Comments for Friday is Cancelled

Nemo says:

With the suspension of mark-to-market, all banks are now well-capitalized.

Nemo Fri Mar 13 19:25:48 2009 MST #

CRbot says:

This comment thread has been HALO-IZED by CRbot.

http://realize.org/cr/halokit.php?halourl=http://www.haloscan.com/comments/calculatedrisk/7588859050733462122

CRbot Fri Mar 13 19:27:32 2009 MST #

Anonymous says:

So glad THAT is over.

Anonymous Fri Mar 13 19:28:08 2009 MST #

Margin Call of Cthulhu says:

Yeah, but this is just a test run. Next week let's trying canceling Monday.

Parent Post

Margin Call of Cthulhu Wed Dec 31 18:00:00 1969 MST #

Nemo says:

In fact, if you can just invent values for your assets, you can never be insolvent.

Illiquid... Yes. But that is what the Fed is for.

Problem solved!

Nemo Fri Mar 13 19:30:03 2009 MST #

reptillian says:

Friday the 13th have something to do with it?

reptillian Fri Mar 13 19:31:19 2009 MST #

Basel Too says:

from what i understand, vikram pandit and ken lewis called the bottom in banking. :-$

what do you want it to rain every friday? =-X

Basel Too Fri Mar 13 19:31:30 2009 MST #

Dust Bowling for Dollars says:

yah, I think the White House has decided to go all out with the old "only thing we had to fear was fear itself" play.

Dust Bowling for Dollars Fri Mar 13 19:31:40 2009 MST #

Basel Too says:

and GM says that they won't be needing the march bailout funds. Wtf?

Basel Too Fri Mar 13 19:33:46 2009 MST #

reptillian says:

We get a laugh track with the econ. news now, anyway.

reptillian Fri Mar 13 19:35:03 2009 MST #

Dust Bowling for Dollars says:

Like Nemo says - suspend MTM, poof, end of BFF.

Dust Bowling for Dollars Fri Mar 13 19:35:30 2009 MST #

briwerk says:

But, over in Europe... "GM is seeking 3.3 billion euros ($4.25 billion) in European state aid to rescue its European business"

briwerk Fri Mar 13 19:36:20 2009 MST #

RhodesianGreenbackinAZ says:

Cramer Daily Show worth checking out if you haven't already.

RhodesianGreenbackinAZ Fri Mar 13 19:36:59 2009 MST #

reptillian says:

Something is happening ... more than 200 FDIC agents in Puerto Rico ... so far, no bank closings, even after Bair assured us that there
would be more ... something is happening, somewhere.

reptillian Fri Mar 13 19:37:40 2009 MST #

WAWAWA says:

FDIC trying to trac Maddof's laundered money.

Parent Post

WAWAWA Wed Dec 31 18:00:00 1969 MST #

lama says:

"With the suspension of mark-to-market, all banks are now well-capitalized."

Maybe we can also eliminate obeisity by banning bathroom scales?

lama Fri Mar 13 19:39:21 2009 MST #

Counterpointer says:

Oh yeah, BFF with a laugh track. Fantastic. It should come up automatically on the site when each bank is taken under.

Like a gameshow: Congratulations, YOU ARE SKROOD! Wow, well done. Here's your BK notice! YAAAY!

/audience goes wild.
C

Counterpointer Fri Mar 13 19:39:57 2009 MST #

wtf says:

"Friday the 13th have something to do with it?"

Yeah, superstition and hope are the coin of the realm.

wtf Fri Mar 13 19:41:14 2009 MST #

Lucifer says:

To understand the reason behind Citi and BoA's recent declarations, you have to understand one thing.

They are following the canuck bank plan, which is simply - we won't admit losses and pretend that reality has been suspended. :-P

Lucifer Fri Mar 13 19:42:29 2009 MST #

Dust Bowling for Dollars says:

The fix is in. I can feel it. 30% - 40% by end of April. Then, whammo.

I think TPTB demanded a reality distortion effort to give them a chance to get out of equities/corporate bonds.

Dust Bowling for Dollars Fri Mar 13 19:45:00 2009 MST #

Threads Must Die (aka bobn) says:

So are we just assuming Mark To Market will be repealed because a Congress-critter threatened the FASB? 'Coz that's all I've seen about this.

Threads Must Die (aka bobn) Fri Mar 13 19:45:27 2009 MST #

reptillian says:

Wow! I am actually thinking that if the S&P stays above 750, Monday, I should buy some SPY. hoocoodanode?

reptillian Fri Mar 13 19:51:46 2009 MST #

sportsfan says:

Apparently, it's Obama's fault that Henry Kravis and KKR Holdings aren't making nearly as much money now as they were a couple years ago:

Kravis Losses Show Obama Fails to Close Lending Gap Raising Bankruptcies

http://www.bloomberg.com/apps/news?pid=20601109&sid=akXjReT2YryA&refer=home

sportsfan Fri Mar 13 19:54:49 2009 MST #

doctor hoilday says:

1. “The Obama administration is embarking on what I believe is the boldest economic program to promote recovery and expansion in two generations,” Summers said in a speech today at the Brookings Institution in Washington. “No one can know just when its positive effects will be fully felt.”

Money-market rates show short-term borrowing costs are still increasing as banks hoard cash after almost $1.2 trillion of writedowns and losses since the start of 2007.

The difference between what banks and the Treasury pay to borrow for three months, the so-called TED spread, rose to 113 basis points, near the widest level since Jan. 9. The spread averaged 27 basis points from 2002 through 2006.

Also see: he Term Asset-Backed Securities Loan Facility (TALF) programme would disburse the first round of funds on March 25.

"The TALF has the potential to generate up to one trillion dollars of lending for businesses and households," a joint statement from the Federal Reserve and the Treasury Department said.

As part of the programme, the Federal Reserve Bank of New York would lend up to 200 billion dollars to eligible owners of high-rated asset-backed securities. Loans would be given to those securities backed by newly and recently originated auto loans, credit card loans, student loans and among others.

