Comments for Krugman Discusses Geithner's Toxic Plan on News Hour

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CRbot Mon Mar 23 23:09:27 2009 CDT #

Nemo says:

I admit the plan is more subtle than I expected.

Nemo Mon Mar 23 23:09:34 2009 CDT #

alybaba says:

More subtle in how it transfers taxpayer wealth?

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alybaba Mon Mar 23 23:13:28 2009 CDT #

Basel Too says:

marron doesn't really address either the asset bubble or the consumer balance sheet.

Basel Too Mon Mar 23 23:21:17 2009 CDT #

Geoff says:

Exactly..put money in banks, make it available, and that somehow miraculously makes people more creditworthy? Absurd..we're looking at millions more jobs lost, incomes cut, and still, most budget line items (health, education) rising at 5+%, so people's standard of living and ability to service debt is still going down. Plus, their assets have been decimated. So the only way banks lend more is if they start going back to the previous status quo of idiot loans...those that wont be repaid. And what is the frickin point of that?

Parent Post

Geoff Mon Mar 23 23:28:27 2009 CDT #

Michael says:

“I think the American tax payer is going to have the last laugh in the end because there ain't no way in hell the tax payer is ever going to be able to pay back the debt Washington D.C. politicians are piling on us.

BO is going to go down in history as the biggest Buffoon of a president we ever had.

Maybe Timmy boy should come up with a plan to to buy up tax payer debt, that will work as well as anything else he can dream up. :-$

Michael Mon Mar 23 23:23:05 2009 CDT #

Nemo says:

More subtle in that it places the burden of losses on the FDIC and Federal Reserve... Once those losses are realized.

Which is not exactly the same as placing the burden on the taxpayer. Still thinking this one through.

Nemo Mon Mar 23 23:23:19 2009 CDT #

KirkH says:

Krugman looks like he's squirming due to a burning desire to slap his forehead and sigh, but he can't.

Just got his book at the airport. Good stuff.

KirkH Mon Mar 23 23:24:46 2009 CDT #

Basel Too says:

nemo, think AIG Financial Products subsidiary

Basel Too Mon Mar 23 23:24:54 2009 CDT #

Geoff says:

What a hack this guy Marron is....he says since Citi went to $1, and then back to $3 that the market has decided that the losses arent that bad. WRONG! Citi went back to $3 because the govt said "too big to fail" in so many words, and we will throw as much money as we can find to support that price and keep it from its true value (which is $0.0) What a disingenuous hack. I hate arguing with that type, and there seems to be no end to the cesspool from which they are created.

Geoff Mon Mar 23 23:26:15 2009 CDT #

Blackhalo says:

Agreed. VERY painful to watch/listen to. I am disappointed at News Hours ability to reach Daily Show levels of preparedness.

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Blackhalo Mon Mar 23 23:30:49 2009 CDT #

Yalt says:

I liked Marron's list of prerequisites for a functioning market, which included "leverage provided by the federal government." I guess that's a general principle now?

I've been noticing that quite often when I see somebody saying something that seems totally nonsensical, they're in the process of talking their book and are desperately trying to conceal that fact. Not an easy chore here for Marron, when the question meant to elicit a positive response regarding the plan was "would you be interested in participating?" He can't very well say "of course we would--after all, they're handing out gold-plated toasters."

Yalt Mon Mar 23 23:29:06 2009 CDT #

dryfly says:

Golden Toasters - great line.

dryfly Mon Mar 23 23:30:53 2009 CDT #

1 currency now [yogi] :) says:

Have to say Marron referred to Citi's 3$ current price in the context of the market pricing in toxic assets over the last year, not the silly jump from 1$.

1 currency now [yogi] :) Mon Mar 23 23:34:22 2009 CDT #

Anonymous says:

It isn't called the Snooze Hour for nothing.

Anonymous Mon Mar 23 23:36:08 2009 CDT #

bearly says:

In a Deal with the devil, you get burned

[Banks, like real estate developers, sold off most of the riskiest debt, said Dan Fasulo, a London-based managing director at Real Capital Analytics.

“They keep the good deals for themselves, and they do the riskier, shadier stuff with a partner,” Fasulo said. “What are you going to do with the bad stuff? You’re going to try to syndicate it privately.”]

http://www.bloomberg.com/apps/news?pid=20601109&sid=aR72TKlxCQ7A&refer=exclusive

bearly Mon Mar 23 23:37:14 2009 CDT #

dow30 summer weight says:

on the "subtle" concept:

Your comments about it reminded me of the MLEC Super-SIV which would have been funded by money from some number of banks, except nobody would contribute to it. So now they co-opt the FDIC as the SIV entity. The FDIC already has a small(relative to the problem size) pool of money from the premiums paid by the banks and can get more by raising the premiums charged to the banks. When the worst comes, they are back by the full faith and credit boilerplate and draw from taxpayers.

So, trying to find a ray of sunshine in the mess, we can hope that before the FDIC goes broke they raise the premiums charged to FDIC member banks and never actually hit the taxpayers up.

I'm dreaming but it sounds good. Maybe they subliminally sent me that message already and I'm just spitting it back out.

dow30 summer weight Mon Mar 23 23:38:09 2009 CDT #

Tom Stone says:

Nothing but good times ahead woohoo!

Tom Stone Mon Mar 23 23:39:01 2009 CDT #

Michael says:

I never liked Krugman's Keynesian approach, but on this issue, at least he's grown a set of balls and is sticking to his guns.

Michael Mon Mar 23 23:40:58 2009 CDT #

Caitlin in Ross says:

Okay. I don't buy it - that "housing is the biggest problem," according to Marron.

This plan is good for the banksters, but I can't see how it helps anybody else, companies or individuals.

Actually the "biggest problem" in our economy is/has been lack of middle-class wage-paying jobs, espec. those that provide for a so-called "middle class" lifestyle in the face of decades of working people's income deflation.

First, in the 70s, women went to work so that families could maintain the "traditional american" lifestyle. (There were other reasons and benefits, too, but this was a major factor in keeping living standards up after the mid-70s.)

When that was no longer sufficient (for a variety of reasons, including vast govt giveaways to the rich, staggering cost increases in health, education and other middle class 'necessities'), Americans basically put everything on plastic and/or HELOCs to try to stay middle class and create a "better future" for their children.

The big hope was that somehow, their income would increase. The alternative was too depressing to contemplate. Hence the massive 'self-underwriting' in the RE market. HT to the dear Tanta.

Note that this situtaion did and does benefit the banksters hugely, as they were able to pump out cc and heloc (secured) loan products to fleece the public of interest and fees. It also served the govt, as it lulled folks into thinking that upward mobility was still possible... HA!

Now, with no jobs or fear of job loss, no credit, no HELOCs, no retirement savings or pensions (most of us in our late 40s' on down are in this boat), not much in the way of interest for any savings we do have, and ever escalating health care premiums, there just isn't going to be any great rush out to buy much.

Except, of course, for booze, candy and a few movies. Sale of those things are UP.

The real plan that Obama ought to be working on is some kind of WPA-employment program, since we don't have much in the way of any other jobless support to help people stay off the streets & feed their kids.

Even in my area (Marin County), folks are starting to get really frightened. :(

Caitlin in Ross Mon Mar 23 23:41:38 2009 CDT #

A.B Prosper says:

Spot on Caitlin. Several really good books have been written on this including "The Two Income trap." by Elizabeth Warren and "Strapped" by Tamara Draut.

Fixing what ails the country means getting wages up to the same relative level they used to be (about 30%) and lowering the work week (with the same pay) to compensate for greater efficiency.

Basically if we don't follow "Ford's Law" and pay the highest wages possible while making the best goods and the lowest cost and trading them as far and wide with others who do the same -- we are toast

Optionally prices can drop about 30% but with all the debt that almost mandates a repudiation which will hurt.

What Big O seems to have planned instead is Mugabenomics, run the presses and that just is a sad failure soon to happen.

I just hope it doesn't turn Mad Max

:'(

Parent Post

A.B Prosper Tue Mar 24 01:56:25 2009 CDT #

NateTG says:

Krugman has the 'stunned by stupid' look down real well.

NateTG Mon Mar 23 23:41:39 2009 CDT #

dryfly says:

PK no hat tip for Nemo - cheapskate. Keep flaming him Nemo.

dryfly Mon Mar 23 23:42:03 2009 CDT #

--Andrew says:

Nemo, out of curiosity, did you do the following calculation? It almost sounds like the Banks would be better off investment-wise if they bought their own bad assets with the government's backing. They come up with the minimum down, the government loans them the rest, viola, cash to the tune of the government's backing is freed up AND they don't lose the asset and limit their loss exposure to the minimum downpayment they had to make.

--Andrew Mon Mar 23 23:43:34 2009 CDT #

WACConomics says:

“my simple thoughts..

The banks are going to have to sell their valuable assets. The unmentionables, they'll be able to keep, under new mtm policy.

All the while making new, supposedly better loans, to recoup the losses still hiding in the closet. Probably will be able to state positive earnings, how remarkable.

WACConomics Mon Mar 23 23:43:39 2009 CDT #

WACConomics says:

Might I add pension funds, insurance companies, institutions in general would LOVE to have the cash-flows of certain assets. Especially with that type of risk-agreement.

