Roubini Says Recession May Continue Until End of 2010 – India Today and Bloomberg
3/6/2009: India Today – ‘Recession to last till 2010-end’: part 1 (click for video)
3/6/2009: India Today – ‘Recession to last till 2010-end’: part 2 (click for video)
3/6/2009: India Today – ‘Recession to last till 2010-end’: part 3 (click for video)
3/6/2009: India Today – ‘Recession to last till 2010-end’: part 4 (click for video)
From India Today:
Recession to last till 2010-end: Roubini
Be it living rooms or public transport, the one question that’s on top of everyone’s mind is the magnitude of the economic crisis and how long it will last. Some of these queries were answered on Friday by Nouriel Roubini, a leading economic forecaster and Prof. of Economics at NYU’s Stern School of Business, at the India Today Conclave 2009.
Roubini, who had predicted the collapse of the US housing market and global recession three years ago, believes that all’s still not well with the world economy even though the US has been in recession since the end of 2007. But unlike most other recessions, this one will be a protracted one, which is slated to last for a good 36 months.
With the world’s largest financial institutions having collapsed last year, the world’s financial system has suffered a cardiac arrest and the global economy is in a semi-comatose state. Despite billions of dollars being spent via stimulus and economic packages, the health of financial institutions is not getting better because US economic losses have touched almost $3.6 trillion, he said.
According to him, while the good news is that the International Monetary Fund is committed to not letting other large financial institutions go the Lehman Brothers way, the bad news is that the credit losses are so huge that it will be rather difficult for any upswing to result in a credible turnaround anytime soon. At present, $1.43 trillion will be required to recapitalise the ailing banking sector of the US, he said.
And if the policy responses are not coordinated and cohesive, the recession could well be L-shaped in nature and the pain could be protracted. The slowdown in emerging economies like China, Korea and India has conclusively proved that the decoupling theory is humbug. The world today is connected by trade, capital and financial channels. This is evident from the slowdown of both the capital and trade flows in these emerging economies. No wonder, their growth has declined from 7 per cent to 3 per cent; these countries have hard-landed already.
Roubini said if retail consumption is falling then corporates are saving cash and thereby curtailing capital expenditure and production. Consequently, job losses are mounting and people are not spending in fear. This has resulted in a vicious cycle and to end this, a collective response from the governments is required.
And if this was not bad enough, Roubini said that even if there is a recovery 12-18 months down the line, it will be warped by the supply side shocks. Commodity producers like oil producing countries have already cut down production. So expect oil prices to touch $100 as soon as the world economy begins to turn around. The only thing that can save the day is prudent and timely action by governments.
From Bloomberg:Roubini Says Recession May Continue Until End of 2010
The global recession may continue until the end of 2010 as the response by governments to rectify it is “too little, too late,” said Nouriel Roubini, the New York University professor who predicted the financial crisis.
“Governments are falling behind the curve,” Roubini said at the India Today Conclave in New Delhi today. “This recession can end up becoming even worse.”
The situation can be improved by appropriate policies, including governments taking over insolvent banks, cleaning them up and re-selling them to private investors, he said. The Group of Seven and the Group of Twenty economies “must act together to get out of this mess,” Roubini said.
Roubini said the global economy may shrink 1 percent or grow 0.5 percent in 2009, before recovering to about a 1 percent growth in 2010, effectively extending the recession until the end of next year.
Emerging market economies, including China and India, will slow down sharply, he said, adding that “we are already seeing the beginnings of a hard landing.”
China’s economy may grow 5 percent “at best” in 2009 after expanding at an average 10 percent pace each year in the past decade, Roubini said, rejecting the theory that emerging markets are decoupled from the problems in industrialized countries.
“It’s becoming a vicious cycle between demand, supply and the financial system,” said Roubini, who served as an adviser to the U.S. treasury department from 2000 to 2001.
Consumers and companies are cutting spending to survive in the current recession, “making the contraction even more severe.” Even if there are banks with sound assets, they wouldn’t lend in an economic decline, he said.
“If you don’t take the right policy action, this U-shaped recession will turn into an L-shaped recession like in Japan in the 1990s,” the professor said.
164 Responses to “Roubini Says Recession May Continue Until End of 2010 – India Today and Bloomberg”
U.S. to invite wealthy to invest in bailout: reportFri Mar 6, 2009 2:23am ESTWASHINGTON (Reuters) – The U.S. government plans to invite wealthy investors to invest in the bailout of the crippled financial system, The Washington Post reported on Friday.The investors would be invited to buy up recently issued, highly rated securities that finance consumer lending — without the risk of massive losses, the report said.The idea is to entice the investors to put their huge cash piles to work to stimulate the financial system, the Post said.The program, which could involve the government lending nearly $1 trillion to these investors, exceeds the size of every other federal effort to address the financial crisis so far, the newspaper said.The initiative adopts an approach that could be the model for future federal efforts to aid the credit markets, sources familiar with government planning were quoted as saying.(Editing by Bill Trott)© Thomson Reuters 2008.
… and how exactly would this f**kery occur “without the risk of massive losses”???
One thing that’s interesting is that we’re starting to see larger volatility fluctuations in interest rates on US debt. Take a look at $TNX (stockcharts.com) when plotted over a 3-year timeframe. There is a trend towards more noticeable large swings. People don’t normally think much about volatility as it affects interest rates – but it could make the pricing of interest rate swaps more difficult. Worst case … it could destabilize interest rate swaps.PeteCA
first try to take their wealth away, then ask them to invest their good money to invest in their bad assets for the good of the country…
Guest wrote early this morning (previous thread):And, so, it begins, America’s death walk into the economic dark ages of hunger, envy and death. Obama has lifted the hammer of communism and smashed the American dream of economic liberty and property rights — taking the property of some to give to others who did not earn it.Unfortunately, Professor Roubini, who has established an important name for himself in estimating this financial crisis, lends his good name and support to many of the socialistic solutions proposed by the Obama Administration.Professor Roubini says the government must evaluate and sort out the banks that are illiquid and undercapitalized and shut them down. I agree.And I agree with his argument that the government needs aggressive credit creation that forces the solvent banks to lend.But without the prioritization of battlefield triage that Roubini advocates for this “war economy,” his military call for command and control doesn’t fit what the Obama Administration and the Democrat Congress are doing. No military commander would ever plan an operation without first having the resources to carry it out. And that’s exactly what Obama and his Democrats are doing. They are operating on trial and error, without the backing of resources, destroying the currency and the voluntary support of the American people. It is a battle recipe for disaster.Yet, Professor Roubini gives the members of the Obama Administration “credit” – for the $800 billion stimulus package, for a mortgage program that is much more than the previous Administration did, and for a bank plan that, however flawed, at least has the benefit of not having another bailout of the banks.And today, Obama launched a part of that $275 billion housing stimulus program — his $75 billion foreclosure relief plan. And it is a textbook case of Socialism — an incentive killer. It offers cash incentives to loan servicers to cut monthly payments – for some. It pushes interest rates as low as 2 percent – for some. And it modifies mortgages on single-unit homes up to $729,750, with higher limits for multiple-unit owner-occupied properties — for some.Unjust, without order, disharmonious, unstable, illogical: “From each according to his ability, to each according to his needs,” the Marx lie._______________and here it is, the “mortgage program” — on America’s road to Serfdom and totalitarianism ~Mortgage ‘Cram-Down’ Bankruptcy Bill May Aid 1 Million in U.S.March 6 (Bloomberg) — At least 1 million Americans would be able to use bankruptcy to reduce mortgage payments under legislation approved by the House yesterday, part of Democratic efforts to stem a crisis that has erased more than $2.4 trillion in home values.The so-called cram-down bill would allow federal judges to lengthen terms, cut interest rates and reduce mortgage balances of bankrupt homeowners… The measure, which passed the House 234-191, now goes to the Senate…House Republican Leader John Boehner of Ohio said the cram- down legislation was “disingenuously” titled the “Helping Families Save their Homes Act.”“The measure forces those who have acted responsibly to subsidize scam artists, speculators and those who knowingly made bad decisions,” Boehner said in an e-mailed statement…http://www.bloomberg.com/apps/news?pid=20601087&sid=akFgFGFBhDp0&refer=home
Wondering if others saw this following ‘forecast’. It was posted here the other day (but I don’t remember who did, sorry).On this page http://www.leap2020.eu/English_r25.htmlYou’ll find this article listed firsthttp://www.leap2020.eu/GEAB-N-32-is-available!-4th-quarter-2009-Beginning-of-Phase-5-of-the-global-systemic-crisis-phase-of-global-geopolitical_a2805.html?PHPSESSID=de4d1267ef87b33e713d2cf0052713a3and this one listed secondhttp://www.leap2020.eu/End-of-2008-The-world-enters-the-decanting-phase-of-the-global-systemic-crisis-Anticipations-over-2008-2013-for-six_a2756.htmlHere are some snips:Back in February 2006, LEAP/E2020 estimated that the global systemic crisis would unfold in 4 main structural phases: trigger, acceleration, impact and decanting phases. This process enabled us to properly anticipate events until now. However our team has now come to the conclusion that, due to the global leaders’ incapacity to fully realise the scope of the ongoing crisis (made obvious by their determination to cure the consequences rather than the causes of this crisis), the global systemic crisis will enter a fifth phase in the fourth quarter of 2009, a phase of global geopolitical dislocation.According to LEAP/E2020, this new stage of the crisis will be shaped by two major processes happening in two parallel sequences:A. Two major processes:1. Disappearance of the financial base (Dollar & Debt) all over the world2. Fragmentation of the interests of the global system’s big players and blocksB. Two parallel sequences:1. Quick disintegration of the current international system altogether2. Strategic dislocation of big global players.We had hoped that the decanting phase would give the world’s leaders the opportunity to draw the proper conclusions from the collapse of the global system prevailing since WWII. Alas, at this stage, it is no longer possible to be optimistic in this regard (1). In the United States, as in Europe, China and Japan, leaders persist in reacting as if the global system has only fallen victim to some temporary breakdown, merely requiring loads of fuel (liquidities) and other ingredients (rate drops, repurchase of toxic assets, bailouts of semi-bankrupt industries,…) to reboot it. In fact (and this is what LEAP/E2020 means ever since February 2006 using the expression « global systemic crisis”), the global system is simply out of order; a new one needs to be built instead of striving to save what can no longer be saved.History is not known to be patient, therefore the fifth phase of the crisis will ignite this required process of reconstruction, but in a harsh manner: by means of a complete dislocation of the present system, with particularly tragic consequences in the case of several big global players, as described in this 32nd issue of the GEAB (see the two parallel sequences).According to LEAP/E2020, there is only one very small launch window left to prevent this scenario from shaping up: the next four months, before summer 2009. Practically speaking, the April 2009 G20 Summit is probably the last chance to put on the right tracks the forces at play, i.e. before the sequence of UK and then US defaults begin (2). Failing which, they will lose their capacity to control events (3), including those in their own countries for many of them; and the world will enter this phase of geopolitical dislocation like a “drunken boat”. At the end of this phase of geopolitical dislocation, the world will look more like Europe in 1913 rather than our world in 2007.Because they persisted in bearing the ever-increasing weight of the ongoing crisis, most states, including the most powerful ones, failed to realise that they were planning their own trampling under the weight of History, forgetting that they were merely man-made organisations, only surviving because they matched the interest of a large majority. In this 32nd edition of the GEAB, LEAP/E2020 has chosen to anticipate the fallout of this phase of geopolitical dislocation so far as it affects the United-States, EU, China and Russia.It is high time for the general population and socio-political players to get ready to face very hard times during which whole segments of our societies will be modified (4), temporarily disappear or even permanently vanish. For instance, the breakdown of the global monetary system we anticipated for summer 2009 will indeed entail the collapse of the US dollar (and all USD-denominated assets), but it will also induce, out of psychological contagion, a general loss of confidence in paper money altogether (these consequences give rise to a number of recommendations in this issue of the GEAB).Last but not least, our team now estimates that the most monolithic, the most « imperialistic » political entities (5) will suffer the most from this fifth phase of the crisis. Some states will indeed experience a strategic dislocation undermining their territorial integrity and their influence worldwide. As a consequence, other states will suddenly lose their protected situations and be thrust into regional chaos.From the second article – and you should go see the charts there:The global financial crisis, which went through a major tipping point in September 2008 as anticipated by LEAP/E2020 last February (1), is only the detonator of the global systemic crisis. The financial and monetary chaos of the past months were only the triggers of a series of economic, social and political crises that will from now on give the pace to the last phase of this global systemic crisis. The most severe consequences – in human, social, economic and political terms – are still ahead of us, not behind. In this October edition of the GEAB (N°28), we therefore chose to establish the anticipatory schedule of the so-called « decanting phase », i.e. a phase along which the outcome of the crisis begins reshaping the global system (2). Our studies thus enabled us to make anticipations for the 2008-2013 period and for 6 groups of countries differently impacted by the 4 specific sequences of this phase: financial crisis, economic crisis, social crisis and political crisis.Indeed, if the first three phases of the crisis were common to the whole planet because they affected the same global system inherited from 1945 and 1989, the fourth phase takes place very differently according to the country and to the specific impact of the crisis for each country. The shock was common, but the trajectories will be different from now on. In fact they constitute the process of reorganisation of the global system and prefigure the new equilibriums that will appear in the coming decade.
