tag:blogger.com,1999:blog-4102429195693595750.post5512833585950428860..comments2024-02-24T19:10:00.395+02:00Comments on Sudden Debt: From Animal Farm To Animal HouseHellasioushttp://www.blogger.com/profile/03564511281240682625noreply@blogger.comBlogger32125tag:blogger.com,1999:blog-4102429195693595750.post-29120976618477962752008-03-18T10:34:00.000+02:002008-03-18T10:34:00.000+02:00It's only the 1st inning.Guaranteed extra innings....It's only the 1st inning.<BR/><BR/>Guaranteed extra innings.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-29219749793916382122008-03-18T09:38:00.000+02:002008-03-18T09:38:00.000+02:00Furthermore, the Fed provided the bride's dowry.Qu...<I>Furthermore, the Fed provided the bride's dowry.</I><BR/><BR/>Quite apt.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-3996078003714320712008-03-18T09:37:00.000+02:002008-03-18T09:37:00.000+02:00Via Global Economic Trend AnalysisAmericans simply...Via <A HREF="http://globaleconomicanalysis.blogspot.com/2008/03/now-presenting-deflation.html" REL="nofollow">Global Economic Trend Analysis</A><BR/><BR/><I>Americans simply don't have enough money to pay back the mortgage and credit-card debt they've run up...Furthermore there is little Bernanke can do about it. Bernanke claims to be a student of the great depression and the so called "lost decade" of deflation in Japan. However Japan did not have to face the overhang of massive consumer debt and <B>global waged arbitrage</B> that Bernanke has to face.</I>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-43515171818927113602008-03-18T07:58:00.000+02:002008-03-18T07:58:00.000+02:00The marriage between JPM and BSC was accomplished ...The marriage between JPM and BSC was accomplished at the end of a shotgun. Furthermore, the Fed provided the bride's dowry.<BR/><BR/>A couple more like that and the Fed will have to start printing money.Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-90092637096421445822008-03-18T07:25:00.000+02:002008-03-18T07:25:00.000+02:00The pigs have convinced that rest of the animals t...The pigs have convinced that rest of the animals that they, of all animals, sit at the pinnacle of order. Without 'em pigs, the world would end and that there will be no farm to speak of.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-50323396764387995652008-03-18T05:55:00.000+02:002008-03-18T05:55:00.000+02:00Hellacious: I am utterly baffled by the Bear Stear...Hellacious: <BR/><BR/>I am utterly baffled by the Bear Stearns buyout. It has been everywhere seen as a rescue of Bear. But it seems to me more critically a propping up of Chase.<BR/><BR/>Why? Because JPM is the mothership, the epicenter, the Queen Bee, of the financial derivative complex. You have seen the page from the Comptroller of the Currency stating the notional value of derivatives held by JPM at $91 trillion, far in excess of all the competitors. It’s like the US defense budget as against the rest of the world, with a fifty/fifty split. <BR/><BR/>I have tried at various times to get some kind of handle on what this consists of, but frankly have no idea. My vague sense is that it’s some kind of bundle of the contracts, in all their diversity, that one can find at Markit.<BR/><BR/>Now the great thing that seems utterly impossible to me is that a big fat bureaucracy could sit on top of this big pile of futures, options, and forwards, while levered at 74 to 1, in the midst of astonishing volatility, and without foreseeing the gravity of the crisis, and come out without staggering losses. Maybe I exaggerate. Whatever JPM’s derivative complex consists of, surely it’s not like the Carlyle fund’s 32-to-1 leverage based on the spread between government and agency debt, which was just demented. But if it is not like that, then why don’t they give some kind of hint as to what it is? What we seem to have learned from the conference call is that it’s just like Bear Stearns; that’s why they’re “very comfortable” with assuming Bear’s portfolio. Should this not make the rest of us appalled? <BR/><BR/>Another thing I don’t understand is how much of the liability JPM has taken on. It seems the Fed has backstopped $30 billion, most of the mortgage related stuff. But isn’t there a lot more than that? The markets have reacted as if JPM got the building for practically nothing and had all the liabilities of the purchase (lawyers apart) covered by the Fed. This doesn’t seem possible to me. <BR/><BR/>Since I’m baffled, I don’t have a conclusion, only an intuition: that the “buyout” is more about JPM Chase than it is about Bear Stearns, and that the real book that prying eyes need to understand and that holds the key to the crisis sits on top of that $91 trillion derivative structure. <BR/><BR/>Thanks much for your insights. <BR/><BR/>DavidDCHhttps://www.blogger.com/profile/05666564268934144143noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-73028088279406735052008-03-18T04:52:00.000+02:002008-03-18T04:52:00.000+02:00The plan by the PTB seems clear as day now, and it...The plan by the PTB seems clear as day now, and it involves several key aspects:<BR/><BR/>1.) "Facilitate" the folding of the smaller more troubled WS firms into the larger ones, i.e. Bear into JPM. <BR/><BR/>2.) Part of that process involves the absolute avoidance of mark to market except behind closed doors for the select few "big fish" who are designated to take part in the "orderly" liquidations.<BR/><BR/>3. Expand the range of rescue activities the Fed will engage in such that <BR/><BR/>"What's going to happen ~28 days from now when these lending instruments come due"<BR/><BR/>emergency deals are rolled over indefinitely. Put another way, emergency deals will become essentially permanent. <BR/><BR/>4.) No criminal prosecutions-which may be perhaps the most preposterous and monstrous development of all.<BR/><BR/>A problem, if not the problem with all these efforts, is that they are undermined by the simple awareness of the per share price that JPM was able to acquire Bear for, $2.00. JPM and The Fed marked Bear to market and that's the figure they came up with. Say it ain't so, Abby Joe. <BR/><BR/>Was Bear frog marched into an unfair deal? Perhaps, but if not, who is kidding who, since if such is the case, the street is undoubtedly full of other banks and broker dealers that are utterly bankrupt.Edwardohttps://www.blogger.com/profile/03613197383283896190noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-37590507989149532462008-03-18T04:22:00.000+02:002008-03-18T04:22:00.000+02:00Nothing changed today, or Sunday. The consumer can...Nothing changed today, or Sunday. The consumer cannot service their debt load, nor can the local, state or FED gov't for that matter.<BR/>So we continue on with the same silly games with the in crowd thinking they can lock in their rewards and move along, maybe they can but my guess is that the apple cart can't be made upright now or in the future without some big payments either in the form of significantly lower standard of living for the average american or the wealthy will see the gov't impose strong measures to move wealth down the income stream, my guess is for a lower standard of living for most Americans.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-17758062347200568832008-03-18T04:11:00.000+02:002008-03-18T04:11:00.000+02:00*"What is WM stock?"- Sorry, Washington Mutual ($4...*"What is WM stock?"- <BR/><BR/>Sorry, Washington Mutual ($40+/share a year ago, $9.24/share today.<BR/><BR/>*Thanks for the Windward Inv advice. I haven't seen anything quite like it (<20 employees, 3 straightforward catagories, etc.). But that PENSCO Trust real estate IRA option fits my current irresponsible "what the hell" attitude. Of course the fees are high and there's tax hassle involved if you collect rent. But maybe I'd buy some Scottish pasture and let the goats graze for free (anything to avoid reading another sleezy prospectus).<BR/><BR/>*Colbert is a GENIUS! He and Jon Stewart are well worth buying a Tivo for.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-24481394130522894992008-03-18T03:25:00.000+02:002008-03-18T03:25:00.000+02:00As my father always said:The feeding trough stays ...As my father always said:<BR/>The feeding trough stays the same, only the pigs change from time to time.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-13469287730657859032008-03-18T02:19:00.000+02:002008-03-18T02:19:00.000+02:00Thai:1."Revamp public policy towards increasing ea...Thai:<BR/><BR/><I>1."Revamp public policy towards increasing earned income for working people"<BR/><BR/>2. "I do have concrete suggestions for increasing earned income, through the creation of high value-added jobs, employed in the radical transformation of the energy regime in the US, and perhaps the rest of the world."<BR/><BR/>to mean someone is going to see a cut in their taxes. I actually interpreted this suggestion to mean workers would either get personal tax credits or a reduction in income taxes....</I><BR/><BR/>With all due respect, you are thinking too much like a Republican. I hope that I am not being too presumptuous when I say that H. and I think more like this statement:<BR/><BR/>(Stephen) Colbert: What made the President's speech so groundbreaking was all the new stuff we heard from the President -- like a domestic agenda. Take his proposal to fix that whole health care mess with the only proven cure-all: tax breaks.