second my friend…finally

“Buy, Buy, Buy” by Michael GaddyBefore a standing army can rule, the people must be disarmed; as they are in almost every kingdom in Europe. The supreme power in America cannot enforce unjust laws by the sword; because the whole body of the people are armed, and constitute a force superior to any band of regular troops that can be, on any pretence, raised in the United States. A military force, at the command of Congress, can execute no laws, but such as the people perceive to be just and constitutional; for they will possess the power, and jealousy will instantly inspire the inclination, to resist the execution of a law which appears to them unjust and oppressive. ~ Noah WebsterWhile we stumble along economically with bailouts, buyouts, and poor sales in almost all sectors, two products in America are seeing dramatic increases in sales: guns and ammo. People who never owned a gun before are buying; people are buying multiples of military style weapons and ammo is being bought by the case instead of by the box.Many explain this away as folks simply worried that Obama will move to ban certain firearms, especially those referred to by the ignorant as “assault weapons,” I believe the motivation to buy firearms and ammunition goes much deeper.More and more Americans are becoming increasingly aware of the storm that is brewing on the horizon, a storm driven by the possibility of a complete economic collapse.The more astute are reading the handwriting on the wall: military combat units being assigned for stateside duty to quell domestic disturbances, a militarization of law enforcement, and the fear of what will happen when the state is no longer able to provide monthly checks to the millions currently living on government handouts labeled as “entitlements.”A strong possibility exists, when the checks stop, those who no longer have will seek to forcibly take from those who do. The scenes from New Orleans after Katrina have not disappeared from the public memory…Americans are purchasing firearms and ammunition in record numbers, not because they believe 2009 will offer unusually good duck hunting, but because they fear the fallout from the coming economic storm and the state’s reaction to that fallout.The larger question is: how many of those who have gone out and purchased firearms and ammo will actually use them…Rest assured, there will be a great majority who will not stand against tyranny. Those who have “gone along to get along” and those who have continually voted for the “lesser of two evils” will capitulate and surrender their weapons, as cowards normally do. They will rue the day they failed to support those who stood for liberty such as Ron Paul…Those among us who are afraid to be free will surrender their guns, their families, and their freedom to tyranny. Do not place your freedom or trust in their hands or depend on them to cover your six.Michael Gaddy is an Army veteran of Vietnam, Grenada, and Beirut…http://www.lewrockwell.com/gaddy/gaddy39.html

Looks like the whackos and the nutcases are coming out of their bunkers again. Folks like Mr. Gaddy, who can’t envision a crisis being handled except at the point of an assault rifle, need to relocate to a country where problems are settled by gunfire. There are plenty of places he can go–but he doesn’t belong on our streets.

Come on, Lewinski again?? Who cares?

We’ll soon see, won’t we?

2 points for NR: the banks are petrified about lending even though they are being inundated with funds from the FED and they will not lend until the economy significantly improves but in order for that to happen, they need to lend (catch 22). Furthermore, there is also a potential meltdown in commercial real estate as easy money and overspeculation as created a huge imbalance between supply and demand.

When will Libertarians grow bold and brave enough to REJECT the bloody revolution that makes them salivate, and turn to justice instead? Libertarians clamour the loudest not to take away the perfect freedom to have the perfect hell of the perfect tyranny of overpayunderpay. This article is fearmongering by people who know money is power and overwealth is overpower, but they cry like babies when you propose sane limits to personal fortunes. They’d rather get out the guns and start the killing. They prefer it to having to THINK. Libertarians are those with the most confused ideas on earth.

Market is shrugging off all bad news based on oversold conditions and “hope” from Obama’s stimulus. Dangerous to be shorting right now as the market has passed significant resistant levels. While I wouldn’t be surprised if there’s a sell off in the short term, I think we are in a bear market rally now that could last until March/April. At that point, I believe we will be retesting the Nov lows. Roubini is an economist, not a stock market timer. Don’t use Nouriel Roubini for timing the market. Technicals matter, and after that – then yes, take Nouriel’s advice for the long term direction of the markets.

a good read from NCWillem Buiter Calls for Less US Stimulus, Expects Collapse in Price of Dollar Assetshttp://www.nakedcapitalism.com/2009/01/willem-buiter-calls-for-less-us.html

Here’s what really happened at Katrinahttp://tiny.cc/8AkSESo what is our heavy breathing gun collector really talking about? Listen to the buzz words “Katrina” and “government handouts” and “worried about Obama”. Sounds like he is worried about black folks rising out of the ghetto. What really happened in New Orleans was that the city was militarized, Blackwater and other gunmen shot citizens with impunity, and vigilantes killed at random saying it was just like going “pheasant hunting.” The gun nuts are using the excuse of a recession to spread racist fear.There was no collapse of civil order in the ’30s; as bad as things are now, times are nowhere near as hard as they were then.By the way, Obama came out in favor of the Supreme Court’s overturn of the DC gun ban.

This argument is entirely based on consumer confidence. How does consumer confidence restore solvency? What money are newly confident consumers going to go out and spend? They spent the the money stored as equity in their homes. Their wealth in the form of 401Ks is down. What wealth do they have left to spend?Models like this just don’t seem to have any ability to comprehend the facts on the ground. The American and European consumers and many businesses are spent out and insolvent. Having over-consumed on overly high wages and excess debt, they are overleveraged and bankrupt, caught in myriad collapsing bubbles. Their balance sheets are in all-time bad shape. They have no more money to spend, and nowhere to go out and get money to spend. Credit markets might improve, but no one is going to lend to insolvent consumers and businesses. Government steps are aimed at pouring more and more money into the system in the form of liquidity, but there is a fundamental attitude shift going on – consumers and busineses will no longer play the game of pushing themselves further and further into debt in order to keep the good times rolling. Or, if their government succeeds in penalizing them enough for being thrifty and attempts to force them, the resulting hyperinflationary spiral will finish all of us off.One must recognize the forces that are at work in this downturn. Global consumption, trade flow, and wage imbalances are correcting themselves in a very powerful way. The way they are correcting themselves is through deleveraging, deflationary forces, and pressure on balance sheets. They are correcting themselves with currency crises and capital flow reversals. Governments are fighting these corrections – tooth and nail. They are fighting with stimulus, bailouts, currency manipulations, market manipulations. They will soon fight with trade wars. If that doesn’t work, they will fight with guns and bombs. They have significant stakes in keeping the status quo, especially because their economic puppet masters in corporations, banks, and the wealthy have so much stake in keeping their rice bowls full at the expense of others.But the imbalances are correcting anyway. No five star team in a the US government or governments of the works will succeed, because the imbalances need to correct. No media-hyped consensus of talking heads, ‘pros’, experts, or pundits will succeed in starting anything except a feeble bear market rally at best. Please be cautious in trying to apply narrowly focused models and talking head proclamations to your thinking. Narrowly focused risk management models helped get us into this in the first place. Recognize the powerful forces at work here and act accordingly.ex VRWC

President-elect Obama has promised in exacting words that he will not take “your guns” and he will not take “your hand guns”. This reminds me a little of the liberals approach to property rights: We will not take your property, but, obviously, they move heaven and earth to remove all legal aspects of using your property.The continuing attempts and increasingly successful efforts to limit every imaginable use of guns are, of course, violations of the Second Amendment. Restrictions on concealment, gun sales, additional rules on registration, and, of course, banning certain categories of guns, are also violations of the Second Amendment.For those people who believe that we will have a free society when finally the only people who have legal use of fire arms are the military, the police and dozens of Federal agencies and, of course, the illegal possession of the criminals, have a really poor understanding of the power center direction of our government.The need for armed revolution against the government is not at hand at this moment, but one thing is certain, the necessity for widespread legal gun ownership and use is at hand.“Governors will never be awed by the voice of the people, so long as it is a mere voice, without overt acts.” Joseph Priestley, “The First Principles of Government, Section II, of Political Liberty” 1771

BREAKOUT!

I agree, but I still think there is a possibility for a sell off that precedes any rally going into March.

…. and don’t forget the resource base depletion leading to increased (energy) cost to extract, and the collapse in shipping globally….

