someone else will.” As high tech innovations and soaring production increased our standard of living, they have taken a greater and greater share — until now they are known as the world’s superclass of rich people. The only reason America’s present generation has ceased to do better than its parent generation is that all advantage in growth has been creamed off by the money managers. Sadly, our present generation is being reduced to “survival level”— with anything over that considered takings.

@ Maundermin 10:49:50> Some advocates of Socialism favor selective nationalization of key sectors within a mixed-market economy. You could substitute the word \’Capitalism\’ for \’Socialism\’ and this sentence would still make sense. Through both Republican and Democratic administrations, the United States has developed and maintained Social Security, Medicare, Medicade, an EPA, OSHA, food stamps, unemployment benefits, government-owned and operated parks, libraries, bridges, roads, dams, publicly funded and controlled law enforcement, and a myriad of other non-private services and facilities. These enjoy broad support among Americans, as the President found out the hard way when he attempted unsuccessfully to expend the political capital he felt he had earned in the last election on \"reforming\" Social Security. I\’m afraid your views are wholly out of step with the vast majority of folks in this country who believe, rightly, that there is a proper role for government in regulating and managing an otherwise unbridled free market economy. What you characterize as \"Middle of the Road\" policies don\’t lead to socialism, but they do lead to greater happiness and cause many more Americans to feel that they have a real stake in the economic and political life of our nation.SWK

$12 Gas and Rationing? Possible, Says ExpertBy CNBC.comCNBC.com| 20 May 2008 | 10:45 AM ET Think $4 a gallon gas is already too much? Then brace yourself, says one expert.\"The prices that we\’re paying at the pump today are, I think, going to be \’the good old days,\’ because others who watch this very closely forecast that we\’re going to be hitting $12 and $15 a gallon, and then, after that, when world oil production goes into decline, we\’re going to talk about rationing,\" Robert Hirsch, Management Information Services Senior Energy Advisor, said on CNBC\’s \"Squawk Box.\" \"In other words, not only are we going to be paying high prices and have considerable economic problems, but in addition to that, we\’re not going to be able to get the fuel when we want it.\"Hirsch argued that the maximum in world oil production has already been hit.\"The idea is that [world oil production] would hit a sharp peak and then drop off, and what\’s happened is, we\’ve hit a plateau in world oil production, and that plateau has been ongoing since about the middle of 2004,\" he said.Those who argue that new technology and new types of energy will solve the problem aren\’t on solid ground, Hirsch suggested.\"There\’s no single thing that\’s going to solve this problem, because it;s as massive as one can possibly imagine,\" he said.URL: http://www.cnbc.com/id/24725305/

may London Banker is SHE/HE :p

@ Guest on 2008-05-20 15:26:001 Gallon Gas in Germany today = 8,82 $Median income Germany 2006 = 40000 $Median income US 2006 = 48000 $(Sorry in dont find actuall Data)I dont understand the problem.f we can pay it why cant americamns?Because they are the better humans wich have the right to use more resources than any other humans?Because they have the right to have a house( even if they cant afford it) 300 miles from their employment to drive 600 miles a day with a SUV they cant afford(what they realize now)?You are all crying all day ME ME ME.oh my god.The gas price the middle class, the american dreamshit.You are all sick.

\"So the process of generating fees and commissions is broken.” A $950 billion reversal in one year!?! The entire mortgage securitization process is broken. Most talking points advocating FD include “to provide financial assistance to distressed borrowers facing default and possible foreclosure” and “to halt the growing trend of homeowners citing negative equity as justification for walking away from their homes”.FD proponents maintain “walk aways” will be reduced by lowering sub-prime borrowers’ mortgage principal balances to approximate their home’s current market value. Foreclosures, they argue, will be sharply reduced if parity can be achieved between indebtedness and market value. However, it’s the apex of the mortgage securitization pyramid needing attention first. FD’s sub-plot is aid to distressed homeowners. It provides the drama and diversion to the primary goal of thawing, unlocking, fixing and repairing the broken mortgage securitization process. The unwinding of the sub-prime mortgage market resulted in not only lost fee income, but most importantly, the ability to “make a market” in MBS. FD proposes the federal government assume the role of quasi “MBS Specialist” bringing MBS sellers and buyers together via FHA home loan insurance. It hopes to remove the default stigma that prevented the sale of sub-prime mortgages by requiring borrowers to purchase FHA home loan insurance when they refinance. Is FD necessary? NO. Although the FHA home insurance angle is intriguing, it’s hardly necessary. There’s a market clearing price for everything, including distressed MBS. What’s required though, are sellers (lenders, investors) willing to accept the current “market value” of their assets, not “marked to model” valuation. But why accept 50-cents on the dollar if your lobbying efforts can secure 85-cents on the dollar?