I agree with the following responses to the above drivel that were also posted on earlier thread:There is a concerted effort among the rethuglican die-hards to post that kind of drivel on influential discussion boards and blogs, including this one. It is part of their effort to damage Obama (and by extension the citizens of this country) so they can get their power back. They destroyed this country’s economy and greatly harmed the people of this country. What they ought to do is walk away with their heads hung in shame. But they are shameless.Hide reply Reply to this comment By Guest on 2009-03-06 07:32:44There certainly is a concerted rethuglicants effort – that’s why i counter their inanity when i have time.You’d think a rock as big as the one they’ve
I just posted this on the last thread in response to a discussion I was having with Miss America.
So what you think they, meaning everyone at the top of the ladder, still believes in Reagan’s Trickle Down Theory? Including Obama and his entire team.That would explain their actions so far.To me that theory never made any sense but it has been the guiding principal of our tax and economic policies for 30 years. I have read some recent essays and articles still touting it. Reagan’s theory about less, OR IMO more sensible regulations had some merit at that time but his Trickle Down Theory was the total opposite of Henry Ford’s theory of paying people enough so that they could be a driving factor in demand. Of course in his case, it was to build up the demand for Ford automobiles. I have always thought the theory made a lot of sense and seemed to actually work out until unions got to powerful. Not that unions are not beneficial, they are just like everyone, to much power and power corrupts. They have kept a lot of innovation from occurring and kept people in jobs that should have been automated. And between regulations and unions are an underlying force in off shoring our manufacturing sector. Of course regulations wouldn’t have been such a factor if real fair trade agreements would have been written and signed but that was just more of the Trickle Down Theory where those at the top got most and then they could, as Masters, decide who got to work.Some on this blog have discussed the income distribution in our system and that is basically the issue I am at. I sure don’t know what would work better than what we have but I do know that what we have has come to the end of its road of usefulness and change is being forced down our throats.I could suggest some tax policy changes and some attitude changes but until Reagan’s Trickle Down Theory has been finally rejected, it would be of little use and NO one in power is listening. Just like they didn’t listen to many of us that have been pointing out for maybe 10 years the consequences of the failures of Reagan’s Trickle Down Theory. And the consequences of to much debt and especially in using housing as a debt vehicle and an ATM. Those in power wanted desperately to keep their gig going and conning the public deeper and deeper into debt with the illusion of gain was very effective, although very short sighted.Greed destroyed our system because those at the top could never have enough and yet had so much more than they could put to productive use that speculation became the game. Speculation is no way to run an 14 trillion dollar economy. And it has come to this. What we are witnessing. A meltdown and probably of epoch proportions.I have said this before. It isn’t what is going on today that is important but how we deal with it. And I have to tell everyone that so far I am not impressed.
As if they haven’t tried already and been burned by the FIRE. Just ask the Buffets and Grosses of the world.
One basic question:Are stock markets a zero-sum game or not ?
What is your solution, Guest?
Ask Investors that got in in the past decade and held on until now.
For me, it is more like a sucking up practice promoted under the name of trickle down theory.Statistics of the evolution of wealth distribution are clear enough.Backed by enough money power, any lie can be sold to to the public. Honesty is the last priority, result the first.
Dow could break under 6500 today. That would put it below the current trading channel .. possibly heralding a stronger downward move. This is consistent with the arguments I have made this week that it looks like we’re headed towards a new period of strong deleveraging.Thanks to the folks at Contrary Investor for pointing out the short-term trading channel for the Dow. It’s a short-term trend, but about all that investors have got right now. It’s all “thin air” below the Dow from here.PeteCA
Ha Ha Ha !!! Good luck. The wealthy ones cashed out long ago, put it into hard assets, and stored it overseas. They knew what was coming.PeteCA
where oh where will it be safe overseas though? this is a genuine question.
g,i just can’t wrap my mind around this onewithout repeatedly running into the wordfascism.?ps. f..ery, lovely turn. never heard that before. well done.!
you clearly cannot blame our current financial crisis solely on the Bush Administration. The Clinton administration absolutely had a play into this current catastrophe.
Morning Skim: Like 1929 (but Worse),Obama as Dow Killer,a Shot at GeithnerBy Eric EtheridgeClusterstock: Henry Blodget links to this chart and notes that “We just hit another milestone. The market has now fallen farther faster than it did during the Great Crash of 1929-1932.”Wall Street Journal: Michael Boskin says “Obama’s radicalism is killing the Dow”:It’s hard not to see the continued sell-off on Wall Street and the growing fear on Main Street as a product, at least in part, of the realization that our new president’s policies are designed to radically re-engineer the market-based U.S. economy, not just mitigate the recession and financial crisis.Naked Capitalism: in a post about Treasury staff appointments titled “Banana Republic Watch,” Yves Smith includes this comment from a reader:We should operate from the assumption that [Treasury Secretary Tim] Geithner will always surround himself with the most awful Wall Street cronies imaginable. He’s totally captive to that ideology. This Administration is going to make Warren Harding’s Administration seem like a convention of nuns by comparison.Los Angeles Times: Joe Queenan says he’s tired of Wall Street analysts telling him that “stock prices are showing up as attractive against other assets,” as a Citigroup strategist said in late February; since then the market dropped another 700 points.In other words, the top analyst for a bank that has effectively imploded is telling investors to buy stock in the equity market that Citigroup helped to destroy. This is a little bit like the chief petty officer on the Titanic offering up survival tips: Whatever you do, don’t abandon ship; it’s cold out there in the North Atlantic.Well, with all due respect, sir, I know that your intentions are honorable and that you’ve got loads of experience in this field. But right now, I’m no longer accepting advice from employees of the White Star Line. There is a time for hysteria, and a time when cooler heads should prevail.This is the time for hysteria.Washington Independent: Daphne Eviatar reviews the administration’s moves in the case of Ali Saleh Kahlah al-Marri and a related Supreme Court case and concludes that “the Obama administration [is] clinging to the right to hold lawful U.S. residents indefinitely without charge on U.S. soil.” Guardian: Simon Tisdall says “this was the week when Iran emerged as the central front in Obama’s fast-evolving Middle East policy — and he is beginning to deploy his diplomatic forces with the audacity of hope and not a little cunning.”Foreign Policy: Marc Lynch publishes a guest post from Gary Sick, whom Lynch describes as “one of America’s most experienced Middle East hands”:I keep reading comments that seem to declare that the Obama administration is simply continuing the failed policies of the Bush administration and that there seems to be no movement toward a different relationship with Iran. I think that judgment is terribly premature.There is a flurry of signaling by the US — both positive and negative: keeping pressure on Iran (Stuart Levey and restrictions on banks), reassuring Israel (appointment of Ross) & Arabs (Hillary’s downplaying of expectations at Sharm el-Sheikh), providing some funding for the Palestinians while pressing Israel to relax entry into Gaza, renewing an opening to Syria, talking about cutting US nuke stockpiles (US Ambassador Schulte in Vienna), talk of including Iran in Afghan security discussions (Holbrook), willingness to remove (anti-Iran) missile defense in E Eur while cajoling Russia on Iranian missile development, nice words from Obama (sometimes), harsh words from Susan Rice (always?), tough words from Adm Mullen, more soothing words from SecDef Gates, unified declaration about Iran by all five UN veto powers at the IAEA (without threatening new sanctions or return to the UNSC), etc etc.We’ve seen nothing like this for as long as I can remember. Almost none of this would have been possible under Bush. It’s actually possible that what we are seeing is (gasp) diplomacy, or preparation for it. It includes pressure on Iran, which I think was inevitable, but it potentially allows for much more.Washington Post: Michael Gerson poses “three possible futures” for American conservatism, including one that “conservatives do not want to consider:”We could be seeing a much more fundamental ideological trauma — something that enters the realm of psychology, not economics. Franklin Roosevelt used the shocks of the 1930s to discredit the capitalism of the 1920s — even though the real causes for the Great Depression had more to do with tariffs, monetary policy and bank failures. Conservative economics fell into disrepute, even as many New Deal policies proved ineffective. Republican elected leaders became less-ambitious reflections of the Roosevelt consensus. Intellectual dissent was captured by extremists from Ayn Rand to the John Birch Society. It took 40 years for the development of an intellectually serious and politically respectable conservative movement.Washington Post: Ron Charles laments the “suburban contentment” of college students today, as judged by their book buying:According to the Chronicle of Higher Education, the best-selling titles on college campuses are mostly about hunky vampires or Barack Obama. … In January, the most subversive book on the college bestseller list was “Our Dumb World,” a collection of gags from the Onion. The top title in January was “The Tales of Beedle the Bard” by J.K. Rowling. Their favorite nonfiction book was Malcolm Gladwell’s “Outliers” about what makes successful individuals. …Here we have a generation of young adults away from home for the first time, free to enjoy the most experimental period of their lives, yet they’re choosing books like 13-year-old girls — or their parents. The only specter haunting the groves of American academe seems to be suburban contentment.
a,zero sum is being generous. think of all the wasted talent. it is tragic! the time! what has it been in service of?
I’m betting the majority of them don’t read books for entertainment.
It’s Trickle up and trickle down. They’re hitting both sides… BUT NOT WITH NEARLY ENOUGH!The trickle up-ers will take every penny and save of pay off a small portion of their indebtedness……and the trickle down-ers are using what they can to recapitalize, but still at a shortfall. Thus leading to them having to make more cutbacks (layoffs), which put the trickle up-ers in an even deeper hole.It’s just not enough from both sides. It’s F.A.I.L.I.N.G. It needs to be an immediate multi trillion dollar move. THAT HITS BOTH SIDES! … and other economies need to do it in synch! (to not disrupt the global economy even more through inflationary runs.)Miss America
Before we get to the solution, looking at the completely irresponsible propositions of this government — an increase in irresponsibility from the last administration — the first priority is to stop the train before it gets to the broken bridge.
“damage Obama (and by extension the citizens of this country)”Wow, you just raise the bar of idiotcy by miles.
‘Obama Bear Market’ Punishes Investors as Dow SlumpsBy Eric MartinMarch 6 (Bloomberg) — President Barack Obama now has the distinction of presiding over his own bear market.The Dow Jones Industrial Average has fallen 20 percent since Inauguration Day, the fastest drop under a newly elected president in at least 90 years, according to data compiled by Bloomberg. The gauge has lost 53 percent from its October 2007 record of 14,164.53, slipping 4.1 percent to 6,594.44 yesterday.More than $1.6 trillion has been erased from U.S. equities since Jan. 20 as mounting bank losses and rising unemployment convinced investors the recession is getting worse. The president is in danger of breaking a pattern in which the Dow rallied 9.8 percent on average in the 12 months after a Democrat captured the White House, according to data compiled by Bloomberg.“People thought there would be a brief Obama rally, and that hasn’t happened,” said Uri Landesman, who oversees about $2.5 billion at ING Groep NV’s asset management unit in New York. “It speaks to the carnage that’s in the economy and the lack of confidence in the measures that have been announced.”A bear market is defined as a decline of 20 percent or more.Buying shares “is a potentially good deal” for long-term investors, Obama said March 3. He compared daily fluctuations to a tracking poll in politics and said he wouldn’t adjust his policies just to meet market expectations.Congress last month enacted Obama’s $787 billion package of tax cuts and spending on roads, bridges and public buildings. His 2010 budget indicated the government’s financial rescue may need another $750 billion after an initial $700 billion.Getting CheaperThe Dow average has dropped 31 percent since Obama’s election. The 30-stock gauge trades at 8.04 times annual earnings, the cheapest since 1995 and down from 10.06 times on Inauguration Day.Citigroup Inc. led the plunge, losing 71 percent. The government proposed taking a 36 percent stake in the New York- based bank, cutting the percentage owned by shareholders. Detroit-based General Motors Corp. tumbled 53 percent after the largest U.S. automaker said it needs more government aid.“It’s the Obama bear market,” said Dan Veru, who helps oversee $2.8 billion at Palisade Capital Management in Fort Lee, New Jersey. “We don’t know what the rules are in so many different areas the government is touching.”The Dow average lost 0.3 percent to 6,577 as of 11:14 a.m. in New York today.Bank LossesThe U.S. economy contracted at a 6.2 percent annual rate in the fourth quarter, the most since 1982, the Commerce Department said last week. Unemployment jumped to 7.6 percent in January, the highest since 1992, as Americans fell behind on their mortgages and banks seized homes at a record pace.Losses at financial companies worldwide that grew to about $1.2 trillion sent the Standard & Poor’s 500 Index to a 38 percent retreat last year, the steepest since 1937.“Prospects for recovery in the financial sector, despite all the government help, still seem rather remote,” said John Carey, who manages about $8 billion at Pioneer Investment Management in Boston. “We’ve had a weak economy for a couple of years, and we aren’t seeing the stimulus working at this point. That is what weighs on investors’ minds.’’The Dow average took eight months to decline 20 percent following the inauguration of George W. Bush, reaching the level on Sept. 20, 2001, nine days after terrorists attacked the World Trade Center in New York and the Pentagon in Washington.Herbert HooverThe crash of 1929 occurred seven months into the administration of Herbert Hoover, who presided over an 89 percent plunge in the Dow between September 1929 and July 1932, the steepest retreat ever.Only twice has the benchmark gauge slipped in the 12 months after the election of a Democratic president since 1900, after Woodrow Wilson’s victory in 1912 and Jimmy Carter’s in 1976.The Dow entered its most recent bear market on July 2, 2008, when a 167-point decrease gave it a 20 percent loss from its record 14,164.53 on Oct. 9, 2007. Unlike the Standard & Poor’s 500 Index, the Dow’s rally from its November low of 7,552.29 fell short of a 20 percent bull market gain, ending at 19.6 percent.“Obama should be listening to the stock market more than talking to it,” said Kenneth Fisher, the billionaire chairman of Woodside, California-based Fisher Investments Inc., which oversees $22 billion. “He hasn’t gotten out of the gate well.”