CM – I have had a very successful run trading SSO using the moving averages you had suggested – with maybe two minor exceptions I have made 40 or so successful trades in the past few days – - perhaps it’s just luck – notwithstanding that or my mild dysleixa I’m next going to experiment with SDS and SSO back to back –Thanks -

This article states what a lot of us already knew, that commercial real estate hyper investing is going the same way residential real estate loans went. Loans made with the justification that the inflationary monetary policies of the FED and the government would continue to work forever. That prices and rents would go up forever… So who cared if the numbers didn’t quite work out, just lend a little more to make the payments for the first year or two and all would be made well by inflation.They used past models of rising incomes to justify the rising costs. Problem was that the rising incomes were skewed to be mostly their incomes (incomes of the top 5% income earners) and not the average consumers’ income.. If you get enough income on the top side to skew the data, that can really blow a financial model apart. It was easy to ignore too as who wants to give up their income. Those at the top of the pyramid didn’t. So they either ignored the consequences of income disparity or they really had no clue how the other 95% had to borrow to even live at the levels they had become accustomed to. They did know that they were benefiting greatly from how things were and weren’t going to give that up. Everyone lied to themselves about wage inflation as long as houses and stocks went up, everyone at the top were happy campers. Then came reality of 2007 and all the overly inflated consumer housing debt started to collapse. Now we are starting into the extension of that with the commercial debt collapse.So most of the commercial real estate loans and many of the corporate loans made in the last 5 or 6 years are destined to blow up.The Professor suggests that the government bail out everyone, to keep the system liquid and from collapse, BUT these loans were also engineered, leveraged and sold off as the article says. We couldn’t fix SS or Medicare or keep our bridges from falling down or some school buildings from leaking much less providing a first class education universally but we can borrow money to bail out financial institutions who decided that their incomes were more important than anything else… Where are our priorities? Obviously not with the elderly or the sick or the children or even the average citizen. The country’s priorities are with those who made huge mistakes with our futures and lost, so now WE get to pay for their mistakes!NY Times > Vacancy rates in office buildings exceed 10 percent in virtually every major city in the country and are rising rapidly, a sign of economic distress that could lead to yet another wave of problems for troubled lenders.………………Vacant or unfinished shopping centers dot the highways. Among the 8.4 million square feet of office space under construction or recently completed in the metropolitan area, 80 percent has not been leased. As a result, the vacancy rate is 11 percent and rising.“I see a wave of troubled assets coming out of Texas in the near future,” said Dan Fasulo, managing director of Real Capital Analytics, a real estate research firm.Effective rents, after free rent and other landlord concessions, have already started to fall and are expected to decline 30 percent or more across the country from the euphoric days of the real estate boom, according to real estate brokers and analysts.That is making it all the more difficult for owners, who projected ever-rising rents when they financed their office buildings, hotels, shopping centers and other commercial property. Owners typically pay only the interest on loans of 5, 7 or 10 years and refinance the big principal payments necessary when the loans come due.Without new financing, owners will have few options other than to try to negotiate terms with their lenders or hand over the keys to banks and bondholders.Among commercial properties, the most troubled have been hotels and shopping centers, where anemic sales and bankruptcies by retailers are leading to more vacancies and where heavily leveraged mall operators, like General Growth Properties and Centro, are under intense pressure to sell assets. But analysts are increasingly worried about the office market.The Real Estate Roundtable sees a rising risk of default and foreclosure on an estimated $400 billion in commercial mortgages that come due this year.

Nice Hayes! Glad I could help you make some coin in troubled times. Now, that being said, if you get really, really pig-rich, you owe me lunch with a huge galss of CC Special Reserve (aged 12 years) and a REAL Cuban cigar!

If I read the comments correctly, the only ones that will survive in tact from this crisis will be the wealthy and the powerful.Is the phrase “let them eat cake” appropriate here ?

Maybe BUT:Other construction world wide is declining. The over capacity will extend for years thus leaving many currently working construction companies with nothing to do and huge vacancy rates will keep any new projects from even going to the drawing boards.All this infrastructure that Obama’s team is talking about will not even cover all those out of work or soon to be.There is NO way that these promised projects will start very fast. It takes time for projects to go from funding to project start up. Nothing is that ready to go. We’ll be lucky if any start before mid summer or early fall and those will be the few, not the majority.By then any company still in business will be glad to have any customers at all.If Obama’s team want an impact on job creation, mandate that all jobs that can be done by hand be done by hand. Keep all the big machinery off the sites and in the yards where ever possible. Bridges take big machines, lots of time and few people and they cost lots of money… Maybe a good sound bite but not a great way to improve the underlying economics.Build rail roads by hand like they did 100 years ago for the best impact.

Hope rally!What!? You didn’t expect it?It is a plan to take away the rest of your cash…. go long with no stops and see how things work out for you. Maybe you have quick fingers..I think this rally should last thru the inauguration at least. Then? Who knows. Depends on earnings and spin as to whether it will have more legs. Keep your eyes on the volume at the resistance levels.

The good old days

You make a fine argument for repealing the Second Amendment and banning private ownership of firearms.SWK

From today’s New York Times:Fighting Off DepressionBy PAUL KRUGMANPublished: January 4, 2009“If we don’t act swiftly and boldly,” declared President-elect Barack Obama in his latest weekly address, “we could see a much deeper economic downturn that could lead to double-digit unemployment.” If you ask me, he was understating the case.The fact is that recent economic numbers have been terrifying, not just in the United States but around the world. Manufacturing, in particular, is plunging everywhere. Banks aren’t lending; businesses and consumers aren’t spending. Let’s not mince words: This looks an awful lot like the beginning of a second Great Depression….http://www.nytimes.com/2009/01/05/opinion/05krugman.htmlSWK

WOW! THe “Save Machine” is hard at work at that $27.70 level-saved it a couple times now. Lets see if the bears grow a sack here…

see comment above about resistance levels

$27.70 is the current breakline for the year end rally. We lose it here and it could be a swift move down that looks a little terrifying to those with weak constitutions….

Tomorrows non-manfg. ISM is a very key number IMHO. Since we are about 68% service now, this could really show how bad things were at year end and will give us a glimps into the coming retail bankruptcy free-for-all that is coming.

3:41 p.m.Minnesota board certifies Al Franken wins recount: reportThat’s it!! I am moving to Canada!

Fighting symptoms – deflation and inflation –without comprehending the causal relation between the increase in the quantity of money on one hand and the rise in prices on the other, as Mises says, practically makes things worse. “It is impossible to fight a policy which you cannot name.”Are we not fighting symptoms here – rising and/or declining prices and credit freeze? Are we failing to fight the cause – the printing of money and excessive fraudulent abuse of the monetary system causing maladjustment and distrust? Let the crash come and take its toll, or let the fraud continue to fuel the fires that now are leading to total collapse of the economy. Listen to Mises:“Ignorance manifests itself also in the confusion of deflation and contraction and of the process of readjustment into which every expansionist boom must lead. It depends on the institutional structure of the credit system which created the boom whether or not the crisis brings about a restriction in the amount of fiduciary media. Such a restriction may occur when the crisis results in the bankruptcy of banks granting circulation credit and the falling off is not counterpoised by a corresponding expansion on the part of the remaining banks…The dearth of credit which marks the crisis is caused not by contraction but by the abstention from further credit expansion. It hurts all enterprises—not only those which are doomed at any rate, but no less those whose business is sound and could flourish if appropriate credit were available. As the outstanding debts are not paid back, the banks lack the means to grant credits even to the most solid firms. The crisis becomes general and forces all branches of business and all firms to restrict the scope of their activities. But there is no means of avoiding these secondary consequences of the preceding boom.[I contend Bernanke knows this, which makes his practice extremely adhorrent of issuing trillions of dollars, unaccounted for, to selected bankers in exchange for their toxic waste and promises, so that many of the same billionaire financiers who created the mess can buy up with bailout money legitimate companies who find themselves innocently caught in the web theses financial spiders have woven.]As soon as the depression appears, there is a general lament over deflation… Now it is true that even with no restrictions in the supply of money proper and fiduciary media available, the depression brings about a cash-induced tendency toward an increase in the purchasing power of the monetary unit. Every firm is intent upon increasing its cash holdings, and these endeavors affect the ratio between the supply of money (in the broader sense) and the demand for money (in the broader sense) for cash holding. This may be properly called deflation. But it is a serious blunder to believe that the fall in commodity prices is caused by this striving after greater cash holding. The causation is the other way around. Prices of the factors of production—both material and human—have reached an excessive height in the boom period. They must come down before business can become profitable again. The entrepreneurs enlarge their cash holding because they abstain from buying goods and hiring workers as long as the structure of prices and wages is not adjusted to the real state of the market data. Thus any attempt of the government or the labor unions to prevent or to delay this adjustment merely prolongs the stagnation…The structure of prices will be lastingly affected by the inflationary venture if the government does not withdraw from the market the additional quantity of paper money it has injected in the shape of subsidies.Conditions are different under a credit expansion which first affects the loan market. In this case the inflationary effects are multiplied by the consequences of capital malinvestments and overconsumption. Overbidding one another in the struggle for a greater share in the limited supply of capital goods and labor, the entrepreneurs push prices to a height at which they can remain only as long as the credit expansion goes on at an accelerated pace. A sharp drop in the prices of all commodities and services is unavoidable as soon as the further inflow of additional fiduciary media stops…The recovery and the return to “normalcy” can only begin when prices and wage rates are so low that a sufficient number of people assume that they will now drop still more.Therefore the only means to shorten the period of bad business is to avoid any attempts to delay or to check the fall in prices and wage rates… (from “Human Action, A Treatise of Economics” Third Revised Edition, 1963, by Ludwig von Mises, pp. 568 – 570)In the above analysis of credit consequences, Mises assumes the total amount of additional fiduciary media enters the market system via the loan market as advances to business. Mises points out the consequences of credit expansion proper must not be confused with those of government made fiat money inflation, i.e., when the treasury borrows from the bank, and the bank provides the funds needed by issuing additional banknotes or crediting the government on a deposit account… The additional fiduciary media enter the market by way of the treasury as payment for various forms of government expenditure…[Yes, Ex-Fed Governor Frederic Mishkin says this crisis is more complex than the 1930s. And I contend it is unprecedented, partnered with crime breeding distrust, and involves all forms of monetary inflation. Financiers are basically stealing money, not even using it for advancing the credit: they are using it to consolidate. “Because,” they would say, “our job is to increase the profit of this company and ourselves.” They violate the law all the time, but this isn’t even violation of the law – the Fed gives them the free money. And that’s the way it was intended. Because guess who’s making the decisions: the same private bankers who made the mess.Said Mishkin on FoxBusiness: The financial shock that hit the U.S. this autumn was bigger than a similar shock during the Great Depression. The recent shock "is much more complicated" and the clean up will be difficult to do.” Said Mishkin during a presentation to the American Economics Association, the Fed is in "experimental mode." He is a strong supporter of the Fed's recent move of cutting interest rates to range to zero and pledging to use unconventional monetary policy. "The Fed doesn't want to be a deer in the headlights," he said."]http://www.foxbusiness.com/story/markets/industries/ex-fed-governor-says-crisis-complex-s/But there’s nothing wrong, is there, with catching the economy and every working and retired American in the headlights — and running over them?