The Wall Street Journal is reporting a Dodd/Shelby bill which provides a £300 billion mortgage foreclosure insurance backstop and reforms to FannieMae and FreddieMac. Apparently Bush is favorable to signing it, making a deal with the house that alters Frank-Dodd toward the new proposal quite likely.I guess we will soon know whether a sufficiency of lipstick on the pig makes for tasty pork in an election year.

Sorry, all i want to say is – this is not confined to one country.The World is not only America(even if the most americans think it is)

For every proponent of FD. Would you consider advancing me a $10,000–I will make every sweet promise you need for assurity. When time comes to pay, of course I will welsh, but make discount offerings of say 50 cents, 85 cents? If you array yourself behind special favor legislation, get ready to accept hard terms when you are the creditors whose principle notwithstaning interest is sawed short. And that for extending your accrued labor to underwrite the potential of others…until that is, you find their potential realized only in skirting honorable recompense and consuming that which they did not produce. Simple…golden rule stuff. No need to make murky a clear point. Repay what you borrow. If lender, lend only to creditworthy whose character forecasts completion of terms. If default is unavoidable, claim collateral and sell it at market on same terms as every other participant. Otherwise the bazaar becomes a racket of differing prices at all times, and buyers draw purse strings and go away.

Written by Guest on 2008-05-20 07:25:29HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAyeah bears are CLUELESSHAHAHAHAHAHAHAHAHAHAHAHA

@ Maundermin 17:01:58You seem to be in love with your own prose, but it really strikes me as so much sophomoric Libertarian gobbledegook. You don\’t really appear to be saying much of substance, other than that you think the least government is always the best government, and that the current government is somehow exceeding or about to exceed the constitutional parameters of its authority. Perhaps you could provide, in clear and concise terms, concrete examples of governmental actions you believe to be illegitimate, and specify precisely what provision(s) of the U.S. Constitution or of any state constitution you believe such actions violate. Frankly, when an American uses hot-button phrases like \"judicial tyranny abounds\" in reference to this country\’s courts, it invariably reflects a colossal and dangerous ignorance about our own constitutional system of government and how it operates. If you want to experience real tyranny sometime, try living in a society in which there is no independent judiciary. Only then will you learn what a complete absence of freedom is truly all about. SWK

fun videohttp://www.theonion.com/content/video/in_the_know_are_politicians

Hard numbers: The economy is worse than you knowKevin Phillips, Harper\’s MagazineTampa Bay Times, Sunday, April 27, 2008http://www.tampabay.com/news/article473596.ece

Anybody been watching Chinese stocks lately?What do you think about the proposition that the Shanghaiindex ($SSEC) has reached a relative low point?PeteCA

Maundermiiiiiiiiin vs. S.W.KI will be accepting bets starting tomorrow morning at the opening bell. The minimum bet is $500 eeh, sorry, 500 euros.I bet it will be more entertaining than watching stocks.

@ Mathias,It matters less if and why Americans pay significantly less for gas. It became part of a \"legacy\" system, as computer scientists refer to it. The whole US economy, and society, is based on cheap and available oil. Take that, and the whole economy is shaken. There is no margin of manoeuver, no adaptability.In this sense, I think European, and especially German, politicians (probably also pressured by \"conscious\" and \"worried\" population) are wise enough to significantly reduce the dependance of their countries on oil (cheap and plenty oil) and drive citizens to adopt a way of life that uses less of it.Or it could be the inverse. Pick your choice.

NR wrote: How will financial institutions make money now that the securitization food chain is broken?There are ways. (Even France did that to support her wars at one time since she did not have an efficient bond market like England).e.g. Citibank sold a flat again in Mumbai this time at Rs. 120,000 per sqft. i.e $3,000 per sqft@Matthias on 2008-05-20 16:42:34 wrote:The World is not only America(even if the most americans think it is)Before 9/11, America was the reluctant superpower. After 9/11, you bet, American is a willing super-power (just like the British Empire). It\’s the politics driving the economics. The price of oil cannot go to infinity since electric vehicles then become viable. I\’ve said this before, Rest of the World driving in their dinky toy cars is just like taking a very small slice of gigantic pizza. With Adam Smith in hand, we get to eat 90% of the remaining pizza. Sorry!@London Banker, I was thrilled with my new found super-sleuth skills to unmask super heroes until I was dissappointed you have plagiarised the apparently highly regarded Prof. Steve Fothergill. If a credit underwriter would get wind of this, you would garner sub-prime credit. Hope you didn\’t get a house via a bank recently. If so, you\’re part of the problem.By plagiarising you have lost your moral integrity. My friend, you\’ve lost your soul.Print First Ask Questions Later.

