Just a Few Data Points . . .
By Barry Ritholtz - April 17th, 2009, 4:30PM
Macro Notes
We don’t want your help because maybe we don’t need itPeter Boockvar
While yesterday's US stock market close was poor, Asia and Europe didn't follow today as debt in Greece, Spain, Portugal, etc... rallied, their CDS narrowed and stocks bounced. The Greek finance minister said January tax revenues came in above expectations and that spending was below target for the month and said "that means the deficit reduction for January is well within what we have promised." The euro is rising in turn. Also helping is the story that Trichet is headed to the European Union leaders summit a day early in order to address Greece's problems even as the Greek finance...
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April 17th, 2009 at 4:42 pm
I didn’t know Obama is Canadian
April 17th, 2009 at 5:08 pm
Nice South Park reference the head.
made me really laugh.
April 17th, 2009 at 5:47 pm
I hope the vix goes to 27 next week…smile on!
April 17th, 2009 at 5:56 pm
well i still think this is just happy talk to try to get consumers out of the gloom. problem is it won’t work this time, they are tapped out due to low incomes and high debt. trouble is they have almost nothing they can contribute. and business hasn’t done much of any thing in so long they don’t remember how (but they do know how to do in other countries really well!).
April 17th, 2009 at 6:30 pm
Great cartoon. How about a similar chart on the development of wages ;-(
April 17th, 2009 at 6:44 pm
On his show tonight, Jim Cramer said that he supported his listeners buying Google at the IPO, but at the time he was on ‘Kudlow and Cramer’ and disapproved of Google’s no-ibank approach of their IPO and told people not to buy.
Screw the ibanks monopoly. Free the people. Free capitalism. …not Kudlow (Bear) Cramer (GS) though, they disagreed. They were wrong.
April 17th, 2009 at 6:49 pm
willid3 Says:
April 17th, 2009 at 5:56 pm
well i still think this is just happy talk to try to get consumers out of the gloom. problem is it won’t work this time, they are tapped out due to low incomes and high debt. trouble is they have almost nothing they can contribute. and business hasn’t done much of any thing in so long they don’t remember how (but they do know how to do in other countries really well!).<<<<
Agreed. I’m not generally a conspiracy minded person (although that’s changing lately), but it sure seems to be a concerted effort by the administration, with the media on their side, to paint a positive picture to remedy the lack of confidence problem. But that’s a canard. We must address the underlying problems of a broken economy that doesn’t produce enough and the huge debt overhang. The idea that we can fix things by moving as much of that debt as possible over to the taxpayers’ balance sheet and get confidence up is absurd, and dangerous.
And the happy talk will only end up getting more of the average folks hurt by luring them into this treacherous, risky market and speculating in houses that are still dropping in value. It doesn’t help.
Truth is always the best policy. But people will never learn that. Much better to cover things up and maintain the status quo, protecting the interests of the politicians and the banking/finance industry.
April 17th, 2009 at 6:52 pm
VD,
I think you’re on the right track..the sooner I-Banking centralization is broken-up, and more Individuals take greater responsibility for their ‘Investment’ decisions..the better, healthier, the Economy will be..
As we know, the more hands between you and your ‘Dollars’, the fewer pennies will remain/the less control you have in directing a *Future that is in concordance with your views..
http://www.thefreedictionary.com/concordance
April 17th, 2009 at 8:02 pm
rock on Hoffer- you couldn’t be more “right”- I believe that in all aspects of life- including the USG’s big power grab- let the chips fall where they may- but I am a firm believer in people taking responsibility for their own actions- big or small- no-one should be expecting the USG to provide.
April 17th, 2009 at 9:23 pm
Funny, but unlike the peanut gallery that frequents this blog, I don’t look to the funnies for economic data!
April 17th, 2009 at 9:23 pm
http://4.bp.blogspot.com/_V7Pddp58Py0/SeiSA7fu2GI/AAAAAAAACLA/oMEIGwAIgj0/s1600-h/image001.gif
from:
http://garyscommonsense.blogspot.com/
a little perspective of the rare company we keep. why should the reaction be any different than the rare action we saw going into this retracement?
i wouldn’t be surprised if we take out that high next week – although i expect it to be ever fleeting. i’m so short right now i make danny devito look tall.