WACConomics Mon Mar 23 23:45:41 2009 CDT #

Geoff says:

And another thing...on the argument of, if you nationalize you own 100%, well, yeh, by definition. But at least then we dont have to throw money at middlemen, and we get the added bonus of wiping out the shareholders and haircutting bondholders. That might make a bit of sense since they are the maroons who invested with these criminals. What exactly is the problem with holding those accountable accountable? Why should random people be accountable, and the people who were most directly part of the problem be rewarded with diamond studded gold toasters? And furthermore, if you nationalize now, and fix the banks, you have a chance of economic recovery. News flash to Mr Marroon...we've been at this for nearly two years, not solving by various complex methods, and the whole time what have we accomplished - ? - destroying the economy that's what. Idiots. If we continue down that road, we lose another half million jobs a month, and for each month, the consumer ability to carry debt and the banks ability to lend is further impaired. How many years does it take to learn this lesson, huh? Best and brightest my arse..more like worst and shadiest.

Geoff Mon Mar 23 23:45:55 2009 CDT #

Anonymous says:

Nemo - Thank you for your explanation.

I am playing around with a spreadsheet and see no reason why the bank will come clean on their "legacy" assets.

Anonymous Mon Mar 23 23:46:04 2009 CDT #

Jay D. says:

.......WBC final now......Jap vs Kor......we have to import asian ball players .....another prima facie evidence of decline of USofA........

Jay D. Mon Mar 23 23:46:21 2009 CDT #

alybaba says:

Silly question, but how would the Fed theoretically recoup its losses? FDIC can raise premiums on the banks.

alybaba Mon Mar 23 23:48:18 2009 CDT #

sm_landlord says:

The Fed can just print up money to cover its losses. They already seem to be doing that.

Parent Post

sm_landlord Mon Mar 23 23:54:00 2009 CDT #

Yalt says:

Nemo, out of curiosity, did you do the following calculation? It almost sounds like the Banks would be better off investment-wise if they bought their own bad assets

Without a doubt, but politically it would be a disaster if they don't cover their tracks. I'd expect some variation on (1)C lends the down payment to Hedge Fund X, which they perhaps have a concealed interest in, to buy BAC assets, while BAC lends the down payment to their Hedge Fund Z to buy assets from C.

Even if nobody has the chutzpah to actually use an entity they have an interest in to do the deal, they'll get a better price the more leverage the fund is able to use.

Yalt Mon Mar 23 23:50:15 2009 CDT #

1 currency now [yogi] :) says:

Bloomberg is listening to me and has gone populist:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aDYvjoj6a6ME&refer=home

1 currency now [yogi] :) Mon Mar 23 23:51:49 2009 CDT #

Yalt says:

1 currency now [yogi] :) says:
Today, 11:51:49 PM

Great. So Bloomberg opens the story with two paragraphs about the larger implications of the bailout, but then follows up with about 25 paragraphs on bonuses and even the concern with the payments to counterparties winds up being the recovery of "bonuses at foreign companies that received money in the insurer’s rescue."

"Deutsche Bank, Merrill Lynch and Goldman Sachs all have said the AIG payments weren’t related to employee pay."

Missing the forest for a blade of grass. Bloomberg is, I mean...I have no doubt that the spokespersons for DB, ML and GS are all quite aware of the diversion they're perpetrating.

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Yalt Tue Mar 24 00:00:42 2009 CDT #

dryfly says:

......WBC final now......Jap vs Kor......we have to import asian ball players .....another prima facie evidence of decline of USofA........

Why would a kid want to play baseball - they all want to make the big money and be investment bankers.

dryfly Mon Mar 23 23:53:55 2009 CDT #

Caitlin in Ross says:

Anytime, anyone says 'best and brightest,' it makes me want to vomit. None of these so-called 'best and brightest,' in govt or wall street are worth a plug nickel.

Where are the 'honest and hardworking,' or the 'industrious and intelligent'? Let's find those folks...

Caitlin in Ross Mon Mar 23 23:54:01 2009 CDT #

NateTG says:

Yalt, it's simpler than that:
Goldman buys a huge (say $100B worth) pile of calls on Citi stock. Then it uses taxpayer money to pay 110 cents on the dollar for Citi's legacy assets. Citi is suddenly solvent, and the calls are deep in the money, so GS makes off like a bandit.

NateTG Mon Mar 23 23:59:22 2009 CDT #

Lucifer says:

The current levels of delusion and wishful thinking are painful to watch...

Lucifer Tue Mar 24 00:04:32 2009 CDT #

Jay D. says:

“Anytime, anyone says 'best and brightest,' it makes me want to vomit. None of these so-called 'best and brightest,' in govt or wall street are worth a plug nickel.

----------------------------------------------

........actually they were 'best and brightest' before went to gov. .....when they entered the secret door , their brains mal-fuction due to bureaucracy.....

Jay D. Tue Mar 24 00:04:43 2009 CDT #

Michael says:

I feel like I'm an extra in the greatest epic movie in the history of mankind.

Plot;
The evil genus Allan Greenspan engineers the greatest financial catastrophe the world has ever seen.
There are many actors throwing around trillions of dollars trying to maintain the class structure of the planet. Many subplots such as Madoff and Staford to keep the audience interested.

What would be a good name for this movie? Greenspan's Follies, Ponzenomics, Total Collapse? Suggestions please.

Michael Tue Mar 24 00:04:48 2009 CDT #

Jackrabbit says:

It seems to me that the main complaint is that taxpayers get shafted. But lets face it folks, whatever the ultimate outcome, taxpayers get shafted. Our pockets have already been picked. The question is what is the least bad way to "move on."

The next complaint is that it does nothing to force the banks to lend. But the alternative, a pre-packed BK/Nationalization results in private banks that also will not lend.

The Geithner plan will accomplish its goal: removing toxic asset assets from bank balance sheets. It wont be pretty: sweet deals for banks, FDIC left holding the bag, Bankers and Execs getting paid huge bonuses for nothing, and a decline in the dollar, but the Fed/Tsy/FDIC can act to ensure that it works.

This is what systemic risk feels like. This is why there should NEVER be *private* institutions that are too-big-to-fail. The debate we should be having is how do we (as citizens) break up these financial juggernauts so that our greatgrandchildren's children don't face such a systemic clusterf*ck in the future.

Jackrabbit Tue Mar 24 00:07:05 2009 CDT #

Michael says:

Nice analysis Jackrabbit, but I don't think our future is what they are concerned about.

Parent Post

Michael Tue Mar 24 00:15:45 2009 CDT #

EvilHenryPaulson says:

If I didn't make it clear in the lady thread,
The minimum overpayment above NPV necessary to exploit the government plan is 7.01% which implies the treasury is contributing matching equity

Anything beyond that is profit, to be distributed using whatever kickbacks negotiated or chosen according to game theory

The limit to how much can be overpaid is how much money the banks can raise with the FDIC bond guarantee, the rate doesn't matter if you expect default but the total amount will matter

With that line of thought the optimal choice for banks would be to have as few deals as possible overpaying by as much as possible while having the treasury sacrifice as much equity capital as possible

Oh yeah, without the treasury equity the proditability hurdle is 14%

Even though the treasury might want to prevent collusion, I'm confident they couldn't atop it if they tried (using Barclays SCM as inspiration)

So the expected loss at full utilization and complete corruptness would be $1.4tn ($100bn UST + $100bn matching + $1200bn FDIC guaranteed)

Although I expect the UST won't have the max $100bn available, nor will $1.2tn be raised in FDIC guaranteed bonds without adverse consequences

EvilHenryPaulson Tue Mar 24 00:07:43 2009 CDT #

EvilHenryPaulson says:

Ok weird autocorrect words from my phone
lady>last, atop>stop, etc

Parent Post

EvilHenryPaulson Tue Mar 24 00:12:50 2009 CDT #

EvilHenryPaulson says:

and that should be $1.3tn maximal losses under the scenario where the private money colluded to be paid from Govt losses

I guess the question becomes how much of that stays in the bank, and is it close to being sufficient?

Parent Post

EvilHenryPaulson Tue Mar 24 00:16:49 2009 CDT #

Yalt says:

Nate, aside from the political problems associated with such a simple plan I don't think the option markets are liquid enough to pull it off. The total value of all June expiration calls (the most active contracts) on C is about $70M, and I'm guessing the total value of all outstanding calls of whatever expiration isn't more than about $200M. Who's going to sell you $100B worth?

Yalt Tue Mar 24 00:09:07 2009 CDT #

JimPortlandOR says:

"Toxic banks not toxic assets"! Imagine. That was said on PBS-TV!

Breathtaking...

JimPortlandOR Tue Mar 24 00:10:24 2009 CDT #

Jackrabbit says:

Are the non-recourse loans secured or unsecured? I wish that were a stupid question.

Jackrabbit Tue Mar 24 00:10:46 2009 CDT #

FFDIC says:

Charlie Ross on CST/PBS going over the slick deal now. Got popcorn?

FFDIC Tue Mar 24 00:12:16 2009 CDT #

Sucka\'s Goin Down says:

"What would be a good name for this movie? Greenspan's Follies, Ponzenomics, Total Collapse? Suggestions please."

Teotwawki XVI It's Different This Time

Sucka\'s Goin Down Tue Mar 24 00:15:13 2009 CDT #

Jackrabbit says:

... name for this movie?

American Dreamers

Parent Post

Jackrabbit Tue Mar 24 00:17:29 2009 CDT #

Anonymous says:

"Banks, like real estate developers, sold off most of the riskiest debt, said Dan Fasulo, a London-based managing director at Real Capital Analytics."

I know for a FACT that a certain large bank who has thus far survived the crisis did that with residential mortgages. They kept all the loans originated in-house on their balance sheet, and securitized all their wholesale/correspondent loans. They knew the brokered loans performed worse, all else equal, and also knew the rating agency models did not differentiate between retail and wholesale loans.