Why All Of The Administration’s Schemes Are SuspectJoe Weisenthal|Mar. 6, 2009, 9:58 AM|13Tags: Economy, Barack Obama, Bailout, StimulusWe can go back and forth debating the merits of various recovery schemes: TALF, TARP, the homeowner mortgage mod scheme, healthcare reform, and so on. But leaving out facts and logic for a moment, there’s a broader reason why we ought to be skeptical of the plans put forth so far: They’re almost all about feeling good, with little actual pain for anyone.Consider:On taxes, we like to imagine that we can pay for all our spending with just a modest tax increase on 2% of the population. The 98% of us who make up the rest get a tax cut!On matters of equality, we think that we can just cap pay and some arbitrary level and that will create fairness.On growing the economy, we’re lead to believe that spending more on ourselves — more TVs, more refrigerators, more dinners out at a fancy restaurant — will be good overall. Of course, we’d love to believe that eating out more and buying TVs is a good thing, but deep inside we probably know otherwise.With the banks we’re supposed to believe that we can keep them going with very little pain, keeping the creditors whole.Green. Windmills and solar will have a role in our energy future, but much of the green movement is about feel-good stuff, and dare we say, smugness. That’s why when we talk about energy independence, coal and nuclear are villified, even though they would clearly help us achieve that.Education. Again, we’d like to imagine that everyone is educable if only we threw more money at it. Education makes us feel good. Educated people feel especially good about seeing others get educated.Homes. Everyone knows that the answer is to let the damage be done and let prices fall to where they may. Problem is, foreclosures make us feel bad. Homeownership makes us feel good, and so even if we know that keeping people in houses they can’t afford without reducing their debt doesn’t really do anything, it feels good that people can keep our houses longer.Bottom line: So far, everything we’ve done makes people feel good in their minds, but the connection between feeling good and actually solving problems is tenuous. The fact that almost none of the “solutions” involves real, immediate pain for the majority of the people now should make us deeply suspicious of it all.
UPDATE ON THE COMING SURPRISE USA. STRIKE AGAINST IRANTHE WAR HAS BEEN POSTPONED FOR ANOTHER TWO TO THREE WEEKS. IT WILL HAPPENED APPROXIMATELY AROUND END OF APRIL TO THIRD WEEK OF MAY SOMETIMES ONCE THE WAR START TO OIL WILL JUMPWITHIN TWO TO THREE WEEK FROM START OF THE WAR AROUND 80 TO 100 US DOLLAR. GUYS PLACE ORDERS ON CALL OPTION CONTRACTS. THERE IS TONS OF MONEY TO BE MADE. THE WHOLE MIDDLE EAST EXCEPT ISRAEL WILL BURN.AND ALSO REMEMBER THE OTHER WARSRUSSIA AND NATO WITHIN TWO TO TREE YEARS.US AND CHINA WITHIN THREE TO FOUR YEARS.INDIA AND PAKISTAN NUCLEAR WAR WITHIN THREE YEARS.NORTH AND SOUTH KOREA WAR WITHIN THREE YEARS.THE SAME WAY THE WORLD FINANCIAL MARKET IS COLLAPSING SO WILL THE WORLD GEOPOLITICALLY COLLAPSING.MAKE YOUR BET ON THE OIL.A FREILECHEM PURIMMASHIACH BEN CHANA.
I don’t know what his solution is, but mine is decent viable jobs, of which the government continuously fails to address.
Sorry for the long post, but I think this is very much worth reading. The Fed is structuring its purchase of bad assets of AIG through off balance sheet entities. We don’t really know who benefited from the purchase of AIG’s bad assets, or what the assets are really worth. Apparently AIG’s creditors were made whole and the paid off at par. We just know that the Fed “loaned” $45,000,000,000 to something called Maiden Lane LLC II and III.There has been discusssion of nationalizing zombie banks. I think what is happening is the reverse – the banks are zombie-izing the nation.http://www.talkingpointsmemo.com/archives/2009/03/lowdown_on_aig.phpMore Lowdown on AIG03.05.09 — 7:58PM By Josh MarshallWe don’t know who AIG’s counter parties were, i.e., who got the money. And the folks at the Fed and the Treasury aren’t saying. But there are a lot of snippets and shreds of information out there that do allow us to get a decent picture of who some of the major beneficiaries are. Zack Roth has the details in this piece today at TPMmuckraker.And then there’s this from a close observer of the AIG matter …Josh, your reporting on the AIG credit default swap/counterparties issue has been spot-on. But to understand what happened there, you have to understand the Fed’s “Maiden Lane” vehicles and how it’s used them to avoid what Congress intended with TARP, which was the real story that came out of Dodd’s hearing on the AIG mess today. And the roots of it go back to the Bear Stearns rescue last year.By law, the Fed isn’t allowed to buy assets — it can only lend, as lender of last resort. That was a problem for the Bear Stearns bailout, because JP Morgan said it would only buy Bear if someone else assumed responsibility for the crap. Fed came up with this idea to start a shadow company, called a special purpose vehicle (SPVs were how Enron operated, creating “Chewco” and the like named after Chewbacca – the New York Fed called their SPV “Maiden Lane LLC” for name of the street the NY Fed is located on in southern Manhattan). The deal then was JP Morgan put $1 billion into Maiden Lane, the Fed put $29 billion in cash into it. Maiden Lane paid Bear Stearns $30 billion, which went straight back to JP Morgan as this deal happened simultaneously to JP’s purchase of Bear. So Morgan got $30 billion in cash ($29 billion net) and the Fed got stuck owning the crap, but was legally only making a loan to Maiden Lane, who was the legal owner (Maiden Lane was incorporated not in NYC, but in Delaware to avoid paying taxes). By the Fed’s own accounting – which is very different from a real company’s accounting – Maiden Lane has lost $5 billion between its creation and today.The same problem happened in AIG, but this time there was no buyer. In Sept, the Fed bought AIG (80%) in exchange for an $85 bill loan. By Oct, it was clear AIG was still dying, so the Fed lent it another $40 billion. This $40 billion was restructured in November when the Treasury put in $40 billion of TARP funds, which was needed to bail out the Fed’s loan which had by this time gone bad. But essentially AIG had 2 problems: it had lent out safe securities with real values and used that money to buy shit mortgage backed securities — this was called ‘Secured Lending Facility’ which was done right under the nose of the state insurance commissioners. It was in the hole $20 billion. The other problem was the crappy insurance that AIG’s financial products company had written on other people’s shit mortgage backed securities – the credit default swaps (CDS). When the bad mortgages that AIG insured went bad, the insurance had to pay-up — but because it wasn’t called insurance, but rather derivatives, AIG hadn’t reserved any money against it. This had lost about $25 billion.Using the loophole it had learned during Bear Stearns, the Fed set up two new companies: Maiden Lane II and Maiden Lane III. Two dealt with the secured lending and Three the shitty credit default swaps. The Fed lent each Maiden Lane $20 billion and $25 billion and then Maiden Lane paid off the investors that had either lent AIG the money to buy the shitty mortgage backed securities (ML II) and those who had the shitty mortgages and the corresponding insurance (ML III). To avoid booking a loss on the Fed’s balance sheet, because the Fed had some legal problems if either of these Maiden Lanes lost money, and because of a reporting requirement that Dodd had put into TARP which actually required the Fed to report to the Congress and the public about the cost to taxpayers from ML I, the Fed did some creative accounting. They still paid all of the investors off at full value (par), so that they didn’t lose anything. But they booked the loss on AIG’s balance sheet and kept Maiden Lane clean. This is the hidden story behind how AIG went from losing $38 billion during the first 9 months of 2008 to losing $61 billion in the 4th quarter.This was all exposed at today’s hearing. And despite repeated requests from Senators on both sides – Dodd, Shelby, Corker, Warner – the Fed is still refusing to say who it bailed out through Maiden Lane II and III.
Go to http://www.washingtonpost.com/ and read the entire article (“Private Investors Seen as Key”). Pay particular attention to the leverage and loss control provisions. It might be a very attractive offering, particularly if the toxic ABS is priced well beneath its intrinsic value (e.g. current market: $0.35/dollar, intrinsic value: $0.50/dollar).The risk is whether or not a market will develop for these assets during the three-year holding period (the gov’t won’t require leverage repayment for three-years).What’s upsetting is the gov’t willingness to forego any upside participation; investors retain all profits but losses are limited to their original level of participation.
I’m more convicned than ever that this Joe Biden comment meant what is going to happen shortly… a total implosion and devastation of the Worlds economy, including the United States Economy.”Mark my words,” Biden told donors at a Seattle fund-raiser Sunday night.”It will not be six months before the world tests Barack Obama like they did John Kennedy. The world is looking. We’re about to elect a brilliant 47-year-old senator president of the United States of America.”Watch. We’re going to have an international crisis, a generated crisis, to test the mettle of this guy.”And he’s going to need help . . . to stand with him. Because it’s not going to be apparent initially; it’s not going to be apparent that we’re right.”
Let me know how that works out for ya!
I remember those comments. It sounds more like Biden was expecting some sort of potential conflict. Maybe from Iran, or N. Korea, or Russia. One thing though .. as the US economy becomes unstable, there will be a strong temptation for America’s competitors and foes to exploit that weakness. That’s for sure.PeteCA
How would this ******* occur? Answer: The FP subsidiary of AIG will step up to the plate and issue some CDSs. The US will back up (i.e. guarantee, loan, or buy, etc.) the creditors owning the CDSs. The Senate Banking Committee hearings of yesterday disclosed this gig in some detail.
Take a look at Michael Panzner’s article here …http://www.financialsense.com/Market/wrapup.htmYou can read the whole thing if you want.Let’s focus on the first chart.Manufacturing new orders, from 1959-current.Of course, lots of folks would notice that the chart has a cyclic behavior. We’re moving toawrds some sort of bottom, though we may not be there yet.But look at something else.Draw a line connecting all those bottoms on the chart since 1990. Notice how it’s steadily going down?That’s our industrial base steadily shrinking. Until at some point a substantial fraction collapses (or gets bought out by foreign interests).PeteCA
And that article by Mr Panzner was …”Getting Uglier By The Minute”.Commentary on http://www.financialsense.com, Thursday, March 5PeteCA
In private vaults in Switzerland & other countries.PeteCA
In private vaults in Switzerland & other countries.PeteCA
CAN YOU ALSO SEE WHAT THE FUTURE HOLDS FOR SCORPIONS? WILL I FALL IN LOVE THIS YEAR?
MA,Could not agree more. In general I think TPTB get too focused on one theory (trickle down). it should be viewed as one of many tools to be used just like any business, army or society looks at any variety of options/tools to survive and grow. Trickle down has it’s place, it’s just not the end all be all. Neither is trickle up. There has to be a reliable steady mix of tools to make things work.
Those comments were during the campaign before the meltdown. Before Obama was elected.
this is on the money
Rep. Boehner has things a little mixed up. The real “scam artists and speculators” are those who sold, bundled, and rated the loans AAA.
Wow! I had to listen to the cspan video of the hearing three (3) times and still did not glean half as much information as this post presents. Thank you.
Bye, bye GMAdios Chrysler
The trickle up-ers will take every penny and save of pay off a small portion of their indebtedness…
Wouldn’t that be good? It would lower their indebtedness and that money floats the banks from the bottom up.. I mean if it was in adequate amounts.Yes there is a problem with the banks still as their current business plan is to get commission on making more and more debt. Sorry, the world has changed and that business plan is dead and will be for quite some time now. If they can’t make money the old fashioned way, maybe they need to close down.But YES it is failing and at this point and any discussion of cause and effect would only be relevant IF anyone actually cared that could do anything about anything. Otherwise it is just to make me feel good because I said it.I don’t think a multi trillion dollar move will do it unless it was targeted directly at the debt that is causing the problem. In other words, directed at the consumer. Not to lend them more but borrowing in their name with the understanding that they get to pay it back over 50 years in taxes. You know the old routine of refi and consolidate.Then the consumers have disposable income to purchase and the economies of the world have someone to produce for. The way things are going under the current plan, the money is being poured into a black hole and no one is benefiting except maybe a few top execs.