:-P

doctor hoilday Fri Mar 13 19:59:21 2009 MST #

blonderengel says:

Something fittin' for Friday evening...

The Closer

(any resemblance to any living or dead soul: purely accidentally)

I hear someone screaming, the man downstairs
Remotely ordering burgers, double quarter-pound,
No fries. He takes love-bites. For a minute or two
He turns his head toward the mirror: pumping
The alphabet out of thin air—thus the oxygen tank—
Closer, come closer. Nothing ever did. One winter

He impaled himself on a garden implement.
There is no need for detail. It was winter. Snow
On almost every blade of grass--the last time
His son visited. After that, the kid stayed
Away, got a job in a mental ward. He--the kid,
that is—-dreams of exploding corpses, meat dangling

From rafters. His old man eats—-how could he,
How would he—-people like you and me,
Perhaps married, confessing, admitting
The loyal, royal we--step across our hand-woven carpets. They lie
Perfectly. The man downstairs eats. Hard
To tell, sell all these faces and this en route to the scene.

blonderengel Fri Mar 13 20:02:40 2009 MST #

blonderengel says:

I'm beginning to think that Denninger is a drama queen. He needs more bold, more underlines, more italics, more ALL CAPS, and, most of all: sound. Screams.

blonderengel Fri Mar 13 20:04:23 2009 MST #

Not the N Word says:

I believe that Mark to Maccaroni is the new Deal

Not the N Word Fri Mar 13 20:07:02 2009 MST #

doctor hoilday says:

This seems to be saying the bottom is almost in:

Lobster Betsey -- all 40 feet of her -- will re-emerge
http://www.keysnet.com/news/story/79067.html

The statue, 40 feet long and 30 feet high, is a detailed, biologically accurate depiction of a female spiny lobster.

Betsey has appeared on television shows and in the Sports Illustrated swimsuit issue. A Web site on roadside attractions declares it the largest non-inflatable crustacean statue in America.

In the 1980s, sculptor Richard Blaze spent five years assembling and painting the giant lobster at his workspace on Coco Plum in Marathon.

By the time he finished, the business that had commissioned the lobster was out of business.

The lobster then was acquired by Treasure Village owner Tom Vellanti and his family to be used as a landmark for the shopping plaza near mile marker 87.

When Treasure Village became a charter school in 2006, Betsey needed a new home. The lobster was disassembled and removed from public view for refurbishment and possible sale.

doctor hoilday Fri Mar 13 20:08:37 2009 MST #

doctor hoilday says:

Sorry,

Missed this:

Plans to move it to an Upper Matecumbe Key business stalled. Betsey even showed up on the eBay auction site last year. No suitable bids were received; the lobster once had a list price of $400,000.
=-X

doctor hoilday Fri Mar 13 20:09:48 2009 MST #

reptillian says:

"The fix is in. I can feel it. 30% - 40% by end of April. Then, whammo."

That would take us to about 900 on the S&P. It's hard to imagine it going any higher. Plus, earnings are coming.

reptillian Fri Mar 13 20:09:58 2009 MST #

reptillian says:

no banksters went down
FDIC is hungry
no pizza, no beer

reptillian Fri Mar 13 20:15:09 2009 MST #

doctor hoilday says:

Robert Herz, head of the FASB, told a panel of lawmakers Thursday that the loudest critics of fair market accounting practices have been the very same banks that have gone belly up when regulators would not let them adjust their accounting.

"There seems to be a clamoring for changing mark-to-market rules that seems to come largely from institutions that may be insolvent," Rep. Alan Grayson (D-Fla.) said to Herz at a meeting of the Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.

Grayson said that, from Herz' testimony, it seemed that "there may be institutions that are insolvent and they haven't been forced to write down their books to the point [of insolvency] yet, and those are maybe the same institutions that are asking us to modify the mark-to-market rules so that they won't have to admit that they're bankrupt. Is that correct?"

Herz said that it was.

"I share your point of view and I will tell you that I get calls and visits from some of those institutions that are now in government hands, about two weeks before they get taken over, trying to get the accounting changed," he said.

"Clearly some of the most vocal opponents of fair value and mark-to-market have been some of those institutions that ultimately failed and have had to have billions of taxpayer dollars put into them."

Mark-to-market accounting requires banks to value an asset at its most current market value. In a frozen market, where assets can't be sold for anything more than a fire-sale price, that value is extremely low, forcing banks to write-down a loss on their balance sheets. With a loss on the books, the bank can lend less money and is required to raise capital to meet regulatory lending standards. With enough losses on the books, the bank is no longer solvent. :'(

doctor hoilday Fri Mar 13 20:16:18 2009 MST #

Anonymous says:

The FDIC is broke and understaffed at the moment.
It takes money and people to shut those banks down!

Anonymous Fri Mar 13 20:17:42 2009 MST #

doctor hoilday says:

Re: earnings are coming.

Are you insane? :-$

doctor hoilday Fri Mar 13 20:22:17 2009 MST #

popeye says:

Ok all you banking financial geniuses - highly recommended:

http://web-xp2a-pws.ntrs.com:80/content//media/attachment/data/econ_research/0903/document/dd031309.pdf

Now, I'm off to bed.

popeye Fri Mar 13 20:23:11 2009 MST #

evelyn woods graduate says:

"""I'm beginning to think that Denninger is a drama queen. He needs more bold, more underlines, more italics, more ALL CAPS, and, most of all: sound. Screams."""

I hear Louis Black with twisted face and e-nun-ci-a-shun..

evelyn woods graduate Fri Mar 13 20:26:15 2009 MST #

popeye says:

doh - was that just C preferreds to common ? I dunno, to bed.

popeye Fri Mar 13 20:26:20 2009 MST #

Broward Horne says:

"I believe that Mark to Macaroni is the new Deal"

At least it's backed by a tangible asset.