So if you want to buy an MBS with loans from this certain bank, beware, because if you expect it to perform as badly as the average MBS, it will perform even worse.

No doubt the MBS is on the balance sheet of some other bank who will be selling it to the taxpayer, uh, a private investor, one of the good guys.

Anonymous Tue Mar 24 00:16:32 2009 CDT #

Patrick Henry says:

Someone just made a lot of money...and it ain't any of you.

Patrick Henry Tue Mar 24 00:17:22 2009 CDT #

1 currency now [yogi] :) says:

yeah but "proditability"? :-E

1 currency now [yogi] :) Tue Mar 24 00:17:31 2009 CDT #

Basel Too says:

jackrabbit:

under the legacy loans program, the FDIC guarantees are collateralized by the assets.

under the legacy securities program, the Fed loans are collateralized by the submitted assets.

such a pain in the ass to keep this crap straight.

Basel Too Tue Mar 24 00:18:00 2009 CDT #

Jackrabbit says:

Thanks.

Parent Post

Jackrabbit Tue Mar 24 00:21:28 2009 CDT #

Anonymous says:

Just a few quick notes about 'The Plan' as reported on German news, though the day's top news concerned the money for Mercedes, even though as was also mentioned a few times, Opel sure needed that money much, much more than Mercedes.

The first reaction, mainly from the news readers, as compared to any financial reporters, was total disbelief when reading 'Billion Dollars' (trillion dollars) - unlike in the U.S., one trillion is still an inconceivably huge number in Germany, and quite honestly, it was apparent that no actually took that number seriously. But then, Weimar is a German word.

After reading the sentence containing the amount, a bit of general information was given, followed by the reaction of the German Banker Association - that such a plan was completely unsuitable for Germany, that such a plan would be exceedingly unlikely to be followed in Germany, and that quite honestly, German banks should never, ever be involved in such a plan. In this case, they weren't talking about piggie Ackermann's Deutsche Bank, but all the Sparkassen, Landesbanken, various 'credit union' like banks, etc. And in a way, it was a bit of too much protesting - as if they were worried that people would draw the wrong conclusion from what the U.S. is doing, and start to react in a predictable manner. German still doesn't have a simple expression like 'bank run,' but 'Panik' is easily translated, not to mention spread.

The other bit of interesting mid-day news, in a single report, is how Germans are stocking up on food, not in the sense of panic buying for economic collapse, but instead buying higher quality food than before - the interviews were interesting, with such tidbits as how good food is the wealth of a poor man, and how the discounters Aldi, Lidl, etc. are now actually stocking higher priced/higher quality items to meet the demand for better food as economic conditions worsen - 20% of Germans have either lost or fear losing their jobs, according to a recent survey.

Anonymous Tue Mar 24 00:19:55 2009 CDT #

Anonymous says:

Roubini already stated the math officially a few weeks ago. 3.49% - 2.75% = .74% Therefore on average, housing prices have to correct down another 18%. And that is when average household income stays pegged, while numbers are crunched. But then wait, we have 800,000 in lost jobs for march to account for. Average household income is dropping, so expect RE to correct down andother 23% to be real, not to mention pendulum over-shoot. Those are the real numbers, the market needs to take the medicine. Either that or magically boost employment and incomes both, across the board...

Anonymous Tue Mar 24 00:24:15 2009 CDT #

CRbot says:

The Latest from Yves:

Guest Post: Hedge Fund Socialism?

CRbot Tue Mar 24 00:25:19 2009 CDT #

here says:

it annoys me that Marron said if you nationalize, you own 100% of the problem. You would own 100% of the problem, but you could recoup your losses by selling off the good assets and business components.

Question: Do you all think that the 15% down-payment incentive implies the government believes the bad assets are worth about $.15 on the dollar?

here Tue Mar 24 00:26:24 2009 CDT #

Jackrabbit says:

Another thing about Geithners PPIP: it is only designed to clear toxic assets, not to save the economy.

It doesn't obviate or preclude using fiscal stimulus. Krugman and others seem to object to the plan because it doesn't get the banks lending. It doesn't and that that's not the chief aim.

Jackrabbit Tue Mar 24 00:28:15 2009 CDT #

Guest says:

Remember that the administration will also be announcing their financial industry reform proposal this week. I think some of us are starting to accept that we will need to make the best of this not-so-great bailout plan, or at least accept it's pretty much the only option we will be offered at this point, and hope it will work despite our objections to it. Let's face it, the situation we are in sucks, and any way out of this hole will be ugly. We can argue there are better ways out of the hole, but we're still in the hole, and at least they're proposing a way out.

However, if the reforms they propose this week are as generous to the banking industry as this plan was, and as divorced from the reality of the ultimate causes and culprits of this mess, I will personally have a much harder time accepting the bailout plan. In particular, as others have noted, "too big to fail" clearly just means "too big", and if that is not addressed in these reforms then the bailout really should be treated as the scam that our gut is telling us it is. On the flip side, if a miracle happens and they propose real, legitimate reform with teeth that introduces fundamental change to the way these corporations have been allowed to run amok, that will do a lot to help me in swallowing down this horribly bitter pill.

I'm not optimistic it will happen, but there's always hope. Right?

Guest Tue Mar 24 00:36:55 2009 CDT #

Jay D. says:

...........the name of the movie?

...........dumb , dumber & retard..........

Jay D. Tue Mar 24 00:37:04 2009 CDT #

EvilHenryPaulson says:

One good thing about the plan is that auction winner gets to choose the servicer(s) of the mortgage pool

Hopefully they will be more efficient in doing mortgage workouts with existing mortgagees ... Assuming their business plan is not betting on default, because that would make the matter even worse

EvilHenryPaulson Tue Mar 24 00:37:32 2009 CDT #

KR says:

Germans stocking food...hmmm. So, what you telegraphing is a fear creeping into a consumer behavior. My pantry is now full of canned salmon and tuna for the same reasons - paranoia. I am good for 400 days at least on these two items.

KR Tue Mar 24 00:39:01 2009 CDT #

Anonymous says:

'So, what you telegraphing is a fear creeping into a consumer behavior.'

No, I wasn't telegraphing that at all, and tried to prevent exactly that conclusion from being casually drawn. Germans are filling their refrigerators with bio (organic) wine, French cheese, Italian salami with hazelnuts, etc. A shift which has surprised the discounters like Aldi and Lidl, who are now running ad campaigns more or less based on the idea of buying expensive quality, not cheap essentials.

One quick conclusion is that Germans are just trying to enjoy an aspect of their lives which is not really reliant on macro-economics. Another quick conclusion would be that Germans have enough savings to actually decide to enjoy the time which an economic slowdown provides.

But these purchases do not represent a stocking up on staples, it is a fairly unexpected trend towards indulgence.

However, it does represent stocking up, at least in part with the view that in the future, such items may not be as possible to fit comfortably into a household budget. However, realistically, no one here expects a shortage of French cheese, organic wine, or Italian salami.

Parent Post

Anonymous Tue Mar 24 02:43:35 2009 CDT #

Basel Too says:

Krugman and others seem to object to the plan because it doesn't get the banks lending.

I think Krugman's biggest problem are the golden toasters.

Nikkei in the process of a pretty nice short squeeze.
http://www.nni.nikkei.co.jp/e/fr/tnks/marketlive.aspx

Basel Too Tue Mar 24 00:39:51 2009 CDT #

Anonymous says:

My understanding of the fundamental disconnect is that the sellers of the toxic assets are too reluctant to cut their prices as they would have to mark their other assets to a similar level and in so doing - face their own insolvency. If that is true, would this new plan have any real effect? If the banks selling these assets still refuse to put them on the market, nothing will be solved. We'll have more buyers, but not at the prices the banks need to stay solvent. To me it looks like a stalemate.

Has anyone looked at the role that other lending channels can provide? When I ask this, I think of a model like Prosper.com or something along those lines. I was lending to individuals on this site to (and making pretty good returns doing so). Unfortunately, the SEC (in all of its infinite wisdom) appears to have shut this particular site down at an inopportune time due to its renewed vigor in "enforcing". I would imagine they're taking aim at others as well.

I guess what I'm asking, is why do we have to be so reliant on the banks in an age where money and information flow faster and more efficiently than ever before? Can't the government - or more to my point - just about anyone/everyone - cut them out of the loop and take over some of the profits they are most certainly leaving behind?

Anonymous Tue Mar 24 00:39:52 2009 CDT #

Anonymous says:

"One good thing about the plan is that auction winner gets to choose the servicer(s) of the mortgage pool"

I don't think it is the mortgage servicer they choose, but the asset servicer i.e., the group that reconcile the monthly remittance reports and makes sure money gets allocated properly.

MSR rights are almost impossible to pull from a functioning servicer, nor would you want to on a bunch of non-performing mortgages.

Anonymous Tue Mar 24 00:40:39 2009 CDT #

EvilHenryPaulson says:

aww nuts

I thought they were going to offer a full bust up to make them as attractive as possible (eg Pincus has his own servicer already and cash willing to invest)

Parent Post

EvilHenryPaulson Tue Mar 24 00:44:36 2009 CDT #

Basel Too says:

wonder what the cds for these mbs are going for...

Basel Too Tue Mar 24 00:47:00 2009 CDT #

A.B Prosper says:

Its all about divide and rule. The Red State/ Economic Liberals say one thing and the Blue State/ Social Democrats say another and while the two sides think that the others are a mortal enemy the financial elite bleed us dry.