Bye!

CM – another good day with SSO – 9 trades all + except my final where I got caught at $28.05 purely due to inattention (lucky I was able to exit right at the close) – strategy seems good so far (but I need to work on tactics and attention span issues) thanks again

Very good article on America’s current crisis, it sums things up quite nicely: http://www.guardian.co.uk/business/2009/jan/04/us-economy-thrift-barack-obama

5:01 p.m.[CI] Cigna to cut 1,100 jobs, or 4% of workforce

I’m with you Anon. Times like these really bring the whackos out if full force.

How do you know what’s oversold? Just because the market sold off doesn’t mean it can’t go down more. If there were really such a thing as oversold and overbought, markets would forever trade in a range.

It ought to be time for him to declare bankruptcy again soon. At least this will keep this blowhard from spouting off about what a great businessman he is. Then again, maybe not. He’ll blame the economy.

When will people learn that you cannot cure the evils of industrialism with MORE industrialism?—”The Triumph of the Machine” – D.H. LawrenceThey talk of the triumph of the machine,but the machine will never triumph.Out of the thousands and thousands of centuries of manthe unrolling of ferns, white tongues of the acanthus lapping at the sun,for one sad centurymachines have triumphed, rolled us hither and thither,shaking the lark’s nest till the eggs have broken.Shaken the marshes, till the geese have goneand the wild swans flown away singing the swan-song at us.Hard, hard on the earth the machines are rolling,but through some hearts they will never roll.The lark nests in his heartand the white swan swims in the marshes of his loins,and through the wide prairies of his breast a young bull herds his cows,lambs frisk among the daisies of his brain.And at lastall these creatures that cannot die, driven backinto the uttermost corners of the soul,will send up the wild cry of despair.The thrilling lark in a wild despair will trill down arrows from the sky,the swan will beat the waters in rage, white rage of an enraged swan,even the lambs will stretch forth their necks like serpents,like snakes of hate, against the man in the machine:even the shaking white poplar will dazzle like splinters of glass against him.And against this inward revolt of the native creatures of the soulmechanical man, in triumph seated upon the seat of his machinewill be powerless, for no engine can reach into the marshes and depths of a man.So mechanical man in triumph seated upon the seat of his machinewill be driven mad from within himself, and sightless, and on that daythe machines will turn to run into one anothertraffic will tangle up in a long-drawn-out crash of collisionand engines will rush at the solid houses, the edifice of our lifewill rock in the shock of the mad machine, and the house will come down.Then, far beyond the ruin, in the far, in the ultimate, remote placesthe swan will lift up again his flattened, smitten headand look round, and rise, and on the great vaults of his wingswill sweep round and up to greet the sun with a silky glitter of a new dayand the lark will follow trilling, angerless again,and the lambs will bite off the heads of the daisies for very friskiness.But over the middle of the earth will be the smoky ruin of ironthe triumph of the machine.

I posted the companion article to this above (it takes the opposite position to Krugman) Can the US economy afford a Keynesian stimulus?FT January 5, 2009 Willem Buiter

Yeah, so when Mr. Obama talks about double-digit inflation, he’s really talking numbers that approach or exceed 20%.SWK

I’m not sure what the alternative is to a massive Keynesian stimulus, other than to sit back and do nothing while aggregate demand continues to decline and unemployment continues to rise.SWK

I think it was a great post. Just too much food for thought for my brain. You have to be a top economist to be able to dissect well what the guy says.

Perhaps a lot of the trouble in the UK and the similarities to the US can be traced to the Reagan-Tatcher laizzes-faire/neoliberal connection.

It was the United States that kept the horror of Russia’s communism alive. This, from Alexander Solzhenitsyn, who was there ~”It is American trade that allows the Soviet economy to concentrate its resources on armaments and preparations for war. Remove that trade, and the Soviet economy would be obliged to feed and clothe and house the Russian people, something it has never been able to do. Let the socialists among you allow this socialist economy to prove the superiority that its ideology claims. Stop sending them goods. Let them stand on their own feet, and then see what happens.” John Hospers, “A Free America,” “Reason”(May 1978), p. 34.And it is the United States that is keeping the Israeli/Palestinian conflict alive. Quit giving aid and weapons to socialist Israel, (as Netanyahu described it a few years back in “Reader’s Digest”) and oblige them to feed and clothe and arm themselves. “Then see what happens,” as Solzhenitsyn puts it.As America herself slouches into socialism, perhaps she is going to get a bitter taste of the medicine she has administered to the rest of the world.

The US Treasury cannot. The dollar will not hold up under such abuse.

Somber Thoughts for the New YearWill There be a Recovery?By PAUL CRAIG ROBERTSJanuary 5, 2009 — Economists will scoff at the question in the title. But that’s because they are trying to fit the present into the past.In the past recoveries were routine, because recessions were temporary restraints resulting from the Federal Reserve putting the brakes on an overheating economy. By restraining the supply of money and credit, the Fed caused inventory buildup, layoffs, and a halt to price rises and union wage demands. With the economy cooled by unemployment, the Fed would take off the brakes. Interest rates would decline, money would flow, consumer demand would rise and workers would be called back to the factories.In those days when workers borrowed to spend, they were borrowing against rising real wages from rising productivity. In economic downturns, few workers actually lost their jobs. They were laid off from their jobs for temporary periods. Workers seldom lost their homes or cars, thanks to union funds and unemployment benefits.Today the situation is different. In the 21st century real wages have not risen. Workers have spent more by accepting deteriorating household balance sheets. They have maxed out their credit cards and spent the equity in their homes. Imitators of the US government, American consumers borrow to pay their bills.The expansion of household debt relative to income created the illusion that the economy was sound. But the consumer economy was as much of a credit-based bubble as the real estate bubble and the financial sector bubble. The economy has lost its real basis.Today it is difficult to stimulate consumer demand by lowering interest rates. Consumers are too heavily in debt to borrow any more. Financial institutions are too impaired to want to lend to anyone except those who don’t need to borrow. As the Keynesian macroeconomists used to say, “you can lead a horse to water, but you can’t make him drink.”And there’s another problem. Much of what American consumers purchase today is made offshore. Stimulating consumer demand in America puts factories back to work, but those factories are located elsewhere in the world.How does an economy consume more than it produces? Previously, this question applied only to poor third world countries. These countries would consume by the grace of World Bank loans. From time to time they would pay for their consumption by being put through an IMF restructuring program that would curtail their consumption to make them repay their loans by forced saving.The United States has so far avoided such humiliation, because its currency is the world money. The US has been able to borrow endlessly, because it can pay its debts in its own currency.This ability might be coming to an end. The US has been using up the bulk of the world’s supply of saving for years in order to finance its consumption. Considering the outlook for the US economy and dollar, the productive nations of the world and those with oil have more dollars and dollar-denominated assets than they want. The US, with its collapsing economy, its bailouts of financial institutions, and its wars, is facing the largest government budget deficit in its history, both in absolute amount and as a percentage of national income. The easy monetary policy, which the Fed hopes will arrest deflation, threatens inflation and further deterioration in the dollar. Foreigners simply do not want to lend more large sums to a country that, from all appearances, has no way to close its trade and budget deficits. They certainly do not want to lend when the interest rate offered is close to zero and the reserve currency status of the dollar is in doubt.Economists and the policy-makers they advise are thinking in the past, a time when low interest rates stimulated consumer and investment demand, thus lifting the economy. Today the low interest rates threaten the dollar, discourage foreigners from lending more to the US, and deprive Americans of interest income necessary to their ability to pay their bills.In the second half of the 20th century, American economic supremacy was a gift of World War II, which destroyed the productive capacity of the rest of the developed world. American economic supremacy also owes much to communism in Russia and China and to socialism in India, which rendered these large countries economically impotent. The United States did not have to compete for its economic hegemony. It simply inherited it from the choices made by the rest of the world.The situation is different today. Unlike the US, other countries are free of the hubris of being the “indispensable nation.” They know how hard it is to be successful and do not treat success as their birthright. They do not give away their economy for nebulous foreign policy goals or for short-term profits. They look ahead 20, 30 years while America’s CEOs look to the next quarter’s profits.The United States is walking on quicksand. It is dependent on foreigners for the funding to conduct the day-to-day operations of its government. Its economy is a hollow shell reduced to dependence on a financial sector that is discredited worldwide. America’s government believes that its foreign wars of aggression are more important than any domestic needs, including the health care of its population.Now that its supply route to feed its war of aggression in Afghanistan is threatened, the American government has the delusion that it will be able to supply its army in Afghanistan through thousands of miles of Eastern Europe, Russia, and Central Asia. Only a government totally oblivious to reality would imagine that Russia’s Putin, whose nose is rubbed in excrement every day by the US government, will permit America to transit Russian territory to resupply US imperial legions in Afghanistan.What we are witnessing is a once great power engaging in fantasy to disguise from itself that it is a failed state.Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions.http://www.counterpunch.org/

