...in palookaville we take predictions seriously...
...which is why we don't make none...
scheizer: ...: It's pretty clear the pros aren't buying. They are selling to the usual victims with the help of the Wall Street media.
The November low was a panic low and not a capitulation low. Capitualtion is when no one wants stocks, period. With the latest EPS forecast for SP500 earnings now at $42, and a Bear market bottom of a PE=8 (based on the last 4 big recession bottoms), the SP500 could/should see 42 x 8 = $332 in 2009. Perhaps we will see capitulation then. comment
...scheizer: Inning one of the Depression - perhaps that is the way you should look at it, plus read this:
...here in palookaville we take 'flation seriously...
...in the square...here in downtownP...is a monument...a rowing boat...
...in the rowing boat is a trinity dude...
...one dude wotz a 'conomist, a'vestor anna banker...
...the Tdude sits facing the way he has come while...turning his...
BACK TO THE FUTURE
peteypinkslip : y'all should know that i was not always a famous artist...
...time was when i wuz a cappin o industry...
...hadda desk anna swivvel chair...view o the car park...anna greasy pole ta climb...
...back then we had INflation an it feel good...real good...(cos we had no dough)
...in 1971 my bro bought a good detached house fo £4,000...
...in 1978 me an beulah bought a semi-detached house for £12,500...
...we sold it in 1980 for £21,900...
...back then it wuz all union power an strikes fo mo pay...
...in 1979 i had a 16% pay rise an in 1980 i had a 21% pay rise...in 1981...no job...
...a car would last six years iffn yo was lucky...but bits was fallin offa it after 2...
...at work the four to 10 pint lunch was not uncommon...especially onna friday...
...prices always rose...you spent money fast to buy before prices rose further...
...money in savings vehicles lost value fast...
...uncle larry saved but did not buy a house...he was wiped out...
...vast areas of the world were industrially unproductive...
...competition and capacity...scarce...think China, USSR...India...
...opec kept raising oil prices...
...interest rates eventually went ta 15.7%
THE L&N DON'T STOP HERE ANY MORE
...today some dismal souls are waitin fo that ta come around again...
...they are waitin fo a great tsunami o INflation ta come float all their boats once more...
...well ma own view is that no such animal exists at this time...
...the 'golden' goose is dead...
...yo house is worth less than you paid fo it...yo car is too...
...yo industry is not in the hands of the wage bargainers...
...capacity has mushroomed all ovva a wurl...
...yo job is not safe and neither is yo currency...
...yo retirement plan is toast...
...yo savins is without interest...your bust bank...state owned...
...globalisation has changed the local outlook...fo evva...
...in work...here in palookaville few people drink, now, at lunch...
...today cars will last for 10, 12, years...without many bits fallin off...
...many have spent their future income...an then some...
...goverment taxes are far higher than they were...an they still deep in debt!
..an still they sit...backs against the current... ...borne back ceaselessy into the past...
beulah : ah lakked it when we woz still shoppin an they was allas sommat we needed ta git...
...nah at painty bastard finds it onna web fo less...or we jus already got one...
TIKKA DUDE...THEY PLAYIN YO RECORD ATTA TIMES
liam : ..."The money markets are locked because the banks don't trust each other. Even they don't know how much toxic debt is out there – and which bank could be the next to fall. That's why the spread between the London Inter-bank Offered Rate and overnight interest rate swaps of the same maturity remains so wide – and wider in the UK, now, than either the States or the eurozone.
The crucial inter-bank market will remain frozen until the banks are forced, under threat of prosecution, to reveal the true extent of their sub-prime liabilities. Such "full disclosure" won't be easy – involving the exploration of millions of complex derivative contracts, often across borders – but it simply must be done.
America's first serious reaction to "sub-prime" was the Troubled Assets Relief Programme – buying up hundreds of billions of dollars of dodgy loans the banks didn't want any more. When that didn't work, the US asked banks to forfeit some share capital in return for government cash, as in the UK.
But that's failing too – as shown by sky-high Libor rates. So, as a matter of urgency, the West must copy the hard-headed Swedes – who, in the early 1990s, insisted nationalised banks write down the full extent of their non-performing loans before more public money is spent on recapitalisation. Only then – once the sub-prime losses are fully-exposed – can securities markets clear and the inter-bank market reboot.
