Financial Armageddon
- Thread starter SGaynor
- Start date
az_max said:
Why? The dollar continues to rise as a temporary flight to quality continues. Oil is dropping as the world economy contracts on a mountain of debt.
Oil and gas will only begin to rise when the dollar starts its downward slide. We are still in deflation as lending is frozen.
UK: Mortgage Lenders Refuse to Pass on Rate Cut as House Prices Plummet
Not only are they refusing to lower rates, which they shouldn't do because risk is high, credit requirements are increasing. The end result, lower real estate prices.
Oil under $50 and $2.00/gal . . . . followed by hyperinflation.
A friend sent me this gem:
http://www.portfolio.com/news-marke...olio/2008/11/11/The-End-of-Wall-Streets-Boom#
http://www.portfolio.com/news-marke...olio/2008/11/11/The-End-of-Wall-Streets-Boom#
Home sick today and channel surfing through the financial/news networks. Appears there are hearings and meetings on everything from lending to hedge funds. The real joke is Sen Dodd's meetings in which he said 'banks won't lend' and consumers 'can't get credit'. Had it ever occurred to him that there is a 3rd possibility? That consumers simply don't want to spend and have retrenched?
I think we are reaching a point in which there is a confidence problem with the government, from Congress, President to the President-Elect. The real problem is government spending and there is no one on the horizon that even is talking about it. A discussion item months ago was how President Bush was the $10T man. Yesterday Forbes added up all the bailouts/programs and came up with another $5T. Everybody is jocking for a bailout and Obama ran on even more spending.
So what do people really see down the road?
Whitehead: "Worse than the Depression"
Calculated Risk
I really don't see the next administration materially decreasing spending. Its as if the US Government has become GM/Ford/Chrysler.
I think we are reaching a point in which there is a confidence problem with the government, from Congress, President to the President-Elect. The real problem is government spending and there is no one on the horizon that even is talking about it. A discussion item months ago was how President Bush was the $10T man. Yesterday Forbes added up all the bailouts/programs and came up with another $5T. Everybody is jocking for a bailout and Obama ran on even more spending.
So what do people really see down the road?
Whitehead: "Worse than the Depression"
Calculated Risk
The economy faces a slump deeper than the Great Depression and a growing deficit threatens the credit of the United States itself, former Goldman Sachs chairman John Whitehead ...
"I think it would be worse than the depression," Whitehead said. "We're talking about reducing the credit of the United States of America, which is the backbone of the economic system. ... I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America. ... I just want to get people thinking about this, and to realize this is a road to disaster. I've always been a positive person and optimistic, but I don't see a solution here."
"I think it would be worse than the depression," Whitehead said. "We're talking about reducing the credit of the United States of America, which is the backbone of the economic system. ... I see nothing but large increases in the deficit, all of which are serving to decrease the credit standing of America. ... I just want to get people thinking about this, and to realize this is a road to disaster. I've always been a positive person and optimistic, but I don't see a solution here."
I really don't see the next administration materially decreasing spending. Its as if the US Government has become GM/Ford/Chrysler.
One week after AIG received an $85 billion bailout from us, executives went on luxurious retreat.
The House Oversight Committee discovered that, just one week after the federal government bailed out insurance giant AIG, company executives went on a retreat to a luxury resort. The executives spent nearly a half million dollars on manicures, facials, pedicures, and massages, among other things. During a recent hearing, Rep. Elijah Cummings asked, “Have you heard of anything more outrageous?”:
Eat, drink and be merry folks - celebrate! - especially on someone else's dime.
The AIG bailout was nothing more than corporate welfare. Just SOP, instead this time around the corporate hogs are dining on some different feed in the trough. I want some heads on a platter. No, wait. Make that paper plates. We can't afford platters anymore....
And what's happening with the remaining $400 billion of the $700 billion banking bailout? Seems Treasury Sec. Paulson is re-writing the "rules." The first half of the cash has simply disappeared into shareholder dividends, salaries, deferred bonuses and such, instead of being used for the intended purposes: to stabilize the markets.
We need more paper plates....
The House Oversight Committee discovered that, just one week after the federal government bailed out insurance giant AIG, company executives went on a retreat to a luxury resort. The executives spent nearly a half million dollars on manicures, facials, pedicures, and massages, among other things. During a recent hearing, Rep. Elijah Cummings asked, “Have you heard of anything more outrageous?”:
Eat, drink and be merry folks - celebrate! - especially on someone else's dime.
The AIG bailout was nothing more than corporate welfare. Just SOP, instead this time around the corporate hogs are dining on some different feed in the trough. I want some heads on a platter. No, wait. Make that paper plates. We can't afford platters anymore....
And what's happening with the remaining $400 billion of the $700 billion banking bailout? Seems Treasury Sec. Paulson is re-writing the "rules." The first half of the cash has simply disappeared into shareholder dividends, salaries, deferred bonuses and such, instead of being used for the intended purposes: to stabilize the markets.