April 17th, 2009 at 9:40 pm
guidepostings @ 9:23
And the XLF 29% above its 50 day MA has got to be somewhat unusual for a major industrial sector of the S&P500.
April 17th, 2009 at 10:07 pm
@ franklin411: “Funny, but unlike the peanut gallery that frequents this blog,”
Pass the peanuts. You must be part of the herd (mentality). Watch Kudlow alot?
April 17th, 2009 at 10:12 pm
next week will say a lot- staggering array of companies reporting earnings- my guess- all mostly to the downside- except for the banks- who are the benefit of the greatest government largess in the history of humankind- fuck them and the horse they rode in on.
April 17th, 2009 at 10:17 pm
@Pat,
Nah, I watch Chris Matthews at 4 (my time) so I can’t watch Kudlow. He’s too anti-labor for me anyway, but I do give Kudlow credit for having Zach Karabell on a lot. I gave up on Fast Money because Melissa Lee is too old and wrinkly in real life, and I find Jeff Macke and Tim Seymour to be too far to the right of Adolf Hitler to be tolerable.
April 17th, 2009 at 10:20 pm
@franklin: “..I don’t look to the funnies for economic data!”
Well..there’s your problem right there.
ahab,
Take that back..about the horse.
April 17th, 2009 at 10:26 pm
franklin-
what makes someone such a nanny state girly man- dude- people are in charge of their own destiny- I have no sympathy for people that make poor decisions- whether joe schmo or citibank- why is it that people look to uncle sam for comfort- answer- because they can
April 17th, 2009 at 10:26 pm
franklin-
what makes someone such a nanny state girly man- dude- people are in charge of their own destiny- I have no sympathy for people that make poor decisions- whether joe schmo or citibank- why is it that people look to uncle sam for comfort- answer- because they can
April 17th, 2009 at 10:26 pm
franklin-
what makes someone such a nanny state girly man- dude- people are in charge of their own destiny- I have no sympathy for people that make poor decisions- whether joe schmo or citibank- why is it that people look to uncle sam for comfort- answer- because they can
April 17th, 2009 at 10:28 pm
wow – that posted three times- cool
April 17th, 2009 at 10:38 pm
@Ahab:
That was cool!
One of my favorite quotes:
The government is us; we are the government, you and I. — Theodore Roosevelt
I’m fine with the government doing anything not forbidden in the Constitution, US Code, international law or custom, or treaty in pursuit of the national interest. If that means enriching a few corporations now to prevent a massive disaster, I’m fine with that.
This is not a morality play. People’s lives are on the line.
April 17th, 2009 at 10:51 pm
franklin- you crack me up- massive disaster- peoples lives on the line- dude – people survive- it’s not a carpet bombing of Dresden we’re talking about- the banks fucked everyone- and the USG has ensured that we’ll continue to get fucked at the bankers expense- if those pathetic excuses of a human being had any dignity they would present themselves to the American people and ask for forgiveness.
April 17th, 2009 at 10:54 pm
i can’t believe we are going thru another friday night without a music post… and i think it should be open to new, favorite wines as well as music … I’m actually drinking the first Australian wine I’ve ever enjoyed… but i’ll see how i feel tomorrow.
April 17th, 2009 at 10:56 pm
@ franklin411: ” If that means enriching a few corporations now to prevent a massive disaster, I’m fine with that.”
They’re not preventing it, they’re postponing it. That’s what governments do. And as far as television is concerned I watch less than 2 hours a week. And that’s mostly CNN News, Sports Center and the Weather Channel when I’m interested. I arrive my opinion from the several impartial websites that I read on the Internet in order to deliver them here. I’m sure that if I’m way off base, someone here will let me know.
April 17th, 2009 at 10:58 pm
Okay, okay, i know you are all dying to hear Brett Dennen: http://www.youtube.com/watch?v=F58TfYHqLak
I’ve bot 2 of his albums from itunes in 2 days… from itunes, of course.