You’re pretty hard on Ben Bernanke (not that he doesn’t deserve it, and much more), but you leave Obama and Hank Paulson unscathed. I don’t think that this is at all fair.Of course, nothing that Hank and Ben have done together or seperately (and they have done and spent plenty) has worked. One thing that you have to admit about Ben and Hank, though–they are not in the least discouraged or detered by failure. To the contrary, each failure is diagnosed by them as being due to not having done enough and not having spent enough, so what we end up with is a series of fiascos each one of which is much more expensive and grandiose than it’s predecessor.Obama hasn’t done anything yet, but he’s really itching to join the club. To the best of my knowedge, there has not been a successful resuscitation of a failing economy by spending huge sums of money on infrastructure, although there have been failures (e.g. post-war Japan or the USA in the 1930′s). If Obama is not to be detered by historical failures, I wonder if he will be detered by his own.In my view, none of the actions of the Fed (nor the promised actions of Obama) address the basic problem of our economy, which is that we have a non-productive, highly-consumptive, services based economy. Furthermore, the economy is characterised by the “creation of wealth” with credit, leverage, smoke and mirrors, etc.. Isn’t it ironic that all the solutions for curing a problem caused to a great extent by creating wealth with credit, smoke and mirrors, etc. require the creation of wealth with credit, smoke and mirrors, etc.?I do agree with you on another of your points. Very soon, the typical US worker will be without money, without a job, and without a future.

mog,this shows the linkage of tweedle dum and tweedle dee, richardson being one tweedlethat can swing either dum or dee. palastis a reporter. thanks for the post you sane person. have you listened to simon reading joyce yet? “mamalujo.” did you catch that?.http://archive.wbai.org/allshows.phpSaturday, December 27, 2008 7:00 amAs i Please..some people just don’t see the detrimental significance of the rot at the center of their political and economic ambitions. oh well.

e,he did say he was dealing in half truths.re. prior comments, you have more than talent.you can think and then some. some one once told me “talent is a cheap trick.”. but..had you read into the comments after the pieceyou would have found this gem….cracked me up for some reason. in response tobuiter’s piece….Speaking of jokes, considering that much of the current mess was caused by people misunderstanding how to use computers and modeling, remember the recent joke written by a computer?It goes something like this. I think it’s a good metaphor for how we’re handling the financial problem.———–These two guys are out hunting and one of them accidentally shoots the other. He has a cell phone so he calls 9-1-1. He’s hysterical, saying he’s killed his friend by mistake.The operator tells him to calm down and “first, make sure he’s dead.”There’s a silence, then a gunshot.Then the guy comes back to the phone and says:“Okay. Now what?”————In the financial crisis, it’s:Where did all the money go?It just evaporated, it never really existed.Okay, imagine another trillion dollars and pour those into the system.Okay, now what?..“dreamed fairness” says ReCaptchaPosted by: Hank Roberts…. that is a good one. so now we’re stuck with all this stuff that was produced with no real demand to support it’s creation and no money to pay someone to get rid of it or rightly own it? and we can’t tell up from down.

perhaps they should war against their own self for a change. hmmm…would that (civil war) still improve the economy?

The charts Buiter references are accurate in 2007 dollars. The data is from the FY 2009 U.S. Budget historical tables at whitehouse.gov/omb – with this cutline: US Debt from 1940 to 2007. Red lines indicate the public debt and black lines indicate the gross debt, the difference being that the gross debt includes funds held by the government (i.e. the Social Security Trust Fund). The second chart shows debt as a percentage of U.S. GDP or dollar value of economic production per year. (Note: The two charts above do not include the recent rise of the public debt to above $10 trillion on September 30, 2008.)According to Answer.com where the charts are displayed: The United States total public debt, commonly called the national debt, or U.S. government debt, is the amount of money owed by the United States federal government to holders of U.S. debt instruments. Debt held by the public is all federal debt held by states, corporations, individuals, and foreign governments, but does not include intragovernmental debt obligations or debt held in the Social Security Trust Fund. Types of securities held by the public include, but are not limited to, Treasury Bills, Notes, Bonds, TIPS, United States Savings Bonds, and State and Local Government Series securities.As of November 19, 2008, the total U.S. federal debt was $10.6 trillion., with about $37,316 per capita (that is, per U.S. resident). The October 3rd, 2008 bailout bill (H.R.1424), section 122, raised the U.S. debt ceiling from $10 trillion to $11.3 trillion. Of this amount, debt held by the public was roughly $6.3 trillion…According to the latest figure charts displayed on the site US Gross Debt 2007 was $9,008 trillion or 65.5% of GDP: 2008 was $10,025 trillion or 72.5% (EST) of GDP. US Public Debt 2007 was $5.049 trillion: 2008 – $5,809 trillion.http://www.answers.com/topic/united-states-public-debtThe Washington Post reports that as of January 2, 2009, the debt stood at nearly $10.7 trillion, of which about $4.3 trillion is owed to other government institutions, such as the Social Security trust fund. Debt held by private investors totals nearly $6.4 trillion, or a little over 40 percent of gross domestic product, according to the Washington Post.The Post points out that “the national debt is projected to jump by as much as $2 trillion this year, an unprecedented increase that could test the world’s appetite for financing U.S. government spending.” [It is rising at $1million a minute.]Says the Post:The government’s hunger for cash began growing exponentially as the nation slipped into recession in the wake of a housing foreclosure crisis a year ago. Washington has since approved $168 billion in spending to stimulate economic activity, $700 billion to prevent the collapse of the U.S. financial system, and multibillion-dollar bailouts for a variety of financial institutions, including insurance giant American International Group and mortgage financiers Fannie Mae and Freddie Mac…Obama and congressional Democrats are debating as much as $850 billion in new federal spending and tax cuts to create or preserve jobs and slow the grim, upward march of unemployment, which stood in November at 6.7 percent…Some of the borrowing was done during the fiscal year that ended in September, when the Treasury added nearly $720 billion to the national debt. But the big borrowing binge will come during the current fiscal year, when the cost of the bailouts plus another stimulus package combined with slowing tax revenues will force the government to increase the debt by as much as $2 trillion to finance its obligations, according to a Treasury survey of bond dealers and other market analysts…http://www.washingtonpost.com/wp-dyn/content/article/2009/01/02/AR2009010202322.html?hpid=topnews

Thanks for the schooling.The public debt you list is federal public debt. Isn’t the size of the entire debt that the people of this country service more important than just one area of debt? Doesn’t the total cost of servicing all the debts takes away from future projects and expenditures?What am I missing when I think about debt. When you pay interest on a lot of debt over years, on things which you used up yesterday can cost twice or three times by the time you pay the debt off. Isn’t debt only worth while when buying something that pays for itself, plus a profit over its life span. Like an oil well or a mine or a jig or tool to make a solar cell or computer memory. Isn’t borrowing money to buy food or fuel that is gone or going on a vacation or spending money on foreign adventurism that has neither immediate nor ascernable future benefits, isn’t that costly to the future. This money is just gone, used up, yet the interest and payments go on and on into the future.It appears to me that the US has reached the point where the accumulation of debt has reached a point, for an ever growing number of families, that there just isn’t enough to go around.Doesn’t all this debt put the US in an uncompetitive position compared to countries that have invested mostly in for profit projects?Tomorrow I would like to go further with this but I am tired tonight.

I think that Roubini is talking about *forced* deleveraging – from hedge funds, in particular. He states above that “Deleveraging will continue, as thousands of hedge funds — many of which will go bust — and other leveraged players are forced to sell assets into illiquid and distressed markets, thus causing price declines and driving more insolvent financial institutions out of business.”While the market may be positively affected psychologically by news of Obama’s stimulus package, these forced sales will probably not be significantly impacted by that. And, of course, the overall economic news is dire. Not to say that there will not be a rally, but my own guess is that it will be very short-lived.

O.K., Roberts’ credibility went out the window with me as soon as he characterized the war in Afghanistan as a “war of aggression.” The U.S. launched military action in Afghanistan after it was determined — and there is no legitimate dispute about this — that it was attached by non-state actors (Al-Qaeda) operating with state support (the ruling Taliban regime in Afghanistan). The current occupation of the country is being carried out by a broad international coalition. War of aggression? Baloney.SWK

how about anybody who buys U.S. government bonds will automatically become a US citizen…

You contradict yourself. They were non-state actors, so we attacked a state? How did we determine that Afganistan Taliban supported the perpetrators of 9-11? Remember, these are the same guys that were trained and equipped by the CIA to fight the USSR. All but two of the hijackers were Saudis, and those were Egyptian. They planned the attack in Belguim, and received pilot training in Flordia. We might as well have bombed Saudi Arabia, Egypt, Belgium and Flordia.Terrorism is not an act of war, it is an unlawful act best handled by police investigation and arrest. There is no such thing as a war on terror. Terrorism is a violent crime by individuals.