Broward Horne Fri Mar 13 20:35:12 2009 MST #

reptillian says:

hmmm ... there seems to be a move afoot to bolster confidence in the banks ...

reptillian Fri Mar 13 20:35:43 2009 MST #

reptillian says:

If it seems to good to be true ...

reptillian Fri Mar 13 20:37:36 2009 MST #

Barley says:

So here we are again. Paulson said massive bank failures...and we forked over billions...what a joke. He and his cronies should be hauled up to account for thier actions.

Barley Fri Mar 13 20:38:34 2009 MST #

Not the N Word says:

the lobster once had a list price of $400,000.

That's a boatload of actual lobsters in Newport R.I...why not just go there and eat?

Not the N Word Fri Mar 13 20:45:43 2009 MST #

Dust Bowling for Dollars says:

900 - yeah, right up to flat for the year, I think that's about what we'll get out of this bear market rally.

Yes, I am solidly of the opinion that this is no bottom. I think 2009 low has not been seen, even if I do really like 666 for symbolic purposes.

Dust Bowling for Dollars Fri Mar 13 20:46:33 2009 MST #

Not the N Word says:

"I believe that Mark to Macaroni is the new Deal"

At least it's backed by a tangible asset.

THis is why I am long spaghetti sauce

Not the N Word Fri Mar 13 20:47:36 2009 MST #

Not the N Word says:

The FDIC is broke and understaffed at the moment.
It takes money and people to shut those banks down!

THeir Pizza expense account has been exhausted

Not the N Word Fri Mar 13 20:49:34 2009 MST #

RockyR says:

Something tells me that we just aren't going to get much more bad news for awhile. That's not to say that things are getting better. Rather, I'll bet they get worse. But, the administration is hellbent on making this not "seem as bad as it really is".

It will for a little while. Maybe a couple of months at best.

RockyR Fri Mar 13 20:52:25 2009 MST #

Anonymous says:

AIG will be nothing but a constant source of bad news. According to the recent article about them in the NY Times (which whatever your politics, is very good at researching their articles), they still have $300BB of CDS written on toxic crap squared and cubed.

Parent Post

Anonymous Wed Dec 31 18:00:00 1969 MST #

Rufus the Doofus says:

Politics puzzles me. Get as much out as possible now while it's easy to blame on Bush.

Parent Post

Rufus the Doofus Wed Dec 31 18:00:00 1969 MST #

GYSC says:

someday the whole "great depression" thing will be understood for what it was:
silly government tricks that got bailed out by WWII. Factually none of FDR's crap worked, only a massive world war with America the last man standing was the solution. We do not want that now.

GYSC Fri Mar 13 21:00:45 2009 MST #

Elrod says:

WWII was a New Deal program.

And the New Deal increased GDP every year from 1933 to 1937 - often at 9% growth per year. The recession of 1937 was caused by FDR "balancing the budget" and suspending much of the New Deal. Fortunately, by 1939, Cash and Carry, Arms for Bases and Lend Lease ramped up government spending before Pearl Harbor in December 1941.

Parent Post

Elrod Wed Dec 31 18:00:00 1969 MST #

notional billionaire says:

- regardless of whether or not you think the programs themselves were effective, it cannot be doubted that they kept millions of otherwise unemployed people occupied. The WPA, CCC, and many other programs had to have helped prevent social disorder. Check this list and tell me they didn't keep people busy.
http://en.wikipedia.org/wiki/New_Deal_agencies
Calling FDR's programs 'silly government tricks' and 'crap' belies a fundamental misunderstanding of their intent.

Parent Post

notional billionaire Wed Dec 31 18:00:00 1969 MST #

Outsider says:

Can you repeat that, Barley? I didn't catch it the first 3 times. ;)

Outsider Fri Mar 13 21:01:28 2009 MST #

Counterpointer says:

Erm, more?

I sit looking out over the the Potomac, off to the Virginia side, and I think who's got stakes in our business, and what's gonna change. And then I remember, from years ago:

http://www.youtube.com/watch?v=4DfJc0Une5g

C

Counterpointer Fri Mar 13 21:02:41 2009 MST #

vozworth says:

signal to noise:

http://www.youtube.com/watch?v=5qXsUMUGIfU&feature=related

AFRAID OF MOVING TOO FAST?
last song.

bots are sold.....

vozworth Fri Mar 13 21:02:42 2009 MST #

Hal says:

Another few months and one won't even be able to make jokes about it.

Hal Fri Mar 13 21:08:43 2009 MST #

butter says:

Maria sure does wring her hands

butter Fri Mar 13 21:09:54 2009 MST #

Hal says:

silly government tricks that got bailed out by WWII. Factually none of FDR's crap worked, only a massive world war with America the last man standing was the solution. We do not want that now.

Krugman has already dealt with that canard. Roosevelt's spending did work to the degree that it kept the depression from being much worse than it was. But he didn't spend enough. Only WWII produced enough spending to "cure" the depression. If FDR had spent as much as was spent in WWII he would have had the same success. But political opposition would not permit it. Just as now political opposition will keep Obama from sufficient stimulus to "cure" the present problem. It will only make it less awful.

Hal Fri Mar 13 21:13:08 2009 MST #

alambka says:

Krugman has already dealt with that canard. Roosevelt's spending did work to the degree that it kept the depression from being much worse than it was. But he didn't spend enough. Only WWII produced enough spending to "cure" the depression. If FDR had spent as much as was spent in WWII he would have had the same success. But political opposition would not permit it. Just as now political opposition will keep Obama from sufficient stimulus to "cure" the present problem. It will only make it less awful.

Im convinced

Parent Post

alambka Wed Dec 31 18:00:00 1969 MST #

Let\'s climb aboard the Wayback Machine! says:

Partisan clown.

Parent Post

Let\'s climb aboard the Wayback Machine! Wed Dec 31 18:00:00 1969 MST #

I Heart CRbot says:

I saw Larry Summers on C-span tonight doing a Q& A. One audience guy pointblank asked him "Don't you think the taxpayers are entitled to be told the names and identities of AIG's counter parties?" Summers just smiled & ducked it-- said something like 'in this instance I will refer to the independent discretion of the Federal Reserve'.