<BR/><BR/><I>President Bush: And for the millions of other Americans who have no health insurance at all: this deduction would help put a basic health insurance plan within their reach.</I><BR/><BR/>Colbert: <B>It's simple: most people who can't afford health insurance also are too poor to owe taxes. But, if you give them a deduction from the taxes they don't owe, they can use the money they're not getting back from what they haven't given to buy health care they can't afford.</B><BR/><BR/>***<BR/><BR/>And that's the Word.<BR/><BR/>If you would like to watch the video, I think you can see it <A HREF="http://satellitesky.blogspot.com/2007/01/stephen-colbert-on-bushs-health-care.html" REL="nofollow">on my blog</A>.OkieLawyerhttps://www.blogger.com/profile/17071917464425173379noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-67316530506027738062008-03-17T21:05:00.000+02:002008-03-17T21:05:00.000+02:00Dink, there have been other posting of Hell's wher...Dink, there have been other posting of Hell's where I too came away with that interpretation, but I sense Hell is saying something more than that of late-- though in truth I am not convinced he has an actual plan more than the inkings of an idea which he has not completely explored. <BR/><BR/><BR/>What is <B>WM</B> stock?<BR/><BR/>By the way, if you are looking for a recommendation for your IRA, I am VERY happy to recommend my own investment manager <A HREF="https://www.windwardinv.com/windwardinv/web/me.get?web.home" REL="nofollow">Windward Investment management</A> . They are based in Boston Mass and their performance results are on the website (I can vouch as being all true). <BR/><BR/>I discovered them a number of years ago when I interviewed investment houses to manage my company's retirement plan assets (I am the plan's trust officer). I have been so happy with them I actually moved all my own and all my mothers assets over to them a while ago.<BR/><BR/><BR/>In fact, as I write this I remember they were the ones who originally introduced me to the idea that 'all is not well in the land of OZ' several years ago. <BR/><BR/>I can certainly vouch for their character (whatever that is worth in an unsecured blog chat world).Thaihttps://www.blogger.com/profile/00700253024420397221noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-81937995538520266042008-03-17T20:44:00.000+02:002008-03-17T20:44:00.000+02:00Hi Thai,My interpretation (which admittedly could ...Hi Thai,<BR/><BR/>My interpretation (which admittedly could be completely wrong) of:<BR/><BR/> "creation of high value-added jobs, employed in the radical transformation of the energy regime in the US" <BR/><BR/>was a "War on Oil" Manhattan Project-esque focus on clean energy to both help the US economy and air quality. We tax the @#$% out of Exxon to pay for tuition for all the new scientists we'll need. <BR/><BR/>Dink and Thai may keep *less* of their earned income for a while, but we'll suck it up for the common good. We'll have less income while others learn to make more income. BTW, I'm forcing optimism on myself because I don't drink...<BR/><BR/>Funny note- In 2004 my entire 401k was in WM stock. I got mad after the election and moved it all in 2005 (Thanks W...?). I'm trying to figure out where to roll it over into an IRA. I just want return of capital. Is using it to buy land in whatever country my finger hits after spinning a globe too random? Just pathetic.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-63827758604373302442008-03-17T20:16:00.000+02:002008-03-17T20:16:00.000+02:00In other words, the focus from now on should be on...<I>In other words, the focus from now on should be on adding value by means of work and savings (capital formation), instead of inflating assets and borrowing.<BR/></I><BR/><BR/>Bravo! The problem is that no one is going to save when interest rates are below inflation. Bernanke has decided to take the opposite route and try to goose borrowing to bring back the happy days of runaway asset inflation.<BR/><BR/>We had both savings and growing income until the 1980s. But TPTB called rising wages "wage-price spiral" and decided to crush it.<BR/><BR/>So now we have consumption based on rising debt rather than rising income. That works (sort of) until debt maxes out. Then the whole thing collapses in a heap.<BR/><BR/>Oops. I think we're there.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-70877218656413278422008-03-17T19:21:00.000+02:002008-03-17T19:21:00.000+02:00Hey Dink!Forgive me if I am being a little dumb, b...Hey Dink!