Daily Digest

Daily Digest - August 20

Thursday, August 20, 2009, 10:08 AM
  • Buffett Says Federal Debt Poses Risks to Economy
  • Population by age (Chart)
  • Q2 2009 Corporate Defaults More Than Double 2008 Total
  • Goldman Sach’s ‘American Socialism Manifesto’
  • Do you live in Georgia? 100 Banks Going Down
  • China cuts holding of U.S. Treasury securities
  • California Housing Bottom Callers and the Foreclosure Clones of 2008
  • Social Security Could Default in 2 Years
  • Art Cashin (Video)

Economy

Buffett Says Federal Debt Poses Risks to Economy

Aug. 19 (Bloomberg) -- The U.S. must address the massive amounts of “monetary medicine” that have been pumped into the financial system and now pose threats to the world’s largest economy and its currency, billionaire Warren Buffett said.

The “gusher of federal money” has rescued the financial system and the U.S. economy is now on a slow path to recovery, Buffett wrote in a New York Times commentary yesterday. While he applauds measures adopted by the Federal Reserve and officials from the Bush and Obama administrations, Buffett says the U.S. is fiscally in “uncharted territory.”

Population by age (Chart plays slides)

The Census Bureau's American Community Survey showed a jump in cohabiting in 2007, the most recent survey year. In California, the number of "family households" with a roommate stood at 228,500 in 2007, up 9.6 percent from 2006. In "nonfamily households," 674,000 reported having roommates in 2007, a 9.4 percent increase from the previous year.

During the Great Depression, plenty of people rented out spare rooms to cope with hard times, said Los Altos resident Don McDonald, 91, whose family in Ohio took in boarders regularly. ... "(Boarders) always ate with us and were, in effect, part of the family. The old family photo album shows several of them over those years."

It is common in a recession for households to double up by moving in with a friend or family member. However I'm not sure if taking in boarders is common in a recession ... although from the stories I've heard, it was very common during the Depression.

Q2 2009 Corporate Defaults More Than Double 2008 Total

The second quarter of 2009 set a new record for the number of corporate defaults, with 82 non-financial events of default, consisting of 16 names in media and entertainment, 15 in autos and 15 in natural resources, according to a new report published by S&P. The total amount of defaulted debt was $254 billion, far larger than the $102 billion spread among 69 defaults in all of 2008.

Of the second-quarter defaults, the largest portion (about 42%) resulted from distressed exchanges, 28% from missed payments, and 27% from bankruptcies. Distressed exchanges occur when a borrower offers creditors securities or cash in exchange for their debt claim that are worth less than the nominal present value of their original claim.

S&P is still predicting a record amount of speculative-grade defaults over the next 12 months, with an expected peak around Q1 of 2010, hitting a total of 13.9% of issuers some time in mid-2010.

This reflects our expectation of continued weak economic conditions and tight credit markets, although we do expect the credit markets to continue to ease somewhat through year-end.

As Zero Hedge has discussed extensively in the past, the predominant category of default event has become distressed exchanges.

Goldman Sach’s ‘American Socialism Manifesto’

Warning: Behavioral economics means one thing to Wall Street and Washington and something quite different to Main Street. It depends on whether you’re the nudger or nudgee, the manipulator or the manipulated, the guys making lots of money or the folks being scammed.

Average folks erroneously believe behavioral economics helps them. But behavioral nudgers just want to help themselves.

And both political parties are guilty. Behavioral economics is all the rage since the new president hired some academic behaviorists. That also helped the GOP, made average folks forget the former president had his nudgers, too, like former Treasury Secretary Henry Paulson. Moreover, his party recently hired 350 lobbyists, many former Senators and Congressmen, to kill the new guy’s health-care reform.

The truth is, folks, behavioral economics, nudging, manipulation and lobbying, whatever you call it, has been a part of American politics for a long time under many names, though neither party publicly admits their nudging strategies.

Do you live in Georgia? 100 Banks Going Down

Federal and state regulators have put as many as one-third of Georgia’s 300 banks under intensified monitoring and recovery plans, mostly strict enforcement orders a step or two short of seizure, according to banking experts.

A majority of these 90 to 100 banks, these experts say, are operating under “cease and desist” orders that require them to complete tough turnaround plans within strict deadlines.

While regulators can be flexible on deadlines or other requirements if banks fall short, many banks that have previously been put under such sanctions have failed.