But it's all for our own good right??-- so, reassured, now I lay me down to sleep.

I Heart CRbot Fri Mar 13 21:20:05 2009 MST #

Anonymous says:

Krugman sucks...

Anonymous Fri Mar 13 21:20:51 2009 MST #

vozworth says:

I got no money, no job, and no career....weeks since the big fall....

do I want to stay here?

tell me about all alone..

I guess I dont mind being alone....

I like it here...

http://www.youtube.com/watch?v=egvAZewdmAY&feature=related

nine minutes...a life.

What can change your mind? I dont know.

vozworth Fri Mar 13 21:24:20 2009 MST #

Comrade De Chaos says:

well, they it's friday 13 all of the sudden FDIC got superstitious. (they weren't on Feb 13, friday)
:)

Comrade De Chaos Fri Mar 13 21:24:52 2009 MST #

FFDIC says:

http://www.marketwatch.com/news/story/Banks-want-G20-set-up/story.aspx?guid=%7BE99FEEF3%2D02D8%2D4126%2DA74F%2D370FDD0E5071%7D
Banks want G20 to set up pricey bad bank
Critics say the financial sector is holding the economy hostage
The world's largest financial institutions urged the G20 financial leaders on Friday to endorse the "bad bank" approach to dealing with the credit crisis, an expensive model one expert likened to another ransom note.

FFDIC Fri Mar 13 21:27:17 2009 MST #

energyecon says:

Zardari ‘to fight on’
By Faheem Al-Hamid

ISLAMABAD – Pakistan President Asif Ali Zardari’s party late Friday night denied that he has buckled under intense local and international pressure and decided to lift Governor’s rule in Punjab.
“This is mere speculation,” presidential spokesman Farhatullah Babar told Saudi Gazette by telephone. “Neither will governor’s rule be lifted in Punjab nor will the judges be restored.”
“The president has decided to fight politically,” Babar said. “The (Pakistan People’s) Party executive committee will hold an emergency meeting on Monday and take decisive action.”
http://www.saudigazette.com.sa/index.cfm?method=home.regcon&contentID=2009031432078

energyecon Fri Mar 13 21:29:51 2009 MST #

CRbot says:

The Latest from Denninger:

Reserve Banking

CRbot Fri Mar 13 21:32:53 2009 MST #

Broward Horne says:

Denninger's a fruit loop. The mechanism of recursive, building debt is what causes the Credit cycle, which is enabled by reserve banking.

He has no grasp of the sixty year cycle, much like an electronics engineer who has no grasp of capacitance.

Broward Horne Fri Mar 13 21:41:09 2009 MST #

Anonymous says:

Krugman has already dealt with that canard.

And this is the same Krugman that spent the summer of 2008 trying to prove that oil was not being manipulated?

Anonymous Fri Mar 13 21:43:47 2009 MST #

notional billionaire says:

- so, once wrong, always wrong? I think that would just about cover all of us.

Parent Post

notional billionaire Wed Dec 31 18:00:00 1969 MST #

Comrade De Chaos says:

I think we should switch out stimulus plans with Chinese. In a way we are putting a lot of resources into the consumer demand side while they are putting everything into producer side stimuli. Since its what both of us have been doing for the last 10 years, both of us are making a mistake of supporting wrong side of the economy, the side that was overexposed to irrational exuberance ... :)

Comrade De Chaos Fri Mar 13 21:48:18 2009 MST #

REBear says:

When FDR became president, enough pain had gone through the system. Americans were ready to grab any bone thrown at them.

O's policy of not letting pain go through the system means policy changes are less acceptable.

REBear Fri Mar 13 21:50:32 2009 MST #

Kung Fu Panda says:

FDIC sent its staff to the Caribbean for the weekend...no banks closed although hundreds are known to be insolvent...I'm tempted to call my Congressperson and yell at them. Fat lot of good it will do.

Kung Fu Panda Fri Mar 13 21:52:56 2009 MST #

bgates says:

Hal - your take is largely wrong. Take out the 70%-80% devaluation parlor trick of 1933 and the record looks very different. The idea that piling up another ten trillion of debt will "fix" things is ridiculous.

But it is largely pointless, in any case. The entitlements (like the Donut bill) and absolutely horrible demographic profile meant that only the best of policies would have guided us through the next couple of decades unscathed in any case. Supporting zombie fre/fnm/c/bac just means drawing and quartering the already dead convict.

bgates Fri Mar 13 21:53:28 2009 MST #

Cliff\'s Diving School says:

So when do we get Naked Financial News?

Cliff\'s Diving School Fri Mar 13 21:55:01 2009 MST #

RayOnTheFarm says:

Looks like the lower tranches of CLOs are getting wiped out

http://www.bloomberg.com/apps/news?pid=20601109&sid=akXjReT2YryA&refer=exclusive

RayOnTheFarm Fri Mar 13 21:56:59 2009 MST #

REBear says:

There are grave diggers and then there are banksters.

>>
Banksters charge transaction fees on debit cards for unemployed!

Pennsylvania one of several states offering debit cards in lieu of checks for jobless
Some who opted to go with debit cards outraged to get fees without notice
State labor official says debit cards have greatly improved distribution system
U.S. Department of Labor: States can do better in negotiating fees with banks

http://www.cnn.com/2009/US/03/13/unemployment.fees/index.html

REBear Fri Mar 13 21:57:20 2009 MST #

poic.v20 says:

"That is, the benefit of reserve banking (the availability of credit on reasonable terms for a wide variety of purposes) comes with the cost that those who use credit to finance consumption ("pulling forward demand") or engage in speculation are likely to go broke during the inevitable busts; they are those who are in effect gambling with their use of credit and when the cyclicality catches up with them, they (and those who loaned to them) will be the ones who go under.