A.B Prosper Tue Mar 24 01:04:08 2009 CDT #

Basel Too says:

from the WaPo:

The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document.

Currently, only banks can be seized.

Basel Too Tue Mar 24 01:07:53 2009 CDT #

The Hamster says:

http://www.pbs.org/wgbh/amex/crash/program/index.html

The Hamster Tue Mar 24 01:08:19 2009 CDT #

Sexy Derivative says:

James Galbraith Calls Geithner Plan "extremely dangerous"

http://bit.ly/fMas1

Good Video.

Sexy Derivative Tue Mar 24 01:12:38 2009 CDT #

Indy says:

Ms. Bair mentioned that banks may need some 'arm twisting' ; anybody catch that? what was she talking about I wonder. May be force banks to divulge and sell toxic stuff? Just a guess.

Indy Tue Mar 24 01:14:08 2009 CDT #

tew says:

Complete softballs from PBS. Marron just deflects and at one point makes a Mr. Burns-esque tug at the housing heartstrings and makes a clumsy complement to Krugman.

But Krugman misses an opportunity to tell the American people that this is a huge rip-off. He emphasizes that the plan may not be enough, but doesn't make the clear case that Marron and his cronies will make billions of easy money off of this deal.

tew Tue Mar 24 01:15:42 2009 CDT #

Sexy Derivative says:

It's Ron Paul's attack on The Fed.

http://www.campaignforliberty.com/

HR 1207 Co-sponsorship Skyrockets: Companion Bill in Senate

Ron Paul's "Federal Reserve Transparency Act" to audit the Federal Reserve is now up to 39 co-sponsors in the House, and an identical companion bill, S604, has been introduced in the Senate. Here are the House co-sponsors:

Young (R-AK), McClintock (R-CA), Woolsey (D-CA), Rohrabacher (R-CA), Castle (R-DE), Stearns (R-FL), Grayson (D-FL), Buchanan (R-FL), Posey (R-FL), Kingston (R-GA), Price (R-GA), Broun (R-GA), Abercrombie (D-HI), Burton (R-IN), Fleming (R-LA), Alexander (R-LA), Bartlett (R-MD), McCotter (R-MI), Bachmann (R-MN), Peterson (D-MN), Akin (R-MO), Taylor (D-MS), Rehberg (R-MT), Jones (R-NC), Foxx (R-NC), Garrett (R-NJ), Heller (R-NV), DeFazio (D-OR), Platts (R-PA), Duncan (R-TN), Wamp (R-TN), Blackburn (R-TN), Poe (R-TX), Paul (R-TX), Marchant (R-TX), Burgess (R-TX), Chaffetz (R-UT), Petri (R-WI), Kagen (D-WI), Lummis (R-WY)

32 Republicans and 7 Democrats so far. [Urge your Representative to co-sponsor] [Discuss here]

Sexy Derivative Tue Mar 24 01:16:58 2009 CDT #

mock turtle says:

ok ok ok ive visited the half dozen econ blogs that are top tier...read the posts and many of the comments

i clearly dont comprehend the ppip or the ppif

but it looks to me like geithners (obamas) program is like ants rushing around on the ground criss crossing each other borrowing, loaning, underwriting, collateralizing, matching, tranching , exchanging at the fed window, and using the proceeds to do all of the same again in different combinations and permutations of the actions named above

a big financial circle jerk with financial institutions that are insolvent spreading their liabilities to other institutions, individuals and the government (taxpayers) until we are all polluted

mock turtle Tue Mar 24 01:18:58 2009 CDT #

Uncle Billy, Mental Widget says:

Nemo, did you read Krugman's blog comments on the Timmy plan before you made yours, with the examples? If so, how come you didn't cred the Krug?

Uncle Billy, Mental Widget Tue Mar 24 01:24:28 2009 CDT #

Panzamonium says:

http://firedoglake.com/2009/03/23/timothy-geithner-making-countrywide-executives-rich-again/

Panzamonium Tue Mar 24 01:33:43 2009 CDT #

sdtfs says:

it annoys me that Marron said if you nationalize, you own 100% of the problem. You would own 100% of the problem, but you could recoup your losses by selling off the good assets and business components.

So what part of the problem don't we "own" now? Isn't the problem for most of us that we're looking at buying into 125% of the problem, and making it bigger, or maybe spawning a whole lot of more problems?

sdtfs Tue Mar 24 02:07:46 2009 CDT #

CRbot says:

The Latest from Yves:

Treasury to Seek Power to Seize Non Banks (Trojan Horse Alert)

CRbot Tue Mar 24 02:09:11 2009 CDT #

El Lurko says:

Did anyone else see Krugman on Charlie Rose this evening? I know many of you like to use him as a John Maynard punching bag, but that guy doesn't so much as flinch on the banks. If there's a reason not to like him on that issue, I'm all ears.

El Lurko Tue Mar 24 02:09:15 2009 CDT #

KR says:

"I just hope it doesn't turn Mad Max"

No, this experiment in social engineering has a plan. Mad max was no plan. There is lots of oil yet for awhile, the problem is we broke the financial system. That system is too greedy not to repair itself; bottom line. When were are out of oil, it's Mad Max...not until. Relax and have a baby.

KR Tue Mar 24 02:29:15 2009 CDT #

Anonymous says:

I'll be on the government cheese line. Y'all come too. It will be a distinct pleasure to see you all there. It'll be like Coney in the 40s on a hot sticky Saturday in July. I'll be the guy manning the concession selling earplugs so people can block out your blather. I do so hope that you'll make it a point to not stop by and say hello.

Anonymous Tue Mar 24 02:33:42 2009 CDT #

Anonymous says:

'spreading their liabilities to other institutions, individuals and the government (taxpayers)'

Actually, that is part of the joke - they want to prevent the collapse of the system of liabilities which continues to provide a revenue stream for those sitting on top of it.

And of course, they will do anything to remain at the top.

Including destroying the very system which provides them their position.

We are watching the end of the American Century. Not that most Americans have a clue what that means, thinking that just because they owe the world a few trillion dollars, the world will continue to follow America's bidding.

Which is ironic, in its way, as the only ones likely to be bidding on America's future are the same bankrupt Americans convinced that debt is still the best measure of wealth.

Anonymous Tue Mar 24 02:35:44 2009 CDT #

KR says:

"No, I wasn't telegraphing that at all, and tried to prevent exactly that conclusion from being casually drawn ..... However, it does represent stocking up, at least in part with the view that in the future, such items may not be as possible to fit comfortably into a household budget."

Its a remarkably well drafted contradiction; although i'm sure you mean well.

KR Tue Mar 24 02:51:26 2009 CDT #

Danny says:

Marron says that even if house prices fall lower, that won't solve the problem b/c there has to be money available to lend. But there is money available to lend! IF THE HOUSE IS AFFORDABLE TO THE BUYER. The problem is, houses still aren't affordable by traditional metrics.

Danny Tue Mar 24 02:52:23 2009 CDT #

KR says:

Danny says:
Today, 3:52:23 AM
" The problem is, houses still aren't affordable by traditional metrics."

Quoting myself (I posted above under anonymous) "Roubini already stated the math officially a few weeks ago. 3.49% - 2.75% = .74% Therefore on average, housing prices have to correct down another 18%. "

That's the math. They have to deal with it. Its not up for argument, historically long.

Parent Post

KR Tue Mar 24 03:00:24 2009 CDT #

CRbot says:

The Latest from Yves:

More Musings on Geithner Plan

CRbot Tue Mar 24 03:05:21 2009 CDT #

KR says:

Real estate markets are "vastly local" (you can quote me on that). Any place where house values are 6X or 7X national income better have a pretty good reason why, or suffer a major correction. Do the math.

KR Tue Mar 24 03:07:21 2009 CDT #

burnside says:

For readers, and on those traditional metrics, it's common to assume one doesn't rightly spend more than one third of net income on all expenses related to where you live. That's a relatively recent and liberal paradigm, dating to the late 1970s.

In the fifty-or-so years prior, the norm was to budget about one quarter of income for housing expense. There were articles in the 80s suggesting we might as well get accustomed to reserving a greater slice of the paycheck for living arrangements. That older model presumed a more balanced life - more room in the formula for transportation, personal expenditures and savings or investment.

When we rebalance in favor of what it is we live in, it comes at a cost.

burnside Tue Mar 24 03:15:02 2009 CDT #

Counterpointer says:

Ok, I listen to Donald Marron, don't know whether to laugh or cry. What an asshat.

I despair. Even Krugie sounded reasonable.

C

Counterpointer Tue Mar 24 03:15:24 2009 CDT #

CRbot says:

The Latest from Yves:

Links 3/24/09

CRbot Tue Mar 24 03:34:46 2009 CDT #

volker the viking says:

Heard this the other day, dunno if it's been discussed here: Every working person over 50 gets 1,000,000 dollars with the following caveats--1)must buy house, 2) must buy American brand car, 3) must quit working.

Solves unemployment problem with creation of 30 or 40 million jobs, fixes unemployment problem and eliminates the inventory overhang in housing. Overnight. Immediately. At a cost of about 40,000,000 dollars.

Pet me. O:-)

volker the viking Tue Mar 24 03:47:01 2009 CDT #

volker the viking says:

of course, the 'merican automakers will be fixed too

volker the viking Tue Mar 24 03:50:12 2009 CDT #

Danny says:

Volcker, got to add at least three more Zeros to your figure. Also, propping up the bubble real estate prices is not going to do any long-term good.