China cuts holding of U.S. Treasury securities

China reduced its holdings of US government debt by the largest margin in nearly nine years in June, according to data from the US Treasury.

California Housing Bottom Callers and the Foreclosure Clones of 2008

So for those bottom callers, I would ask what big industry is going to make up for the lost jobs? Assuming job growth increases in the state, why would this justify current prices in mid-tier markets? The data is rather clear and the Alt-A and option ARM wave will cause problems. As I detailed in a previous article housing has a treacherous path ahead because prime loans are now defaulting in high numbers as well. This is obvious like it was back in March of 2008 but some would rather ignore logic and facts.

Social Security Could Default in 2 Years

“The situation is much worse than people realize, especially because of the problems brought on by the recession, near depression.

“That’s not been on the board — people don’t seem to know that,” Bachus, the ranking member of the House Committee on Financial Services, said in a wide-ranging interview with the Tuscaloosa News Editorial Board. “What this recession has done to Social Security is pretty alarming.

“We’ve known for 15 years that we were going to have to make adjustment to Social Security, but we still through that was seven or eight years down the road,” he said. “But if things don’t improve very quickly, we’re going to be dealing with that problem before we know it.”

The solvency of Social Security, which provides pensions for people over 65, has not played a major role in the current debate over health care in Congress and Bachus, a Vestavia Hills Republican who represents part of Tuscaloosa County, said it will not likely be addressed in any health care bill the House eventually passes, although if a Social Security bail out is needed, it will invariably impact government health care programs.

In the debate over health care, Bachus said that he could support a bill that includes privately-administered health “co-ops,” along with the elimination of fraud and waste in existing government programs like Medicaid and Medicare.

Art Cashin (Video)

22 Comments

Headless's picture
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Re: Daily Digest - August 20

Paul Farrell says:

"This is a historic government coup: The GOP created a new “American Socialism” that resembles Russia under Putin, with its bizarre blend of socialism plus just enough hint of capitalism to keep a steady flow of kickbacks to a corrupt dictator and his moneyed cronies."

I think the Russian model would be the preferable outcome, but I fear we're going to a much darker place.

I repost the below, as I would like to salute the Tellers of Truth that dwell here, and it provides a few glimpses into the process by which we have come to the point of Revolution as an entirely likely next step:

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

What CM and the community here are creating is of historic significance!

(John Pilger: Obama and Empire)

"The primary goal of great power is to limit our natural desire for social justice and equity and real democracy. Long ago Edward Bernay's invisible government of propoganda elevated big business from its unpopular status as a kind of mafia to that of a patriotic driving force. The American way of life began as an advertising slogan. The modern image of Santa Claus was an invention of Coca Cola. Today we are presented with an extraordinary opportunity. Thanks to the crash of Wall Street and the revelation, for many ordinary people, that the free  market has nothing to do with freedom, the opportunity within our grasp is to recognize that something is stirring in America that is unfamiliar, perhaps, to many of us within the left, but that is related a a great popular movement that is growing all over the world.

Look down at latin America: less than twenty years ago there was the usual dispair, the usual divisions of poverty and freedom, the usual thugs in uniforms running unspeakable regimes. Today, for perhaps the fist time in 500 years, there's a people's movement based on the revival of indigenous cultures and language, a genuine populism. The recent amazing acheivements in Bolivia, Ecuador, El Salvador, Venezuela, Argentina, Brazil and Paraguay represent a struggle for community and political rights that is truly historic, with implications  for all of us. The successes in Latin America are expressed perversely in the recent overthrow of the government of Honduras, because the smaller the country, the greater is the threat of a good example that the disease of imancipation will spread...

[Pilger later quotes Martha Gelhorn]

'I'll tell you what anti-American is. It's what governments and their vested interests call those who honor America by objecting to war and the theft of resources and by believing in all humanity. There are millions of these Americans in the United States. They are ordinary people. They are ordinary people who belong to no elite and who judge their government in moral terms though they would call it common decency. They are not vain. They are people with a wakeful conscience. The best of America's citizens. Sure, they disappear from view now and then, but they are like seeds beneath the snow. I would say they are truly exceptional. Truly exceptional.'

[Pilger continues]

"My own guess is that  a populism is once again growing in America, evoking a powerful force beneath the surface that has a powerful history...something is coming again....

What Obama and the bankers and the generals and the IMF and the CIA  and CNN and BBC fear is ordinary people coming together and acting together. It's a fear as old as democracy, a fear that suddenly people convert their anger to action, as they've done so often throughout history.