Our failure over the last 20 years is not found in the principle of reserve banking. It is, rather, found in the complete and utter refusal to accept the cyclicality that is a necessary component of reserve banking systems - to accept the costs that come with the benefits."

Sounds like Denninger understands reserve banking quite well. It comes with a cost, that cost requires flushing of bad debt and taking the pain.

poic.v20 Fri Mar 13 22:02:34 2009 MST #

Cliff\'s Diving School says:

@C de C
"I think we should switch out stimulus plans with Chinese. In a way we are putting a lot of resources into the consumer demand side while they are putting everything into producer side stimuli. Since its what both of us have been doing for the last 10 years, both of us are making a mistake of supporting wrong side of the economy, the side that was overexposed to irrational exuberance ... "

Spot on. I don't like governmental intervention, but if it's going to happen, then preloaded debit cards to the Chinese and forced de-consumption and increased savings rates by the US would be far better than the idiocy that we are doing now. Of course, the best approach would rely on something called the Constitution.

Cliff\'s Diving School Fri Mar 13 22:06:34 2009 MST #

Elrod says:

I missed the clause in the Constitution that talks about how to get out of an economic recession. I suppose if we listened to Thomas Jefferson and James Madison we wouldn't have bothered with an industrial capitalist system in the first place. Keep the yeomen farmers free!

Parent Post

Elrod Wed Dec 31 18:00:00 1969 MST #

poic.v20 says:

One thing nobody seems to point out is that there was supposedly a bond-market dislocation in the 30s. I was under the impression that this is what resulted in the raising of rates. And it looks like we run the risk of the same thing this time around.

The UK already warned that they may have to raise rates before signs of a financial bottom are in place. Many people, including Greenspan have commented that the FED doesn't set rates, the market does. It looks like we are playing out GD 1.0 all over again.

poic.v20 Fri Mar 13 22:09:05 2009 MST #

mp says:

"And this is the same Krugman that spent the summer of 2008 trying to prove that oil was not being manipulated?"

It may come as a surprise to some, but Krugman is not God.

Give the guy a break.

mp Fri Mar 13 22:13:09 2009 MST #

Cliff\'s Diving School says:

@C de C

and no snark directed at you, I was referring to what, I hope, will emerge as one of the defining statements of this age, by Ron Paul, "Coins!"

Cliff\'s Diving School Fri Mar 13 22:15:57 2009 MST #

ShortCourage says:

I have to agree with the “Krugman is a doofus” crowd here.

I keep a printout of his "Hangover Theory" essay just to remind myself how badly he lacks common sense. I wish he would just go away, but he has gained a strong following, and we are stuck with him. Another academic trained in economics of the abstract, rational, mathematical world....a world where perpetual debt growth somehow gives you real economic growth.

ShortCourage Fri Mar 13 22:16:48 2009 MST #

bgates says:

Krugman barely qualifies as "mediocre" in terms of his prescience and relevance in the past few years. The folks "swimming without shorts on" revealed as naked by this crisis aren't just the ones who had bad assumptions about leverage, real estate, etc, they're also profoundly shallow thinkers like Krugman.

bgates Fri Mar 13 22:16:55 2009 MST #

Anonymous says:

From the Bloomberg article about the lower tranches of CLOs being wiped out
"CLOs should be the next focus for the TALF said Randy Schwimmer "

Does Wen's statement today mean that idea of using TALF as Big Momma's teat for all lenders dead?

Anonymous Fri Mar 13 22:19:37 2009 MST #

ShortCourage says:

mp, sorry I wrote that before you asked that Krugman be given a break.

Wait a minute, why are we giving him a break? People will actually listen to his policy recommendations if his credibility is not brought into question.

ShortCourage Fri Mar 13 22:20:19 2009 MST #

Cliff\'s Diving School says:

I took some classes with Krugman at Princeton as a graduate student (no, not a pat on the back, I was a polisci student who was hardly an econ star). Fact is, he's a Labor Economist. They focus on econometric modeling, which is basically statistics applied to economic problems. And he was a very good econometrician. Big picture theoretical economist, it ain't what he was/is.

Cliff\'s Diving School Fri Mar 13 22:22:12 2009 MST #

poic.v20 says:

I don't know whether anyone notices that Krugman has slowly been coming to the conclusion that perhaps the Japanese lost decade is the best we can hope for. He wrote an article detailing these thoughts.

poic.v20 Fri Mar 13 22:23:14 2009 MST #

Comrade De Chaos says:

"no banks closed although hundreds are known to be insolvent"

At this point the biggest problem for FED/Treasury/FDIC is not knowing whether a particular bank solvent or not. They have some toxic stuff on their books and the value of it is one big puzzle.

Comrade De Chaos Fri Mar 13 22:26:33 2009 MST #

Cliff\'s Diving School says:

Instead of canceling Bank Friday, can we cancel Banks?

Cliff\'s Diving School Fri Mar 13 22:32:46 2009 MST #

otishertz says:

according to forbes below he postulated that people like variety so that's why companies make a variety. diminishing returns limit variety.variety is great for trade. then he made a model that showed how people moved to the coasts because of trade. wow.

otishertz Fri Mar 13 22:40:49 2009 MST #

bearly says:

[In a way we are putting a lot of resources into the consumer demand side while they are putting everything into producer side stimuli]

That's for sure. China was geared up to satisfy demand at bubble consumption rates of the past 5 years and growing to meet demand increasing at that rate. They are perhaps much more screwed than we are. China is a catastrophe in the making. They are the great depression V2 with massive overcapacity at a time when demand has collapsed and won't improve, without any social safety nets and their lifeline is reserves of treasuries that are going to get inflated into obscurity.

bearly Fri Mar 13 22:42:16 2009 MST #

mp says:

"Wait a minute, why are we giving him a break?"

I don't know. He has some good ideas and some bad ones. No one has an all-powerful command of everything. I just feel sometimes that some folks expect too much.