The UK/US approach of piling public sector debts on top of private sector debts prevents this vital purging process. Until it happens the global economy will continue to slide. But the big Western economies remain in self-denial, repeating the mistakes made by the Japanese. We're creating our very own "zombie banks" – technically alive, but commercially dead due to the weight of their toxic debts. A Western "lost decade" now looms.
So we need Swedish-style full disclosure. Nothing else will break the deadlock and get us out of this fix. Western politicians – and commentators – need to stand up to the powerful money men and administer the necessary medicine...." sunday times...
painty : ah laks liam...ahm sure glad he aint bangin on abaht inflation this week...again...
...the vezzel wiya bezzle...has a pellet wiya poison...
...the pension fromma palace has a brew wot is true...
snowhite : (sotto voce)(to the audience) pssst!...don tell at painty bastard...
...but ahm glad he guardin me stash an not at bezzle b*stard...
...still avvin said that...santa look all pooped aht ta me...
NB chart is uk based and funds reflect the effect of currency movements
charts from equitable life are used as an illustration of sector performance comparisons only and not as a commentary on their investment performance. no opinionis offered here either for or against equitable life as a pension company...
...they just happen to have these charts... ...which i find very helpful... ...when comparing sector fund performance...
richie : hey ponzie...how come everyone stopped shoppin man?
ralf malf : yeahhhhhhh...crummy Christmas anna sucking new yeah...
potsie : whooeeee ponzi i think my strings have snapped...
ponzi : y'all jus stop suckin dudes...i gotta scheme ta get us outa this jam...
THE PONZI CHAPEL CEILING
paintybollox : shoot! ....ah jus bin onna ticker blog...anna bin shocked and awed...
zooneh : wot fo yo bin frazzled man?
beulah : at f**kin ticker jus blowin offa steam innit? ...he allus inna bate...
laverne : ah dunno beulie babe him n mish be two offa best bloggers onna planet...
spidah : onna web yo kin scare yo self...iffn yo aint street smart...
peteyangelo : that ole ticker gotta ponzi scheme all laid bare...itta woik o art...
ticker : ..."This is an uncomfortable reality, but it is reality.
Mr. Madoff stands accused of (in his own words) running "a Ponzi Scheme."
In fact, our entire economy over the last ten years, and really back to at least 1987, has been roughly equivalent to what Mr. Madoff was doing.
So has our government.
Let's go down the list of things that have been inflated beyond their natural boundaries, and look at how each and every one of them was destined to collapse - and why they're all collapsing at once:
The Internet Bubble.
The Housing Bubble.
The Stock and Credit Markets Generally.
Our Government's Finances.
There are many who say that our government debt-bubble will not collapse, and they list a whole host of reasons.
Why would you believe that?
Can you show, through history, one speculative bubble that has not popped?
Can you find one time - just once - that such a bubble was able to be grown without limit?
Simply put: No......
.......Americans have, as a nation, become fat, dumb, "entitled" and lazy.
There are many who argue that those who live "hand to mouth" don't have that choice. Really? Here are two statistics that make clear that this is simply false:
In 2003 there were 159 million cell phone subscribers in the United States, and the average monthly bill was $49.91. Penetration has since grown to approximately 70% of the population (from ~60% in 2003.) Since 25% of all persons are under the age of 18, the majority of the non-subscribers to cellular services are in fact children under the age of 10.
In 2002 58 percent of persons age 18 and over were overweight, and 23 percent were considered medically obese.
.....So in fact we have two "inconvenient facts" that contradict the claim that those who live "hand to mouth" and yet are working could not save for their retirement and old age if they decided to do so - the first being that they spend nearly $600 a year on cellular service - a luxury, and the second being that nearly 6 in 10 are consuming significantly more food (and paying for it) than their body demands for metabolic balance......
.........As the embedded (and fraudulently-concealed) debt continued to mount banks and other institutions found themselves performing a Madoff - that is, issuing new credit (debt) to be able to "show earnings" that in fact were a phantom. Unlike Madoff they did not have to go find someone new to put money in to be able to issue the checks to existing investors, since a bank that can operate with no reserve requirements imposed on it is capable of issuing as much credit as it wants, effectively "printing money."