“The American and European consumers and many businesses are spent out and insolvent.”Boy do I hate this kind of dogmatic statement without a shred of evidence to back it up. I do not believe that American and European consumers are insolvent. SOME are. Most are not. The massive declines in consumption we have just seen happened in just a few months. Everyone didn’t suddenly become insolvent practically overnight. Banks didn’t suddenly stop all credit. What I believe has happened is that people are scared shjtless about the economy and that’s why they stopped consuming so freely, and this happened to both the solvent and the insolvent ones.

I had to laugh when on yesterday’s news they spent about 5 minutes (a long time for 30 minute broadcast) interviewing buyers of GM cars and quoting them as “I’ve been looking for several months now and these are the lowest prices I have seen, so I just had to buy!” Did anyone make the connection that just maybe the reason GM cars are “at the lowest prices I have seen” is because there is a greater than 50/50 chance they will be bankrupt within the next year? Is this the fair and balanced reporting that allowed our current problems to get so out of hand ny keeping much of the public in the dark? Good job media, keep telling the sheeple it’s a great time to buy a GM car!

I would have to respectfully disagree with your assumptions for this reason: much of what I have heard by the media or read about our military operations is incorrect. I personally am close friends with several people who have fought in Iraq and in previous wars and have been told a much different story about what our true goals are, spreading misinformation to the public, outrageous covert operations, how we equip and train one enemy to fight another and then later turn on that enemy and on and on; it’s just unbelievable!

yup. Besides that 9-11 was a bomb attack (according to http://www.ae911truth.org) and not some airplanes (my personal opinion). Ask Dick Cheney, I am sure the man knows all about it.

I don’t contradict myself at all. We were attacked by non-state actors SUPPORTED BY a state, so we were well within our rights under international law to use military force against Afghanistan in response.No one in the international community seriously disputes that Al-Qaeda were based in Afghanistan at 11 September 2009, that they were operating camps to train terrorists, and that they were hosted in these efforts by the Taliban. That is why our military response in Afghanistan — in contrast to our attack on Iraq — has received, and continues to receive, widespread international support and why the current occupying coalition in Afghanistan is so large.Terrorism may or may not be an act of war, depending upon whether it is carried out by a state actor or sponsored by a state actor. The 9/11 attacks on the U.S. clearly were acts of terrorism sponsored by a state actor, namely, Afghanistan.In appropriate cases, I agree that terrorism may be treated as a criminal matter, much like international piracy. As a point of fact, however, “police investigation and arrest” as means of addressing the 9/11 attacks on the U.S. would have been wholly futile because such means require cooperation from the states in which the criminals are situated and in which the crimes originated, and we certainly get that from the Taliban, who insisted on protecting Osama bin Laden and Al-Qaeda as its “guests.”I agree that there is no such thing, legally speaking, as a “war on terror.” Wars are between nation states, period. For this reason, I continue to believe that the Congress abrogated its constitutional responsibilities by passing a resolution allowing the President of the United States discretion to enter a de facto war with Iraq, rather than passing a formal declaration of war.SWK

You folks are now wittnessing the importance of the “save” yesterday by certain interest…keep the TREND intact, you allow folks to pile on. RIGGED!

And another 50 points…10:00 a.m.U.S. November pending home sales index down 4%

You are entitled to believe that black is white, too, but that doesn’t make it so. When folks create and buy into complex conspiratorial explanations for events that are more simply explained otherwise, it only serves to provide cover for Mr. Cheney and others who should be subject to legitimate criticism and liability for their wrongful actions, because the accused can simply dismiss all criticism as coming from “conspiracy nuts” and thereby deflect public attention from their misjudgments and misdeeds.SWK

Great Read!http://www.uiowa.edu/ifdebook/timeline/Credit_Crisis_Timeline.pdfHistory Of The World (Financial Crisis), Part IPosted In: Economy, Global EconomyNice to see someone is taking notes of the ongoing economic crisis. From the Press-Citizen out in Iowa earlier today:For visual evidence of just how bad the global financial crisis has become, visit the Web site of the University of Iowa Center for International Finance and Development. If you dare.The page – in PDF form at link — has a meticulously detailed timeline of events leading up to the economic collapse, and it highlights news reports of every struggling investment bank, failed mortgage company, missed-earnings warning, lousy housing report, cut dividend, and various other portents of impending financial doom.“The timeline is pretty gripping reading for those who have an interest in the worst financial and economic crisis since the Great Depression,” said Enrique Carrasco, a UI law professor and director of the center. So gripping and well kept, in fact, that it’s now one of Google’s top entries for the credit crisis timeline, surpassing even Wikipedia…“It’s a great way for readers to get the bullet points of what’s happened so far,” said HeeJin Lee, a third year law student, one of the UICIFD’s researchers and its managing editor. “It’s easier to understand than most people think, and this is a way we can present the core of it for people who aren’t financial experts to comprehend…In addition to the timeline, the UICIFD tracks the economic crisis on a blog with weekly updates and commentary (link). The center will also co-host a symposium with the law school’s International Law Journal about the global credit crunch and economic crises on Feb. 20 in the Boyd Law Building.Source:“UI law center presents a sort of ‘Global Financial Crisis for Dummies’”Press-Citizen, January 5, 2009

Another scumbag that needs to go away…Confessions of a former real estate bullAs chief economist for the National Association of Realtors, David Lereah was famously optimistic. Now a private consultant, he’s abandoned what he calls the ‘positive spin.’http://money.cnn.com/2009/01/05/real_estate/Lereah.moneymag/index.htm

More good news on the banking front:January 5, 2009hp1339Treasury Provides TARP Funds to Local BanksWashington- The U.S. Treasury Department announced details this week of a $15 billion investment in 7 banks made through its Capital Purchase Program.

K,physical events in time conform to the laws of cause and effect, not the laws of political convenience. so what do the engineers say concerning these events..http://www.ae911truth.org/.scientist and professionals, not nuts,although nuts are involved.

Once again today, the fight to maintain the current trend is ON BABY! NO SELLING SAYS HANK N BEN!

BEN and HANKS: 31 flavors of bailouts!

Jan. 6 (Bloomberg) — New York University obtained a court order extending a ban on J. Ezra Merkin transferring millions of dollars of the university’s funds related to investments with Bernard Madoff.Is it just me or does it seem a bit disturbing that according to the article above, Ezra Merkin, the chairman of GMAC ( which just became a bank holding company and accessed billions of TARP money) had dealings with Madoff.Meanwhile Madoff is mailing out valuables to his in-laws as he continues to do time in his Penthouse with his wife at his side. And somewhere in California there is a kid who stole a loaf of bread who is also doing time in a 10′ cell and is some inmate’s “wife”.

BREAKOUT! BEARS D-NIED AGAIN!

Maybe a length of post limitation. I have had to write for editors before. When there is a word limit it really makes you go back and get to your point. Also, maybe a format change – something more along the lines of a blog with individual diaries that may or may not attract attention and like-minded comments, perhaps?As for political content, I think it is impossible to separate politics from economics, because both have so much to do with human behavior. Also politics is playing a key role in the government’s response, obviously. We have to understand something about wage imbalance, pay justice, etc, to understand the economic forces at work. Ditto the political motivations behind tax policy.I think the doomsday rants arise because of the unprecedented situation we are in, and peoples very strong emotions about it. I for one learn from this, because you must tap into peoples passion not just their intellect to really understand human behavior, which is at the core of our situation.What is lacking on this site largely is the what we do about it part, however. Part of this is because so many feel helpless. There is a fair amount of trading advice. OuterBeltway has been involved in some efforts that are more forward looking, however his efforts are not all concentrated here.As for charging a fee, I know this is technically a paid site, however you can participate in the blogs without subscribing. I have not been successful in even getting the admins here to tell me how much the subscription is! I don’t think their business model caters to individual bloggers.

$350 or so…he is predicting profits to come in at $40 on the S&P500…the same actually as mentioned by Sedacca on Minyanville…

Anyone else hear that song…yup, I think….I can hear it better now…YUP! it’s “Rocket Man”

Good Post. I mostly agree. However, IMHO, The underlying reason for the overly optimistic assumptions built into the system is that very few in the financial industry wanted the party to end. Pure and simple greed. From my lay perspective, I can only surmise that they must have seen it coming and refused to acknowledge what was plainly in sight. They merely used the numbers to back up their fantasy.I am not a trained economist and I could see it coming, just reading the Economist and WSJ. The Titans of Industry merely used their financial wizardry in an attempt to continue the game of musical chairs, or rather the game of Hot Potato. The faster the financial instruments were bought and sold the less chance you had to be the one holding them when the curtain came down. Sadly, the curtain has now fallen Globally. Time to start a new game.

g,how else indeed.

On CNBC: German Tycoon Commits Suicide The bankruptcy of living a life of seemingly infinite wealth.

Happy New Year. There is plausibility in everything you list. I hope No. 37 is not what I think it is, and if it is, I think the people’s reaction will be different from 9/11.Also, people don’t take kindly to adversity that hits close to their own pocket books — which is why the government hires thousands of government intellectuals to feed the public a continual diet of false ideas and solutions — it fears to awaken this powerful sleeping giant.A powerful and well-researched list. Thanks. It will be interesting to tick off those that hit home.