April 17th, 2009 at 11:09 pm
Karen-
Thanks- can’t say I like the music much (Nirvana fan from way back) but I do like the woman trying on the shoes- makes me want to work in a shoe store- what can I say- I like to help people
April 17th, 2009 at 11:54 pm
Here’s a good blog post about the role of consumer optimism in this recession:
http://thevalueatrisk.blogspot.com/2009/04/can-optimism-alone-spur-recovery.html
April 18th, 2009 at 12:43 am
History of multi-day stock runs
http://marketsci.wordpress.com/2009/04/16/exploring-multi-day-stock-market-runs/
April 18th, 2009 at 3:38 am
>> They’re not preventing it, they’re postponing it.
If I may nitpick…
They could allow freefall/chaos or inhibit it. Yes, it drags it out. But, the intensity of what might or, IMHO, would otherwise happen is too much of a risk.
And what is that? Well, let’s imagine what happens when a company can’t make payroll because its bank fails. What happens to its employees, their landlords, their local grocers, their CRE, their suppliers, etc., etc.? What happens when this doesn’t affect just one company but most companies and all the big banks? At a certain point, it’s impossible to escape the carnage, like avoiding a huge pileup on the interstate when everyone else was driving reckless around you but the “prudent” people weren’t. Those “prudent” people would be hit, injured and killed, too. (If they had been *really* prudent, they would’ve been complaining from ?-2005 about the reckless driving conditions, before the accident became inevitable.) There would’ve been a complete run on the whole credit system. Whether you like it or not and whether you contributed it or not, even the “prudent” would suffer.
If no one tried to inject some confidence back into the system, I believe we would go straight back to the 1930’s. Nearly every company or person in America would go bankrupt except the Amish and the short sellers. And even the short sellers might go bankrupt for lack of a solvent counterparty. (E.g., witness CHK’s hedges lost in the LEH bankruptcy. Imagine that over and over.) We would see cascading failures that would overwhelm the bankruptcy judges/attorneys/system for years. It would be worse than the 1930’s because back then credit wasn’t so prevalent. If not arrested, the size of all the credit writedowns would catch 99% of Americans off guard — everybody but the homeless and people in jail. It would be worse again than the 1930’s because so few of us own land or means of subsistence farming.
Folks, I read criticism after criticism every day on this blog and every other one I visit. (Don’t mean to single out anyone’s statement, because most of you are in consensus and I’m sorta not.) I sympathize with the — well-informed — criticism and enjoy reading it. And I would’ve liked a different way to reliquify credit than to give it to the shmucks who started this and the bondholders or other “investors” who aided and abetted Wall Street’s “Credit Counterfeiting Scam” (introduction of “Bad Money” into the global credit/debt/money system — that’s “all” it was). But, the first step in any emergency is to try to stabilize the situation. The administrations have probably been taking what was the easiest, first steps to do that.
Will we figure out a way to unwind the 350% debt/GDP ratio built up over 30 years? (Like Steve Barry said, the hole BB is trying to fill is huge. I think the debt is unservicable without irrevocable printing.) If we drag this emergency out long enough, maybe some solutions will become more popular. Maybe it’s as “simple” as QE (and making it irrevocable). Maybe mutual debt forgiveness at the national level. Maybe something else. (Actually, I think something else dramatic will happen, such that repayment of debt becomes an “academic” exercise. But, that would take a lot more explanation, possibly.)
…
>> dude – people survive- it’s not a carpet bombing of Dresden we’re talking about
Ahab, as for people’s lives being at stake, I believe they are. If the situation deteriorated faster and deeper, would we see more tent cities? If we were to “let the chips fall where they may”, I imagine the number of Hoovervilles would grow and grow. What kind of health care do people living in tents receive? What kind of food do they eat and water do they drink? What about hygiene? Does psychology have adverse effect on health? How many will turn to crime, leading to further unproductive uses of people’s time? People depend on the economy — on trading with each other — to survive or thrive. No, it’s not the carpet bombing of Dresden. But, I don’t think that the carpet-bombing of Dresden is the threshold for deciding to act.