Thanks for the memories!
Dow crossing through the bottom of the current trading channel (6500) at about 2 pm Eastern time today. Bye Bye market.I don’t think that Obama is going to get his wish about stabilizing US unemployment. It’s headed the other way. This is going to cause a lot of angst in Washington DC.PeteCA
The difference between the Great Depression of the 1930s and this new depression-in-waiting is that back then, unlike today, the US had tremendous production and growth potential, with a value-backed dollar that was able to pay for FDR’s socialism. That unbelievable capacity — although unrealized in the downturn created by Fed monetary policies — flowed into FDR’s massive government expansion and into a world war. That back-up capacity, inherent in America’s free enterprise system, enabled 20th century government to get bigger and bigger because the nation withstood it.Today is different. The US is on the edge of currency insolvency, without a manufacturing base and with a huge welfare class and wealth-draining plutocracy to support. And, today, unlike in the 30s, the rest of the world has tremendous growth areas building competitive economies. While the US acts as a military superpower and spends trillions on weapons it never uses, the rest of world is not spending on weapons, it is spending on its economies.The U.S. was in a very unique position in the late 30s as evidenced by how it restructured to fight a world war with the production of thousands of ships and airplanes, defense weaponry and troop support…since that war, a morphing one-party system has used up that waning potential to further expand its warfare-welfare state. Government now employs 22,387,000 Americans, 8,744,000 more than manufacturing.Today’s tragic job report shows only jobs in education and health care to be holding. And the Obama budget and the omnibus-spending bill continue to punish private sector jobs and encourage the volcanic eruption in big government.Politicians and economists in America are experiencing an attack of déjà vu, believing once again that America can engage massive, failed FDR socialism. But the difference now is, America can’t pay for it. If Obama and his Democrats continue down Bush’s path, with even more anti-market policies, the U.S. will be bankrupt.America won’t have big government socialism: she will have anarchy. A nation can’t run a government bureaucracy unless it has growth to support it, natural resources to supply it, trade to engage it. Massive socialism enables none of those things.
via CR (A must Read)Fed’s Hoenig: ‘Too Big has Failed’http://www.kc.frb.org/speechbio/hoenigPDF/Omaha.03.06.09.pdfhttp://www.calculatedriskblog.com/2009/03/feds-hoenig-too-big-has-failed.html
While the scientists at CERN take a breather due to the malfunction of the Large Hadron Collider, the rampant speculation of a global antimatter cataclysmic event have subsided. However, new calculations show that the world is not without risk while the LHC is repaired. Simulations show that there is a statistical certainty that an event will cleave the global financial system’s pyramid and wreak havoc around the globe.Mathematically speaking, the situation is untenable. The only independent variable is time. This event where one or multiple sections of the pyramid cleave in two is being called The Great Cleavent.
The man sounds more like an anarchist than a vice president of the United States.”His words leap across rivers and mountains, but his thoughts are still only six inches long.” E.B. White: World Government and PeaceGod help us!
Yes indeed, a great read!The only thing left out is what happens to the bondholders? The bondholders seem to be the ultimate protectorate through all this! What does that say for the future?
Good news guys! Turns out we here at RGE are all just suffering from a particularly acute case of “irrational pessimism”! Prescient? Nah. Pessimistic, apparently.Get a load of this:Markets face ‘irrational pessimism’Friday March 6, 1:45 pm ETBy Rachel Beck, AP Business WriterNew extreme in US stock sales leads to ‘irrational pessimism’ among investorsNEW YORK (AP) — You’ve heard of “irrational exuberance,” right? That’s the expression Alan Greenspan coined more than a decade ago when he warned that investors could be bidding stock prices too high. His worry was that escalating asset values were trumping reality.ADVERTISEMENTThese days, the opposite seems to be the case. Call it “irrational pessimism,” a fear that stock prices are headed in only one direction — lower and lower — because asset values and profits seem certain to fall.Caught in the vortex of this new hopelessness are once-pristine blue chip stocks like General Electric Co., whose share price has plunged 45 percent in the last month to below $7 a share. Investors have become increasingly worried that losses at its financing arm could put a crippling dent in the conglomerate’s capital base.But before buying into the notion that all is lost, it’s worth remembering that stock indexes today are almost exactly where they were in 1996 when then-Federal Reserve Chairman Greenspan issued his warning.Investors ignored him then, pushing stocks higher for more than three years until the Internet stock bubble burst in 2000. Now, a growing number of markets experts are saying the time may be near when the Cassandras of doom should also be ignored.”You can get to emotional extremes in both directions of the market,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. “Savvy investors think in those terms and they know how to get that to work in their favor.”By that, he points to the short-sellers who are playing a big role in what the market is doing today. They make money betting stocks will drop, and have set the tone in this current decline, which began after the market reached record highs in October 2007.Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors, takes that one step farther. “The shorts are staging raids on our companies,” he said. “For the last two years, the best bet you could make on the market was against it.”Sorrentino knows that because his firm owns 6.4 million shares of GE, and he can’t understand why the stock is trading where it is given that parts of the Fairfield, Connecticut-based company by his count are worth a lot more than where its shares are trading now.He’s convinced the shorts have made it tough for anyone in the market — at GE and beyond — to think positively because they could get burned. Therefore, investors have decided it is easier to follow than fight them, even if a company’s finances say something else.A case study of GE illustrates how this may be playing out. Even though GE is in many different businesses from jet engines to entertainment to lending, investors seem to be focused entirely on its finance arm, GE Capital. Once a major profit generator for the company, now there are worries that it is short on liquidity and could post big losses.GE’s CFO Keith Sherin went on GE-owned CNBC Thursday to get the message out that there was no “time bomb” brewing at the unit, which he said would be profitable in the current quarter, had ample capital and had set aside money to cover any of its losses.That followed lots of other efforts in recent days from the executive suite — insider stock purchases, video statements from CEO Jeffrey Immelt and other spin — to shift investors’ thinking about such gloom.”GE put out a press release (Wednesday), citing all the good things it is doing to drive away the demons, but Jeffrey Immelt is no Harry Potter,” said Kathleen Shanley, an analyst at the bond research firm Gimme Credit.That investors haven’t responded positively may be due to the fact that 1.5 percent of GE shares are out on loan to short sellers, nearly double the level at the start of the year, according to Data Explorers, a short-selling data research firm based in New York.The shorts’ efforts have then been backed by nervous individual investors who now have reason to sell since GE announced plans Feb. 27 to cut its dividend for the first time since 1938 to save $9 billion a year. GE will pay shareholders a 10-cents-a-share dividend beginning in the third quarter, 68 percent lower than the company’s original plan of 31 cents.All that selling is putting fund managers on edge, especially foreigners like sovereign wealth funds that had counted on GE as a safe investment. Of particular concern is whether GE’s triple-A credit rating could be in jeopardy if its finance arm lacks capital.And then adding to the downside pressure is what is going on in the credit-default swaps and options markets. Investors are taking out additional insurance to protect themselves in case GE defaults on its debt, and then they are hedging that with the purchase of put options, which gives them the right to sell shares at a specific price. Some investors in recent days bet the stock would fall to $2.50 by June.All that shows how GE’s stock has been ravaged by “irrational pessimism” — fed by the shorts but potentially without much to back it up.Analysts at Deutsche Bank said Thursday that they valued GE’s industrial arm at $12 a share — almost double where the stock currently trades.Sorrentino goes even higher, putting the industrial business at $20 a share. Add to that, he says, its NBC Universal entertainment division, which could fetch somewhere around $4 to $6 a share, and around $7 to $9 a share for its medical systems business.The negative environment in the overall market is driving away prospective buyers, said Darin Newsom, senior analyst at the Omaha, Nebraska-based market information company DTN. “Right now no one wants to support this market,” he said.That may be driven by fear instead of reason.Rachel Beck is the national business columnist for The Associated Presshttp://biz.yahoo.com/ap/090306/na_us_wall_street_blues.html
Obama saves 25 jobs with $787,000,000,000 stimulus package.Flies to Ohio to celibrate.http://www.reuters.com/article/politicsNews/idUSTRE5254UM20090306
Where is confidence? Most of your posts are intellectual drool. What does mom do with the spit? Wipe it up. Then feed another spoonful of mashed peas.It might take longer than expected. The results will not be as rosy and as soon as the big baby Rush would like. But someone has to plug in the pacifier into this man’s dirty mouth and his bad attitude which is very, very anti-AMERICAN.Long live freedom, not a person who wants to squash it.
Funny person. Horse blinds need to be extracted
Irrational on the way up, and somehow still irrational on the way down. And naturally, the ‘irrational exuberance’ was based on reason on the way up, but the ‘irrational pessimism’ is based on fear on the way down–I could have sworn that the way up was paved in fear that you’d be left behind mixed with generous helpings of greed and hubris. Huh. Brings to mind the similar logic that huge amounts of new debt will fix huge amounts of old debt. It is amazing to me how some people are able to spin things.
I’m not sure all these folks are buying much these days….Broader Unemployment Rate Hits 14.8%If a half-percentage-point increase in unemployment rate isn’t ugly enough for you, there’s more from your government statisticians: almost a full percentage point jump in a broader measure of unemployment.The Labor Department reported today that its most comprehensive measure of joblessness hit 14.8% in February, from 13.9% in January. That’s just about 1 out of 7 Americans who are either unemployed and looking for a job, want a job but stopped looking, or part-timers who want full-time jobs.We’ve already blown through the prior high point of the data series, which the Bureau of Labor Statistics started in 1994. An even broader (since discontinued) series hit 15% in late 1982, and we’re likely to fly right through that one next month.The 8.1% official unemployment rate, up from 7.6% in January, only counts people who are available for work and actively looked for a job in the prior four weeks. The 14.8% figure (known as the “U-6” by the BLS) includes everyone in the 8.1% figure, plus people who say they want a job and looked for work recently, along with people working part-time because they couldn’t get a full-time schedule.How high can the U-6 go? Just looking at forecasts for the main unemployment rate, the broader measure would hit 17% by the end of next year. Some economists say 18% to 20% — 1 out of 5 people unemployed in some way — wouldn’t be terribly surprising. If employers aren’t hiring, job hunters would be more likely to give up hope and stop looking even if they do want jobs. After the 2001 recession, employers took roughly two years to resume meaningful hiring and competition was stiff for the jobs available. Anyone searching for a job during this recession is already aware of that grim reality. –Sudeep ReddyPermalink | Trackback URL: http://blogs.wsj.com/economics/2009/03/06/broader-unemployment-rate-hits-148/trackback/
Irrational by whose standards…. sure not mine… it’s called taking care of your own… something the people who call us irrational seem to think we are not capable of…was good for a laugh… I luv watching the PTB squirm, cry, run for cover, moan and groan, feel bad for themselves…. it truly is fun to watch them all….
Just Crossed 6500 again
Don’t worry. The rational optimistic traders who operate via reason instead of fear will have it back up in a jiffy.
When the national saving rate went negative in 2005, it wasn’t as bad as it was made out to be because “savings” had taken on a new form.The new world savings had become 401k. That effectively replaced peoples long term savings plan, thus allowing them to spend their current/short term savings.The backup to that plan was the house. The house was the medium to long term savings plan (and short for the flippers).So the savings going “negative” didn’t really reflect the true overall savings……but the horror story was… the “new savings” was being priced incorrectly, giving people a false belief of what their “new savings” looked like. The house dropped, the 401k dropped. Both in ways that 3 years ago would’ve been called IMPOSSIBLE!!! (except to the few of us who saw this wreck coming)So for the trickle up-ers, the new level of what they need is very large. Funding their indebtedness, and trickling up through savings accounts at banks, doesn’t provide banks the revenue to grow. All it provides is the ability to make some of the payments.That maintenance level sounds fine… but that does not allow for the downstream net payments of overall worldwide debt to be paid.Look at it like this… You know the current debt load is HUGE. Tomorrow’s is even bigger. With that in mind, sustainable cash is not good enough. GROWTH is needed no matter what to meet the obligations that are both existing (and massive) and coming into creation (which will be even larger).Debt needs destroying. …but when debt is destroyed, so is credit. (The repayment of a loan is like a dollar expiring) Yet credit is needed to meet the current obligations to which we are short on. …and why are we short? The gutting. The float of nonservicing redemptions from the financial system. All of the alchemy that in turn was spent, was destroying 2 dollars for every 1 that really existed. This cycle repeated itself to where alchemy (monopoly money) was muuuuuuuuultiiiiiiplyyyyyying. 4 spent for every real dollar. 8 spent… 16 spent……and the float existed on this thanks to 401k, pensions, HouseATMS, etc……and now that money isn’t there for the trickle up-ers, so the funding needs to be huge!!! …and Hugex2 if it’s to preserve the growth that is needed by our financial system to meet its obligations.Miss Americap.s. Eco<M I lie the way you write. You stream your thoughts together in a much more concise way then I seem to be able to. Keep up the good woork and I’ll catch you at BT.
The rational optimistic traders who operate via reason instead of fear——————-Such a species exists? We will require photos, video and extensive documentation, please!