WOW! Saved again! This is gutsy to say the least…

AGAIN REMINDERUSA WILL GO TO WAR WITH IRAN AROUND END OF MARCH OR APRIL 2009. THE MOTHER OF ALL THE WARS GIVING BIRTH TO OTHER WARS, WHICH INCLUDESNUCLEAR EXCHANGE BETWEEN PAKISTAN AND INDIA.INVASION OF WESTERN EUROPE BY RUSSIA.NORTH AND SOOTH KOREA WAR.CHINA AND TAIWAN WAR.ALSO THE HEZBOLLAH CELL ARE READY IN USA TO ATTACK THE MAJOR CITIES WITH CHEMICAL AND BIOLOGICAL WEAPONS.GOOD LUCK TO EVER ONE

Crap

The other issue here is the excess inventory. We have to many houses and they are to big to be affordable under current and future circumstances. We have to many everything else that was mass produced. Large inventories in cars, trucks, refrigerators, washers, ….And the common response is to lower interest rates to increase demand… Except that didn’t work this time… Why not?Because of the previous epidemic of low rates and lower than sane qualifications for loans, we pushed forward purchases. Way forward. This caused builders of everything to rush to get products to market, houses, car and everything… and in the end, they produced way to much.So now we have not only to much inventory but to much debt and almost no demand and little ability or desire to purchase. The psychology has changed and now everything is cheaper the longer you wait. So for those who are overly indebted, they are getting more and more upside down, And for those who have money, there is little or no reason to buy.What will change this scenario? Time… Time to write down bad investments. Time for companies to sell off inventories.I see no practical way of forcing this. Forcing buying ahead was what caused it. No way to force overly indebted people or businesses to borrow more to purchase more until they have worked off or written down their existing debts.

How do these people keep their friggin jobs AND, make $300K a year on top of it?????The consensus estimate for year-end 2008 was 1,632 for the S&P 500 at the start of 2007, which translated into an expected gain of 11.12%.

wow, PPT managed panic rally.

I exited – net down 48 cents/share for the day we’ll see if we can catch one last ride – the key mistake was jumping on an uptrend well after the MAs had favorably crossed – I did the same thing yesterday and through luck escaped – s for brains -

Why with thinking like this, of course, from CNBC:Stocks were on their way back up again as investors shrugged of some disappointing economic data and kept an optimistic outlook about President-elect Obama’s economic-stimulus plan.”In the very near term, there’s just a lot of optimism,” Jason Roney of Sharmac Capital told CNBC. “There’s a perception in the very near term that the worse the data is, the better the stimulus will be,” he said.This is like saying, the worse the patients vital signs are, the stronger the medicine we will give him. Therefore, be optimistic about his chances.There now I qualify. Big bucks and stable employment, here I come!

Yes, but will it be the Lakers or the Celtics this year?

The Cavs… Someone please give Cleveland a break for once.

Let The Water Seek Its Level,Do nothing – seems to be the safest approach – too many unintended consequences otherwise.Folks like Krugman are bleeding *ss liberals, aka NYT, who are in favor of Bamalot and other such crap. The great psychologist C.G. Jung characterized Socialism and Communism as examples of an ‘unnatural and even pathological condition’ that imagines that it can control everything by will and reason alone. Thus these folks are working with a half a deck.

Dumbass

e,Overcapacity is a global problem. I think even time is not enough, there also needs to be demand shift. Like everyone is hoping BRIC/EMs accomplish by increasing the demand of those that are not now big consumers.What they can do is to punish thrift, like they did in the past decade or so. The thinking was kind of insidious. Like when they said – you should not pay off your home loan at low interest rates when you can earn a higher return in ‘the market’. Or, worse, go ahead and tap the equity to invest. I have heard the arguments that say one is losing money by not investing. This thinking enticed so many to bet their futures on appreciating home values and 401Ks.If they succeed in punishing thrift again, they may start some form of borrowing cycle. Or, if they cause inflation to take off, debts will be reduced. Either alternative is moving us in the wrong direction.

4:07 p.m.[AA] Alcoa to reduce headcount by 13,500, 13% of global workforce

4:08 p.m.[AA] Alcoa reducing 2009 capital expenditures by 50%4:08 p.m.[AA] Alcoa freezing salaries and hiring4:08 p.m.[AA] Alcoa to reduce 1,700 contractor positions

Could you spare a few Wilsons?

why would you long dollars when Fed is starting money printing policy now. in fact long stock now.

Given the fundamentals, I doubt this rally run survives much longer than inauguration day (You can tell I just had a HUGE dose of bear:-).Since you can never loose money by taking profits, and in agreement with the bearish forecast of such prestigious economists (i.e., The Professor and Shilling); today, I sold my TBT position (quite likely too early. I plan to trade in and out and even go long long Ts again if rates go up high enough)09 SPY calls, and my XLE leaps. I continue to hold my USO and DBA leaps.

Just a fan

g,i don’t know? but rest assured someone would find a wayto profit from it.

You’d probably make more selling CA to the Chinese. At least they have money to spend.

also here:IBM May Cut Thousands of Jobs, Employee Group Says (Update2)http://www.bloomberg.com/apps/news?pid=20601103&sid=aXFIXifapQeE&refer=us

I agree with Dr. Roubini on most parts of this article. However, my inclination is towards that of an L-shaped recession than a U-shaped one. I believe the main reason being that that financial securitization has made it almost logistically impossible to work out individual mortgages. When a loan is securitized to an MBS, then sliced and diced the payments into a CDO, thereafter another round slicing and dicing to become a CDO square, the payments are all over the place. One payment could be due to a Citigroup customer in America another could be due to HSBC customer in London. Working out the mortgages would mean tracing each and every payment across the globe and across financial institutions. My point is implementing a HOLC to work out mortgages would be a logistical nightmare because of securitization. The US government will have to buy all the CDOs and CDO squares in the world to work them out. That would effectively call for a nationalization of most American land to become state-owned. Firstly, it might take quite a while to government to realize this point. Secondly, the ideological impediment will block or slow down such a solution. So therefore my take is that an L-shaped recession tending towards a depression is a more probable outcome rather than a U-shaped one. Then again, I might not be right. If so someone please correct me if I am wrong.

Numerous excellent points in all these great posts–reminding back to what we’ve been doing! Good stuff!The government and all its marketing arms of brokers, business journalists, paid-off university economists, and every single last person in the real estate industry, spoke with forked tongue, and all are revving up the same line again — to sell refrigerators and stoves and SUVs and five-bedroom stuccoed chicken-wire McMansions crammed in a wheat field. What you need is a new kitchen. Forget the price: zero interest: forty years to pay. It’s never-too-late-to-spend Bernanke all over again. Don’t worry about your house. Serve your country. See what you can get out of your home and buy yourself a big chunk of KB Homes.But, old Joe, he don’t seem to be listening.

a,what happened to marie?.Marie AntoinetteFrom Wikiquote.http://en.wikiquote.org/wiki/Marie_Antoinette.“It is quite certain that in seeing the people who treat us so well despite their own misfortune, we are more obliged than ever to work hard for their happiness.Marie Antoinette (1755-11-02 – 1793-10-16) was Queen of France and Archduchess of Austria. She was the daughter of the Holy Roman Emperor Francis I and his wife Maria Theresa of Austria, the wife of Louis XVI, and the mother of Louis XVII. She was guillotined at the height of the French Revolution, and is interred with her husband in the the Cathedral of Saint Denis near Paris, with most of the royalty of France. She was born Archduchess Maria Antonia Josepha Johanna of the Habsburg dynasty..It is quite certain that in seeing the people who treat us so well despite their own misfortune, we are more obliged than ever to work hard for their happiness. The king seems to understand this truth; as for myself, I know that in my whole life (even if I live for a hundred years) I shall never forget the day of the coronation.After learning of the bread shortages that were occurring in Paris at the time of Louis XVI’s coronation in Rheims, tradition persists that Marie Antoinette joked “If they have no bread, then let them eat cake!” — or simply Qu’ils mangent de la brioche — “Let them eat cake.” However this phrase occurs in a passage of Jean-Jacques Rousseau’s Confessions written in 1766, when Marie Antoinette was 10 years old, and still 4 years away from her marriage to Louis XVI of France. It occurs in an account of events that happened before she was born and implies the phrase had been long known before that time. Rousseau mentions that in 1740: I recollected the thoughtless saying of a great princess, who, on being informed that the country people had no bread, replied, “Then let them eat pastry!” He makes no identification of this princess, whom some believe may have been an earlier French queen, Maria Theresa of Spain. Further information on this matter can be found at The Straight Dope, “On Language” by William Safire at The New York Times, and in the discussions at Google groups.I put on my rouge and wash my hands in front of the whole world!Expressing her irritation at her very public life as royalty. She gave birth to her first child in her bedchamber before an audience of hundreds of courtiers.”

Oh my goodness these layoffs are proving to be brutal. We were discussing this today in the office. In addition to the effects of retail collapse following Christmas, my office mate was postulating that many held back this kind of bad news because they did not want to ruin their employees holidays.While I hope he is wrong, my head and my gut both tell me he is right. He usually is.Then my son calls and says his job is drying up also, and one of his employers went out of business, leaving his last week’s salary unpaid.I think the optimism may not even last until Inauguration Day. I think Obama should demand a recount.

k,specifically wtc 7.free fall collapse. you have a rational mind, science background.how do steel and concrete columns do this without being sheered and displaced?what mechanism accomplishes this? no plane, no explosion.