I expect we’ll see more Hoovervilles anyway. But, a slower rate of contraction gives people more time to make adjustments and avoid that level of adversity.
…
Also, more tangentially, this statement:
>> I have no sympathy for people that make poor decisions-
might “work for me” if everyone started off with equal opportunity and were continually supplied with equal information. But, we’re not. In a world where people must specialize in some areas in order to provide value to others (via the economy), people are forced to forgo becoming experts in other areas. Structurally, it’s just not a level playing field. So, I do have sympathy for people who make mistakes. (Humans aren’t perfect, okay?) A society that lacks sympathy for “losers” is not one I would wish to live in. I prefer a society where people try to help other people (as long as those people try to help themselves or just plain can’t).
>> people are in charge of their own destiny
Do you believe randomness plays no role? Maybe you do or don’t. But, it seems you downplay it, at the very least. I personally consider it an admirable goal for society to try to smooth out the effects of randomness. No, not completely. But, to some kind of “humane” extent, obviously agreed by consensus. (For now, I’m not in consensus.)
April 18th, 2009 at 3:54 am
Some loosely related footnotes…
My own Oct ‘08 bailout rant:
http://www.unknownliberal.org/blog/?p=7
(I’m not sure I agree with myself back then. For me, this is a continual learning process. As part of the laity in these matters, I reserve the right to flip-flop.)
…
For psychological reasons, I suspect it’s “better to bail out everyone than bail out no one.”
…
Oh, as an example of the effect of the crisis on people’s lives, consider the reports of letters of credit being denied and affecting agricultural trade. If confidence were not restored at least somewhat, what could have happened?
April 18th, 2009 at 4:55 am
heh heh!
http://lib.store.yahoo.net/lib/realityzone/UFNtaxrallycartoon.jpg
April 18th, 2009 at 7:05 am
wunsa-
you may care to peruse: Why There will be no other Bubble to Save us from this 40 Year Financial Bubble: From Manufacturing, Technology, and Financial Services. Real Estate Bubble. Drop in Corporate Tax Receipts.
http://www.mybudget360.com/why-there-will-be-no-other-bubble-to-save-us-from-this-40-year-financial-bubble-from-manufacturing-technology-and-financial-services-real-estate-bubble-drop-in-corporate-tax-receipts/
Contra to your appeal, you might care to wonder why the USGov isn’t aiding Individual self-sufficiency, but, rather, is full-throated in its “Green Shoots”-agitprop..
April 18th, 2009 at 8:20 am
Someone whose name begins with an ‘f’ wrote: “This is not a morality play. People’s lives are on the line.”
You’re putting up a straw man here, dude.
April 18th, 2009 at 9:14 am
@ common man-
a lot of truth in that cartoon
@wusacon-
quite the reply- we’ll have to agree to disagree- I will never agree with the Bush/Obama bank bailout (no bank too big to save)- I have more sympathy for the common man- unfortunately- the bank bailout contrary to your impression- was in my mind- not for the benefit of joe taxpayer but at the expense of joe taxpayer.
April 18th, 2009 at 10:34 am
wait a minute guys. They haven’t touched the gold bubble yet. That one is still on the launch pad and that one is going to make the inet bubble leverage looks like kids play
April 18th, 2009 at 11:14 am
franklin411 Says:
April 17th, 2009 at 9:23 pm
Funny, but unlike the peanut gallery that frequents this blog, I don’t look to the funnies for economic data!
—————
While I don’t much agree with much of what you post….I still took the time to read them based on your avoidance of the truly banal.
That time has reached an end. I’m quite sure you aren’t as moronic/dense as this post indicates….but life is short….I see no reason to avoid the obvious conclusion.
Bon Chance.
April 18th, 2009 at 10:21 pm
Karen: A day late and way down the blog. But the video was very cute. Juxtapositions. As if …
So, how was the Australian wine? I started sampling them quite some time back, when the really good reliable ones were also really affordable. You know, before the likes of Greg Norman, buying all the shelf space.