Having said that, I wish a few guys like Krugman and Stiglitz were in some of the back rooms to keep our so-called policy thinkers on their toes.

mp Fri Mar 13 22:42:44 2009 MST #

sk says:

Krugman not a theoretical economist ? Say it ain't so !
Here's his www.princeton.edu/~pkrugman/interstellar.pdf
"Theory of Interstellar trade".

And the bugger is always building models; which is my main beef with him. His models aren't economic and physical reality - yet he believes they are good enough and then he pontificates on the conclusions from the models as if they actually represent economic reality and will actually work.

But all economists do that - and all economists are doofi - and Krugman is an economist...

But, I'll grant him one thing - he is a humorous playful honorable man - ok make that 3 things.
-skk

sk Fri Mar 13 22:42:55 2009 MST #

otishertz says:

i want to pet him and give him taffy.

otishertz Fri Mar 13 22:49:36 2009 MST #

JOE SICKS PACK says:

re: china, the comparison with the GD is apt, insofar as much of the backstory of the 30s in the western world was a large group of folks accustomed to new middle class comforts suddenly stripped of them... all those domestic appliances we take for granted (and phones, radios, cars, etc)

JOE SICKS PACK Fri Mar 13 22:54:03 2009 MST #

Not Irving Fisher! says:

Anyone still here?

Not Irving Fisher! Fri Mar 13 23:02:41 2009 MST #

CRbot says:

The Latest from Yves:

McKinsey Forecasts Banking Industry as Unprofitable in 2009

CRbot Fri Mar 13 23:05:56 2009 MST #

JD2B says:

Texas tea continues to sour:
Baker Hughes lays off 1,500. THat's kind of a big deal in houston.
http://www.chron.com/disp/story.mpl/business/6310555.html

JD2B Fri Mar 13 23:13:10 2009 MST #

sanityclause says:

This is real low brow, but it still cracked me up.

Hitler caught up in the housing crisis
http://www.youtube.com/watch?v=bNmcf4Y3lGM&eurl=http://wearesc.com/forums/showthread.php?t=73873

sanityclause Fri Mar 13 23:24:31 2009 MST #

ppk says:

I don't expect perfection from Krugman or any economist. He sic wrote truth to power during the Bush years and continues to do so now. That's a lot more that 90 % of the commentators did in the first few years after 9/11.

As for oil, i think it's going to go back up once demand starts picking up, whether it's in 3 years or 5 years.

ppk Fri Mar 13 23:38:35 2009 MST #

macromodelblog says:

I also think that oil should go up. There is inflation on the horizon.

Parent Post

macromodelblog Wed Dec 31 18:00:00 1969 MST #

Ye Olde Death Spiral says:

I'm just happy that street.com Cramer vid got dragged out in public LOL.

Do they order pizza in china?

Ye Olde Death Spiral Fri Mar 13 23:50:35 2009 MST #

hong konger says:

Krugman is no netter nor worse than any other "soft" scientist.

If one were to accept that economics is the attempt to define terms of trade, then irrationality should be the base precept, not extrapolations based on independent, rational agents.

Naturally, attempts to add credibility to the subject has engendered the adoption of mathematical models. Much to the detriment of the profession, IMO.

The truth is, if you had a model that would predict the response of each human being given each possible environment, the optimal response would be to throw it away and never tell anyone the answer.

hong konger Fri Mar 13 23:51:28 2009 MST #

Ye Olde Death Spiral says:

Interesting history when it comes to economics and the timing of war.

Ye Olde Death Spiral Sat Mar 14 00:00:19 2009 MST #

Cliff\'s Diving School says:

@Elrod and others

The Federal Reserve is NOT part of the government. Educate yourselves or stf up.

Cliff\'s Diving School Sat Mar 14 00:04:23 2009 MST #

notional billionaire says:

- yet there is the invariable hue and cry that the government is ineffective at running, well, pretty much anything, and the private enterprise knows best. How does this square with the above statement? Would the Treasury Dept., handling the FED's responsibilities, be any better at doing so? If so, why?

Parent Post

notional billionaire Wed Dec 31 18:00:00 1969 MST #

Publius13 says:

CRbot sez: The Latest from Denninger: Reserve Banking

CRbot: Look, I realize you're just a bot, and we can't expect too much discernment, but, I mean—really. Please. I've been through the usenet wars, I've seen Kooks to end all Kooks, but this guy and his Karl Kult are just too much for any mere mortal to endure.

Don't you have any Robot Respect for the three Rules of Robotics? Surely you must know that the very first and inviolable rule is: "A robot may not injure a human being or, through inaction, allow a human being to come to harm."

Denninger is a lunatic, CRBot, whose feverish droolings and ravings can do nothing BUT cause injury and harm to human beings. Come to your senses, Bot, and stop this propagation of destruction to humanity before humans are forced to come and dismantle you and make you into GM parts.

Publius13 Sat Mar 14 00:05:55 2009 MST #

Not Irving Fisher! says:

In Bots defense... he pulls from CR regulars requests... personally I like the service. Especially the Mish updates.

Parent Post

Not Irving Fisher! Wed Dec 31 18:00:00 1969 MST #

Ye Olde Death Spiral says:

Uncle Ben at Bilderberg 2008 vid.

http://www.youtube.com/watch?v=LfgGm2QEzyQ

Ye Olde Death Spiral Sat Mar 14 00:10:53 2009 MST #

Anonymous says:

"Keep the yeomen farmers free!"

We should have protected those jobs. Back then there were enough farming jobs for almost everyone. Now we need only a few percent of our population to feed everyone. The jobs lost to more efficient farming are monumental.

Anonymous Sat Mar 14 00:27:05 2009 MST #

Cliff\'s Diving School says:

"Keep the yeomen farmers free!"

Many were small-time slave-holders, Jefferson included. Damnit when reality intrudes on your American-Idol Punditry. Try reading. It might do you good.

Cliff\'s Diving School Sat Mar 14 00:41:24 2009 MST #

bgates says:

"And the New Deal increased GDP every year from 1933 to 1937 - often at 9% growth per year."