@ Maundermin 22:20:00>Ok, i\’ll accept your challenge, but only on the condition that you first prove I don\’t understand how the Judiciary has exceeded its constitutional bounds. You\’re the one who asserted that \"judicial tyranny abounds.\" I think the burden of proof is on you.>I love people who presume to know something about you. I don\’t presume to know anything about you. Your posts are all I have to go on, and they speak for themselves. >It gives you an advantage on the court.Don\’t you mean, \"in court?\" BTW, Maundermin, while I stand by the substance of my 19:17:48 post yesterday, I did not intend it as a personal attack on you, but only as a challenge to some of the ideas you expressed and the manner in which you expressed them. Sorry if I came across as unduly harsh. This board provides a wonderful forum for the scholarly exchange of ideas, and I don\’t wish to see it brought down to a level of vulgar sniping between participants with divergent views.SWK

S&P, Moody\’s debacle with ratings.Conspiracy of Liars. Financial innovations consist of improvisations on the truth and personal honor. Pays well though…Will these erroneous ratings prompt an industry wide review; will ratings be downgraded? Probably not as pressure from CDS holders and the fragility of a system built on falsehood can no longer sustain the pure light of truth.Tell all the Truth but tell it slantSuccess in Circuit liesToo bright for our infirm DelightThe Truth\’s superb surpriseAs Lightening to young Children easedWith explanations kindThe Truth must dazzle graduallyOr every man be blind—Yes got the slant part, but the \"tell ALL the truth\" or even SOME of the truth is gonna be tuff.

The US economy is going the way of linens n things..ch11. What we needed more strip malls containing junk made in China.. Glad that period is over.

On Iran:A year ago arguments were made that we could not attack Iran because oil would go above $120/barrel and it would kill the economy! Well we are there anyway so we might as well do the right thing! The economy is screwed anyway.

I hear Bush has a plan to save the Dow:Add Marathon Oil, Valero Energy, Conoco, Transocean, Anandaroko Petroleum to the Dow!

so, if we are in the age of Globalization (check), and modern markets including derivatives, CDOs, etc. are global (check), and such markets are more complex than any SEC or similar could ever comprehend (check), andas inferred at yesterday\’s roundtable, only global financial institutions understand such markets (check), andsuch markets to survive and thrive require proper oversight & regulation (check), thereforeis it not up to the largest global institutions to convene NOW and jointly form such a global oversight & self-regulatory, independent body – design it, fund it, adhere to it – so that global markets can proceed with confidence?and if we recognize that only the institutions have the understanding of these markets and can do this,most importantly, IS IT NOT THEIR FIDUCIARY DUTY TO DO THIS?And failing to take this action, therefore, is a dereliction of this duty, and shareholder lawsuits should commence immediately to this effect?Such lawsuits could at minimum spur such action, and one must argue, have every opportunity for success as well.

John Snow in 2004: The US economy is not built for $65 oil!

@ Print First Ask Questions Later\"Parody\" would have been a better term than \"Plagiarism\" for what I did to that innocent article on disability benefit reform. As Guest above noted, I prefaced it with an explicit statement that it was a spoof and italicised it (as I always do with excerpts) to denote that I was reusing pre-existing text. Lighten up.The value of anonymous moral integrity might be difficult to weigh, nonetheless I value mine.

Oops. In answering a comment regarding LB’s parody on banker welfare, I inadvertently addressed my remarks to ptm, rather than Print First Ask Questions Later. Sorry.