.....Regulations and leverage limits are supposed to prevent this, but they were systematically and intentionally dismantled in the name of "financial innovation."
In truth they were dismantled in the name of a massive financial fraud that permeated every corner of our credit system, from credit cards to student loans to automobiles to housing.
This ponzi scheme even extended to individual consumers - that is, you.
If you HELOC'd out money and paid down your credit cards with it, then charged anew or cash-out refinanced, you were a Madoff. If you bought a house with an Option ARM, knowing full well you could not make make a fully-amortized "recast" payment, you were a Madoff. If you played the balance transfer game with your credit cards, rolling balances from one zero-interest offer to another, you were a Madoff.Tens of millions of Americans did one or more of these things - and each and every one of them - if not you then someone you knew - was running a personal version of Madoff's scheme.
Every organ of our government and regulatory system was involved in this knowing deceit and the complicity required for it to occur - Congress, The White House, Treasury, The Federal Reserve - and still is.
So why did the bubble collapse, if these institutions are able to continue to literally "print money" and the regulators were intentionally ignoring all of it?
The fundamental problem with all Ponzi Schemes, even those in which the operator is able to issue credit at will, is that it relies on people not challenging the books.
It requires "belief" - that is, confidence.
Thus the phrase "con game".
When Bear Stearns two hedge funds collapsed, the house of cards began to shake. People started looking at balance sheets and asking lots of very inconvenient questions, including exactly how one can have a mortgage-backed security rated "AAA" when 40% of the loans in it are either delinquent or in foreclosure. A few people started to listen to those who had analyzed the math, such as myself and Mish, and the light came on in their head - "Oh My God, they're right!"
See, while credit spends like money, it is not money. ........
.............You would think that Bernanke and Paulson would recognize what is going on - and that they are unable to stop the inevitable collapse.
Here's the problem - they do recognize it, but they are two of the architects of it, and admitting the truth means taking responsibility for what they have done.
That's not going to happen so long as they believe they can manage to keep the "con" going with someone.
The group of "someone's", however, is shrinking rapidly. Commercial and Investment bank loans, then Fannie and Freddie, then commercial paper issuers, and now various sorts of consumer loan products such as credit cards, automobile financing and student loans are all being shunned by those with actual money as they start to peek under the kimono and find not a pleasant sight but rather something both ugly and hairy staring back at them.
Thus, the transfer of all of this "credit" (really bad debt) no longer backed by money (as the producers have taken their ball and left) from the institutions that created the ponzi scheme to "the sovereign" - the Government - in all of its forms, whether it be Treasury or The Fed directly.
The latest announcement came on Friday, when The Fed loosened the terms of the TALF (one of its alphabet soup programs) and effectively allowed hedge funds to borrow from it.
This, incidentally, is why Bloomberg has had to sue The Fed to try to get disclosure of the crap they have taken on their balance sheet, and why Fox News announced that it is suing Treasury to gain disclosure of what they have taken on.
It is also why Markit has announced that they're "postponing" the listing of performance data on "Prime" mortgages - they were pressured to do so (by their own admission) because a published price means no more lying about values, and that could mean immediate (and monstrous) new writedowns for banks which hold trillions of dollars of "Prime" mortgages yet are valuing them pretty much "however they want."
As I said before, evil requires secrecy.
There is real (and justified) fear that should the truth of what is being held in these "Fed and Treasury programs" be disclosed in full that those with money (that is, producers) would flee United States Treasuries (and dollars.)
This is not an unjustified fear; it is, in fact, fear of exactly what has happened thus far and led to the collapse of AIG, Lehman, Bear Sterns and the near-collapse of Fannie and Freddie.
And what is The Fed using for its "credit grade"? Ratings from the same agencies that graded as "AAA" toxic subprime debt that all blew up.
If this last gambit fails so does our government's ability to deficit spend.
There is a near-100% probability that it will fail - we are simply arguing about the "when", not the "if".
See, without evidence that the debt (not deficit) they are asked to back will be paid down at some date-reasonable in the future, eventually the people with money will flee.
It is simply a matter of exactly when their confidence fails (that is, at what leverage ratio do they say "screw this!"), not if it will fail.