'At a time of universal deceit,' wrote George Orwell, 'telling the truth is a revolutionary act.'"

More on the origins and manifestations of this deception we now call  our government:

The Century of the Self

Mein Kampf, Part I

Harold Pinter on Charlie Rose

Seymour Hersh: Mario Savio Memorial Lecture (safely skip to 8:00, where the historic speech begins)

Conversations with History: Daniel Ellsberg

Conversations with History: Noam Chomsky

Conversations with History: Howard Zinn 

Davos's picture
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Re: Daily Digest - August 20

Kiss deflation bah bye. The only de-anything is going to be a de-valued dollar.

*U.S. TREASURY TO AUCTION $27 BILLION IN 52-WEEK BILLS
*U.S. TREASURY TO AUCTION $42 BILLION IN TWO-YEAR NOTES
*U.S. TREASURY TO AUCTION $31 BILLION IN THREE-MONTH BILLS
*U.S. TREASURY TO AUCTION $28 BILLION IN SEVEN-YEAR NOTES
*U.S. TREASURY TO AUCTION $30 BILLION IN SIX-MONTH BILLS
*U.S. TREASURY TO AUCTION $39 BILLION IN FIVE-YEAR NOTES

This is the price of supporting the grift and fraud in our banking system.

I count $207 billion, coming two weeks after a $250 billion dollar week.

Let's annualize - that would be about $5 trillion a year in annualized issuance.  My-oh-my how long can this continue?

 

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Re: Daily Digest - August 20

JP Morgan Bails Out California

http://www.businessinsider.com/jp-morgan-bails-out-california-2009-8

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Re: Daily Digest - August 20

Hi Headloss,

Great post, thanks.

DavidC

pedaler's picture
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Re: Daily Digest - August 20

I was tooling around Mish's site to better understand the deflation/inflation concept and came across this well written piece.

http://globaleconomicanalysis.blogspot.com/2009/02/fiat-world-mathematic...

I am solidly in the inflation camp but after reading this I am starting to have doubts. Can someone please tell me why Mish is wrong. 

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Re: Daily Digest - August 20
pedaler wrote:

I was tooling around Mish's site to better understand the deflation/inflation concept and came across this well written piece.

http://globaleconomicanalysis.blogspot.com/2009/02/fiat-world-mathematic...

I am solidly in the inflation camp but after reading this I am starting to have doubts. Can someone please tell me why Mish is wrong. 

There are 2 similiar threads running. The deflation camp seems to have good merits. I know which camp I'm in but time will tell which camp is correct and like they say, we could and likely will see asset prices lowered on non essential things before inflation. Happy camping.

Thread 1

Thread 2

FireJack's picture
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Re: Daily Digest - August 20

Deflation or inflation prepping for what's to come should be the same.

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Re: Daily Digest - August 20
FireJack wrote:

Deflation or inflation prepping for what's to come should be the same.

Deflation is simple hold cash. Inflation is a little different as cash won't help.

TechGuy's picture
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Re: Daily Digest - August 20

I am solidly in the inflation camp but after reading this I am starting to have doubts. Can someone please tell me why Mish is wrong. 

Mish is wrong because the US federal gov't and many US states are insolvent. If the US endured a deflationary spiral of more than a year or two,  the gov't would no longer be able to service its debt and still provide basic gov't services. Last year, the gov't paid about $482 Billion in interest payments. Since then the Federal debt has risen by $2 Trillion.  US gov't revenues are down about 27% for the year (FY2009). Deflation would make revenues fall even further,preventing the gov't from meeting is debt obligations and is service obilgations (entitlements, Gov't employee salaries, utlity costs, etc). Should the gov't default, then the dollar would become worthless, causing hyper-inflation. The federal gov't is now forced to supress interest rates to avoid a real default on its debt payments. Its very unlikely for the remainder existance of the United states (as we know it),  that short term gov't bonds yields will exceed the real inflation rate beyond a couple of hundred basis points (ie 1 % to 2%).

