What you are seeing here is really a result of years of Korea, Taiwan, and China taking market share in things like industrial goods to electronics. At one time, for example, Japan dominated the RAM industry with names like Toshiba, today it's companies like Hynix Semiconductor and Samsung.
I added to the blog post itself so it would go out onto the RSS feed. Good work, hope you write a post or two soon.
I do think there are some problems myself, I'm really not into some of the open borders, unlimited migration groups like La Raza and I think there is some good reason to be wary of ACORN too. I know these are "the right" complaints but I think they have some points. I wasn't sure about where it was in the budget that they claim though.
Have any credibility at this point? I mean these were the same guys that stamped AAA on crap and sold it to everybody.
I just wonder if this is more market negativity, sky is falling, or if it is real projected numbers backed up by hard data.
All reports I have heard and read are very, very favorable with regards to the Obama budget. By most accounts it is honest, transparent, forward looking and consistent with his campaign promises. Some progressives would like to see more on the revenue side, e.g. - more tax rollbacks on the upper 5% of income earners. But there is enough rollbacks in the current plan to keep the lobbyists quite busy. In the meantime though, resolving the bank situation is drifting from ridiculous to absurd. Geithner has not fooled any investors so far and his latest nebulous plans will not change that. Krugman is feeling the same. But I think this post on automatic earth says it all:
Ilargi: Bernanke says the recession will be over in a few months. MarketWatch has a deadline that says "Evidence mounts that recession's worst is past”. The Dow is up 3.5% when I write this. Now I'm sure Bernanke would look just fine with a party hat on his skull, but by now words like his this morning have become irresponsible. You can't keep on lying to people and expect them to always come back for more. The high and mighty in the markets are understandably giddy at the prospect of hundreds of billions of additional taxpayer dollars being moved into their failed institutions.
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This is the cover of the February 15, 1999, issue of TIME Magazine.
Robert Rubin, Alan Greenspan and Larry Summers as the three wizards who will save the world. Ten years later, Rubin is the man behind the scenes of Obama's finance team, Greenspan is busy doing mea culpa's that leave him without blame, and Summers has his eyes on Greenspan's old throne. These guys have orchestrated the downfall of the American economy ten years ago, through the Glass-Steagall repeal, insanely low interest rates and lack of regulation for 'innovative' financial instruments. They are today still firmly in the seats of power. I can't think of anything more worrisome than that.
So what are the chances that the new bank bail-outs will accomplish what they are supposed to do? It may seem like a very complicated question, and one that many will claim no-one can foresee the answer to, but maybe it's actually pretty easy. A new version of the Case/Shiller S&P Housing Index was published today, and it shows another record fall in US home prices. 18.5% in one year, a 9th consecutive record.
Professor Robert Shiller, someone I’ve taken issue with for his overly rosy forecasts in the past, did an interview yesterday with Henry Blodget in which he makes three points with regards to the future of domestic real estate.
House prices are still only halfway back down to fair value.
Prices don't usually stop at fair value. (Shiller calls this overshoot, I have referred to it as oscillation, what goes up must come down harder)
Obama's plan won't turn house prices around.
What this means is that prices have come down between 25% and 30% already, that they will drop another 30%, and that's before the overshoot. Shiller is getting very close to the prediction of 80% or more peak to trough I have been using for well over a year now, don’t you think?
How do we link housing prices to the bank bail-out? Like this. MoneyandMarkets has a cute little set of numbers.
Mike Larson adds a few comments:
Citigroup is on the list because of three factors: Its main banking unit has a C- financial strength rating. It has large exposure to the credit risk of derivatives. Plus, it has a big exposure to mortgages — $198 billion. Wachovia is in a similar situation: It made the fatal mistake of buying the nation’s largest and most aggressive mortgage lender — Great Western Financial — at the worst possible time. And it’s also got some serious exposure to derivatives. Washington Mutual, the nation’s largest thrift, has a D+ rating and is loaded with mortgage exposure. HSBC has a D+ rating. Plus, it has an exceptionally large 721% of its capital exposed to the credit risk of derivatives. In other words, for every single dollar in capital, HSBC is taking a credit risk of $7.21 with trading partners in derivatives, according to the U.S. Comptroller of the Currency.