<BR/><BR/>Forgive me if I am being a little dumb, but my reading of Hells 2 statements:<BR/><BR/>1."Revamp public policy towards increasing earned income for working people"<BR/><BR/>2. "I do have concrete suggestions for increasing earned income, through the creation of high value-added jobs, employed in the radical transformation of the energy regime in the US, and perhaps the rest of the world."<BR/><BR/>to mean someone is going to see a cut in their taxes. I actually interpreted this suggestion to mean workers would either get personal tax credits or a reduction in income taxes (i.e. Dink and Thai keep more of their earned income),<BR/><BR/>I did not interpret this to mean a reduction in corporate tax rates.<BR/><BR/>Am I seeing this wrong?<BR/><BR/>Forgive my confusionThaihttps://www.blogger.com/profile/00700253024420397221noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-25849571393403395382008-03-17T18:34:00.000+02:002008-03-17T18:34:00.000+02:00"They confiscated everything, even the stuff we di..."They confiscated everything, even the stuff we didn't steal!"-<BR/>Animal House quote that seems fitting for the panicking Wall Street elite<BR/><BR/>Regarding the increasing income proposal: Perhaps this wasn't meant as a complex accounting scenario, but more in the sense of increased quality of life ("tide comes in, all boats rise"). The GI Bill was social engineering for the betterment of the whole. India, China, and Ireland made phenomenal strides in a short period of time by ramping up math/science education opportunities. Making a Manhattan Project to be the country with the lowest crime rate, cleanest environment, and best educated populace would be worth more than having the lowest corporate tax rate.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-4394835345805579652008-03-17T17:30:00.000+02:002008-03-17T17:30:00.000+02:00PS On jobs...Though I am not a politician, I do ha...PS On jobs.<BR/><BR/>..Though I am not a politician, I do have politician friends. To them I sometimes "spoonfeed" more concrete suggestions. "spoonfeed" because they are far too involved in politics to follow the real world and thus be able to translate broad ideas into actionable policy.<BR/><BR/>Gotta runHellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-70172866352624575872008-03-17T17:27:00.000+02:002008-03-17T17:27:00.000+02:00re: "silence" on jobs specificsBecause I am not a ...re: "silence" on jobs specifics<BR/><BR/>Because I am not a politician, neither do I want to be. The broad guidelines remain: away from assets/debt and towards income/savings. <BR/><BR/>Not to mention that today is a rather busy day for long explications.Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-40048184620976249782008-03-17T17:20:00.000+02:002008-03-17T17:20:00.000+02:00Why the silence on "I do have concrete suggestions...Why the silence on "I do have concrete suggestions for increasing earned income, through the creation of high value-added jobs, employed in the radical transformation of the energy regime in the US"...?Thaihttps://www.blogger.com/profile/00700253024420397221noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-36834577371984441922008-03-17T17:15:00.000+02:002008-03-17T17:15:00.000+02:00Maybe Morgan got a great deal, maybe not. At the ...Maybe Morgan got a great deal, maybe not. <BR/><BR/>At the level of leverage that broker/dealers operate, even a slight move down in asset prices that cannot be immediately liquidated for cash or adequately hedged (eg CDOs) results in a TOTAL wipeout of net equity, building and all. <BR/><BR/>This is precisely what happened to BSC and why the Fed has to provide a loan of $30 billion to Morgan against BSC's portfolio of such assets. <BR/><BR/>And they now "own" 14.000 extra employees, of which it is doubtful they could use more than 2.000 or so.Hellasioushttps://www.blogger.com/profile/03564511281240682625noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-46923550822585808492008-03-17T16:56:00.000+02:002008-03-17T16:56:00.000+02:00@Anon,Mish had a nice piece on just on this the ot...@Anon,<BR/><BR/>Mish had a nice piece on just on this the other day... <A HREF="http://globaleconomicanalysis.blogspot.com/2008/03/feds-swap-meet.html" REL="nofollow">What happens 28 days later?</A><BR/><BR/>So did <A HREF="http://www.interfluidity.com/posts/1205254205.shtml" REL="nofollow">Interfluidity</A>Thaihttps://www.blogger.com/profile/00700253024420397221noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-13288272682185793472008-03-17T16:36:00.000+02:002008-03-17T16:36:00.000+02:00JPMorgan Chase got THE sweetheart deal of the cent...JPMorgan Chase got THE sweetheart deal of the century with the bailout. The bear stearns building that they supposedly own is worth $1 Bil. <BR/><BR/>As an FYI: Bloomberg reported 67% failure rate for last week's muni bond auction.