At this point the federal gov't has too options:

1. Print money and slowly collapse as inflation will slowly force the gov't to shutdown. Over time costs for utilities salaries will rise forcing the gov't to cut services to point of a complete gov't collapse

2. Permit deflation, causing a rapid plunge in revenues resulting in a quicker collapse.

There is no way over the long term that the federal gov't is sustainable. It spends too much and produces too little to survive. Mish assumes that sooner or later that the gov't will change its tune to a balance budget and that interest rates will rise to cause deflation. Neither is likely to happen because the gov't can and will change the rules and laws. No politican wants to be the guy that cuts entitlements, or raise taxes on the Middle class. That is political suicide. The Majority of votes want Congress to provide entitlements and send Federal dollars to their state and town to create jobs. The farmers want Federal aid to support farming, teachers and parents want schools to get more money, everyone wants new, bigger and better roads, retirees want more entitlements and free healthcare. Other's want the gov't to invest in renewable energy. Cash for Clunkers, Trillions for the GSEs and Banker bailouts. This list goes on and on. With the exception of a hand full of elected officials, everyone in Congress and the senate is pushing for spending increases to ensure re-election (both Republican and Democrats). Politicans are in Washington NOTto better America, they are in Washington to better and enrich themselves!

Chart of Cumlative Inflation:

Cumulative inflation

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years. "

I suppose in the very long term, Mish will be right, since after a hyper-inflationary collapse deflation is absolulting going to happen as the US dollar is replaced by a more stable currency. I am sure that after the hyper-inflationary collapse, Mish can declare victory and vindication. Consider that after the complete collapse of the Zimbabwe dollar, Zimbabwe is in a state of hyper-deflation as the new national currency of Zimbabwe is the US Dollar (for now). Bus fare has fallen from about 300 Trillion Zimbabwe dollars to 50 cents USD. But anyone stockpiling dollars hoping to to live like a king, will sadly be mistaken. 

 

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Re: Daily Digest - August 20

Deflation for the next year or so then lookout for inflation is my guess.

My how things are such a mess these days. Reality makes me nauseated at how our so called leaders have squandered or economy away with their mindlessness.

From what I collect the car dealers are not getting paid (yet) from the Govt for the clunkers they already destroyed by putting Sodium Silicate in the tank & running them til they seize. http://www.kansascity.com/637/story/1393764.html

Now they are going to have to add alot more people to process all these claims. Solid long lasting job growth LOL. This makes me feel real secure about how "efficient" they would run a national healthcare plan LOL.

What is next? They have the 65 & older crowd drink a quart of sodium silicate & run around the block til they drop because they are considered old clunkers too?

When Barney Franks is asked by a man at a town hall meeting can I trust Govt he responds this is a Democracy you can't trust Govt??? We are in big trouble IMHO. I will try to find the link.

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Re: Daily Digest - August 20

Social Security must be short of cash, they just sent me a notice changing my payment date from 3rd week of month to 3rd day of following month. 

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Re: Daily Digest - August 20

TechGuy, Good read, thanks!

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State Pension Funds Down 59%

State Pension Funds Down 59% On Private Equity Bets

Ah, the good old days, when diversification meant splitting your money between levered instruments (securities), somewhat levered and less liquid assets (like timber and commodities) and extremely levered investments (like private equity).

That kind of diversification didn't work out so well, when everything collapsed at the same time -- those most-leveraged positions got crushed.

Bloomberg compiled the ugly details:

U.S. pension funds contributed to the record $1.2 trillion that private-equity firms raised this decade. Three of the biggest investors, state pensions in California, Oregon and Washington, plunked down at least $53.8 billion. So far, they only have dwindling paper profits and a lot less cash to show the millions of policemen, teachers and other civil servants in their retirement plans.

The California Public Employees’ Retirement System, the Washington State Investment Board and the Oregon Public Employees’ Retirement Fund -- among the few pension managers to disclose details of their investments -- had recouped just $22.1 billion in cash by the end of 2008 from buyout funds started since 2000, according to data compiled by Bloomberg. That amounts to a shortfall of 59 percent. In total, they haven’t reaped a paper gain from funds formed in the past seven years.

And this is really what all the controversy about placement agents and pay-to-play exploitation of state pensions is all about. If these investments had just kept sailing on, nobody would have cared. But when you're staring at a loss on all investments in the last 7 years, someone's got to pay.

The good news for private equity: these funds need to hit such aggressive numbers going forward that they're forced to keep making the same bet, hoping the law of mean reversion starts to work back in their favor.

 

http://www.businessinsider.com/state-pension-funds-down-59-on-private-eq...