Did he say they weren’t? Seems to me he’s one of the few making the accusation. Credit should be given where credit’s due, IMHO.
this is how we get to dow 4000Current 40003m Co $41.01 $25.02Alcoa $5.03 $3.07Amex $9.87 $6.02AT&T $22.04 $13.44BOA $3.10 $1.89Boeing $29.70 $18.12Caterpillar $22.73 $13.87Chevron $57.07 $34.81Citigroup, Inc. $1.01 $0.62E.I. du Pont $ 16.63 $10.14Exxon Mobil $62.48 $38.11G E $6.96 $4.25General Motors $1.41 $0.86HP $26.59 $16.22Intel Corporation $12.18 $7.43IBM $84.25 $51.39J&J $47.28 $28.84JPM $15.34 $9.36Kraft $21.34 $13.02McDonald’s $51.45 $31.38Merck $22.45 $13.69Microsoft $15.02 $9.16Pfizer Inc $12.49 $7.62Coke $38.65 $23.58Home Depot $17.63 $10.75Procter & Gamble $44.77 $27.31United Technologies $38.00 $23.18Verizon $26.73 $16.31Wal-Mart $48.29 $29.46Walt Disney $15.49 $9.45
This is typical Wall St. bullcrap. Let’s see, all the shorts are destroying big ole GE! The sum of the parts is worth way more than priced! This is “irrational pessimism” from someone who can’t provide a balanced view (or doesn’t want to).First, GE is the most levered US institution of any considerable size ( GE Leverage Ratio) that might be a we bit reason to have some pessimism towards GE.Second, GE has halted it’s stock buyback program, slashed its dividend by 70%, needed 139 billion in FDIC help and is exiting major businesses! ( NY Times, Bloomberg, Reuters) Yeah those all look like reasons to be optimistic!Third, yes the jet engine, health care, transportation and turbine manufacturing will survive and will generate profits, but that has to be balanced against the debt that aircraft/jet engine leasing/financing, health care equipment leasing/financing, locomotive/rail car leasing/financing, and the financing/leasing of just about every other piece of doo doo out there. On balance, GE is worth less than zero! Those other businesses are what the bondholders will collect against not the stockholders!Reasonable assumptions or irrational pessimism where’s your money?
A comment from ‘Terry’ over at Baseline Scenario:”OK, someone has to ask the question: What of economic value is left in the global or US financial system that makes it worth saving by governments and taxpayers?Whenever the phrase “increased systemic risk” or “too big to fail” is thrown out, it is almost always because the speaker, in hushed and worried tones, expresses concern about the stability of the financial system. What is left in the system that makes it worth saving? How much should we pay to save those parts (& no others)? What would really happen if AIG, C, BAC, HSBC, RBS, GE,… were denied access to public funds and went bankrupt?I’m tired of the innuendo about the massive global financial and economic chaos that would be generated by upsetting this financial system. Someone has to spell out what would happen and why we should care.”Thoughts?
Solvent banks are asking why they have to bail out Wall Street’s greed, paying for its “excesses” and “incompetence.” Solvent taxpayers are asking why they have to bail out Wall Street’s fraudulent mortgage packagers and Hud’s and Fred’s and Fan’s corruption, taking on other people’s delinquent mortgage payments. The only folks not askin’ any questions are, you guessed it, the US Congress and the US Senate and your Dear Leader, Barack Obama, the giver…and the taker.MINNESOTA BANK ASKS WHY IT PAYS FOR WALL STREET GREEDMarch 6 (Bloomberg) — TCF Financial Corp., the Wayzata, Minnesota-based bank that never made a subprime loan and hasn’t lost money since 1995, is asking why it should help clean up the mess made by Wall Street.“I’m kind of bitter,” said William Cooper, chief executive officer of the 448-branch bank, adding that over the years TCF has invested about $1 billion in the Federal Deposit Insurance Corp.’s fund that guarantees bank deposits. “We pay for the excesses of our competitor over and over again.”TCF is among more than 8,300 banks and lenders insured by the FDIC facing increased fees and a one-time “emergency” charge designed to raise $27 billion this year for the agency’s depleted coffers. Community banks may take a 10 percent to 20 percent hit to 2009 earnings even if the FDIC halves that charge, said Camden Fine, president of the Independent Community Bankers of America.The ICBA and its 5,000 mostly locally owned member banks are rebelling against the costs, as well as curbs on pay and business practices imposed on recipients of U.S. capital after public outrage over bonuses and perks. Community banks rely more on deposit funding, so they suffer a “much heavier burden” as a result of deposit insurance proportionate to size than peers such as New York-based Citigroup Inc. and Wells Fargo & Co., with its headquarters in San Francisco, Fine said…More than 500 banks, insurers and credit-card companies applied for money from the government’s Troubled Asset Relief Program, which has distributed more than $290 billion to companies including Citigroup and American Express Co. While regulators encouraged both ailing and healthy banks to take TARP money, losses by big banks and pressure to cut dividends, pay and perks have stigmatized the program for others, Cooper said.“The regulators wrongly suggested we take it,” Cooper said. “Everybody who took the TARP money now is a crook and an evil character…”http://www.bloomberg.com/apps/news?pid=20601109&sid=anmrn4H8hXfw&refer=home
Ha ha ha! last second save in the market today? Could be just some program trades – based on the current trendline. Or might be a little bit of interference. Doesn’t matter. The deleveraging process is inevitable. Falling sonsumer demand. You can’t fight that.PeteCA
Ha ha ha! last second save in the market today? Could be just some program trades – based on the current trendline. Or might be a little bit of interference. Doesn’t matter. The deleveraging process is inevitable. Falling consumer demand. You can’t fight that.PeteCA
VERY good question. Not all banks are created equal. Some banks have remained conservative and maintained good loan standards. Why should these banks be lumped with the bad ones?? I don’t blame them a bit for raising objections.PeteCA
Hello all, Miss America here.I have a new post that is not very “economics” related. (Although there are some micro/macro economic parallels that do exist)It’s on the topic of drugs in sports, and it is something I have been enthusiastically fighting against for the last couple of years. (it has taken much of my time every January thru March each year.)• There are players, owners and organizations that need to be held accountable for their actions!• Transparency needs to be returned to the performance we are sold through “legitimate” regulation and rules (and strict enforcement).• The victims of this era should be recognized and not forgotten!We must do it for our future generations. (I KNOW THAT SOUNDS CLICHÉ!!!) …but it is true. Through baseball banning drugs, other sports will follow. That will trickle down through Colleges and High Schools. (This will not only SAVE LIVES, but it will save $$$BILLIONS$$$ in long term medical costs that will eventually be incurred. The downstream effects of genetic alterations that are done outside of medical care have a snowballing effect generation to generation where these alterations will wind up affecting millions.)Please visit if you care to join the discussion, pass along the word, or even help join in my quest at trying to bring about a small change to a little part of the world.Thanks, Rich HHello all, Miss America here.Here’s the link:http://www.rgemonitor.com/globalmacro-monitor/255886/play_ball__-_a_victimless_crime
President Obama was in Columbus, Ohio, today to promote the economic stimulus package; why not from Washington, D.C.?Because, addressing the 25 recruits in the graduating class of a police academy whose salaries will be funded by the stimulus funds provides a nice photo op. And the tough, investigative, hard-as-nails White House press corps hits the airwaves this a.m. with…actual news lead-in:“President today sees first jobs created from his stimulus package.”No mention I could find about the extra costs the stimulus incurs selling it to the people…like the taypayer-paid national sales trip to sell the taxpayer-funded program to the taxpayers by the taxpayers’ chief executive. Air Force One floats along at around $68,000 an hour — giving new meaning to the phrase…letting your money work for you!Pity some of our founders’ respect for the duties of the chief executive and protection of the public purse didn’t come down to recent presidents.Jefferson, for example, never made a single public address while he was president, even sending along his first inaugural address in written form to Congress for someone else to read.
“Obama has lifted the hammer of communism and smashed the American dream”Oh, come on! Its obvious you haven’t a clue what communism is, and I doubt Obama does either. But it might be a good idea if Americans stopped dreaming, woke up and smelled the coffee (or whatever that smell is)
If the world is collapsing do you really think you’re getting your electronic air money out of a foreign country without resistance. Or are you hiring a huge truck to cart around your gold bars to be ambushed. What exactly would be the plan. I was thinking about it this morning, showing up in Cayman only to see a gun pointed at my face, and being told it’s gone, we needed it. Might be a better idea if you had items to barter with besides money if this is the direction we’re going.
I AGREE PETEWhy in the name of that is common sense would anyone buy US debt for like 1%?At some point anyone or any country with extra cash is just going to tell us to all go to Hades and put it in their Jack Benny vault and wait it out….the final coffin nail in this flawed uncontrolled growth/debt dead economy we fruitlessly try to revive the wrong way.Look at the $85B pyramid scheme housing bailout waste….9 million lottery recipients get about $9000 each. Sounds like a few months of mortgage payments at best, but more likely a complete waste of our tax dollars when these upside down mortgages are like $50-200K underwater.I think we should use 100% of the stimulus money developing industrial base jobs again….Hades, if we could train domestic technicals, with a year or two of college, to be the predominant sector of the Boeing development workforce that sucessfully developed the 757/767 in 1978; what do we need cheap insourcing of technicals into America for? Ask Bill Gates, he’s a college dropout.We should do this now and stop wasting all the stimulus money on flash pan road projects that die after a few months or add more overpopulation that further deteriorates our schools.And if countries in Asia and Europe get mad at us for manufacturing our own stuff again, tell them its the only way we can get back to buying anything from them again [and making the monthly payments on the debt we owe them]….its definitely in their best longterm intererst too.
Krugman has a new piece up. A couple snips:”by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or deserve to be rescued.And this means that the government would have to lay out trillions of dollars to bring the financial system back to health, which would, in turn, both ensure a fierce public outcry and add to already serious concerns about the deficit. (Yes, even strong advocates of fiscal stimulus like yours truly worry about red ink.)”and this, which I found interesting:”it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.”Taking a page out of Dr. Roubini’s pagebook? And ever so gently pushing forward his agenda? Interesting…
It’s not in scorpions nature to fall in love, they just sting the back that carries them.
From an above post of Leap statement:”the global system is simply out of order; a new one needs to be built instead of striving to save what can no longer be saved.”@ We sure do live in interesting times! on 2009-03-06 09:31:28imo this is correct and the term “simply” is also correct.However, as function proceeds form, designing a new economic system is not yet possible as we do not have enough data to form an opinion as to what the primary function of the next economic system will be!One thing that is certain however, it will NOT be a consumer driven (toys 4 us) economic model and once you get your Mind around this, the clearer your ‘fish-tank’ model becomes.SOoooo, I posit further rapid decline; much more as we are nowhere near the bottom and the balmy calms that will be found there and,as the dust has not yet settled, we have no possibility of grasping the energized trends that will define context of the future and hence the design details (read: parameters) of the new global economic systems.time to focus on survival and the consideration of the values that you would like to define the essential and basic fractal (building block) for the next Epoch and this should be done at family and tribal or community levels.As I have said before, “leadership” is done and is focused on its own survival which is unsustainable; they will soon greet their hard fate of natural justice; their work is done, here.If you wish to build ‘civilization’ choose not “leadership” from the noisy and eager; this is your lesson of the day – as it is so written and remember, “all that needs to be said, has been said”.If you choose pioneering; trust only yourself. We are pioneers.Ho hum
???Long live freedom?Including freedom of speech?Why are some people so quick to try to shutup Rush all of a sudden?Dude if you don’t like what he has to say,either turn the dial on the left or the oneon the right.He’s just a radio talk show personalitydoing what he has been doing for years.Makes this administration look really weak.
Words you need to take to heart.
$68,000 an hour! Let’s see, 25 hours of Air Force One equals $1,700,000 equals 25 police recruit jobs at an annual take of $68,000 each! Who needs a stimulus. Just ground Air Force One for one year or 8766 operating hours, at $596 million.Why didn’t Obama just let Nancy Pelosi zip out there in her reoriented 737. It operates at only $10,000 an hour, as evidenced by her friends-rewarding trip to Italy with hubby and relatives and her liberal election supporters immediately following passage of the stimulus bill — to trace her relatives and other assorted “fact-finding” missions (she would have been better off to have skipped the audience with Pope Benedict as he called a press conference after her visit to blast her stand on abortion as a Catholic).Nancy slipped millions in spending on contraceptives into the stimulus bill. Pelosi, who says she is an “ardent Catholic,” told ABC’s This Week that the money spent on family planning services would “reduce costs.”
Wow at this rate there will be 7500 jobs by the end of the year minus the ones lost due to the cost of photo ops.
More reasons to take your money out of any bank.
Gosh, you’ve given me some more short ideas. Take a look at Kraft — stripping out non-recurring events, NI + depr – Cap ex < dividends; it has negative net worth; it has continued to use its cash to buy its own shares; it likely has debt coming due. The drawback is a short player must pay the 5% dividend to the long holder.It’s a fine company. It’s just overleveraged. Maybe that is a metaphor for the American economy.