We need more paper plates....
apg said:
What's that about good intentions? In reality the government does not have the ability to stabilize markets or home prices. Assets will seek the correct perceived value regardless of intervention. Home prices cannot be 'stabilized' at current value. They will continue to drop until the ratio between incomes and prices returns to traditional multiples.
A good perspective on 2 presidential adminstrations and a president-elect adminstration short-list.
The High Priests of the Bubble Economy
By Dean Baker - November 11, 2008,
MarkP said:
So, you're saying the Bush bailout was wrong? How is that possible? According to you (and him) they've never ever made a mistake.
The "Bush" bailout? C'mon man, this is just completely disingenuous. How 'bout the "Frank" bailout?
apg said:
I'm saying that the expectation that home prices could be stabilized at value levels close to pre-credit crisis is intellectually dishonest. One day long ago credit availability was based on traditional criteria - verifiable income, downpayment, % of income, etc. If credit is offered on that basis asset value will return to those traditional multiples. Current prices will deflate. EVERYONE knows that. Democrats and Republicans. Last time I checked both Democrats and Republicans have been throwing money around like they have a printing press.
Which they do. This is not a Bush bailout. It is a Democrat & Republican bailout.Now, to say that I never said Bush doesn't make mistakes is incorrect. Our point of contention, repeated again with the financial crisis, is that history is being ignored to serve an agenda. You obviously didn't read the Bubble Economy article which covers two administrations and an incoming administration. Administration is not just 3 presidents. It includes all the advisors and as demonstrated by Obama, its a pretty short list for both Republicans and Democrats.
I'll see your $xxB stimulus package and raise it . . .
Professor 'Nobel Prize' Krugman is proposing $600B . . . .
http://calculatedrisk.blogspot.com/2008/11/krugman-return-of-depression-economics.html
Why not $1T ?
Spending has gone exponential.
Professor 'Nobel Prize' Krugman is proposing $600B . . . .
http://calculatedrisk.blogspot.com/2008/11/krugman-return-of-depression-economics.html
Why not $1T ?
Spending has gone exponential.
Now for something completely relevant-
Anyone got COMEX Gold futures set for a December delivery?
Anyone realize that there is up to a 100% (over spot) premium being paid for physical silver?
Anyone got COMEX Gold futures set for a December delivery?
Anyone realize that there is up to a 100% (over spot) premium being paid for physical silver?
az_max said:
Excellent overview. Appropriately titled - The End
Something I didn't initially think about -
"How much did home prices need to fall for these loans to blow up? (It turned out they didn’t have to fall; they merely needed to stay flat.) "
While I don't usually agree with Krugman's politics, as an economist, he is generally right.MarkP said:
Everything he said in that article is correct. I've always wondered if $700B would be enough, considering the size of our economy (~ $10 trillion), the amount of CDSs out there ($50--60 T), etc. Heck, look at AIG. The government has committed $150 billion to them alone, and they've nearly burned through that in, what, two months?
A friend of mine was telling me about the business that he's in. They are seeing demand destruction on a daily basis. One day the plant is sold out, by week's end, its at 50%.
This is going to get worse before it gets better.
Citi Firing 60,000, Chairman May Still Lose Job
Yahoo Finance
Nov 14, 2008
As for Krugman, he is wrong. Forcing consumption won't change the underlying problems. Low interest rates and bubblenomics have misallocated capital. Until that capital is reallocated into productive activities, forcing lending and consumption will only exacerbate the problem. Bailing out GM is a good example.
Yahoo Finance
Nov 14, 2008
As for Krugman, he is wrong. Forcing consumption won't change the underlying problems. Low interest rates and bubblenomics have misallocated capital. Until that capital is reallocated into productive activities, forcing lending and consumption will only exacerbate the problem. Bailing out GM is a good example.
Two Cold Soakers said:
I follow the metals markets. Premiums have been starting to shrink in the past day or two, but are still crazy high.
As I'd find much amusement in a COMEX default, I doubt it will happen unless some rich Russian, Chinese or Saudi guy who's looking to pull some strings decides to mess with 'em.
Holy cow!
Citigroup plans to cut about 50,000 jobs
By Greg Morcroft, MarketWatch
NEW YORK (MarketWatch) -- In the most dramatic round of layoffs seen to date in the battered U.S. financial sector, Citigroup Inc. said Monday that it plans to cut about 50,000 additional jobs in an effort to cut costs and stem huge losses sparked by bad investment and lending decisions.
Combined with earlier cuts of more than 20,000 positions, the latest job cuts will equal a 20 percent reduction in the bank's workforce from peak levels reached in the fourth quarter of 2007.
Citigroup plans to cut about 50,000 jobs
By Greg Morcroft, MarketWatch
NEW YORK (MarketWatch) -- In the most dramatic round of layoffs seen to date in the battered U.S. financial sector, Citigroup Inc. said Monday that it plans to cut about 50,000 additional jobs in an effort to cut costs and stem huge losses sparked by bad investment and lending decisions.
Combined with earlier cuts of more than 20,000 positions, the latest job cuts will equal a 20 percent reduction in the bank's workforce from peak levels reached in the fourth quarter of 2007.