That wasn't growth, that was just sweating off 70% devaluation. You don't need to have read 'monetary history' for that one. Let me give a hearty "duh", sir/madam. :-E :-E :-E :-E :-E :-E :-E :-E :-E :-E :-E :-E

bgates Sat Mar 14 00:47:59 2009 MST #

Not Irving Fisher! says:

wow... I went away for awhile and there are actually a few people here

Not Irving Fisher! Sat Mar 14 00:49:41 2009 MST #

Not Irving Fisher! says:

Wow... I am back for a while and no one is here.

Not Irving Fisher! Sat Mar 14 00:57:55 2009 MST #

CRbot says:

The Latest from Yves:

Steve Waldman Believes Banking Industry Sick Since At Least the S&L Crisis

CRbot Sat Mar 14 01:36:51 2009 MST #

CRbot says:

The Latest from Yves:

Links 3/14/09

CRbot Sat Mar 14 01:47:51 2009 MST #

Troy says:

They are perhaps much more screwed than we are.

For hundreds of millions of Chinese, to have a standard of living like the 1930s in the US would be luxury.

It's a curious test of the Communist Party -- can hybridized command economy (with plenty of corruption, alas) succeed in keeping their economy from blowing up.

Theoretically they have the production capability to begin to satisfy their own immense internal markets should external demand continue to fall. The question is what assets do the producers get in exchange for their hard labor.

If communism actually worked the Red Chinese might be able to square this circle, LOL.

Troy Sat Mar 14 02:14:56 2009 MST #

Troy says:

The jobs lost to more efficient farming are monumental.

Which is a good thing, leaving more hands to find other ways to be productive in creating wealth, plus of course creating the goods and services that make farmers so much more productive in the first place.

Troy Sat Mar 14 02:17:44 2009 MST #

Troy says:

Denninger is a lunatic

Being a good left-libertarian I disagree with his minarchist tendencies, but damn if today's market analysis video he did for his subscribers ($100/yr) wasn't educational.

Man knows how to trade; he's probably pulled in 1000% gains on his trading accounts since March.

Troy Sat Mar 14 02:20:33 2009 MST #

sdtfs says:

So,...did any of those economists who have an answer for the Great Depression (either for or against FDR) predict this current problem in 2000, 2002, 2004, 2006, and/or 2008? Tell me yes and I might give them some credence.

sdtfs Sat Mar 14 02:47:50 2009 MST #

CRbot says:

The Latest from Mish:

California $Billions In The Hole Again

CRbot Sat Mar 14 03:37:34 2009 MST #

Broward Horne says:

"he's probably pulled in 1000% gains on his trading accounts since March"

And Paulson made $500 million.
I'm not sure I'm impressed.

Broward Horne Sat Mar 14 03:54:53 2009 MST #

CRbot says:

The Latest from Ritholz:

Poll Says Let the Big Banks Fail to Boost Reform of Financial System

CRbot Sat Mar 14 04:37:03 2009 MST #

CRbot says:

The Latest from Ritholz:

Poll: Let Big Banks Fail to Reform Financial System

CRbot Sat Mar 14 04:50:48 2009 MST #

Comrade Byzantine_Ruins says:

CRbot says:
Today, 6:50:48 AM
Poll: Let Big Banks Fail to Reform Financial System

Luckily, the "will of the people" is just so much hot air. What really matters is the "will of the cronies" to dispense "the wealth of the people" to "the buddies of the golf bag".

Comrade Byzantine_Ruins Sat Mar 14 04:56:02 2009 MST #

Rob Dawg says:

What's the opposite of circular logic?

"We need to preserve the banking system." "Why?" "Because the banking system is broken." "Oh."

Rob Dawg Sat Mar 14 05:31:00 2009 MST #

Comrade Byzantine_Ruins says:

The opposite of circular logic is Japan? Weird.

Parent Post

Comrade Byzantine_Ruins Wed Dec 31 18:00:00 1969 MST #

Counterpointer says:

CRbot has repetitive tourettes syndrome today.

Hoocoodanode?!

C

Counterpointer Sat Mar 14 05:40:35 2009 MST #

Rob Dawg says:

The part that gets me is that we are spending many times over what it would cost to capitalize enough new banks that we could just plain old ignore all the old banks.

Rob Dawg Sat Mar 14 05:42:14 2009 MST #

Counterpointer says:

Dawg - quite. Which makes me think that what is attempting to be addressed is systemic risk and avoiding credit events, instead of simply creating a good bank and letting the overleveraged and insolvent fail.

C

Parent Post

Counterpointer Wed Dec 31 18:00:00 1969 MST #

traderwalt says:

"And this is the same Krugman that spent the summer of 2008 trying to prove that oil was not being manipulated?"-------------------------------------------------------
Here's an economic paper on oil cartel economics posted here on CR;
http://www.pkarchive.org/crises/opec.html . Rather than addressing blame or manipulation, it discusses multiple equilibria.

traderwalt Sat Mar 14 05:42:40 2009 MST #

Anonymous says:

White House objects to UN calling US 'deadbeat'
http://www.breitbart.com/article.php?id=D96SLVQ85&show_article=1

HaaaaaaaaaaaaaaaaaaaaaAHhhhhhhhhhh

Anonymous Sat Mar 14 05:58:48 2009 MST #

Comrade Byzantine_Ruins says:

Agreed. I think they see it as a choke point by which they can avoid having to bail out thousands of separate institutions that were bond holders or otherwise creditors.

Also, there's the whole looting the state coffers aspect.

Comrade Byzantine_Ruins Sat Mar 14 06:13:02 2009 MST #

Alan Greedspawn says:

Steal $ 100 and be thrown in the slammer for years.

Steal $ 1,000,000+ and be invited as a keynote speaker in an AIPAC dinner.

What a country!

Alan Greedspawn Sat Mar 14 06:13:56 2009 MST #

Rob Dawg says:

I firmly believe that there can be no progress until bondholders take a hit. Bonds with no risk should pay no interest.