Or take HP – its balance sheet contains over $40 billion in water (goodwill and intangibles) giving it negative tangible net worth. 15 forward PE. Fine company, makes a lot of money, but it has $10 billion in debt due this year.
I think in the new system we should have a flat rate tax system and people should be taxed on their savings anually not on their earnings or spending. This would ensure that more money will remain in circulation and savings can be used to run credit system hence creating jobs ect. Resulting system will also make it possible to have smaller govnmt. Any input:)
My real life example – Demand falling off a cliff….It hit home for my family a little over a month ago when my husband was laid off. We were just at the point that we had all of our credit cards paid off and were starting to heavily save for a house down payment and to start a family. I have a decent income (which has been reduced by approx. 20% for this year), but it leaves no room for saving or buying anything. We can only pay bills and can barely do that. So there goes our savings. He is actively looking for full-time work, but no jobs in his field seem to be out there. We live in CA, so it’s expensive to live and only getting more expensive with increases in taxes. I can vouch for the fact that the saying is true that “it’s a recession when your neighbor loses their job, but it’s a depression when you lose your job”. My sentiment or whatever you want to call it is very negative. I feel depressed, frustrated and trapped. There will be no ‘consumption’ from us any time in the foreseeable future. No house, no baby, no vacation (and boy do I need one!), no nothing. And the real kicker is that we owe a decent amount in taxes for this year after having already paid in a huge amount. Being fully aware of where my tax money is going and how greed and excesses are being rewarded, I sure don’t have a warm and fuzzy feeling about paying even more when we can barely make ends meet. Our decisions in the past may not have been perfect, but we did avoid buying a home in CA with no money down or with whatever ‘creative’ financing options were available to us and we avoided many other “debt” pitfalls in which so many find themselves. Yet, here we are, basically in the same sinking boat.
What do you mean by taxing savings annually? Do you mean taxing the value of the account from year to year (meaning that the principal, if not added to, would deplete on an annual basis), or do you mean taxing the earnings on savings (ie–interest). Would it only apply to savings accounts, or also to anything left in checking accounts too? Does that mean property taxes would be done away with? How about CDs and 401Ks and other retirement accounts? For that matter, how would those approaching retirement age be able to save for the time when they’re not working?
Lucy: Fortunately, you did a number of things right. You paid off all your credit card debts … which was an excellent move! You also avoided buying a house over the last year or so, in spite of what all the adds by realtors kept saying (“Now is the perfect time to buy a home!”). That debt burden would have killed you right now. And although your hubby is laid off, there’s a chance that even if he gets a part-time job, or just part of his former income, your situation will improve just a little bit.Things are expensive in CA. I agree. It seems like there’s just a million things each week that suck down so much money. It’s really ridiculous. But our society won’t really change until a lot of people (like yourself) just start cutting costs and refuse to accept all the surcharges and fees that eat people alive. One good thing in your favor – no home and no baby. Both those items really suck down a lot of money these days. It’s probably worth putting off those commitments until things stabilize in CA. We’re nowhere near that point yet.Hang in there! If you’re young and you’re healthy you can get through this.PeteCA
Well there’s a beautiful line of propaganda .!! If it was’nt for the uncontrolled financial mess this past 10 years,no one would have to intervene in the Market Place.I’ts funny how Obama is suddenly responsible for the 10 year old mess.The “Remedy”is being proposed by the same people who allowed it to happen in the first place.All they are doing so far is bail out the Bank CEO’s and other Controlling Interest investors who were legally scamming the system.No one in a position of power wants to be the person who takes the Hair Cut.In the meantime they are being bailed out at the public’s expense.So what else is new.They control the system .
The companies in trouble are those that have become uncompetitive (need to shut their doors or move completely overseas), or are just carrying too much debt relative to their net worth. Yep, you can go after shorts here. But think about it … Kraft and HP are not small fry, and they basically were good companies. So if they get hammered, what does that tell you about our industry in the future?PeteCA
You’re talking about high rollers here. Some of the financial elite of this country. They can do things that the little guys (like you or me) can’t consider. It’s set up through companies that operate outside the US sphere of influence. When the elite want to move assets, they can do it. They don’t get their fingernails dirty in the process.PeteCA
Thanks Pete. I know that in the overall scheme of things it could be much worse for us and we will get through this. However, it is a miserable existence to have to pay out every last penny of what you earn on living necessities (rent, utilties, transportation, food). I would like to enjoy my life, but I feel enslaved to this lousy excuse of an economic system. Maybe I need more ‘hopium’.
FYI – a whole lot of changing going on…Is it time to overhaul the Dow index? NOTE DATE: FEBRUARY 23 2009February 23, 2009 — NEW YORK (Reuters) – There was a time when a tumble below $10 in the share price of a company in the Dow Jones industrial average meant ignominy.Now, after vertiginous stock market falls in recent months, five of the venerable index’s 30 components are trading under that price, including its two oldest members, conglomerate General Electric and automaker General Motors .Citigroup stock plunged below $2 on Friday, making it cheaper than a medium cup of coffee at Starbucks.Continued membership in the Dow of these battered stocks, which include aluminum producer Alcoa and Bank of America , is raising questions over whether the index should overhaul its lineup to include the likes of bank Goldman Sachs or Internet company Google .It has also stoked a decades-old debate over whether the 112-year-old index is really an accurate snapshot of the overall U.S. economy.”It’s been out of touch for a while,” said Jocelynn Drake, an equities analyst at Schaeffer’s Investment Research.”There are companies out there that are more significant to the market and they have not appeared in the Dow and there are others that should have been kicked out.”But expelling stocks because they are cheap would fail “to tell the story of the U.S. economy,” said John Prestbo, editor and executive director of the Dow Jones Indexes.”Companies that have sunk so far down we’ve kept because they were still telling the story of the financial industry,” said Prestbo, who helps select the companies in the Dow.He declined to comment on the possibility of an index makeover but did not rule out the idea…ELITE GROUP FACES CHANGEThe index is rarely altered but when it is, it is done so at the discretion of a team of editors at The Wall Street Journal. Changes in its makeup affect funds such as Diamonds Trust , an exchange traded fund that mirrors the Dow.It was last changed in September when food company Kraft Foods replaced American International Group after the U.S. government took a large stake in the insurer.Now as shares of Bank of America and Citigroup plumb fresh lows, criticism is growing that the Dow has lost its luster.”I was surprised Citigroup was still a part of it,” analyst Drake said. “GM is another one. I understand them trying to get a slice of the automotive sector but … it’s not a market mover anymore.”Drake added that Google and computer giant Apple are more influential in the stock market.Citigroup and Bank of America should be swapped for a financial company with a higher share price, such as insurer The Travelers Co or Goldman, said James Bianco, chief executive officer of Bianco Research Securities.This would paint a more accurate picture of the financial sector because the Dow is a price-weighted index, where cheaper stocks count for less. For every $1 lost on a Dow component’s stock price, the index sheds roughly 8 points.That means if the three current cheapest stocks — Citigroup, Bank of America and GM — shrank to zero, the Dow would lose less than 60 points or 0.8 percent based on Friday’s close, a sign of how much the sector has declined.”The financials have a much larger bearing on the market than is reflected in the Dow,” Bianco said.However, while the two banks have small market caps, their fate is key to the overall economy and therefore stock prices, countered David Joy, chief market strategist at RiverSource investments.”Symbolically what happens with them has a lot of important implications for the broader economy,” Joy said.Added Prestbo: “I read somewhere that GM is a metaphor for the U.S. economy because it’s in damn trouble.”If a company is still big enough to be considered a metaphor for the U.S. economy, then wow.”http://news.moneycentral.msn.com/ticker/article.aspx?Feed=OBR&Date=20090223&ID=9633652&Symbol=AACURRENT COMPANIES IN THE DOWCompany-Symbol-Industry3M-MMM Diversified industrialsAlcoa-AA-AluminumAmerican Express-AXP-Consumer financeAT&T-T-TelecommunicationBank of America-BAC-Institutional and retail bankingBoeing-BA-Aerospace & defenseCaterpillar-CAT-Construction and mining equipmentChevron Corporation-CVX-Oil and gasCitigroup-C-BankingCoca-Cola-KO-BeveragesDuPont-DD-Commodity chemicalsExxonMobil-XOM-Integrated oil & gasGeneral Electric-GE-ConglomerateGeneral Motors-GM-AutomobilesHewlett-Packard-HPQ-Diversified computer systemsHome Depot-HD-Home improvement retailersIntel-INTC-SemiconductorsIBM-IBM-Computer servicesJohnson & Johnson-JNJ-PharmaceuticalsJPMorgan Chase-JPM-BankingKraft Foods-KFT-Food processingMcDonald’s-MCD-Restaurants & barsMerck-MRK-PharmaceuticalsMicrosoft-MSFT-SoftwarePfizer-PFE-PharmaceuticalsProcter & Gamble-PG-Non-Durable household productsUnited Technologies Corporation-UTX-Aerospace, heating/cooling, elevatorsVerizon Communications-VZ-TelecommunicationWalmart-WMT-Broadline retailersWalt Disney-DIS-Broadcasting & entertainment’Chevron and Bank of America were added in February 2008, and Kraft Foods, September 2008.http://en.wikipedia.org/wiki/Dow_Jones_Industrial_AverageThe top 10 stocks typically account for about 20% of the S&P 500 index weight and performance, as shown in the table below.Top 10 Components of S&P 500 Index By Weight As of March 2008Company-Float Adjusted Market Cap(Millions of dollars)-Index WeightExxon Mobile 453 3.93%General Electric 370 3.21%AT&T 231 2.01%Microsoft 227 1.97%Procter & Gamble 216 1.87%Johnson & Johnson 184 1.60%Chevron 177 1.54%Bank of America 168 1.46%International Bus. Machines 159 1.38%JPMorgan Chase & Co. 146 1.27%Top Ten Total: 20.2%Source: Standard & Poor’s.http://www.investopedia.com/articles/exchangetradedfunds/08/index-debate.aspCOMPARISONDow Price v. Cap Weighted (posted May 4, 2007)Stock- Cap Weight- Actual WeightAA –0%-2%AIG-3%-4%AXP-0%-4%BA-0%-6%C-7%-3%CAT-0%-5%DD-0%-3%DIS-1%-2%GE-21%-2%GM-0%-2%HD-1%-2%HON-0%-3%HPQ-1%-3%IBM-1%-6%INTC-4%-1%JNJ-3%-4%JPM-3%-3%KO-1%-3%MCD-1%-3%MMM-0%-5%MO-1%-4%MRK-1%-3%MSFT-14%-2%PFE-7%-2%PG-3%-4%T-6%-2%UTX-0%-4%VZ-2%-3%WMT-5%-3%XOM-12%-5%http://247wallst.com/2007/05/04/dow_price_v_cap/image-3-indu_theor_table_3_tphqjpg-for-post-11619/
What is the point of creating a new Financial system,compatible with the Physical System(Much Needed), when the Politicans and their financial backers will simply change same to legally scam it to their advantage.Isn’t the real trick to change the basic relationship between the Banksters and the Politican’s to the point the Public actually have the clout at the Ballot Box ???? Items such as a 3 Term Limit and a limitation on the abilities of the Banksters to Finance the Vote. Let’s face it ,what was the reason Fanny Mae/Freddie Mack paid $8 Million to Obama and $6 Million to McCain ????????
F**kery… I first heard this in Jamaica 80s. Refers (no pun) to any messed up situation or loosely to anything going on in Amerika.
Lucy:Don’t forget to pat yourself on the back once in a while, as you have done the right thing technically and as the Recession turns the corner in a years time you will have far more choices due to all assets having been written down one way or another.The only real backup a person has is job training and more job training for all of life as well as good friends for moral support…….
@ spirit. above..worlds on worlds.He , who through vast immensity can pierce,see worlds on worlds compose one universe,observe how system into system runs,what other planets circle other suns,what varied Being peoples every star,May tell why Heaven has made us as we are..alexander pope, essay on man
Ahh yes; but if they do not invest their monies it will be inflated away now won’t it? Hold onto them accounts with all you can as they will ‘halve’ their value come ‘heck or floods’ (figure out that one son).Hardee har har har har. Ain’t this grand fun?
“The Dow Jones Industrial Average has fallen 20 percent since Inauguration Day”another history making statistic for our beloved America.Obama, who is this Obama you speak of. O wise one!?Ha ha ha…we are screwed. Have you noticed lately, that firms which produce something, like GE, GM are dying? Whilst firms that produce close to nothing, such as Google are the market darlings?The writing is on the wall. Save those pennies, you will need them soon
Biden – I say his thoughts are 5 cm long!he makes Obama look good, simply because he is small in stature.brilliant he said?we were duped by the election hpye. Time will tell that we made a mistake.