Danny Tue Mar 24 03:56:00 2009 CDT #

Anonymous says:

'Its a remarkably well drafted contradiction; although i'm sure you mean well.'

Only in America would indulgence be compared 'stocking up' - in Germany, which still maintains adequate stockpiles of food discretely spread throughout its borders to feed its entire population for more than 6 months, stocking up means dried lentils, peas, and other such legumes, flour, milk powder, vegetable oil, etc.

It has never included French cheese or Italian salami. Admittedly, 'stocking up' may not have been the best choice of words - it was meant more tongue in cheek, because even if Germans are buying significantly higher amounts of expensive French cheese, the total amount of cheese in the refrigerator remains fairly static.

And of course, this is also a reflection of something else, reported just this morning - the IMF expects world trade to drop 9% this year. Expensive foods of the luxury variety which used to be exported globally is undoubtedly part of that contracting number. Which means that in Europe, there is a lot of food which may not have been 'local' in a globalized sense, but which is becoming local in an EU sense - at least the Germans still pay cash for quality. Broadly speaking, a decline in global exports is not all bad - unless you happen to be sitting in the economy that imported consumption beyond its capacity to produce.

Europe is going to be swimming in a lot of excess products for the next period of time.

Anonymous Tue Mar 24 03:56:54 2009 CDT #

CRbot says:

The Latest from Yves:

Guest post: Can Geithner's public-private partnership get it done?

CRbot Tue Mar 24 04:01:20 2009 CDT #

CRbot says:

The Latest from Yves:

Links 3/24/09
China Calls for New Reserve Currency

CRbot Tue Mar 24 04:09:38 2009 CDT #

volker the viking says:

Danny writes: "Volcker, got to add at least three more Zeros to your figure. Also, propping up the bubble real estate prices is not going to do any long-term good."

## Okay, add three zeroes and do it with my compliments and thanks as well! It's still far less than we have thrown at the problem to date. As to propping up prices, well when excess inventory clears we'll know the price. Propping up indeed!

Pet me again, working boomers, we just got a big fat raise! O:-)

volker the viking Tue Mar 24 04:30:15 2009 CDT #

Rob Dawg says:

Thank you r_t_o for our nightly dose of teutonic overlording. Yes, we all understand that the Germans are not going to suffer, indeed as you so glowingly report they will actually enjoy the imminent global economic crisis as they merrily consume the local luxuries they heretofore had been munificently casting upon the waters for the unwashed masses who neither appreciated nor deserved to consume.

http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9407E6DE103FE233A25757C0A9679C946796D6CF

http://www.jstor.org/pss/3159517

http://www.fao.org/es/ess/toptrade/trade.asp?disp=majorcommodity&country=3&ryear=2004

You will notice on that last Germany showing up as a major importer but looking at the export list Germany is noticeably absent.

I'm sure I am not alone in hoping you expand the sharing of your... unique perspectives to a blog of their own where topicality will not be an issue.

Rob Dawg Tue Mar 24 04:52:22 2009 CDT #

Anonymous says:

'to a blog of their own where topicality will not be an issue'

You have links to five year old data, and topicality concerns you?

Or I post information about a major private capital injection concerning the world's largest manufacturer of medium and heavy duty trucks and larger buses before I could find any English language news, and you are concerned about topicality?

Do you plan to soon return to playing with the oil fairy in your global cooling playpen?

Parent Post

Anonymous Tue Mar 24 07:31:11 2009 CDT #

Comrade Byzantine_Ruins says:

Patrick Henry says:
Today, 1:17:22 AM
Someone just made a lot of money...and it ain't any of you.

I would argue that the current generation of criminals are themselves just a permutation of bagholder for previous cohorts of leaders. Let's face it, the people directly responsible for this are very likely to die for it by assassination or judicial murder.

The guy who sold that greater fool the shop, provided he kept his fortune through this, he's the real fortunate criminal.

Comrade Byzantine_Ruins Tue Mar 24 05:10:49 2009 CDT #

central_scrutinizer says:

If not for good guys like Krugman, CR, Mish, Denninger, and others, I would have probably drank a gallon of hemlock by now.

History will record you guys as heroes.

central_scrutinizer Tue Mar 24 05:30:16 2009 CDT #

Comrade Byzantine_Ruins says:

China Calls for New Reserve Currency

Countries would entrust a portion of their SDR reserves to the IMF to manage collectively on their behalf and SDRs would gradually replace existing reserve currencies.

There's where it will miscarry. Principal actors will quickly suborn its policy apparatus because it has no independent base of taxation, so they can make subornation a condition of ongoing fund flows. It will have the same kind of illusory independence as a central bank. I hope the Chinese are ambitious and not naive in formulating this plan.

That's also the only thing that's not as it is in the currently extant world. Now, you can build your own currency basket as you like and not be exposed to external management risk.

All you really get is a chance to give your cash to an ostensibly "independent" firm that's really nothing more than poppet for the emergent fiscal hegemon, willing to fritter your funds away on interests germane to that hegemon to the last (someone else's dollar).

If you want to become a backer of a currency regime like this, I invite you to imagine the scale of stimulus projects embarked on by hysterical policy establishments who have this bank in captivity and thus can pledge future global OPM streams rather than future national-scale tax streams.

You can't absolve yourselves of the burden of good policy, no matter how hard you try.

They constantly try to escape
From the darkness outside and within
By dreaming of systems so perfect that no one will need to be good.
But the man that is shall shadow
The man that pretends to be.

Comrade Byzantine_Ruins Tue Mar 24 05:43:48 2009 CDT #

burnside says:

anon,

When I read you on your expatriate life, I'm reminded of some of the oddities which accompany falling in love - the object of one's affections seems somehow so attractive, so intelligent and accomplished and funny. Of course, and at the same time, one suspects he can't be quite all that in actuality, and in fact he isn't. But first, one has to be receptive to the idea of 'falling', yearning for it, really, else it doesn't happen.

And while one's friends can see he's not quite all that, as indeed he can see for himself, it makes no difference at all. The butterflies and the Odes to the Loved One persist regardless.

Well, you do see, don't you?

burnside Tue Mar 24 05:44:40 2009 CDT #

Anonymous says:

Sure - I have lived for 15 years in a country that engaged in continent wide mass murder with one of the most hatefully ugly ideologies ever developed, which for decades considered the U.S. to be the shining beacon which it should try to emulate in developing democratic institutions to provide for the common good. Being an American in Germany is surprisingly comfortable - compared to the American mass media driven imagery, most Germans, at least in this region, remain extremely well disposed to Americans - after all, it was the U.S. which managed to utterly destroy a country which then felt nothing but gratitude at the U.S. for decades afterwards. Somehow, I doubt that the Iraqis or Afghanis (especially those with a habit of attending wedding parties) are likely to be as thankful in a couple of decades.

I live in an area which still thinks being industrialized is a better idea than outsourcing the dirty work because financial engineering will make the rich richer. Though the self-satisfied news reports about how Mercedes ability to attract private capital proves that Germany remains a desirable location for serious business had at time a touch of that old 'USA Number 1' feel to it. But considering at how Mercedes is staring at a likely loss for this year, knowing that some of that money sitting on the sidelines is interested in Made in Germany helps people here feel a bit better.

A place which seems to lack much of the fear so common in the U.S. - imagine the American politician responsible for school security repeatedly stating, after a public school massacre, that schools must not be turned into prisons since it would destroy the very basis of a democratic society. Which is just the plain truth - and yes, I do have an example in mind; the land of the metal detector, home of the private prison guard.

By and large, Germans seem to think that the only reward for failure should be dismissal when punishment is not possible, where serious discussion concerning capping manager pay if a company is not profitable and using state aid will likely become law (I can hear Ackermann now - by turning its back on the American model, Germany is condemning itself to insignificance).

Obviously, there are many, many differences between the U.S. and Germany, but oddly, Germany resembles what the U.S. could have been if we hadn't decided to elect a B-movie actor to play president.

Of course a lot of this is historical, and in a generation or two, things will have turned in whatever direction the future holds. Even now, with the younger tattoed and pierced police (not to mention shaved virtually everywhere, male and female), Germany is certainly not a place that Kunstler would socially approve of.

Parent Post

Anonymous Tue Mar 24 07:24:24 2009 CDT #

Rob Dawg says:

New international currency: two wolves and a sheep voting on what's for dinner.

Rob Dawg Tue Mar 24 05:50:13 2009 CDT #

CRbot says:

The Latest from Mish:

Krugman's $200 Billion Lunch

CRbot Tue Mar 24 05:56:08 2009 CDT #

Comrade Byzantine_Ruins says:

I can hear R_T_O and others already formulating the argument that this is based on trying to support fiscal hegemony, so let me phrase it as a critic of the system of international exploitation that passed as development for about 40-50 years.

Did the people who were actual subsidiary donor nations with genuine charitable intentions really benefit their causes by participating in the world bank / global banking / IMF rape machine the neocolonial powers set up?

It seems to me that apparatus only served to enforce the linkage to a national balance sheet of private debts between naive or corrupt regimes and cynical or criminal international bankers, when those debts would have been better dissolved if the real goal was development.

Comrade Byzantine_Ruins Tue Mar 24 06:05:05 2009 CDT #

Anonymous says:

'I can hear R_T_O and others already formulating the argument that this is based on trying to support fiscal hegemony...'

Well, someone did write a book about it.

Parent Post

Anonymous Tue Mar 24 06:48:51 2009 CDT #

Bubblisimo Gerkinov says:

Danny says:Today, 11:52:23 AM But there is money available to lend! IF THE HOUSE IS AFFORDABLE TO THE BUYER. The problem is, houses still aren't affordable by traditional metrics.