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Re: Daily Digest - August 20

If only someone would be able to accurately predict if it is going to be deflation or inflation we could all be billionaires. LOL  In my business (construction) and hobby (beef cattle raising) inflation is rampant.  Concrete, polystyrene, shingles, etc have all continued to go up and not at only 3% mind you.  In farming seed and chemicals and tires are up double digits.  On the other hand, labor is desperate and rates are down and real estate is falling like a rock.  We may have entered a phase with the worst of all worlds-asset and wage deflation and inflation in living expenses and productive inputs.  A squeeze play if there ever was one.  After all we are in uncharted economic territory.

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Re: Daily Digest - August 20

Peter Schiff 8-20-09 must watch IMO

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Re: Daily Digest - August 20
Hotrod wrote:

... we are in uncharted economic territory.

Wink +1

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Re: Daily Digest - August 20
Davos wrote:

Deflation is simple hold cash. Inflation is a little different as cash won't help.

Deflation is a lack of money to support normal exchange in economy. It can be done by hording money, but today when all money in circulation comes in form of debt, deflation is caused simply when bank refuse to lend. And by the way, cash (money with some substance in it, like metal or paper) make only a fraction of all money in circulation. Bank`s credit (debt) created `out of thin air` is a dominant form of money, not cash like most people thinks.

So, if huge amounts of cash (dollar bills) are printed and given to banks for bailouts (instead of productive economy) and they refuse to lend, there is actually no additional, new money in circulation and economy sinks further into recession or depression and that is exactly what banksters and oligarch want. Rich people don`t like when middle class gaining wealth (and thus independence), so they tend to control it through: taxation, periodical recessions or depressions, wars, etc.

 

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Re: Daily Digest - August 20

So, if huge amounts of cash (dollar bills) are printed and given to banks for bailouts (instead of productive economy) and they refuse to lend, there is actually no additional, new money in circulation and economy sinks further into recession or depression and that is exactly what banksters and oligarch want. Rich people don`t like when middle class gaining wealth (and thus independence), so they tend to control it through: taxation, periodical recessions or depressions, wars, etc.

Lending is very robust these days. Ginnie Mae is lending in the neighborhood of $450 Billion this year, much of it is probably subprime. The other GSEs: Freddie and Fanny are also issuing billions in new loans and refinanced loans every month. The Fed has handed them $1.25 Trillion to play with (perhaps even more since the Fed Books are closed to the Public) The GSEs and FHA now offer loans  with LTV's as high as 125%. That means they are giving people up to 25% of the homes value to spend. They aren't just giving homes away, they are paying people to take them! Perhaps thats why home sales have suddenly and drastically soared last month.

http://online.wsj.com/article/SB10001424052970204908604574334662183078806.html

 Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007

 

http://online.wsj.com/article/SB124843389720278803.html

Corporate Bond Issuance Sets Record

Global corporate bond issuance rose to $1.791 trillion during the first half of this year, exceeding the prior record of $1.74 trillion in the first six months of 2007, according to Standard & Poor's.

So the data so far points to very robust lending for 2009. All of this is being sparked from loose and cheap money coming from gov'ts around the world. The majority of central banks are printing money trying to re-inflation the global bubble. As long as they continue to pump trillions, there will be little to no deflation. We are much more likely to be stuck in stagflation as jobs market remains weak, but the excessive money printing drives up commodity costs. Today, NYMEX crude topped $74, and Gold has recovered from its recent drop.

 

 

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Re: Daily Digest - August 20
TechGuy wrote:

Lending is very robust these days.

Correct me if I`m wrong, but Ginnie Mae is not a bank and it does not issue money. It sells securities which are basically bonds. So, what it does is exactly the oposite from issuing new money - it draws existing money from investors and thus reach of those who really need it: manufacturers of various goods and services. Money is a universally accepted medium of exchange (or mean of payment) and that includes: coins, dollar bills and most dominant form of money - so called bankers money which has no substance. It exist only on bank`s accounts. Bonds and securities are clearly not money. They are some kind of certificate of debt which are to be paid in real money in due course.

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Re: Daily Digest - August 20

Deflation vs. Inflation

It's BOTH

Both AT THE SAME TIME

Deflation of the physical economy, on top of that deflation via the value of companies, commodities and other things falling.  But the thing to understand is this.

When hyperinflation occurs it will come with CONTINUING deflation of the physical economy.

Thus in a very real way we'll have DEFLATION AND HYPERINFLATION at the SAME time.

So to pay off the ever increasing debts, we'll have less valuable dollars, and less ability to pay them.