Citi's market cap is around $12 billion. Its "assets" (wonder what is in that pot) are stated as over 100 times its cap, at $1,292 billion. If Citi indeed has all those assets, investors would be nuts not to buy in, wouldn't they? Its mortgage exposure is 16 times the market cap, while its derivatives risk is $2.79 per dollar in capital. (NB: total Citi derivatives positions were estimated at $38 trillion last year)
If housing prices keep falling in the way and to the extent that Shiller indicates, Citi will lose another $100 billion on its mortgage portfolio, while its mortgage backed securities and other derivatives will easily add a trillion here and there to the bleeding. Which in turn indicates that if home prices don't come back up, which Shiller says they will not, that Citi is way beyond salvation.
In 1999, mere months before the Glass-Steagall repeal was voted through, Robert Rubin handed the Treasury Secretary seat to Larry Summers, in order to move on to Citi and put to "good use" all the new financial powers he himself was responsible for writing.
In 2009, Rubin left Citi throuigh the revolving door that connects Wall Street to Washington, to team up again with Larry Summers and Tim Geithner, and make sure hundreds of billions are being poured into the bank he helped implode. None of Obama's initiatives will do anything to save the banking system, or restore economic growth, or benefit the taxpayer. We're witnessing the liquidation of the US as a going concern.
I sure hope Ilargi is wrong but it is hard to argue with his reasoning. Especially when Krugman, Roubini, Reich, et al are saying pretty much the same thing.
Recoinsider ..... I enjoy reading your posts and appreciate all points views and NEW ideas. There is no problem with new thought processes and spirited debate .... its a way of finding out if something is viable or not. If only Congress would engage in more debate and less bickering.
You are correct.... the current system is broken and new ideas can come from anywhere. I promote thinking outside the box.
At the same time I understand Robert runs the show so I cannot speak to past events.
You're completely right. I have no stomach for risk, and no wish to invest in a business that isn't either already profitable enough not to need my investment, or that I do not believe will be profitable enough not to need future investment.
Thank you for the recommendation of books. The rest I've answered in my own blog, which is linked to off this account. I decided you deserved more of an answer than me just dropping off the universe. I will be logging out now and not logging back in, as it is clear that what I see as populism and protectionism is completely a different set of values than is "economic reality".
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Moral hazards would not exist in a system designed to eliminate fraud.
So with that being the case, it seems like the article attempts to convince that the uptick rule is valid, helps, and should be reinstated. If you don't need to actually short to perform a short, what good would reinstating the uptick rule do?
seebert, surely there has to be another way than violence? Killing one, just brings on retaliation, that is how wars start. Surely, as one intellectual to another, we can come to a more civilized way of achieving reform? No? I like you, seebert, sure we don't see eye to eye, but it saddens me when we have to go for an eye for an eye.
But what seebert is proposing is not exactly economic fiction, if what I think he's proposing is what I'm thinking. If I am correct, he's proposing something akin to the old Technocracy movement from yesteryear.
The technocratic philosophy assumed that energy was the critical factor determining economic and social development. The Technocrats measured social change in physical terms: the average number of kilocalories used per capita per day. Money would be replaced by energy certificates, the total supply of which would be determined by the total amount of energy used in the production of goods and services
The above is taken from the wikipedia link I provided. The Technocratic ideal is interesting (especially in Science Fiction), but I think in the end unworkable. You really end up replacing one set of economists with another. Also human behavior is not really taken into account.
Responding to a different account, that what I saw as populism is a completely different set of values than can possibly be supported by a free and open market.
I see no way to create a strong middle class or a strong US economy at this point without radical change to the way markets work.
I will take into account what others have written, and I will be reading, but this will be my last post, as it is now clear to me that the class warfare has progressed to a point where I can no longer give my assent to the violence being done in the name of "it's just business", or the fraud being perpetuated in the name of corporate finance.
Good luck with the fantasy of returning to a gold standard or anything else related to a government of, by, and for the people when the people can't even control production of their own money.
-------------------------------------
Moral hazards would not exist in a system designed to eliminate fraud.