Finally, Doug Wakefield and Ben Hill have the proof. With graphic documentation, they show undeniably how the market is manipulated to engineer false bottoms by Fed intervention. Here‘s their intro and the proof is on the webside. Of course, the big players know this and make money on rocking it back and forth – fleecing the unaware. THE DAY FREE MARKETS DIED at SafeHavenby Doug Wakefield with Ben HillMay 20, 2008 –Though our government has increasingly influenced our markets since the creation of the Federal Reserve in 1913, we have recently reached the point where it would be a glaringly obvious misnomer to call the markets \"free.\" And while some aspects of a free market remain, those who\’ve studied the day-to-day operations of our nation\’s banking system and the stock markets\’ performances at certain times, would likely come to the conclusion that, on occasion, the state, through the Fed and certain banks, intervenes to engineer market bottoms.Am I talking about something that is done in secret to which only the most privileged are privy? While the history of global politics and global banking has always been based on secret meetings, those who\’ve read about the government\’s extensive intervention, at critical points in our markets – usually occurring at the rule-making level – are well aware of the manipulation about which I write.Since the credit crisis became public knowledge to those who follow the financial news, we have seen four market bottoms. CHARTWe only need to look at recent history to see the merits of our previously stated hypothesis. If I am correct, then we must set aside the tired assumptions of the market\’s \"random walk\" or \"the average investor\’s reaction\" to the latest breaking news as the impetus for large market moves. Instead, we must consider Wall Street and the Fed\’s actions when prices start to decline. Do they focus on facilitating exchanges between buyers and sellers, or has their focus shifted to engineering US equity market bottoms when critical price levels are met? Far from an academic discussion, this issue strikes at the very heart of confidence in our markets, which was born out of the \"freedom\" that has been associated with capital markets for generations.With various sources continuing to use phrases like \"worst in 20 years\" or \"not seen since the Great Depression\" to describe the markets, we should be asking, \"When they are at or nearing bottoms, do our equity markets demonstrate what looks like naturally occurring or contrived market action? More specifically, do the billions of dollars worth of loans made to certain economic players have an effect on the markets? If the public received such generous funding on such generous terms, how would this affect market dynamics?Point number one on the main chart at the beginning of this article shows us that a bottom occurred on August 16th, 2007, the day prior to equity options expiration Friday. As we can see in the next two charts, banking and brokerage stocks went up sharply during these two days.AND THE PROOF BEGINS… As Guest said: A “MUST READ FOR NON-BELIEVERS…Proof of PPT footsteps?” (It was for me!) http://www.safehaven.com/article-10308.htm

Don\’t look now-stocks turning green!!! What a fraud!

By supporting stocks, they take away the shorts and the pad the leading indicators. The US govt is out of control with the fraud theyperpetrate against the average US citizen on a daily basis.

CHECKMATE!!!Fed Sees Slower Growth But Hints at Hold on Rates FED, FEDERAL RESERVE, GDP, ECONOMIC GROWTH, FOMC, FED MINUTESBy APThe Associated Press| 21 May 2008 | 02:04 PM ET Federal Reserve policymakers are expecting sharply lower economic growth, higher unemployment and an inflation pickup this year.The revised forecast reflects blows from the housing and credit debacles along with zooming energy prices.Even with the more downbeat outlook, Fed officials, in documents released Wednesday, left the impression that they would not be inclined to cut interest rates further.The decision in late April to reduce rates was a \"close call,\" the documents said.The Fed hopes that its powerful rate cuts since last September and the government\’s stimulus efforts would energize growth in the second half of this year.Separately, a Fed governor said Wednesday that the Federal Reserve must protect its inflation-fighting credibility and should resist \"reflexive\" calls to cut interest rates further if growth weakens.Fed Board Governor Kevin Warsh said the U.S. central bank had lowered rates considerably to offset the shock of the housing crisis, and it was now time for the private sector to continue the healing process.\"Even if the economy were to weaken somewhat further, we should be inclined to resist expected, reflexive calls to trot out the (interest rate) hammer again,\" he told the Exchequer Club in Washington.The Fed has slashed interest rates by 3.25 percentage points since mid-September to shield the economy from a global credit crunch sparked by the meltdown of the U.S. subprime mortgage market.Investors now see it holding rates steady until toward the end of the year, and then starting to raise them.Warsh\’s remarks will reinforce this perception, as well as the view that the Fed is ramping up its inflation rhetoric.His speech follows similarly hawkish comments this week from Fed Vice Chairman Donald Kohn.Warsh said inflation should moderate gradually if soaring commodity prices level out, as expected.He also noted wages were not likely to accelerate and core inflation, excluding energy and food prices, was in a \"seeming steady state.\" But he was adamant that the central bank could take no chances with its anti-inflation reputation.\"Inflation has been elevated for some time and prices of commodities are surging.I find these trends particularly vexing at a time when global demand growth, most likely, has slowed,\" he said. \"If the Fed were deemed too accommodative for too long, credibility could be undermined, threatening to create a persistent inflation problem that would have to be corrected, no doubt at great cost.\"The public could see the stance of policy as a sign that our commitment to long-term price stability has wavered. That is not a perception we will countenance,\" he said.http://www.cnbc.com/id/24759910/print/1/displaymode/1098/