Right ... if you have a reasonable downpayment and income, you'll have little or no problem getting a home loan.

So basically, all this talk about 'getting banks lending again' means vering back to subprime bubble levels again.

Or am I missing something?

Bubblisimo Gerkinov Tue Mar 24 06:05:46 2009 CDT #

Counterpointer says:

central scrutinizer - I'd really like to sign up to that sentiment, but history is written by the victors. And in this bitter phase we just don't know who that will be.

Cross fingers, dude.

C

Counterpointer Tue Mar 24 06:05:58 2009 CDT #

Anonymous says:

The U.K. inflation rate unexpectedly rose in February after higher food costs and the weakness of the pound sustained price pressures even as Britain’s recession deepened.

Consumer prices climbed 3.2 percent from a year earlier, the Office for National Statistics said today in London.
http://www.bloomberg.com/apps/news?pid=20601068&sid=az3Mym_LOWw0&refer=home

Don't know why it was unexpected when they are doing their best to destroy their currency. =-X Keynesian fools.

Anonymous Tue Mar 24 06:08:47 2009 CDT #

Rob Dawg says:

Byz writes: cynical or criminal international bankers

Don't you mean cynical and criminal international bankers?

Rob Dawg Tue Mar 24 06:09:16 2009 CDT #

Anonymous says:

'You will notice on that last Germany showing up as a major importer but looking at the export list Germany is noticeably absent.'

Well, looking at your third link, Germany is a major importer of cheaper subsidized agricultural products from Italy and France, not to mention Spain - got to love the same sort of distorting agricultural subsidies in the EU as in the U.S. But notice 'cheaper' - the standard German
'feta' cheese is made from cow's milk, whereas the real feta cheeses from places like Greece or Turkey cost easily 3 times as much. The same applies to a lot of the real low cost wines in Germany - stuff even an American would be embarrassed to put ice cubes in, but at when it costs at a 1 to 1 rate, it works out to be quite cheap. And of course, I was calling Italy and France food exporters of high end products, whose markets are shrinking, but then, I'm sure you can dispute that easily by finding the appropriate link.

But I will say it is nice to see you have learned how to include links when attempting to make a point.

I didn't look at your first link - not only do I hate reading the NYT (I stopped buying the IHT after it became a NYT subsidiary), I don't do cookies/passwords - call me silly that way. Your second link also seemed to have a cookie problem, which at least in this case, is not due to my personal browser settings - this is a public PC with all the idiocy of Flash, cookies, HTTP referrer, etc. active.

But the third link is from 2004 - I know, sometimes data is delayed. And interesting to see how much beef the U.S. imports - but we don't talk about things like that, right?

Anonymous Tue Mar 24 06:10:46 2009 CDT #

Comrade Coinz! says:

Tonight, I learned of an unimaginable local financial disaster. A collegue of my wife's was laid off two weeks ago from her school district job. On Friday, her husband was laid off with 1 month of severance pay.

These two are both highly educated with dozens of years of work experience and had an annual income of $450k. That has gone to $0 in less than a month.

This couple in December completed a $100k adoption and are now strapped with huge expenses and no income, in a broke state with over 10% unemployment.

As bad as things have been so far, I am still shocked by this.

Comrade Coinz! Tue Mar 24 06:16:08 2009 CDT #

Anonymous says:

Comrade Coinz, what state are your friends in? North Carolina?

Parent Post

Anonymous Tue Mar 24 06:57:14 2009 CDT #

Comrade Coinz! says:

"Comrade Coinz, what state are your friends in? North Carolina?"

Cali

Parent Post

Comrade Coinz! Tue Mar 24 07:45:57 2009 CDT #

Rob Dawg says:

Both Pimco and Blackrock like Timmay's Toxic brew. That seals the deal for me. I know how I'm going to vote.

Rob Dawg Tue Mar 24 06:24:30 2009 CDT #

Counterpointer says:

Erm, Dawg, exactly when do you expect to vote on any of this?

C

Parent Post

Counterpointer Tue Mar 24 06:28:29 2009 CDT #

Comrade Byzantine_Ruins says:

Rob Dawg says:
Today, 7:09:16 AM
Don't you mean cynical and criminal international bankers?

I wanted to leave the argument without a cutting point from someone who wanted to say that international bankers were merely naive.

Anyway, I don't see any real reason to get behind it that isn't political. Not that it might not gain a lot of traction or come to fruition, but it won't be on the basis of inherent merit.

I also don't see it as having a chance of really going anywhere because of the effects of the milieu of decaying states.

Who's going to found a defining new institution, the broke, aging resource overlord who suddenly looks like he should have focussed a LOT more on national development, or the guys without anyone firmly in charge of their imploding industrial revolution, who also feel like they should have focused a LOT more on internal development.

They might be able to deploy it to some end as a weapon to destroy the dollar without ever taking it anywhere, but I don't think they have the legs or the skill to build that kind of international apparatus.

These are the kind of policies that are more for institutions emergent in the post-crisis milieu to establish. Any serious, rather than tactical consideration of this at this time is wasted air. The current institutional context hasn't been compromised yet.

Once the context is breached and there's a new milieu emergent, then this will settle out quickly by natural process of institutional selection -- the institution will be fulfilling a need, not an agenda, and will get pulled along by its mission.

Comrade Byzantine_Ruins Tue Mar 24 06:31:47 2009 CDT #

Rob Dawg says:

BYZ,
The Chinese are vastly misreading the rest of the world. Sure bashing the US has their own cabinet departments in some countries but if it comes down to choosing between 800lb gorillas it won't be the Chicomms.

You are correct that they don't have the skill to pull it off regardless.

Rob Dawg Tue Mar 24 06:38:46 2009 CDT #

Rob Dawg says:

Counterpointer says:Today, 4:28:29 AM PDT
Erm, Dawg, exactly when do you expect to vote on any of this?

Well maybe not directly but when the Constitutional Amendment comes to a vote of either Congress or the States to authorize this fundamental change I will make my voice heard.

Seriously, I hope someone puts this before the courts. It would be worth it to hear the administration's argument.

Rob Dawg Tue Mar 24 06:44:20 2009 CDT #

Broward Horne says:

Who can say if the Chinese are so scheming but the proper way to introduce a meme is to seed it into the environment prior to the shakeup that it makes it relevant.

Broward Horne Tue Mar 24 06:50:35 2009 CDT #

Chicago Dude says:

This couple in December completed a $100k adoption and are now strapped with huge expenses and no income, in a broke state with over 10% unemployment.

People pay $100,000 for the privilege of taking in and caring for an unwanted child? Here's an idea - if you want to make sure someone is capable of providing for the kid, don't make them spend $100,000 on the process.

Chicago Dude Tue Mar 24 07:02:24 2009 CDT #

Comrade Byzantine_Ruins says:

Rob Dawg says:
Today, 7:38:46 AM
Sure bashing the US has their own cabinet departments in some countries but if it comes down to choosing between 800lb gorillas it won't be the Chicomms.

I think they really hate us, man. To the point of irrational policy decisions. Hence the tactical opening to attack the dollar by announcing a doomed institution in opposition.

But I think it is ultimately deterministic when the actors are this big and disparate -- the Chinese will go as far as they have the natural capability and inclination to. International regimes are like traditional Icelandic jurisprudence, the judge can't pass sentences the judge personally can't undertake to enforce.

They have inclination but little capability.

I think the big risk is that they are amateurish enough to think they can engineer a smooth transition, whereas any real success will bring this milieu to a swift and violent end. If they don't know it's a financial doomsday device, then that is problematic.

Comrade Byzantine_Ruins Tue Mar 24 07:07:49 2009 CDT #

Anonymous says:

Newly thrifty Americans go foraging, trash-diving

Miranda Walton's old Ford pickup was collecting dust on her ranch in Austin, Texas, so she decided to trade it in for something she needed -- goats.
http://www.reuters.com/article/bondsNews/idUSN2327019120090324

Goat roper, I guess you can eat those nasty bastards.

Anonymous Tue Mar 24 07:09:24 2009 CDT #

Teddy says:

Free at last, free at last, thank God almighty we are free at last............yes, the banks are getting their strings of bailout debt cut that indentured them to US taxpayers thanks to Obmama's man Timmay. When all these brain dead multi-national banks and insurance companies, hedge funds, and "investment" groups circle the wagons and buy this toxic crap with 3% down from one another with government non-recourse financing, they will, in effect, severe the strings of debt that Bernanke emphatically stated tethered them to US taxpayers, thereby unloading everything on the taxpayer. These multi-nationals will drain the last drops of blood from America while they free themselves from debt. It's no wonder wall street is rejoicing. Someone should tell Michelle to stop pretending to twist a shovel and penetrate the grass for a veggie garden and tell her man that we all know that he is bankrupting this country. Tell her that her man will become more infamous than dubya and will be a one term president if his Chicago and Washington scandals don't bite him in the ass first. Frankly, everybody that I know who changed course and voted for Obama now feel betrayed. :(

Teddy Tue Mar 24 07:10:45 2009 CDT #

Black Star Ranch says:

Boycott "SINGLE GENERATION ONLY SEEDS".

You guys still arguing over the Geithner Toxic Eradication Plan? Never figured Krugman for a lightweight (agreeing with the Obama gang at all costs)

Black Star Ranch Tue Mar 24 07:10:48 2009 CDT #

Samdog says:

Krugman:

"...not toxic assets, but toxic banks."