Dear Mr President:It is the elitest of the wealthy, those who has been in charge under your predecessor, who de-invested and cashed out the US economy. They are enjoying in splendid retirement now. In their 200ft yachts sailing the south seas, in their hideaway villas. Their cashout strategy has worked like a charm. The rot they left behind have begun to nourish maggots just as they predicted.So your administration now want these most wealthy of folks to return home and invest their hard-earned money to save the country? Ha ha ha!!The USA is not a country my dear Obama. The US is a hedge fund with a bit of imperialism thrown in. Look you know history. The aristocrats of the Spanish Empire stole 150,000 tons of gold from the New World to finance all that was empire. You know, the Spanish Armada and other silly fun stuff of preemptive holy wars. When the gold was nearly used up, the elites cashed out and retired in Mexico and S America, leaving Spain in ruin for the next 200 years. Did the ‘loyal’ Spanish aristocrats and wealthy even invested so much as an oz of gold back in Spain to save it? 16th century Spain was not a country. It was a Roman Catholic Holy Casino. Ha ha ha!!
Obama led tax increase on all hard working American will crowd out private economic growth and bring Obama led depression. Try get a government paid job, I heard, it is better paid than private sector and best benefit, health care, and pension fund benefit. Too bad, all your hard-money will be tax away.
“how greed and excesses are being rewarded” are going toward government workers. the government is getting bigger. bailout for insolvent institutions are getting bigger too. too bad Obama led congress rob your money and pay to other. Try get a government job.
“just start cutting costs”??? doesn’t matter!!! the government is expending at all level. soon the government will raise tax on you and spend your money on your behalf. Especially with Obama and Democrats led congress.
What would happen?Well, good businessmen would buy up the assets of these bankrupt companies on the cheap. Then they would restructure them. Then make them profitable and start growing them again.That’s the way of the world and that’s what isn’t happening in America.
why not just abolish/confiscate all kind of saving. so all money will remain in circulation? why dont you come out and suggest that? your freaking COMMIE. GO BACK TO RUSSIA, SICK COMMIE.
r,now i get it! i can even hear the right accent.thanks.
g,if you missed it, go back two threads and check the mike whitneypiece on blowing up an economy as it relates to this.the more you have, the more you have to lose. period.risk of loss can only be “eliminated” by a perversion of truth butyou will find this perversion corrupts the store of what you have.so it goes.
I heard rumors that W. Buffett is getting MarginCalls! Of all the people, I do not undrestand why he did NOT see this comming?
Nobody ‘knows’ when this current deprecession (not quite a depression and certainly not quite a typical recession) will come to an end. Nobody. I hope that more of the elite minds start stating that they just don’t know. To say otherwise will provide false hopes or instill misguided reactions.This is an open-ended crisis which unfortunately will only react to corrective actions (if there are any) in bits and pieces. The entire picture is too complex to define much less forecast an outcome. The derivative calculus alone proves it.I believe this deprecession moving target will end when it’s damn good and ready. Plan accordingly.AM
Rich, you do a fine job! Don’t say that about yourself…
@Guest II 09:59:34: “What is your solution, Guest [to Obama’s recipe for disaster]?”There needs to be an end to these investment banker bailouts and we have to let the “Too Big to Fail” who’ve failed, remain failed. It does no good to talk about a solution when a cartel of underworld banker businessmen control America’s money supply, and thus all commerce and industry, not for the benefit of the economy but for the benefit of their portfolios and power. It’s just not worth the time or space—although the answers are all there, in the cornucopia of wealth produced by America’s miraculous economic beginnings, in Ludwig von Mises’ correct theory of the business cycle, in the writings of F.A. Hayek and Murray Rothbard, in the brilliant works of Henry Hazlitt and the writings of Ron Paul.In the 1960s, the once-arch Keynesian London “Economist” proclaimed that “Keynes is Dead,” and he remained dead until about a year ago when the FDR tax-and-spend economists such as Krugman came out of ignominious shame, emboldened by the public disgrace of George Bush and the failed policies of his “neo-conservative” Trotskyites.Up until that point, it was grudgingly being acknowledged that the money supply and bank credit play a leading role in the Mises theory of the business cycle. If, as Murray Rothbard said, when that rediscovery, that renaissance, comes once and for all, “the whole concept of a Council of Economic Advisors will be swept away, and America will see a massive retreat of government from the economic sphere.“But for all this to happen, the world of economics, and the public at large, must be made aware of the existence of an explanation of the business cycle that has lain neglected on the shelf for all too many tragic years.”I predict that within the year we will either see Keynes reburied once and for good, or time will run out for the United States as a free, economically vibrant society.FDR’s New Deal represented failure and LBJ’s Great Society represented false prosperity. The heart of the American economic miracle always was and is freedom: its lifeblood free enterprise.Which will it be — freedom or free lunch?Guest
They are ALL Fvcktards.Nixon for going off the gold standardRaygun for his extravagant yearsBush Sr. – war and other assorted goodiesClinton – goosing accounting standards to ‘balance’ the budget, eliminating Bretton WoodsDubya – well, what didn’t he screw up?Obama – so far, he is doing everything wrong. Wrong cabinet, wrong measures re: stimulus to rape the savers – if there are any left at this point.We are hopeless.
Likely the best concisive analysis I have read to date on why Obama’s administration is acting the way it is and why we’re where we are. Credit must be given to Lew Rockwell’s site for having this columnist. Absolutely brilliant in illuminating the obvious which most of us by now have ferreted out but have not articulated quite as well.William L. Anderson needs more exposure.This is a must read. Impressive to say the least.AM”It Is Time to Admit the Obvious: The Political Classes Deliberately Are Blocking an Economic Recovery”http://www.lewrockwell.com/anderson/anderson240.html
Rich – this is just one more symptom of the moral decay that is plaguing us. I agree that they should be punished, but right now on the list of sins to triage – well, it is not tops on my list….
Lucy, I’m sorry all this has happened to you. So disappointing for you and your family, I’m sure.
It’s great to see MA talk about a multi-trillion dollar move!But then, you know, I’ve always wanted to, you guessed it,Print First Ask Questions Later.
I would respectfully disagree. Google produces TRUTH. The Truth is invaluable. Can’t imagine they can gave the equity of Truth away at a measely 85 bucks.With Obama getting elected the ‘safety’ of the suburbs and the need for a car will become irrelevant.P1AQL
Elimination of debt means that you have to create a trade surplus. Telling everyone else to bugger off (like they’re buying much from us anyway, other than weapons) is spitting into the wind.What industry? Airplanes? Yeah, Boeing got like 4 new orders last month (vs. 125 for Feb of last year). This is a dying industry, just like the automotive industry: it would have plunged sooner, but the government has been far more generous in subsidizing it [military spending; ton of money following 9/11; covering airport "security" expenses etc.]).As I’ve mentioned several times, ramping up manufacturing will require lots of resources, many which will need to be imported. This, along with high wages, means a very small margin (read “take a LONG time to make ground on our deficits).Mark
Stop denigrating anarchists! Some of the finest thinkers have been anarchists. These folks can’t compare!Mark
Hi, all! Things are definitely tightening here in my corner of the world, but interestingly, no one here is even close to as pessimistic as those on this blog. Of course, the RGE crowd self-selects for pessimism, but out here the focus is on navigating forward.Even if the real estate, equity and bond markets collapse, there is still an economy – and a global economy too. What most people counted on for savings will evaporate, but that affects the top tier of most developed economies, not the working class and lower middle class. These working people haven’t had savings or secure pensions, except in their homes and government pensions, for the past quarter century or so. The working class and most of the middle class will lose their corporate pensions and 401k savings, many will lose their homes. The top tier will lose their savings and investments too.Anger in the middle class and the top tier will lead to reforms, but for now that means in the USA that they are trying to axe Medicare and Social Security as a way to reinforce the top tier’s extraction of even greater share of a shrinking government take from the economy and world savings. Obama could be Clinton on steroids, as it was Clinton that killed the welfare entitlements.Obama looks to me like the American Tony Blair. Blair was Thatcher’s favourite successor, turning on the base that elected him, and I suspect Obama would have been Reagan’s favourite. Blair intoduced consultants and public-private partnerships to the UK government, vastly increasing the debt and streaming huge profits to private sector cronies. Obama looks determined to do the same, if he can finance more debt, with the able assistance of Geithner and his crowd.Socialise losses – privatise profits. Still the same game!It won’t end well, but that’s only the collapse of the dollar and the USA, the UK and some of Europe. The rest of the world is beginning to accept that America is collapsing and is assessing the alternatives to American leadership. There are many, and some are more attractive given the lawlessness and violence of American leadership for the past decade or so.America represents only 350 million or so of the 6.2 billion people on this planet. American leadership – politically and economically – was good for a few decades, okay for a few more, and bad for the last few. It is time for a change. The destabilisation will be costly, but I’m pretty sure the end result will be better than many now expect – at least on average for the global population, if not for Americans.I was reminded this week that the surest way to rig an election is to pre-determine the short list so that whoever gets the votes is owned. Obama or Clinton or McCain maybe didn’t matter. They all work for the same masters.The rest of the world doesn’t have to serve them, and maybe they are realising it is time for emancipation. Maybe that is why there continues to be optimism out here.
Notice how all these Ditto Heads hide (as “Guest”)?I’d love to see Limbaugh in as president. I’d be able to finally collect on a wager that beheadings of leaders would make a come back…Mark
LB, I am sorry to say that I cannot disagree. I fell for the Obama line and voted for change; but to date his economic policies, national security positions, and middle east policies are virtually identical to Bush! Meanwhile the conservatives rant on about the “stock market is voting against Obama.” It’s all so silly.
HSBC has NOT collected any bailout money.Mark
Mohamed El-Erian (Video), very interesting. Worth watching.http://www.simoleonsense.com/mohamed-el-erian-when-markets-collide/
Rich, I’m going on a 2 week drive down thru Nevada, Arizona and back thru New Mexico and Southern Utah and will be mostly out of touch. Will have a lap top but know the area and there is little chance for a wifi connection most places. We are camping mostly with a tear drop trailer. Getting away from all the noise for a few weeks and hopefully talking to people who don’t have a HDMI port in their foreheads.Sounds like the system is going to implode, no matter what THEY do. I’ll have enough cash and gold in case the credit system goes down while I’m out. I am starting to wonder how bad and what if while away.Crazy times we are living thru. Some where lost between Orwell and Heinlein. Or the shows Lost and Damages. This shouldn’t be happening to the US.I loved our discussion. Thanks. It helps to knock these things around to get a better grasp on them.I sure hope this doesn’t get as bad and messy as I think it could. Wouldn’t be good for anybody. Us or TPTB types. No one is going to win if this melts down and gets out of control.As for the BT, I haven’t felt much like posting there as it seems a little confused still. Goals are good but so far the system by which this kind of dialogue happens is awkward. I have intended to email Tom and let him know but just get so busy inside my own head and time goes by so fast. Hope it is smoother soon. Will check in as I can.
“…..but I’m pretty sure the end result will be better than many now expect – at least on average for the global population, if not for Americans.”and this was a peach too….”The rest of the world is beginning to accept that America is collapsing and is assessing the alternatives to American leadership. There are many, and some are more attractive given the lawlessness and violence of American leadership for the past decade or so.”Yea, sure they are. Pray tell what other freedom-loving, humankind-loving, nation’s leader out there will step up to the plate and make it all better for us? Please give us a name we can truly believe in. Afterall the world is overflowing with such magnanimous saints in government serving their people and always of course everyone besides for their better good. Always.Optimism? I hate to say this but delusional optimism is nothing more than rationalization. The U.S. is far from perfect and on that I can’t disagree with you but amoung the rest of the better imperfects it still beats the hell out of Big Brother Britain for example anyday. Well, at least so far it does.So when I hear this wonderful optimism that a collapsed post-America will bring the rest of the world closer to utopia I really have to have a hearty laugh. Oh yes, it will be a new beginning alright.AM
The Professor needs some new adjectives to describe the recession. “Ugly,” “Protracted,” and “U-Shaped” are getting kinda old.May suggest, “Sweaty,” “Filthy,” “Disgusting,” and “Smelly.”
“Mohamed El-Erian (Video), very interesting. Worth watching.”I tried to watch it but after Mohamed said, to paraphrase….”The government is going to have a much larger role in your lives, not because it wants to, but because it has to…” I had had enough. Oh that was enough for me right there indeed.He sounds like someone who works at a firm that depends on the government (the taxpayer) to bail their arses out of incestous bond relationships that have gone sour due to unforeseen tan-line exposure when the tide went out. Is the correct spelling PIMPCO, btw?AM
Change is in the air. For those that gots, change is bad. For those with nothing, change is good.Good to see you lurking LB.
You really have no idea what America does in the rest of the world, do you? You think this country just goes around the world feeding the hungry and healing the sick?
LB,If you are still lurking, I would be interested to hear if the people you refer to in your corner of the world are paying any attention to the depletion of resource base and other physical constraints resulting from our existence in the closed system of our little planet…it seems to me that most of the “economically literate” fail to be “biosphere literate”As a wise individual recently stated “I’m afraid Gaia is going to be a real hardass when it comes to grading this final project in “ecology 100″ and a lot of people are going to fail the course.”
Any leader who is not complicit in the torture and murder of innocents in the name of furthering the Corporations of America will do, actually, AM.