@ Maundermin 12:47:02Bad example. I am intimately acquainted with the Schiavo case and with the Florida and federal constitutions, and I personally know Judge Greer. You are way out of your element here. The Schiavo case was correctly handled and decided at all levels. Unfortunately, it would take an inordinate amount of time for me to try to disabuse you of all of the fundamental misconceptions that you harbor about the law, and about the facts of that case. Suffice it to say that if the right to life were inalienable under the Florida Constitution or the U.S. Constitution, we wouldn\’t still be putting anyone to death here by lethal injection.If you are seriously questioning the Marbury v. Madison decision and the right of the courts in this country to interpret legislation and determine its constitutionality, then respectfully, you really need to go back to school and learn something about the law and the history of this country, in particular, what the separation of powers doctrine is all about. To suggest that the actions of a chief executive officer of a state are beyond challenge is to advocate dictatorship. How ironic it is that you should invoke the name and works of George Orwell to justify such an extremist position! Talk about real tyranny!Under your faulty calculus, Jeb Bush would have been entitled to ignore the decision of the Florida Supreme Court and do whatever the hell he wanted to do because he thought it was within his constitutional authority, and Richard Nixon would have been within his constitutional rights to refuse to comply with a subpoena that the U.S. Supreme Court ruled he would have to obey. Both Bush and Nixon bowed to the authority of the courts because they each understood something that you obviously don\’t: the courts are the final authority when it comes to interpretation of legislation and constitutional mandates, period. You can read and interpret any way you choose the Federalist Papers and the works of all the outraged right-wing bloggers in cyberspace, but that won\’t change the fundamentals of our constitutional system of government. I think we are getting far afield of the subject matter of Dr. Roubini\’s blog, and I would suggest we re-focus on the economy.SWK

Let’s not give Doug Wakefield too much credit!!! He’s pointing this stuff out after the fact. He’s looking at a chart, and pointing out the obvious. (though I do appreciate the fact that at least someone else is looking at this stuff!)I pointed this stuff out, prior to, and during the manipulation… HERE ON THIS WEBSITE! (going back through August 2007) It’s well documented. I gave friction points, I called EACH AND EVERY major turn. ACCURATELY!!! I explained this financial war, it’s targets, and how it was achieve through credit availability. I explained how the problem was “FIXED” (as in fixed income) and that’s how TPTB could reasonably calculate P&L, thus giving them the ability to manipulate. (that’s also how I attained my friction lines) Where’s my Cuppie Doll!!!!! I want a blog! Where’s the love NR?

@LBSumpin\’ seems lil\’ fishy! The parody article referenced an academic which would fit the profile very, very well. Including his work as Director of the newly-formed Alliance. But, just as you say, it was all a result of misunderstanding. Didn\’t mean to tip the bridge cards, what, what? Too bad, as the union of caped crusaders had sent a Mr. S.F. his newly stitched up spandex superhero tights, cape, boots, and flying googles. Poor man will simply be confused.

@ Broadcloth Vanity isn\’t my sin. It\’s Jealosy. (I hope you didn\’t misinterpret the D- coment. It was acknowledgemnt of your \"rich & hearty\" pun. Dick=rich)

Kilgores,With all due respect, you act as though most degreed constitutional lawyers agree with your position, such arrogance is is hard to believe.I laugh at the many holes in your argument, and please do disabuse me of my so-called many misconceptions about constitutional applications.The concomitant of seperation of powers is the system of checks and balances. In accordance with that system no one branch can act as supreme arbiter of constitutional matters. Your inimate realation with Judge Greer is preventing you from objectively examining the matter.It\’s funny how your under the impression that none of the forefathers and framers of the constitution shared my opinion. Maybe you need to go back to schoo yourself, but so you don\’t repeat the same mistake twice, read what the founding fathers actually said of the issue, and dont be so dependent on your pal Greer to think for you.By the way, I suggest you re-read my post; I said nothing that would intimate the executive branch has spreme authority. What I did say was that the finally authority has been vested in the people. Read article 4 section 4 of the constitution.Considering I have little patience when it comes to debating online, I\’ll take your advice and focuse on the economy.