Removal of the ability to deficit spend, when the government will be running a $1 trillion+ deficit next year, would result in a roughly 25% instantaneous reduction in the government's budget - assuming tax receipts will be maintained. The problem is that they won't - with unemployment skyrocketing and GDP collapsing, tax receipts are likely to fall 30% or more, meaning that in all probability the government will find itself having to cut its budget in half on an immediate basis.
Since a goodly part of that budget is in fact interest and it cannot be cut (without causing a general default) the consequence would be a requirement to slash all government programs immediately by approximately 60% - including Medicare, Social Security, the military, education, other social programs (e.g. Title I) and everything else. In addition The Fed would be forced to immediately disgorge all of its bad assets into the market at whatever price they could be sold for, lest The Dollar become "de-currencied" almost instantaneously.
Think about Iceland and how quickly their situation unraveled.
hamish macrae : ..."I don't think Gordon Brown has any idea of the contempt in which he is held in the rest of the world. I sat at lunch next to a top European politician a few months ago and his assessment was unrepeatable. (He cheered up noticeably when I said that the PM couldn't win an election.)
carmen macrae : There'll be no tomorrow, no matter how we pretend....
....Tomorrow brings sorrow, and loneliness without end....
beulah : WTF...aint no carmen macrae onna vid.....ya limey b*stard...
NB chart is uk based and funds reflect the effect of currency movements
'FLATION GONNA FLIP
ambrose : ..."Clearly the US is already in the grip of debt-deflation. "The obvious conclusion is that the Fed should print money to purchase private sector assets so as to drive up their price," he said.
Fed chief Ben Bernanke does not need prompting. He made his name as a Princeton professor studying the "credit channel" causes of depressions. Now fate has put him in charge of the channel.
Under his guidance, the Fed has this week pledged to "employ all available tools" to stave off deflation - and damn the torpedoes. It will purchase "large quantities of agency debt and mortgage-backed securities." It will evaluate "the potential benefits of purchasing longer-term Treasury securities," i.e, printing money to pay the Pentagon.
Put bluntly, the Fed is deliberately stoking inflation. At some point it will succeed. Then the risk flips quickly to spiralling inflation as the elastic snaps back. There will be a second point of danger.
By late 2009, if not before, the bond vigilantes may start to fret about the liquidity lake. They will worry that the Fed may have to start feeding its holdings of debt back onto the market. The Fed's balance sheet has already risen from $800bn in September to $2.2 trillion this month. It will be $3 trillion by early next year.
"The bond markets could go into free fall," said Marc Ostwald from Monument Securities.
"The Fed went into this all guns blazing just as the Neo-cons went into Iraq thinking it was a great idea to get rid of Saddam, without planning an exit strategy. As soon as we get the first uptick in inflation, the markets are going to turn and say this is what we feared would happen all along. Then what?" he said.
New Star's Simon Ward said all three measures of the US broad money supply are flashing recovery. M2 has risen at annual rate of 17pc over three months.
"It has all changed since the Fed began buying commercial paper in October. If the money supply is booming at 20pc in six months, inflation will become a concern. Given that public debt ratios are already on an explosive path, we risk a debt trap," he said....telegraph
vince : is he right musky?
charts from equitable life are used as an illustration of sector performance comparisons only and not as a commentary on their investment performance. no opinionis offered here either for or against equitable life as a pension company...
...they just happen to have these charts... ...which i find very helpful... ...when comparing sector fund performance...
"2008: A year to forget, but one we won't be allowed to for a long, long time
This year has been a simply stunning one in financial markets."
terry smith : ..."I think that the downturn will be much more prolonged than usual. The average for the USA for 1854-2001 was 17 months, but the Great Depression of 1929-33 lasted 43 months and the grandaddy of recessions in this period was one which lasted 65 months from 1873-79. It would be wise to prepare for a long siege....
... This is why the next battle will be over the creditworthiness of governments and the strength of currencies. We have already seen the collapse of Iceland caused by its banks having liabilities which its economy couldn't guarantee. It may be tempting to see Iceland as an isolated and extreme case, but don't be fooled. Any country and currency is at risk which has guaranteed bank liabilities which are large in relation to its total economy....
...However, for me, the $64,000 question is not how long the recession will last or whether one or more currencies or governments' credit will be severely damaged; it is whether we will get deflation or inflation as a result of this crisis...