Short answer is “not much”. Everyone still aspires to the big house, big car, luxury life style ideal they have imported from American TV and movies.Looks like Gaia is going to get an assist from Deflation in making her point about the need for thrifty use of resources. Perhaps a time out due to economic collapse is what mankind needs for a basic reassessment of life style targets.
It’s About Evolution 101……and humans may just be on the precipice of becoming extinct! WE ARE THE EVIL! The extent of that evil has only just begun to rear its ugly head for when the survival instinct kicks in we all “know” where that is heading. Look what happened in Germany after WWI – they voted in a psychopath/dictator, believed they were the superior race, etc. as psychological compensation in response to their depression/hyperinflationary circumstance.With nukes in many hands to start turf wars, not much hope for humans exist in our world. As a species we are already overdue for the event since on average a species becomes extinct after four million years. We are being measured and given what is unfolding I don’t have a lot of hope for our continuation on this planet. The experiments will continue – in a 1,000 years – as shown in [i]Life After Humans[/i], the planet will not even have a visible sign that we were here. We are far too inflated with our being a “Superior” species.
Humans are not pollution. Humans are the resource that gives value to all other resources.I feel sorry for those of you who hate the humans.are you “…Keeping one step ahead of the persecutor within…” (Bob Dylan)oh and: NEW THREAD
I can’t afford to pay you you will have to tend my fields for $3 dollars per/hr, here is a tent you can set up and the store I own sells beans and water, it’s the only store in town because I own all the land. Oh but the beans and water cost more than you make plus you have to pay rent to use my tent and land so we’ll just call it even. I’ll sustain your life but you work my fields in exchange. Now you are a free man, you’re free to go any time you like right?-we live in a democratic society and if you work hard enough I may give you some extra beans for the week, the harder you work the more reward you’ll get so work really hard. Oh yea I own all the land within 100 square miles so without a car get used to it here plus my competitors and I have worked out deals with one another to make sure we pay the same amount in salary.Death to the neo-conservative/Libertarians their stupidity and instinctive greed and justification goes beyond the limits we can sustain as a society. Can’t they see through free trade slavery can just as easily and more effectively been had because the money interface clouds the fact that it’s slavery. So just do away with the government and allow the accumulation of money to enslave the masses with no form of protection? Let the Libertarians die off they are evil!!!!!
You’re right, the alternative would have been soooo much better, as Grandpa McCain is demonstrating every day.
I Hope the well run banks go after the badly run banks. I hope they tell the govt to take a hike… nothing like some good old bank duels at the Bank Corral….and i still say GS is behing most of these bad descions by the govt’t.
On pay cap, what we really need is to go back to the rules when the stock holders actually controlled the boards of directors who then worked for the stock holders again. Instead of this incestuous relationship whereas the the CEO picks the board and the board picks the CEO and they all get together to decide what they are worth. We don’t need pay caps, we need functioning companies that respect the stock holders. In the current set up, the lien holders are more important than the owners of the company and the CEO and Boards are a bunch of incestuous predictors.On education, it isn’t that everyone can’t be educated to some level. The trouble is that everyone is different and there are many different ways different people learn. Some do well with conventional books and others need audio video and others really need hands on. Then there is the difference in what people are interested in. Some students and society would be better off if they were outdoors planting plants while others as an apprentice in an mechanics shop or learning about electricity. The trouble with our educational system is that it was designed for the Industrial Revolution where thing were less complex and students really only needed rudimentary math and writing skills. Our society has changed and become much more complex yet we are still trying to cram all students into a one sized fits all box with an outcome more applicable to the needs of society 50 years ago. So many students are totally bored and feel totally out of touch with what is being crammed… Garbage in equals garbage out.But the solutions are just to make more laws and spend more money on the same production line that is failing. I see our educational system in the same light as GM. Yes they still produce a product but it is overly expensive and not suited to the needs of the customer. Their solution to growth wasn’t to make a better car but to buy up other producers who also couldn’t make a decent car. So they got to be the world’s biggest by acquisition rather than innovation.And yes it is the incestuous management who some how believe that paying themselves ungodly sums of money make them valuable. It is also the country’s health care policies and the unions and the …. the bottom line is US education and US manufacturing were both unable to change with the times, for similar reasons, so are now failing us.We probably will be better off allowing them to fail and then picking up the pieces so as to not be forced to recycle all the garbage attached to their current form.
Lucy- I live in Ca also (Northern). It’s a disaster here and i have watched it building for 10 years. California has more problems than any other state. Its GDP loss drag on the rest of the country alone will be 1-2% this year. What the state govt and Obama (Fed) have failed to realize is that so goes Calif, goes the rest of the economy. No one is addressing the problems out here. Our budget deficit will hit 50-60B later this year. State taxes and fees are rising dramatically. We have the highest unemployment in the number of people out of work. The coming water problem is going to be a disaster. i got notice i can expect my water bill to go to 300-350 a month if I don’t cut 60% and we have already cut a lot the past year because I saw this coming. Sales tax is up, Car tax is up… Real estate will continue to lose value – another at least 30% in CA. Job creation and growth will be slow out here for 10 years. Silicon Valley will continue to fall apart. No one needs anymore computers and iPods out here, and especially most can’t even afford them these days. Twitters and Googles and companies like that do not sustain solid job growth.I went to Costco recently and noticed they raised the prices on everything. 9.99 items are now 12.99, 18.99 items are now 22.99. What I have noticed is we will get nickel and dimed into the poor house out here. We will all be shopping in Wal-Mart until there is no competition left and then they will raise prices on the junk they sell. Gasoline has been on avg 25% more out here for over 10 years than any other place in the country. Why? Because people never paid attention and the oil companies knew this. We have inflation picking up very quick out here on items people need like food, energy, water. On items people don’t need, sure there is current deflation, like on autos, tv’s, big ticket items. We are being gouged right in the midst of this economic crisis as we speak and still most people out here don’t realize it. Sure people are cutting back on consumption, lowering demand, and they think they are saving money, but they don’t see the inflation creep on stuff they need. One step forward, 2 steps back.I’ve been in 12 years orig. from east coast and cannot believe the difference in political, business and social views. These views will never allow a positive rebound form this disaster out here. And yes the greedy idiots on the east cost caused a lot of this, but in my opinion, the people back there will hold them accountable and will slowly recover…I could go on and on about California, but I will say it will be many years before it ever recovers; its problems are way too deep and severe.With no house and no children, why don’t you leave this disaster of a state? Look to the Midwest. Look at the economy of North Dakota sound and robust even now. You are not tied down here other than possibly family, but you can still maintain that by visits, travel, email, phone etc…California and its people who choose to stay will endure many years of hardship. Sure the super wealthy will always survive, but anyone who has wealth still like me, you, most others will watch it go away to fix problems that cannot be fixed. This has been years in the making out here.Best of Luck to you and your family… take control of future and don’t let a state like California hold you back.
“Any leader who is not complicit in the torture and murder of innocents in the name of furthering the Corporations of America will do, actually, AM.”Well then as I said, please give us a name of that leader that represents a nation which operates its business under a lily white idealogy and at the same time also affords its citizenry a Constitution, Bill of Rights, and other sundry details that at least adhere in principle to equal protections under the law.Please.AM
“You really have no idea what America does in the rest of the world, do you? You think this country just goes around the world feeding the hungry and healing the sick?”I never said I was under the delusion that America acts like a boyscout. But again please give me the name of another country that does go around feeding the hungry and healing the sick at the level the U.S. does.Please.AM
Prof Peter singer says that America is least charitible among all the industializes countries by gdp ratio.
Well,I could suggest AUSTRALIA,NEW ZEALAND,NORWAY,SWEDEN,FINLAND,CANADA ETC……
A couple of minor points. Homo Sapiens is nowhere near four million years old. 100,000 max. Plus, I believe there will be massive evidence of human existence on this planet for millions of years to come, IMHO.
Actually, it’s abundantly obvious that Obama does NOT believe in trickle down. The tax cuts were aimed at the middle, and there was even some for the poor. Infrastructure is aimed at the middle. The only major piece of Stimulus I that was for the wealthy was the AMT Patch, a bit of kabuki that we go through every year because the Republicans want a campaign issue.This is standard Keynesian economics, just not enough of it.
But I, I’m the PRIMERO! URRRAAAAA
Slowly people are starting to get what I’ve been saying…There can be no sustained economic growth. Period! Mother Nature holds the time piece and she says that our clocks don’t have as many clicks as hers. (and per the glacial cycles we’re closing in on the next one: we’re starting to run long on our current inter-glacial cycle)Mark
Quid pro quo, KPMG, tax shelters, audits of DOJ and unemployment. U-6 unemployment is 15% yet KPMG remains employed by many of its clients including the DOJ. Word on the street is KPMG’s revenues are down at least $300 million which seems low given the number of failed financial institutions KPMG audits whose financial statements were riddled with tax fraud (at least according to Mike Hamersley) and accounting fraud (which apparently only the markets could figure out, right Citi). When are the massive layoffs at KPMG going to start as apparently accounting fraud is out of vogue? Word on the street is KPMG not only audits a disproportionate amount of Insurance companies engaging in accounting fraud and tax fraud but KPMG’s own purported Bermudian fraudulent Captive insurance company, Park, was engaging in accounting and massive tax fraud. How can this be? KPMG as part of its deferred prosecution agreement with the DOJ was given the audit of the DOJ, perhaps, a quid pro quo for KPMG agreeing to throw several of its tax partners under the bus and destroying theirs’ and their families lives, pay a large fine, be monitored by a fellow who used to work for the government as head of the SEC, Breeden (millions in fees earned by a former government official (more quid pro quo)); a deal struck by Flynn, Loonan, Bennett, Taft and Holmes. Which partners will KPMG throw under the bus next to help in avoiding indictment by the DOJ for the massive $100s of Billions in accounting fraud KPMG assisted their financial clients in purveying against the public and the markets. Is it possible the KPMG partners believe that since KPMG audits the DOJ the massive accounting fraud they purveyed will be allowed? Are the DOJ accounting statements riddled with fraud like most of KPMG’s clients? If I were a KPMG partner I would not count on it judging by what the U.S. Government did to Sadam once a good friend of the U.S., is the same type of devastation and destruction coming to KPMG? Word on the street is KPMG through its captive insurance company, Park, not only defrauded its partners (and the KPMG Board of Directors) by kiting current legal claims into insurance liabilities with the help of none other than AIG but committed massive tax fraud itself with the approval of KPMG’s internal legal counsel Loonan and Taft . In fact, the world renowned whistleblower Mike Hamersley testified to the Senate and DOJ, that the type of “tax structuring” KPMG’s captive insurance company entered into (and many of KPMG’s clients) was in fact, tax fraud. And believe me, Hamersley claims he knows tax fraud when he sees it since while at KPMG he purveyed much of this type of tax fraud for his clients, the very same tax fraud he decried to the Senate and DOJ about while destroying the lives of many families, the emails are there for the world to see yet no one looks, why? Does KPMG believe it and its partners are immune from prosecution for continued and massive accounting and tax fraud because of the “deal” it struck to audit the DOJ? If the U.S. government’s behavior in the past towards its presumed friends, KPMG should not count on it and if you are a partner at KPMG that purveyed accounting and tax fraud (at least according to Hamersley), you can only expect to be thrown under the bus for a life of ass raping just like KPMG, Flynn, Loonan, Bennett, Taft and Holmes did to its tax partners (over rather trivial sums compared to the massive financial fraud presently destroying this country). Of course there may be hope since Hamersley a tax fraudster by his own definition has a high level government job destroying lives over the very same type of tax fraud he used to commit not withstanding the fact the government knows he committed tax fraud (based on Hamersley’s own emails), Quid pro quo?
Forensic Economist … did you catch Joe Mason’s article from 6-Mar-09 on this site? If not, here is the link …=> AIG is a Hedge Fund – and so are Large Impaired Banks
Thanks for the link. I tend to have time only for Nouriel – but obviously there is a lot more to RGE.
You mean like all the other countries that gave their part of $15B to Africa to fight aids?AM
Or like all the other countries that provide massive medical and subsistence assistance when natural catastrophes hit around the globe like the U.S. does?Yeah, the Netherlands. Sure.AM
One other thing: the American people are for the most part the most charitable in the world per capita. Yes, we are charitable indeed, including with our blood. But who cares what the U.S. did as in WWII when they sent their boys in to get slaughtered en masse so that others could live free from Hitler et al?AM
Canada has more corporate corruption than the U.S. It’s just that they hide it well, taking advantage of goodwill and a reputation built during times gone by, when Canada was genuinely a country with principles. Canada today never punishes their corporate gangsters. In fact, the country seems to be some sort of safe heaven for these types. May I bring your attention to Nortel and it’s former CEO John Roth, who presided over the company’s destruction. He walked away with 150M during this mess and no one said boo. We also export these types. May I have a hand please for Canadian born Former WorldCom Inc. chief executive Bernard Ebbers. How about police brutality aplenty? More recently an agitated traveler, a visitor from Poland named Robert Dziekanski was electrocuted (tasered) to death at the Vancouver airport. Obvious abuse of police power. Some would say plain murder, and there is video to prove it. In this case it was decided up front that not one of the four officers responsible will face any disciplinary action.