There are other ways to short a stock or industry. One can, as you pointed out, short a call or buy a put if one is bearish on a stock. Some more "sophisitcated" traders also go one step further, and look for correlaries that take advantage of the situation. For example, one popular trade is to go long airline stocks if you think oil is going to fall, or go long the GDX (the gold mining stocks ETF) if you think gold will go up. Then there is shorting the futures contract, like the S&P 500 e-mini. A few years ago, the US saw the birth of a new product, Single-Stock Futures, traded on OneChicago Exchange (which is jointly owned by Interactive Brokers, the Chicago Board of Options Exchange, and the CME Group). Not exactly popular with the retail investment crowd, mainly institutional players use them. They're not a bad product actually. They tend to move at the same rate and near the same price as the original stock, but you only have to put down 20% of the value of the contract (which represents 100 shares). Like I said there are many ways to be bearish on something.
Isn't what you're proposing what the old technocracy movement in the 20s and 30s was all about? Replace currency units with units of energy? Incidentally, that is what Gene Rodenberry based Star Trek's Federation's economy on. Then again, basing an economy on a work of fiction sounds kinda wacky too.
This is a very good point. For the Populace to wake up it is assumed they have the ability to self-educate, look up concepts, systems on the web, read economics texts, learn.
I'm doing that all of the time and if I say something stupid, wrong, incorrect, well, someone point it out but to not be self-educating is probably the reason pundits like Glenn Beck and many others (I'll take Olbermann on the left because he seems quite full of it also) can take one fact, or one graph and then use that fact to spin some inane policy recommendations, often crafted by some corporate lobbyist think tank or special interest group also not founded firmly in economic fact or even historical data.
Populism is simply not posting ill conceived ideas, incorrect concepts and inaccurate data. You are posting nonsense as many of us have pointed out for months. That has nothing to do with Populism or getting economic and related policy that creates a strong middle class or U.S. economy.
What you are seeing here is really a result of years of Korea, Taiwan, and China taking market share in things like industrial goods to electronics. At one time, for example, Japan dominated the RAM industry with names like Toshiba, today it's companies like Hynix Semiconductor and Samsung.
I watched Cramer's special and she said they were increasing the requirements of the insurance for banks.
Is this calculated into this? That show aired yesterday.
it's scary. Very dependent upon exports.
I added to the blog post itself so it would go out onto the RSS feed. Good work, hope you write a post or two soon.
I do think there are some problems myself, I'm really not into some of the open borders, unlimited migration groups like La Raza and I think there is some good reason to be wary of ACORN too. I know these are "the right" complaints but I think they have some points. I wasn't sure about where it was in the budget that they claim though.
Have any credibility at this point? I mean these were the same guys that stamped AAA on crap and sold it to everybody.
I just wonder if this is more market negativity, sky is falling, or if it is real projected numbers backed up by hard data.
It has always been about class warfare.
All reports I have heard and read are very, very favorable with regards to the Obama budget. By most accounts it is honest, transparent, forward looking and consistent with his campaign promises. Some progressives would like to see more on the revenue side, e.g. - more tax rollbacks on the upper 5% of income earners. But there is enough rollbacks in the current plan to keep the lobbyists quite busy. In the meantime though, resolving the bank situation is drifting from ridiculous to absurd. Geithner has not fooled any investors so far and his latest nebulous plans will not change that. Krugman is feeling the same. But I think this post on automatic earth says it all:
.
This is the cover of the February 15, 1999, issue of TIME Magazine.
Mike Larson adds a few comments:
I sure hope Ilargi is wrong but it is hard to argue with his reasoning. Especially when Krugman, Roubini, Reich, et al are saying pretty much the same thing.
As far as I know Moody's has good methodology so this is pretty damn scary doomsday press release.
So is this on derivatives or actual underlying assets? Am I reading that right?
Recoinsider ..... I enjoy reading your posts and appreciate all points views and NEW ideas. There is no problem with new thought processes and spirited debate .... its a way of finding out if something is viable or not. If only Congress would engage in more debate and less bickering.
You are correct.... the current system is broken and new ideas can come from anywhere. I promote thinking outside the box.
At the same time I understand Robert runs the show so I cannot speak to past events.