...To put it simply, a government can always raise interest rates until they have stifled inflation. But you cannot cut rates below zero. Japan's long deflation and recession after its asset bubble burst in the late 1980s shows how ineffective government policies can be against deflation. But one thing is clear: both inflation and deflation are pernicious, and we're definitely heading for one or the other, or maybe both in succession. sunday telegraph
"Experts can only guess as we head into the unknown"
irwin stelzer : ..." But we have moved beyond the range of what we know about credit crunches. All we know is that the results so far have not matched the predictions of the proponents of these policies. Which is one reason why Paulson decided not to use the second half of his $700 billion, and to leave it to the next Congress and the incoming president to decide whether it might not be better to pass the remaining $350 billion direct to homeowners who are falling behind with their mortgage payments. Surely that would reduce foreclosures and repossessions, thereby easing the glut of unsold homes, raising prices and helping to bring the recession to an end. Surely? Better, perhaps....
...the following opinions are best guesses based on the imperfect analytical tools in this economist’s tool kit, and a good deal of real-world experience.
So here goes: the second tranche of $350 billion should be aimed at easing credit markets rather than specifically at the housing market; the GM bailout will fail because the parties won’t give up enough to make the company competitive; the dollar won’t sink because there are few places investors can trust as much as the United States, even a heavily indebted United States. That much I know — well, think I know. sunday times
Alistair Darling and Lord Mandelson are preparing for tense negotiations with Britain's banks over their failure to resume lending and offer competitive mortgage deals to homeowners.
We keep saying...we've got no more money for you. sometimes we call in debt, but confess. We've been messin' where we shouldn't have been a messin' and now something else is shrinkin' all our dosh.
These banks are made for lending, and that's just what they'll do one of these days these banks are gonna walk all over you.
We keep lying, when we oughta be truthin' and we keep losin' when we oughta not bet. We keep samin' when we oughta be changin'. Now what's right is right, but we ain't been right yet.
These banks are made for lending, and that's just what they'll do one of these days these banks are gonna walk all over you.
We keep playin' where we shouldn't be playin and we keep thinkin' that we'll never get burnt. Ha! We just found us a brand new bunch of suckers...yeah and what we know they ain't HAD time to learn.
These banks are made for lending, and that's just what they'll do one of these days these banks are gonna walk all over you.
charts from equitable life are used as an illustration of sector performance comparisons only and not as a commentary on their investment performance. no opinionis offered here either for or against equitable life as a pension company...
...they just happen to have these charts... ...which i find very helpful... ...when comparing sector fund performance...
...the only sound is that of the gently fallin dust...
...petey anna crew is gone ta town...
...anna loft is empty...except of course fo beulah...who is takin this opportunity ta...
...check out petey's mac...fo cheatin or gamblin or...WTF is appnin ta her pension stash...
beulah : hi!...it me...BEULAH..!...that painty bastard be gone xmas shoppin atta 5 an dime...
laverne : (aht inna yard...firin up a still)...cheap n lazy...cheap an lazy bastard...
beulah : at somebitch gotta be upta sumpin...allas onna mac an chattin wi iz mates...
laverne : wot fo i gotta chop wood fo a still?
beulah : caint see no cheatin emails...an he aint gamblin...poker faced git!
...lets see if he don f**ked up me stash?...click...click...click...
beulah : WTF..!...wottit all mean?...wots me stash in?...
beulah : damn me eyes an blast me stupid curiosity...killed a cat...innit...
...caint let the git know i wuz spyin onnim... but mebbe i wuz...
...better off not knowin...hope ta God he...hedged my bets...
peteypainty : y'all don pay no tention ta lil ol beulah nah...she don mean no harm...
...she jus lak alla pension suckers out there...hopin fo a best...
...while...fearin fo a worst...
...fact is...alla suckers gotta watch they own backs...an guard they stash...
...nuthin stays the same fo long...
...ya gotta know when ta hold em...an when ta fold em...
...the politix gotta index linked guaranteed stash...so they don care...
...the proper bollox...they jus gotta fill column inches...
...an deliver suckers ta a advertisers...
...that jus leaves you...sucker!
charts from equitable life are used as an illustration of sector performance comparisons only and not as a commentary on their investment performance. no opinionis offered here either for or against equitable life as a pension company...
...they just happen to have these charts... ...which i find very helpful... ...when comparing sector fund performance...