Great line (and painfully true ...).

Samdog Tue Mar 24 07:11:02 2009 CDT #

Rob Dawg says:

Byz,
Its the same as with Taiwan. If they just gave up on reunification the two would quickly form closer ties than any takeover could hope to enforce.

The US abuse of the defacto world currency is still less destructive than trying to replace it.

Rob Dawg Tue Mar 24 07:13:20 2009 CDT #

Broward Horne says:

The US abuse of the defacto world currency is still less destructive than trying to replace it"

Said the American from the comfort of his easy chair. :)

Broward Horne Tue Mar 24 07:14:46 2009 CDT #

Counterpointer says:

The Chicomms are ultra realists. When the Brits said, some time back, that there are no permanent friends, just permanent interests, they basically learned that from the Chinese. It was a late imperial moment, for sure, but nontheless valid for it.

So, the question cecomes, what are the new permanent interests?

C

Counterpointer Tue Mar 24 07:16:38 2009 CDT #

CRbot says:

The Latest from Ritholz:

Buying Risky Assets

CRbot Tue Mar 24 07:19:00 2009 CDT #

Broward Horne says:

You guys are so funny. China was dumb enough to collect $1 trillion in unredeemable funny money. And the current course is clear enough - Uncle Sam blows another bubble 10X bigger and blows everyone up all over again a in couple of years anyway.

Broward Horne Tue Mar 24 07:23:19 2009 CDT #

Comrade Byzantine_Ruins says:

Anonymous says:
Today, 7:48:51 AM
Well, someone did write a book about it.

If only it was just one! I have several shelves! Hundreds of hours of class and seminar!

Comrade Byzantine_Ruins Tue Mar 24 07:23:35 2009 CDT #

Anonymous says:

I hate this - soundbites are just so boring.

But I don't get fingerprinted when flying back into Frankfurt, unlike my wife flying into Dulles. It's a little difference like that which keep me wondering when all those well armed Americans will finally realize what idiots they are thinking that freedom is something abstract, much like the words they mouth to comfort themselves.

You really should turn that metaphor around - why do I remain so disgusted at the nation that I grew up in? Please, try to tell me what I'm missing in a country that tortures, that allows itself to be plundered by the same people that own the news that rails against 'regulation,' and a nation filled with people unable to reconcile geology with whatever faith based belief system they cling to.

Germans still cling to the illusion of democracy, on their part. Showing again that Germany remains decades behind the U.S. - but then, the Greens did make one point glaringly obvious in the face of entrenched economic and social interests - actions speak louder than words.

Anonymous Tue Mar 24 07:25:03 2009 CDT #

Werner says:

Rob Dawg says:
The Chinese are vastly misreading the rest of the world. Sure bashing the US has their own cabinet departments in some countries but if it comes down to choosing between 800lb gorillas it won't be the Chicomms.
You are correct that they don't have the skill to pull it off regardless.
~~~~~~~~~~~~~~~~~~~~~~~~~
a) No, the Chineese do not misread "the rest of the world" (which is feed up with the fraudulent, irresponsible shenanigans of the AAA-lying, money-printing Americans.

b) We (the EU), WILL HELP them !!

P.S. The only ones who think that the currency of a country which lead it's financial system into desaster and is now, via monetisation, ruining it's currency should be the world's reserve currency are (you guessed it) born and breed dopes.

Werner Tue Mar 24 07:25:35 2009 CDT #

danm says:

OK. So the Fed could just print the money it needs to buy up all the toxic stuff and offer the banks a clean slate by keeping it on its own books until the last issue matures. This would cause moral hazard but hey, something needs to give.

But instead, on top of giving bankers a clean slate, it is giving a freeby to investment firms by offering them the opportunity to LEVER up on TOXIC stuff by offering special loans and guarantees?

I'm amazed that so many people are happy to have this crap floating around for another 15 or 30 years and think nothing of having big players use leverage on this crap. Leverage means more money going into the economy. Remember the 1st rule of inflation? The first one to get the money wins! These bankers and investment firms will be the first one to get this money... so guess who wins!!!!

I thought we had just learned our lesson about leveraging crap!!!!

It's mind boggling. The bubble has not burst yet... too many Americans still in denial or floating on a feel-good cloud.

danm Tue Mar 24 07:25:51 2009 CDT #

Publius13 says:

Nemo sez: More subtle in that it places the burden of losses on the FDIC and Federal Reserve... Once those losses are realized.

Which is not exactly the same as placing the burden on the taxpayer. Still thinking this one through.

What's to think through? The FDIC and the Fed go up on the mount once a month and come back with bushel baskets of cash given to them by God. The taxpayer is saved. Let's all go home and bake a nice fruit turnover.

Publius13 Tue Mar 24 07:27:47 2009 CDT #

CRbot says:

The Latest from Denninger:

Lawlessness Begets Lawlessness

CRbot Tue Mar 24 07:27:50 2009 CDT #

Dirk van Dijk says:

A highly leveraged transaction financied with non recourse loans, humm where have we seen this before? Oh yeah, its called a mortgage. Only in this case it is someone who has no emotional attachment to the house, no worries about pulling the kids out of school and who has no fear of getting his credit rating dinged if he mails in the keys. No way anyone would walk away from a mortgage in those situations. Pimco and blackrock are going to be "homeowners" and the FDIC and the Fed the bankers and the toxic paper is the house.

Dirk van Dijk Tue Mar 24 07:31:04 2009 CDT #

Comrade Byzantine_Ruins says:

Broward Horne says:
Today, 8:23:19 AM
“You guys are so funny. China was dumb enough to collect $1 trillion in unredeemable funny money. And the current course is clear enough - Uncle Sam blows another bubble 10X bigger and blows everyone up all over again a in couple of years anyway.

Couple years? You were like "six weeks!" or "ninety days!" about two weeks ago.

I don't even know that I disagree with you. This isn't gonna take a couple years to reach endgame, I don't think.

Anyway, I think they had a plan, basically to be a dishonest investment destination.

They were gonna rope in all kinds of money "thousand flowers" like and then slam the gate shut with prosperity trapped inside (i.e., catch moon in barrel). They just found out it's easier to start the process than to come up with the determination to close the gate.

They are fucked now too, it is way too late to close out the game.

Comrade Byzantine_Ruins Tue Mar 24 07:31:39 2009 CDT #

Rob Dawg says:

r_t_o pontificates thus: "
Obviously, there are many, many differences between the U.S. and Germany, but oddly, Germany resembles what the U.S. could have been if we hadn't decided to elect a B-movie actor to play president. "

Uhhhh yeah. And if RWR had lost to incumbent Carter the wall would have fallen anyway. Not.

Rob Dawg Tue Mar 24 07:35:01 2009 CDT #

Dirk van Dijk says:

as to the falling of the wall, much woulkd have depended on who was elected in 84. However, even if it were mondale following Carter, the wall would have eventually come down, maybe five years later, but it would have come down.

Parent Post

Dirk van Dijk Tue Mar 24 08:00:22 2009 CDT #

Comrade Byzantine_Ruins says:

Werner says:
Today, 8:25:35 AM
b) We (the EU), WILL HELP them !!

See, Rob? Probably intelligent too. No idea what kind of policy choices he's making.

The perils of cynical policy, illustrated. Who is dumber, America for doing it ruthlessly or Werner for emulating it naively?

Comrade Byzantine_Ruins Tue Mar 24 07:35:21 2009 CDT #

I Heart CRbot says:

I think I could have digested the Fed printing what it needs to buy up the toxic assets and then keep it on its own books until the last issue matures.

But this plan is just too much to stomach.

I thought we had just learned a huge lesson about levergaing CRAP!

On top of still having this crap floating around for 15-30 years, it will be LEVERAGED! Leverage and the interest payments it generates impact the economy. This crap will be generating risk free revenues for these investment firms... investors will be rewarding this with higher multiples... and the game goes on!

The first rule of inflation is that the first one to get the new cash is the winner.

Basically, bankers and the top investment firms have created a plan that will give them 1st access to this new money.

I Heart CRbot Tue Mar 24 07:36:39 2009 CDT #

Counterpointer says:

Byz - moon in a barrel, nice line. I was thinking more like Werner as the frog in the well, only able to see 1000th of the sky.

C

Parent Post

Counterpointer Tue Mar 24 07:45:15 2009 CDT #

Broward Horne says:

"You were like "six weeks!" or "ninety days!" about two weeks ago"

Not about a new bubble, about how long before a real currency panic starts. Blowing a new bubble would take awhile if it's even possible. But we're gonna try with $5 trillion in new deficits in the pipeline.

Of course China is screwed. But why repeat a second, larger screwing at the hands of Americans?

Loss of reserve currency status is par for the course, a historical constant. I'm a bit surprised to see Born-n-Bred Doomers arguing against it. Truly, there is some bit of denial still waiting for purgement. :)

Broward Horne Tue Mar 24 07:41:03 2009 CDT #

Rob Dawg says:

slam the gate shut with prosperity trapped inside

Perfect analysis using only 8 words. Bravo.

Rob Dawg Tue Mar 24 07:41:56 2009 CDT #

CRbot says:

The Latest from Denninger:

(More) Misdirection By The Fed And Treasury

CRbot Tue Mar 24 07:43:02 2009 CDT #

Rob Dawg says:

Byz,
I got a kick out of reading r_t_o and then Werner back to back with their different universes views of how Germans see America. Short answer is that when the American Century well and truly ends it will be sorely missed.

Rob Dawg Tue Mar 24 07:46:43 2009 CDT #

Comrade Byzantine_Ruins says:

Counterpointer says:
Today, 4:15:24 AM
Ok, I listen to Donald Marron, don't know whether to laugh or cry. What an asshat.

I agree. I watched it last night, bothering my friend by hooting "you can't print DEMAND" at the screen.

I despair. Even Krugie sounded reasonable.

His expression was classic.

He almost aired the consumer balance sheet issue, which I thought was interesting. He invoked it as bank balance sheets but the reason there's no asset expansion is lack of quality opportunities.

The whole attempt to "get this thing going again" by establishing a supply-based flow of credit. It just really beggars my ability to express disbelief, that people don't see that there's not an infinite uptake for consumer credit unless you are willing to accept that it will never be paid back.

It's just like, when does the Treasury / dollar complex fail during our 20 year voyage around the Sea of Japan?

Comrade Byzantine_Ruins Tue Mar 24 07:48:23 2009 CDT #

Werner says:

Comrade Byzantine_Ruins says:
....I think the big risk is that they are amateurish enough to think they can engineer a smooth transition, ...

The utterance of an megalomaniacal American.

... If they don't know it's a financial doomsday device, then that is problematic.....

The "doomsday device" are irresponsible Americans who (for longer than a decade now) live beyond their means (on other peoples money) and think they need not pay the piper and (as Broward Horne says a few posts further down ) their "unredeemable funny money".

P.S. The only ones who think that the currency of a country which lead it's financial system into desaster and is now, via monetisation, ruining it's currency should be the world's reserve currency are (you guessed it) born and breed dopes.

Werner Tue Mar 24 07:50:34 2009 CDT #

CRbot says:

The Latest from Ritholz:

WAMU Sues FDIC for $6.5 Billion

CRbot Tue Mar 24 07:54:04 2009 CDT #

JohnRDC says:

"More subtle in that it places the burden of losses on the FDIC and Federal Reserve... Once those losses are realized."

Newmo: My take is that since the FDIC already is low on funds, it will tap its Treasury draw, which may have to be expanded. Taxpayer money is to be used.

As for the Fed, well, it does have the printing press. Inflation/devaluation cannot be far behind. Come to think of it, that's a hidden tax.

JohnRDC Tue Mar 24 07:54:07 2009 CDT #

citiprank says:

"Seriously, I hope someone puts this before the courts. It would be worth it to hear the administration's argument."

After what the courts let the last administration get away with... do you really think they'll try and stop them? Heck we have assclowns like scalia on the supreme court who think torturing people is a-ok

I have no doubt the courts will let obama do almost anything like they did bush

citiprank Tue Mar 24 07:54:45 2009 CDT #

homedad43 says:

Heard NPR early this AM and listened to brief exposition on the new plan. Also mentioned that even individuals would be able to participate in the plan by buying distressed assets...so after spending time listening to y'all and learning, I figured out how I could play with the big boys.

1. Form a small LLC with minor amounts of assets.
2. Stop paying the mortgage for about 5 months so that it technically becomes a non-performing asset for the mortgage lender, who's willing to move it off of the books.
3. Assume that the mortgage is $200K and the lender is willing to let it go at 65 cents/dollar. I put up 10% in the LLC, which amounts to about $13,000 with the remainder funded by Uncle Sam.
4. I stop paying the mortgage in entirety and then with a truly non-performing asset, stop paying on the US backing and let the LLC default on the non-recourse loan.
5. I purchase the title to the property free and clear from the LLC for a nominal amount, say $100.

Cost to me is $13,100 for a $200K mortgage on a property that is still not underwater.

If a stay-at-home dad can figure this crap out, you think the big boys aren't planning?

FWIW, an additional sad commentary.

Talked with the middle schooler about it over breakfast.

1. He fully gets it.
2. He thinks that we should do it. "Everybody else is doing it, why shouldn't we?"

homedad43 Tue Mar 24 07:58:28 2009 CDT #

CRbot says:

The Latest from Yves:

Guest post: Can Geithner's public-private partnership get it done?

CRbot Tue Mar 24 08:01:07 2009 CDT #

Rob Dawg says:

the wall would have eventually come down, maybe five years later, but it would have come down.

I'd laugh if this weren't so sad. Ingrates.

Rob Dawg Tue Mar 24 08:04:57 2009 CDT #

citiprank says:

"Uhhhh yeah. And if RWR had lost to incumbent Carter the wall would have fallen anyway. Not."

Wow Dawg... you are a really smart guy.. but that's just a silly thing to say... .Please tell me you don't think "raygun beat the commies"... jeez.... the wall was coming down with or without his actions... his actions just bankrupted the govt (yes we've been bankrupt since then) and redistributed wealth and income to the rich..... he's worshipped like a hero here even though he's the crook who started this whole disaster in the first place

citiprank Tue Mar 24 08:06:11 2009 CDT #

Counterpointer says:

Byz - you're well on point, as usual.

Ghesh.

It's going to be a difficult day at work, I can tell already.

C

Counterpointer Tue Mar 24 08:06:29 2009 CDT #

CRbot says:

New Thread: Geithner: New Powers Needed to Seize Non-bank Financial Companies
http://www.calculatedriskblog.com/2009/03/geithner-new-powers-needed-to-seize-non.html ( 0 comments ...You could be FIRST! )

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CRbot Tue Mar 24 08:15:24 2009 CDT #

Rob Dawg says:

Please tell me you don't think "raygun beat the commies"

Sorry to disappoint but I must not be a smart as you think because that's what happened. It was ruinously expensive and one unintended consequence is that it gave the US a taste for deficit spending from which we will be decades in withdrawal. The USSR was teetering but RWR gave it a push and a push that made it fall in a direction where nobody got hurt when it fell.

We need a Reagan for the Evil financial Empire but we got ourselves a Chamberlin.

Rob Dawg Tue Mar 24 08:15:45 2009 CDT #

Black Star Ranch says:

Werner......

"....currency are (you guessed it) born and breed dopes."

If you are going to ridicule us in English, at least use the proper tense - [born and BRED dopes]

Black Star Ranch Tue Mar 24 08:15:56 2009 CDT #

Rob Dawg says:

BSR,
There's been an order change. Instead of two families from Detroit you are being assigned a New Orleans refugee and her kids along with two semi-retired autoworkers from the dissolved labor pools. Take good care of them and teach them good work ethics and useful skills.

Rob Dawg Tue Mar 24 08:22:13 2009 CDT #

Lobbyi$t Ben Dover says:

"We need a Reagan for the Evil financial Empire but we got ourselves a Chamberlin."

I live through the Reagan era as Governor and President. I truly feel he would not have stood for the crap that has gone on since Clinton, Bush and now Obama. First clue is the falling apart of the Republican party due to lack of honest conservative actions.

Lobbyi$t Ben Dover Tue Mar 24 08:23:09 2009 CDT #

Comrade Byzantine_Ruins says:

Werner says:
Today, 8:50:34 AM

The utterance of an megalomaniacal American.

Technical judgment you'd be wise to heed.

The "doomsday device" are irresponsible Americans who (for longer than a decade now) live beyond their means (on other peoples money) and think they need not pay the piper and (as Broward Horne says a few posts further down ) their "unredeemable funny money".

You bought the paper. The policies were completely transparent. As a harsh domestic critic, I have to say, I was here ten years ago and I was not alone.

Why did *you* enable my country's robbery of *me*? Now *you* want to enforce the debts undertaken despite *my objections* on *me*?

Sorry dude, I advocate debt forgiveness and repudiation in the third world too, and I don't care what it does to the total return component of your pension fund, you passive enabler of despots. Get off your high horse, you just have an interesting way of saying you want your money back and you don't care who gets hurt.

P.S. The only ones who think that the currency of a country which lead it's financial system into desaster and is now, via monetisation, ruining it's currency should be the world's reserve currency are (you guessed it) born and breed dopes.

Feel free to get out, but I am not sure, does "out of the frying pan and into the fire" translate into German? How about "when you dine with the devil, you better eat with a long spoon"?

Comrade Byzantine_Ruins Tue Mar 24 08:23:38 2009 CDT #

wally says:

One of the amazing things about this whole situation is the way that the people who predicted these problems - in some cases laying out facts, figures and charts - and who explained why they would happen and who pointed out the structural causes have been completely and purposefully shut out of any conversations, planning and discussion about solutions.
This really is strange; the people who caused the problems - vast, nearly fatal damage to world banking systems - are now somehow still in control of the money and the "solutions" to problems whose existence thy denied.
Geithner's attitude appears hostile to those people; he has clearly taken a side in the matter that is completely inappropriate given his role in government.

wally Tue Mar 24 08:28:13 2009 CDT #

dryfly says:

CBR & Dawg - you guys are having a good 'discussion' but for naught - none of those reasons matter to the Chinese at all - only one matters: how do continue to employ the gazillions of peasants heading to the city? So long as they decide the best way to do that is via export sector mfg targeted at US McConsumers... they are going to peg the dollar and buy assets to maintain said peg. Everything else they say is philosophical masturbation.

The day they find a better option to achieve those results [or heaven forbid have NO OPTIONS - those would be 'interesting times' for sure]... that is the day the USD ceases to be the reserve currency.

They can clamor all they want for an alternative currency - won't make a bit of difference unless they then also find 'alternative customers' - ones that can pay in the 'new' currency.

Talk about the Mother Of All Catch 22's...

dryfly Tue Mar 24 09:13:28 2009 CDT #

Comments for Krugman Discusses Geithner's Toxic Plan on News Hour

END