It has always been about class warfare.
we're asking you to think things through as well as think before commenting.
You're completely right. I have no stomach for risk, and no wish to invest in a business that isn't either already profitable enough not to need my investment, or that I do not believe will be profitable enough not to need future investment.
Thank you for the recommendation of books. The rest I've answered in my own blog, which is linked to off this account. I decided you deserved more of an answer than me just dropping off the universe. I will be logging out now and not logging back in, as it is clear that what I see as populism and protectionism is completely a different set of values than is "economic reality".
-------------------------------------
Moral hazards would not exist in a system designed to eliminate fraud.
he is not saying energy units (well consistently) but batteries, which have an exponential decay factor, i.e. more like an option.
So it's almost a misinterpretation of a pretty funky original idea.
So with that being the case, it seems like the article attempts to convince that the uptick rule is valid, helps, and should be reinstated. If you don't need to actually short to perform a short, what good would reinstating the uptick rule do?
seebert, surely there has to be another way than violence? Killing one, just brings on retaliation, that is how wars start. Surely, as one intellectual to another, we can come to a more civilized way of achieving reform? No? I like you, seebert, sure we don't see eye to eye, but it saddens me when we have to go for an eye for an eye.
But what seebert is proposing is not exactly economic fiction, if what I think he's proposing is what I'm thinking. If I am correct, he's proposing something akin to the old Technocracy movement from yesteryear.
The above is taken from the wikipedia link I provided. The Technocratic ideal is interesting (especially in Science Fiction), but I think in the end unworkable. You really end up replacing one set of economists with another. Also human behavior is not really taken into account.
Responding to a different account, that what I saw as populism is a completely different set of values than can possibly be supported by a free and open market.
I see no way to create a strong middle class or a strong US economy at this point without radical change to the way markets work.
I will take into account what others have written, and I will be reading, but this will be my last post, as it is now clear to me that the class warfare has progressed to a point where I can no longer give my assent to the violence being done in the name of "it's just business", or the fraud being perpetuated in the name of corporate finance.
Good luck with the fantasy of returning to a gold standard or anything else related to a government of, by, and for the people when the people can't even control production of their own money.
-------------------------------------
Moral hazards would not exist in a system designed to eliminate fraud.
There are other ways to short a stock or industry. One can, as you pointed out, short a call or buy a put if one is bearish on a stock. Some more "sophisitcated" traders also go one step further, and look for correlaries that take advantage of the situation. For example, one popular trade is to go long airline stocks if you think oil is going to fall, or go long the GDX (the gold mining stocks ETF) if you think gold will go up. Then there is shorting the futures contract, like the S&P 500 e-mini. A few years ago, the US saw the birth of a new product, Single-Stock Futures, traded on OneChicago Exchange (which is jointly owned by Interactive Brokers, the Chicago Board of Options Exchange, and the CME Group). Not exactly popular with the retail investment crowd, mainly institutional players use them. They're not a bad product actually. They tend to move at the same rate and near the same price as the original stock, but you only have to put down 20% of the value of the contract (which represents 100 shares). Like I said there are many ways to be bearish on something.
Isn't what you're proposing what the old technocracy movement in the 20s and 30s was all about? Replace currency units with units of energy? Incidentally, that is what Gene Rodenberry based Star Trek's Federation's economy on. Then again, basing an economy on a work of fiction sounds kinda wacky too.
This is a very good point. For the Populace to wake up it is assumed they have the ability to self-educate, look up concepts, systems on the web, read economics texts, learn.
I'm doing that all of the time and if I say something stupid, wrong, incorrect, well, someone point it out but to not be self-educating is probably the reason pundits like Glenn Beck and many others (I'll take Olbermann on the left because he seems quite full of it also) can take one fact, or one graph and then use that fact to spin some inane policy recommendations, often crafted by some corporate lobbyist think tank or special interest group also not founded firmly in economic fact or even historical data.
Populism is simply not posting ill conceived ideas, incorrect concepts and inaccurate data. You are posting nonsense as many of us have pointed out for months. That has nothing to do with Populism or getting economic and related policy that creates a strong middle class or U.S. economy.
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