Also, Kilgores, if you need sme references of scholars who agree with my position, I\’ll be glad to provide some.Moreover, and lastly, Supreme executive authority has been incorrectly misconstrued by you to mean spreme absolute authority. Go re-read my post and maybe you will catch trhat distinction, however implicitely it was conveyed.

@ Miss AmericaYou are the Man! We are not worthy! Yes, indeed, you called every single turn from August onwards, and Doug Wakefield is a sad and slow fellow to crawl over the data after the fact. Still, he validates what you predicted, and that adds value (though no where near as impressive).

Fed is attempting to put OIL into the TAF, a first for the Fed, Ben is very creative fellow.

if you like to look at pictures for comparitive purposes see GLD 6 month from 11/11/05 to 5/15/06 versus USO\’s 6 month chart – things that make you go hmmm. congrats Miss A, maybe i could send you my peanuts to place on the table for me

@S.Templehttp://www.bloomberg.com/apps/cbuilder?ticker1=USO:UShttp://www.bloomberg.com/apps/cbuilder?ticker1=GLD:USI see the inverse correlation until mid June \’06, then a strengthing correlation through today. What should I know? What should I be looking for? What future consequence? I feel a bit thick asking but need a little coaching here.

Gold pricing suppressed since May 1st? Strong gapping since july \’06, but gold always outstripping. Now oil poised for higher than normal average returns? Or has oil become new gold as hedge? CB\’s using oil for reserving purposes?Just in a little one light shack in a gulag…and need more info.

@Broadcloth, it is the technical picture and performance of GLD during that period and especially what followed the spike that is interesting to me. not commenting on current daily or intermediate correlations at all. just the technical similarity of how GLD\’s chart appeared before its fall during that period and how the oil chart for the past 6 months is fairly similar technically to that historical GLD chart – particularly the blow off to the upside part we have right now. once GLD topped at that time, it declined 20%ish over 30 days… just mixing and matching pictures of charts

\"bundles of BBB subprime mortgages into AAA rated tranches of CDOs. Along this fee generation machine the monoline insurers were making fat fees insuring these toxic instruments and providing additional AAA blessing on this garbage and trash.\" Who are these people? What are their names?

IT\’S OVER AND THE FED HAS LOST Big Ben must be sitting in his office scratching his head tonight. The market is melting down. What can he do? The usual tonic, an interest rate cut, would cause a catastrophic fall in the dollar and cause commodity prices to accelerate faster than their already blistering pace. There is no special facility which can be set up to overnight rescue the economy from the evil twins, commodity inflation and asset deflation. There is nothing he can do to prevent a sharp market drop. Medic has rightly pointed out that as the market plummets, boomers are going to start to panic and begin dumping stocks. There is going to be a massive liquidation of everything except oil stocks, which will not be able to hold up the market. And eventually, when we enter the depression, even they will collapse as worldwide demand plummets. It is a long way down to the bottom of the canyon!! Good night Ben!

Who are they? What I meant is who are those that provided the AAA ratings? It\’s my understanding that the list is short.

@ hlowe 17:36:32U.S.-based rating agencies include:A. M. BestFitch RatingsMoody\’sStandard & Poor\’sEgan-Jones Ratings CompanySWK

Here\’s a real hyperlink to that June 2003 SEC publication (I keep neglecting to do this)…Rating Agencies and the Use of Credit Ratings under the Federal Securities LawsSWK

@ SWK\"at least Moody\’s computer didn\’t rate them AfA\". I agree, I don\’t think that an \"Automatic Fire Alarm\" signal is a good one. Concerning the market, I don\’t know how to take it, I talked about Moody\’s because I was shorting it. (I find Moody\’s name particularly appropriate: they rate securities depending on their Mood)@ GloomyI don\’t want to oppose your \"excitement\", since I agree with you. I just don\’t want to use the same reason why we oppose to bullish to prove that we are at the point of no-return i.e. few days stock market movement.

@ Hubert Gabrisch on 2008-05-21 10:06:31,Long only index funds began moving into commodity derivatives no later than early 2004 but, as with hedgies, have increased their exposure in an absolute sense — all the easier to do when they are able to circumvent normal position limits through the mediation of swaps dealers. This one may interest you:Berserker Funds in Commoditieshttp://wallstreetexaminer.com/blogs/winter/?p=1664Other hand, it doesn\’t bring such wonders as commodity-linked structured notes or the over $8 trillion (notional) of total commodity derivatives in 2006; no doubt very much more by now.Way over the top with this financialization \’thing\’.