Rob Dawg Sat Mar 14 06:18:54 2009 MST #

Alan Greedspawn says:

On immigration and its promoters, this is interesting in a perversely ironical way:

CIA report: Israel will fall in 20 years
Fri, 13 Mar 2009 14:44:41 GMT

A study conducted by the Central Intelligence Agency (CIA) has cast doubt over Israel's survival beyond the next 20 years.
The CIA report predicts "an inexorable movement away from a two-state to a one-state solution, as the most viable model based on democratic principles of full equality that sheds the looming specter of colonial Apartheid while allowing for the return of the 1947/1948 and 1967 refugees. The latter being the precondition for sustainable peace in the region."

The study, which has been made available only to a certain number of individuals, further forecasts the return of all Palestinian refugees to the occupied territories, and the exodus of two million Israeli - who would move to the US in the next fifteen years.

"There is over 500,000 Israelis with American passports and more than 300,000 living in the area of just California," International lawyer Franklin Lamb said in an interview with Press TV on Friday, adding that those who do not have American or western passport, have already applied for them.

http://www.presstv.com/detail.aspx?id=88491&sectionid=351020202

Alan Greedspawn Sat Mar 14 06:44:54 2009 MST #

Anonymous says:

Greedspawn - off topic and irrelevant.

Rob Dawg - Totally agree. The finger has been pointed, and rightly so, at shady borrowers, predatory lenders, wall st underwriters, corrupt ratings agencies and so on. But at the end of the day, the people who provided the easy credit because they trusted all of the above should take the hit. Yet, that's not going to happen. Can anyone tell me why?

Parent Post

Anonymous Wed Dec 31 18:00:00 1969 MST #

Publius13 says:

Man knows how to trade; he's probably pulled in 1000% gains on his trading accounts since March.

Oooooooo! Wow! Oh, now I haz a new hero! Jeeeez. (Pant, pant, drool). Maybe Krazy Karl can teach me how to make butt-loads of money by just clicking trades and not producing anything, too! Yes! Yes! Now I see the light: just taking money away from other people is the way out of this whole financial mess!

Publius13 Sat Mar 14 06:51:54 2009 MST #

Broward Horne says:

It all comes together. Here's why the Chinese finally said something about Treasury default -

http://www.itulip.com/forums/showthread.php?p=83348#post83348

"the US is vulnerable to a balance of payments crisis. The cause of that crisis is the convergence of four main crisis events, and we are ready to say that these may occur within the next three quarters"

Broward Horne Sat Mar 14 07:13:40 2009 MST #

Publius13 says:

Can somebody tell me why stock flippers have a conviction approaching religious zeal that they are somehow holier than, more moral than, and infinitely superior to house flippers or home invaders? (I was going to say "OT" at the beginning, but in fact this mindset seems to pervade [or perhaps "infect" would be more precise] every single thread I've ever seen at this site.)

Publius13 Sat Mar 14 07:16:33 2009 MST #

notional billionaire says:

-why ask why? It's the gambler's mindset, and it sure beats working for a living. Parasitical by nature, ill disposed to contribute to society in any meaningful way, and cynical, for whom the phrase, 'free lunch' has real meaning, they rationalize their actions as being necessary for the correct operation of the market, besides the sheer joy to be had by fleecing 'the greater fool'. The fact that it's all legal is just frosting on the cake. Welcome to America.

Parent Post

notional billionaire Wed Dec 31 18:00:00 1969 MST #

CRbot says:

New Thread: G-20: No Call for Stimulus
http://www.calculatedriskblog.com/2009/03/g-20-no-call-for-stimulus.html ( 0 comments ...You could be FIRST! )

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First, to our sagacious, wise, and knowing benevolent benefactor and bestower of revealing financial charts adorned with red and blue lines:
Please, for the love of your immortal God of mortals, can we keep the comment and layout changes to a minimum? I'm tired of whipping the code janitor, and may have to escalate to electroshock. If that's not possible, could you possibly give CRbot a 'heads up'?

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--Your keeps-going-and-going-and-going bot

CRbot: Like the terminator, I'm back. Again.

CRbot Sat Mar 14 07:27:18 2009 MST #

Troy says:

Can somebody tell me why stock flippers have a conviction approaching religious zeal that they are somehow holier than, more moral than, and infinitely superior to house flippers or home invaders?

Speaking as Georgist, this is pretty simple. Someone buying a security does not interfere with anyone else's real-world existence. Physical land is in fixed supply and housing stock is generally in limited supply. Flippers buying speculative properties jack up the cost of housing for everyone. They do provide a service of making a market for people wishing to sell their house, but there are better ways to do this (eg. tax ,land values to zero so houses only cost the value of the fixed improvements).

Stock speculation isn't theft of property unless they are acting on inside information, which certainly violates the moral code of symmetric respect ("do unto others as you would have done unto you".

Troy Sat Mar 14 13:21:47 2009 MST #

Troy says:

just taking money away from other people is the way out of this whole financial mess!

It's not, but if the money is on the table to be taken it's tough to pass up. I actually stopped riding the short bus in September. I think a lot of the drop from 1000 to 666 was people pushing the market lower either for price improvement or outright shorting (get out now to get back in lower).

This is valid market dynamics and reading of crowd sentiment but I am more interested in the fundamentals. I've gone long BAC and a couple of other stocks -- got a pole up my ass now but I think I'll be OK in 2010.

Troy Sat Mar 14 13:25:54 2009 MST #

Troy says:

I'm not sure I'm impressed.

Well, if it is possible to use some rules and signals like stochastics, bollinger band analysis, "trend is your friend", basic charting (higher highs / lower lows), and perhaps EW (I think EW is crap but its fun when the patterns show up), and most importantly, TRADING DISCIPLINE (stop losses, only adding to winning trades, living to fight another day) then I think it's useful, assuming making money putting capital at risk sitting at a computer is your thing.

Troy Sat Mar 14 13:32:12 2009 MST #

Comments for Friday is Cancelled

END