Our physical economy won't reach 0 but the equivalent of that is possible, meanwhile the hyperinflation will send t

Then you have to think of the money as a group.  An ever smaller amount of this hyperinflated money or as of now it's current value is going to REAL people, ACUTAL companies, and thus the physical economy is deflating.

But the 2nd group of money, as an ever increasing % will be used (and said to be required) to fund the monteary system apparatus. 

Thus you'll have hyperinflation, but you won't have they hyperinflated dollars to pay for anything, since it'll all be used to try to fix the problem.

So we'll have to make do with relatively the same amount of money we have now, at hyperinflated prices.  Which will continue to feed onto itself until the economy is near 0, and the monetary debts towards infinity.

When you throw in the fact there is 1500 trillion in derivatives, those numbers after you adjust for hyperinflation really do get towards infinity.  1500 trillion is obviously  1.5 quadrillion.  Imagine that, we're now talking about trillions and quadrillion like we used to talk about millions and billions.  (and i'm only 31). Yet incomes have gone up by how little?

October 1st will be interesting.

On another note I remember reading somewhere there are more 'new' foreclosures in CALIFORNIA, the state, then new housing starts, IN THE COUNTRY called UNITED STATES.  Again this isn't a recovery, or green shoots, or stabalization.  It's fantasy. 

Watch things like cnbc, it was kind of funny how most got cautious, a couple got mad (liesman and ratigan), the rest were drinking kool-aid.  But generally speaking it was a dose of reality to them last year. 

Now watch them, other than saying 'we don't know if things could get bad again', they are mostly all drinking the kool-aid again.  Leisman has come off his stances a bit, but still is cautious.  But everyone else is full-on drinking the kool-aid, and they'll pay for it I'm sure soon enough.  Hell even Dylan Ratigan is on msnbc instead now, because he didn't want to shovel the crap they no doubt asked him to.

Also the figures I read above are generally accounting tricks.  Like when they call refinanced homes, new home sales. Stuff like that.  The figures they are giving you, aren't the metrics needed or the figures needed to impact the economy in the way they 'tell us' it does.  Real loans to small businesses are DOWN, not up.  Loans among financial institutions and those linked...is off the charts.  But of course they show you 1 percent of what they lend to specific people and say that shows how the rest of the economy is doing.

Come October, and perhaps later, but the next downturn IS scheduled for October 1st give or take a couple of weeks.  The same problem of high rates for businesses to restock inventory - like Kroeger (think grocery stores), or to pay employees will become next to impossible.  Once again those that didn't not engage in very 'risky' sectors

Finally what people need to realize this isn't a problem within 'the system', this is a problem OF THE SYSTEM.  The weakest link was sub-prime lending, thus it was the FIRST shockwave. But all the others are now set to start going off, and the next one occurs when the market realizes what's come of the new fiscal year.  This can happen a couple weeks before, to maybe a couple of weeks after October 1st.  But rest assured, we'll be EXACTLY where we WERE at, but much worse.  Because the situation IS much worse.  Not to mention that THIS YEAR, unlike LAST year, we already have a stock market ~5k points down, we already have hundreds of banks in trouble or failed, we already have double the unemployment, numerous states are already virtually bankrupt.  (plus we're minus all the bailouts and stimulus), mark to fantasy rules, the fed backstopping 15-30 billion a day, all with a bigger problem than last year. 

So I personally expect this october to be 3-10x as bad as last year. 

The scary thing is if otherwise solvent businesses will not be able to purchase the goods they need, like for example KROEGER, then we could have literally millions starving by the end of the year.  I'm sure we'll try to do something to make sure that wouldn't happen.  But it may not work.  It's what could of happened last year, but we took steps.  Those steps will not work this time.  So different ones must be taken. 

It is scary, and things are worse than last year, which is why seeing all the kool-aid going around is so disturbing. 

Right now we have a bunch of people thinking the market can kick an 18 point field goal to overcome a 17 point deficit.

But as anyone familiar with football knows, field goals are only worth 3 points.  That's the stock market right now.  People are going to get burned again.

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Re: Daily Digest - August 20

just a test post..I changed my settings and something is not working right.

Jeff

 

Jeff Borsuk's picture
Jeff Borsuk
Status: Silver Member (Offline)
Joined: Jul 25 2008
Posts: 150
Re: Daily Digest - August 20

good stuff! thanks idoctor!

Jeff

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