I have read quite a bit about the CDS market and have been alarmed that creating a clearing house such as the ICE Trust (an extension of the Fed system) absorbs all the risk but are funded somewhat by the participants and of course, backstopped by the Fed, and of course, the taxpayers. Guess who’s going to determine participants’ creditworthiness? The same 3 ratings agencies that got us into this mess in the first place: S&P, Moody’s, and Fitch. The Fed will not allow ratings be accepted from any other ratings agency, which is unfortunate as we know the ratings agencies are partly responsible for the mess we are in.The CDS market is probably going to shrink substantially over time as these contracts mature and fewer are written due to the systemic nature these contracts pose.A looming question I have is: There are many other flavors of derivatives, and the flavor that concerns me the most are currency swaps. Seeing how the currency markets are fluctuating wildly, what are the risks of a major dollar devaluation? Other than the obvious counterparty credit risks, could we be facing another financial crisis? Anyone?

k,and the lease holder, l.s., stated publicly that the building was”pulled”, meaning intentionally demolished. but how and by who? these questions were never answered as the answers would be horrifying, so we can all come to our own conclusions?this is just the beginning of the bush doctrine. now i puke as does Israel on Gaza. america does on iraq. etc. etc. etc..the truth of institutional man usually sucks. the absolute truth however is beautiful..and i remain blind. man. see you in the next world.

v,damn right. recount that shiaazzle and let palin have this shiaazzzle.

Devaluation of the United States currency would depend upon superior valuation of foreign currencies respective of each’s independent economy in relation to ours. Since decoupling of world markets has been dismissed and irrespective of trade imbalances with those currencies, liquidity thresholds can and should be lowered to enable debt to be purchased at bargain prices with little inflationary influence to the broader domestic economy and only for the very short term.

A MUST READ. Thank you, thank you for the link.

Finally, someone makes sense.

Actually, I’m checking the blog and should be contributing again soon. I was away on a brief vacation over the holidays, but did not go too far with my family (like everyone else, we’re trying to be frugal and pay off debts).PeteCA

g,well, i guess you done said it. took a stab and hit the liver. too bad no one else gets it. we will have to live with art. but art is great.no wonder w.w. is on the 100,000.00 bill.i fluctuate from moments of aphasia to those of mania. you seem to keep this in check, what is the secret?.http://www.answers.com/topic/aphasia..Medical Encyclopedia: AphasiaSponsored LinksApraxia InformationResources & Treatment Info. Learn About a Nutritional Solution.www.SpeechTrial.com/ApraxiaAphasia Therapy SoftwareCommunication, Memory, Attention Speech & Cognitive Rehabilitationwww.ParrotSoftware.comHome > Library > Health > Medical EncyclopediaAlso from Answers.com…Bladder ProblemsFind out the different types, and ways to overcome this common problem.More about Aphasia:Causes and symptomsDiagnosisTreatmentPrognosisPreventionResourcesDefinitionAphasia is condition characterized by either partial or total loss of the ability to communicate verbally or using written words. A person with aphasia may have difficulty speaking, reading, writing, recognizing the names of objects, or understanding what other people have said. Aphasia is caused by a brain injury, as may occur during a traumatic accident or when the brain is deprived of oxygen during a stroke. It may also be caused by a brain tumor, a disease such as Alzheimer’s, or an infection, like encephalitis. Aphasia may be temporary or permanent. Aphasia does not include speech impediments caused by loss of muscle control.DescriptionTo understand and use language effectively, an individual draws upon word memory—stored information on what certain words mean, how to put them together, and how and when to use them properly. For a majority of people, these and other language functions are located in the left side (hemisphere) of the brain. Damage to this side of the brain is most commonly linked to the development of aphasia. Interestingly, however, left-handed people appear to have language areas in both the left and right hemispheres of the brain and, as a result, may develop aphasia from damage to either side of the brain.Stroke is the most common cause of aphasia in the United States. Approximately 500,000 individuals suffer strokes each year, and 20% of these individuals develop some type of aphasia. Other causes of brain damage include head injuries, brain tumors, and infection. About half of the people who show signs of aphasia have what is called temporary or transient aphasia and recover completely within a few days. An estimated one million Americans suffer from some form of permanent aphasia. As yet, no connection between aphasia and age, gender, or race has been found.Aphasia is sometimes confused with other conditions that affect speech, such as dysarthria and apraxia. These condition affect the muscles used in speaking rather than language function itself. Dysarthria is a speech disturbance caused by lack of control over the muscles used in speaking, perhaps due to nerve damage. Speech apraxia is a speech disturbance in which language comprehension and muscle control are retained, but the memory of how to use the muscles to form words is not.— Julia Barrett..to combat this i try to stand on my head. it seems to help. up down inversion. it turns out that breathing is the thing.

My view is that inflation should not be a problem because the US could be in a Fisher debt-deflation and a keynesian liquidity trap. I’ve read in a book “The Credit Crunch” by Graham Turner, whereby he has stated that Japan did try this solution before and it did not work out for them. Unfortunately, I’m no economist so I do not know it’s validity.

v,i feel bad for the rich / poor bastard. really.he should have known it is all just paper and ego.life is richer than all that crap.

All this speculation came about because the report initially issued by FEMA opined that “The specifics of the fires in WTC 7 and how they caused the building to collapse remain unknown at this time,” and because WTC 7 was home to a secret service field office, an SEC records storage facility, and various corporate offices. As soon as all that came out, so did the second-guessing conspiracy nuts.Following FEMA’s initial report, the National Institute of Standards and Technology, at FEMA’s request, launched an investigation into the collapse. In its investigation, the Institute has has been assisted by no less than six independent outside professional organizations, including the Structural Engineering Institute of the American Society of Civil Engineers, the Society of Fire Protection Engineers, the National Fire Protection Association, the American Institute of Steel Construction, the Council on Tall Buildings and Urban Habitat, and the Structural Engineers Association of New York. The lead investigator was S. Shyam Sunder, who holds a Ph.D. from MIT in structural engineering and serves as the Deputy Director of the Building and Fire Research Laboratory at the Institute.In their final report, the investigating engineers concluded that fire caused by debris from the twin towers — not internal explosions — started an uncontrolled conflagration in WTC 7 that damaged a critical column somewhere around the 13th floor of the building on its east side, resulting in the collapse or buckling or severing (read, “DISPLACEMENT”) of adjacent columns and then the floor structure above them and leading to progressive vertical collapse up to the penthouse level. An unsustainable redistribution of the load carried by the interior structure ultimately caused the collapse of the entire building. I don’t know what you’re talking about when you ask how steel and concrete columns could enter into a free fall without being sheared or displaced.What mechanism led to the building’s collapse? According to the executive summary of the final report, “[f]actors contributing to WTC 7’s collapse included: the thermal expansion of building elements such as floor beams and girders, which occurred at temperatures hundreds of degrees below those typically considered in current practice for fire-resistance ratings; significant magnification of thermal expansion effects due to the long-span floors in the building; connections between structural elements that were designed to resist the vertical forces of gravity, not the thermally induced horizontal or lateral loads; and an overall structural system not designed to prevent fire-induced progressive collapse.”As to doubts about how uncontrolled fires in WTC 7 could have resulted in a symmetrical collapse, the executive summary explains that “WTC 7’s collapse, viewed from the exterior (most videos were taken from the north), did appear to fall almost uniformly as a single unit. This occurred because the interior failures that took place did not cause the exterior framing to fail until the final stages of the building collapse. The interior floor framing and columns collapsed downward and pulled away from the exterior frame. There were clues that internal damage was taking place, prior to the downward movement of the exterior frame, such as when the east penthouse fell downward into the building and windows broke out on the north face at the ends of the building core. The symmetric appearance of the downward fall of the WTC 7 was primarily due to the greater stiffness and strength of its exterior frame relative to the interior framing.”The executive summary further addresses a certain video, in which it appears that WTC 7 is descending in free fall, which critics claim is “something that would not occur in the structural collapse” described in its report because it would “ignore basic laws of physics.” The executive summary noted, “In the draft WTC 7 report (released Aug. 21, 2008…), NIST stated that the north face of the building descended 18 stories (the portion of the collapse visible in the video) in 5.4 seconds, based on video analysis of the building collapse. This time period is 40 percent longer than the 3.9 seconds this process would have taken if the north face of the building had descended solely under free fall conditions. During the public comment period on the draft report, NIST was asked to confirm this time difference and define the reasons for it in greater detail.”None of the independent professional organizations participating in the investigation uncovered any evidence of explosions or other sabotage that would have led to the fires and the collapse of the building. The executive summary of the report noted that “For the building to have been prepared for intentional demolition, walls and/or column enclosures and fireproofing would have to be removed and replaced without being detected. Preparing a column includes steps such as cutting sections with torches, which produces noxious and odorous fumes. Intentional demolition usually requires applying explosive charges to most, if not all, interior columns, not just one or a limited set of columns in a building.” Moreover, the sound levels of sounds like “thunder” and so forth reported by the witnesses did not match the sound level of an explosion that would have been required to cause the collapse of the building. The executive summary pointed out that “[i]f the two loud booms [reportedly heard by an emergency responder] were due to explosions that were responsible for the collapse of WTC 7, the emergency responder—located somewhere between the 6th and 8th floors in WTC 7—would not have been able to survive the near immediate collapse and provide this witness account.In short, mainstream engineers have rejected the views of the so-called AE9/11 Truth crowd about what “really” caused the demise of WTC 7. A simple explanation based on real facts will defeat a complex explanation based on conspiratorial speculation any day.SWK

k,does any of that make any sense to you? as groucho said….” who ya’ gonna believe, me or you’re own eyes?”

