It is ok…I got some great pictures of snow geese today, and one of my builder’s sons killed a wild boar on the place today….pretty good thanksgiving.

I think the population (insert taxpayers) is trying to “deleverage” and I think the only institution right now trying to releverage is the treasury…and I personally think it has gone too far, and that Japanization is a real possibility…

That is why I am buying short term cd’s…if we go into deflation I will make money, and if it becomes obvious the fed is leading us down the inflation trail, I will have time to buy inflation instruments….

Man, I should have moved here right out of graduate school…

My bad.

We need to allow the economy to shrink back to realistic operational levels, not try it maintain it at levels that we cannot actually manage to support. It WILL shrink, no amount of injected debt can prevent this from happening. The people will refuse to borrow, refuse to consume excessively, the banks will refuse to lend, and the companies that should expire and allow opportunities to emerge in the economy for new companies to replace them will instead wallow in their markets, supported by government bailouts and blocking more efficient companies from thriving — this is the path that Japan took and was so derided for taking.

Just look a what is happening in the mortgage industry — the smaller and regional lenders that were doing a good job are now being forced to compete with behemoths that are incapable of competing otherwise, but are subsidized by enormous amounts of government bailout money, money that is ultimately borrowed and placing a burden upon all companies and individuals in the nation.

We have processes to manage the deconstruction of failed economic enterprises — it’s called bankruptcy. The processes we have are designed to realize the losses, and clear the books of the debts associated with the failed entities. The only alternative that I can see to de-leveraging in this manner is to somehow manage to expand the valuations while maintaining the prior debt levels or decreasing them. And that is simply not happening.

Am I nuts, or are all the people claiming that we are de-leveraging misusing the term?

It must be that I am nuts, as there are a number of people who know more about this than I do who are claiming that we are de-leveraging. Perhaps this Christmas season we shall see some actual de-leveraging, as people actually buy less, but I know of no hard numbers (yet) to indicate that this is happening. And people have been banging the “de-leveraging” drum for many months now.

I would like someone to explain this to me and cure my mental fogginess (a tall order, I know — I would also like a pony for Christmas, and not this large pile of manure, so please don’t try and fool me by handing me a shovel and telling me that there’s a pony inside!).

I agree with everything you’ve said, but I still don’t see anything that tells me how this is “de-leveraging”.

Sure looks to me that they are trying to leverage their way out of this mess. It may well be that no matter which way we go, all roads lead to the “all fall down” exit.

Kinda like bleeding the anemia patient.

I am intensely eager to see what kind of medicine Dr Volcker prescribes for this patient. These other yokels (Paulson, Bernanke) I have come to regard as witch doctors or worse (Congress).

Good point and excellent visual image: “we are using our new debt to buy paint for the car up on blocks in our yard.”

It does seem that way, but, I think what they are trying to do in addition to shoring up failed corporations and asset prices is reflate the economy to stimulate demand, slow the fall of GDP, the rise of unemployment, and stave off deflation.

Whether this approach is ultimately right or wrong, I really don’t know. But I am becoming more sympathetic to the libertarian view of letting it all fall down and rebuilding anew. However, the political reality here, and everywhere else in the world, is that collapse and rebuilding is too painful, and it would not be tolerated by people without serious repercussions such as “throwing the bums out” in the next election here and perhaps a revolution in places like China.

It increasingly seems to me that the only possible outcome of such endless bailouts and borrowing will be a continual erosion in the value of the dollar and very high inflation – as many here have been saying for a long time. But that probably won’t happen until after this recession is over. It will be then that TROW will begin to realize the US is technically bankrupt and will shun the USD and our Treasuries.

Kinda embarrassing, as I use it every day.

I would tend to think of de-leveraging as paying down my credit card bills, or buying less “stuff”.

But it seems to me that we are taking out a 2nd/3rd/4th/5th/ … mortgage on our nation, to pay the interest on some bad “stuff” that we bought that is now broken with no warranty. The value of the “stuff” is falling rapidly, and we are using our new debt to buy paint for the car up on blocks in our yard.

The way that I see us de-leveraging is to haul the junk to the junkyard, and pay down the still-outstanding loan on it (or file personal bankruptcy) and get on with our lives. But that’s not what I see happening.

Can some numerically talented person/quant put together a chart that shows this battle between leveraging and de-leveraging?

Barry?

“… we are seeing a massive deleveraging and the disappearance of multiple trillions of dollars from consumers and businesses”

Do you know of any hard data that supports this? While I readily admit that it FEELS like that, and the equities markets have certainly lost some trillions of dollars, from my vantage point (way far away from the action) it appears that the Fed+Treasury are MORE THAN compensating for these losses — at least in monetary terms — with truckloads of new debt.

This strikes me as more leveraging, not de-leveraging.

I ask because I see this meme of de-leveraging everywhere, but have yet to see any hard data to support it. All the hard data that I see instead tells the opposite story, that we are debt-leveraging our hearts out trying to keep the boat afloat.

Until we start throwing some of the passengers (GM, Freddie, Fannie, AIG, ,,, ) and their debt-laden baggage over the rail, the boat is going to continue to sink.

I’d really like to believe, I’ve been clicking my heels together and repeating “there’s no place like home” over and over again, and if you can point to any quantitative data that shows actual de-leveraging in progress, I would dearly appreciate it. You might have to ‘splain it to me in small words that a young child will understand. My sanity may depend upon it.

Hiking in the mountains today. Passed quite a few “For sale by Auction” signs that are unusual for this area…