<BR/><BR/>The Fed also opened a new lending facility for securities dealers. Just outrageous. And no one will be perp-walked for this one.<BR/><BR/>What's going to happen ~28 days from now when these lending instruments come due?<BR/><BR/>My guess is they won't ever mark the assets to market value.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-66592932480731434562008-03-17T14:43:00.000+02:002008-03-17T14:43:00.000+02:00@Hell...I am strill trying to understand what you ...@Hell...<BR/><BR/>I am strill trying to understand what you practically mean by "Revamp public policy towards increasing earned income for working people."<BR/><BR/>What do you define as work? Will there by some person or organization to determine what is acceptable 'work'?<BR/><BR/>Does someone who digs ditches count as a worker, but someone who designs computer chips not? What about an attorney-- you certainly have my vote to exclude all personal injury attorneys from your working tax credit proposal!<BR/><BR/>And supposing the computer chip designer earns $1,000,000/year for their 'work'? Does this level of income get preferential treatment because we define it as acceptable work? Or will there be a maximum income cut off for this 'tax credit'?<BR/><BR/>And supposing a worker decides to work 2 full time jobs to really earn and save money for his/her family? Let's further assume each job earns $500,000 so the worker earns $1,000,000/year as a result of working twice as much as everyone else, will this get the 'tax credit', or will $1,000,000/year still be too high regardless of how hard a worker works? <BR/><BR/>Will we say 'OK' to a tax credit at $1,000,000/year (if society defines it as 'real work'?) and send government 'work checkers' to verify a worker really works 2 jobs (as opposed to dividing 1 job into 2). <BR/><BR/>But would that be fair? Perhpas another worker clocks 80 hours a week (I know many attorneys that do that)-- might they complain working twice as long in 1 job is still as bad as working twice as hard thru 2 jobs... <BR/><BR/>Will we set up an organization to check that perople's productivity?... "How hard are you really working"? <BR/><BR/>Or will we focus this tax credit on 'acceptable work' as long as it has 'results'? (who will define that)<BR/><BR/>Will teachers get their 'working credit' when they earn more for directing classrooms with twice as many students? <BR/>Or will the credit focus on what the test scores of the students are are? <BR/><BR/>And what about differentials for 'undesirable work'... supposing some workers punch the clock on the overnight shift (like me and lot of other emergency physicians, nurses and paramedics). If these workers earn more for nights and weekends (which no one else wants to work), will they get to keep this extra money as well? Will there be an 'upper limit' to what they keep no matter how many undesirable shifts they work?<BR/><BR/><BR/>Your proposal may sound specific to you, but to the rest of us who do work for a living and punch punch a clock and work the nights, weekends and holidays that no one else wants but need to be covered (think about it next time you call 911 for chest pain at 3 am), you plan still seems a little short on details.<BR/><BR/>I do not want to 'push back' on your proposal-- if it really make sense then great-- but ideas are cheap and this one really needs a lot more 'fleshing out'..Thaihttps://www.blogger.com/profile/00700253024420397221noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-25963274050482700442008-03-17T14:29:00.000+02:002008-03-17T14:29:00.000+02:00Amen! I have referred to the pigs of Animal farm ...Amen! I have referred to the pigs of Animal farm at my blog too, but in a different context!Independent Accountanthttps://www.blogger.com/profile/07800220849565219709noreply@blogger.comtag:blogger.com,1999:blog-4102429195693595750.post-5890384782345642332008-03-17T13:46:00.000+02:002008-03-17T13:46:00.000+02:00Because of the exorbitant pension benefits granted...<I>Because of the exorbitant pension benefits granted to/demanded by public employees in California? More pigs at the trough?</I><BR/><BR/>eh:<BR/><BR/>These pension benefits were promised in order to keep taxes low and instead of wage increases for teachers. What you are seeing now is the natural result of "pay me now or pay me later (with interest). Also, California's prohibition on raising property taxes (which support schools) also contributed to the problem.<BR/><BR/>You have to think of government as a conglomeration of service-based industries. No ticky, no laundry.OkieLawyerhttps://www.blogger.com/profile/17071917464425173379noreply@blogger.com