Thanks for the laughter. I really enjoyed that!! (I’m rubbing the tears off my cheeks.) Sorry, I’m still laughing…

No sense at all. And it’s driving me crazy.I feel like I’m living in a parallel universe.And it’s like deja vu–like I’ve seen a similar storyplayed out as an episode of The Twilight Zone.Somebody needs to wake up here, me or them, and my biggest fear is that it’s not me.

I love Bill Bonner’s post today in Daily Reckoning.http://www.dailyreckoning.com/The level of stupidity in the world is quite astonishing.

Breaking news in India.http://news.in.msn.com/business/article.aspx?cp-documentid=1773410&wa=wsignin1.0The ramifications of this is far-reaching. Satyam was one of the most followed companies in India with offices spanning the globe, and listed in NY. And audited by one of the big 4. It reminds me of Enron and Worldcom. In a stressed environment, more cases will start to surface, as fraud hidden by bull markets is revealed in the current stressed global economy. There will be more to come.

HEY MASHIACH,BACK IN OCTOBER 16TH, 2008, YOU WROTE:

HELLO GUYSI WAS THE FIRST ONE TO BREAK THE STORY OF PRESIDENT OBAMA GOING TO WAR WITH IRAN AROUND FEB OR MARCH 2009 FOUR WEEKS AGO.HERE COMES DEBKA. AND CONFIRMING MY PREDICTION….

Above comment can be found at:http://www.rgemonitor.com/roubini-monitor/254055/interviews_with_charlie_rose_and_cnbc_severe_recession_and_financial_crisis#123671HOW COME YOU ARE NOW SAYING IT WILL HAPPEN AROUND END OF MARCH OR APRIL 2009? FEELING A BIT UNSURE ABOUT YOUR OWN PROPHECIES?

How does it cost money to trade on ebay?Time maybe.

What do most of us know about animal husbandry, crop rotations, insect pests and how to control them without pesticides. How many people can help birth a cow, pig or sheep, train a horse for harness or an ox for the yoke. Better make this system work because back to the land isn’t an option for most people. My great-grandfather made horseshoes and everything else he needed; my grandfather bought the shoes and fitted them on the forge; my father called a farrier; I drove a tractor. Working on a farm in the old days was 7-days a week 16hrs/day hard labour – I grew up on one and couldn’t wait to get out. I could go back I suppose. I’ve got 30 acres, a barn and a dug well and I grow most of my vegetables for a hobby. It would be a hard life, it has it rewards but I’d rather be drinking rum on the beach in Cuba in February than cutting wood at -20 degrees Celsius.

groupthinkthe article could have been called”Why do humans as a group, miss the warning signs of just about everything”?

prepare for more ‘Bush is good’ news between now and the 20th…‘Contrary’ to Media’s View, Bush Says Environmental Record Stronghttp://www.cnsnews.com/public/content/article.aspx?RsrcID=41568

can someone explain why this is supposedly such a big problem:Banks trying to cope with rise in bad loanshttp://www.chicagotribune.com/business/chi-tue-banks-loans-jan06,0,1470732.story

2.31% of loans nationwide non-current, highest level since 1993

I mean, 2.31% looks like a very small amount. It would mean that more than 95% of the loans are current. Don’t the banks earn enough money from their busines to be able to cope with 2-3% of bad loans??

Lota people in the economy. Some are still buying that stuff and RR, Ferraris, etc. But the volume is down quite a bit. The volume of non-essentials can never be zero.

A great one from Mauldin. I fully agree with his S&P500 valuation exercise and his take on the current rally.http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/01/02/2008-annus-horribilis-rip.aspx

A great one from Mauldin. I fully agree with his S&P500 valuation exercise and his take on the current rally.http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/01/02/2008-annus-horribilis-rip.aspx

You mean – send your children/grand-children the bill

From the article:”While I am negative on the stock market (and markets around the world) in general, there are some stocks which are now at reasonable values. When you can find a stock with a P/E ratio lower than its dividend, and with that dividend reasonably well protected, I can’t argue with a long-term investor buying that stock. 6% dividends can cover a lot of market sins at these levels. (Don’t ask for stock recommendations: I don’t analyze stocks. My business is analyzing the economy and money managers. A man has to know his limitations.)”.I don’t know anything about stock analysis. Can anyone reply with an example, so I know where to start looking at the stocks’ parameters? Thanks

My view is … I’m no economist so I do not know it’s validity.

A great one from Mauldin. I fully agree with his S&P500 valuation exercise and his take on the current rally.http://www.investorsinsight.com/blogs/thoughts_from_the_frontline/archive/2009/01/02/2008-annus-horribilis-rip.aspx

Thanks very much for saying that, Lord Sidcup. I hate calls for less free speech and more “only let the wealthy voices be heard”. It’s as counter-American-ideals as it gets, even though it has sadly and wrongly become institutionalized at the top.Dr. Roubini opened this site up to all because it was the right thing to do for people who need information in a terrible time that affects us all, rich and poor. To even request exclusivity by economic class at this time, imo, insults our Host.

Indian Stocks Plunge Most in Two Months on Satyam Scandalhttp://www.bloomberg.com/apps/news?pid=20601091&sid=acP9ZjZHXOKY&refer=india

Ebay charges a percent fee on anything sold. Usually this fee gets passed onto the customer as the handling fee. You also need a paid business account to accept payments via Paypal (also owned by Ebay.)

Oh Boy! am I glad I sold my SPY Feb calls yesterday. Noe my puts will start to work! As I said, selling TBT was too soon. 30 yr T down again despite job numbers. Shilling got me too gloomy:-)Private sector cut 693,000 jobs in DecemberWednesday January 7, 2009, 9:08 am ESThttp://finance.yahoo.com/news/Private-sector-cut-693000-rb-13989928.htmlhttp://finance.yahoo.com/indices?e=futures

From Sam Pizzigati’s excellent and priceless TooMuchOnline dot orgTwo veteran activists, Chuck Collins and Nick Thorkelson, have now delivered just what we need, the Economic Meltdown Funnies, a witty and welcome economic guidebook in comic book format.But don’t let that comic book format fool you. Even sophisticates on matters economic will walk away from these imaginatively packed pages with a new take or two. Collins and Thorkelson haven’t dumbed down our economic predicament. They’ve explained it.EconomicMeltdownFunniesdotorg(psst psst, jomos – take this baby viral!)

g,a holographic mutant twin, no more no less.i’m sure of it.

Gee, check the headlines (bloomberg, CR, WSJ) it looks like the situation is really accelerating on its way down!And how do you spell scumbag? What the f%^* is this guy doing out of jail?http://online.wsj.com/article/SB123134632617361151.html?mod=testModJANUARY 7, 2009, 7:23 P.M. ET Madoff Is a ‘Danger,’ Argue ProsecutorsGovernment Asks for Prison as Details Emerge of Jewelry Gifts to Family.Prosecutors argued that money manager Bernard Madoff poses a “danger to the community” and should go to jail pending his trial, after he mailed valuables including diamond watches to friends and family, according to a written court motion made public Wednesday.The mailings in late December may have violated the terms of a court order freezing his assets, said prosecutors from the U.S. attorney’s office in Manhattan. The judge, however, took a more-measured view.The prosecutors alleged Mr. Madoff, who was arrested after he allegedly confessed to running a “giant Ponzi scheme,” sent a package containing some 13 watches, one diamond necklace, an emerald ring, and two sets of cuff links to relatives.The government said it was informed that the value of those items exceeded $1 million.Two more packages containing a diamond bracelet, a gold watch, a diamond Cartier watch, a diamond Tiffany watch, four diamond brooches, a jade necklace, and other jewelry also were sent to relatives, prosecutors said.Mr. Madoff, founder of Bernard L. Madoff Investment Securities LLC, consented to a preliminary injunction and asset freeze Dec. 18 in a civil-fraud case brought by the Securities and Exchange Commission.Meanwhile, prosecutors have until Monday to convince a federal grand jury to indict Mr. Madoff, unless he or the court agrees to give prosecutors more time. Prosecutors are continuing their investigation into whether other individuals participated in the alleged fraud….

Of course, my favorite quote from Groucho is, “I’d never want to belong to any club that would have me as a member!” I’m satisfied with the Institute’s findings on WTC 7. There are too many real conspiracies out there to fabricate more for ourselves…SWK

Everyone DID become insolvent overnight. A personal balance sheet that last year had had a $600k house with a conforming $400k mortgage, net $200k, a $500k IRA and car loans of $30k, has seen the net $670k go to net $400k or so – with return on low risk bonds near zero, try retiring on that. Obviously, as measured by foreclosures, “many” people are having worse problems. People are rebuilding their balance sheets through debt reduction. I’m 51, and learned the lesson 30 years ago that paying off loans had much future value. Our “got to have it now” generation is being supplanted by a “got to pay for it now” generation.

By the way, if you’re to the lookout for some new gps watches, check out out my blog for much more info

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