On Monday, we looked at the impact of the Exhaustion Rate on Continuing Unemployment Claims (See Continuing Claims “Exhaustion Rate” and Exhausted Claims part II). Those charts and tables made it clear that Continuing Unemployment Claims were dropping not due to folks getting jobs, but simply using up all of their benefits.

Wednesday, we learned of a) record credit card chargeoffs and Increasing minimum Credit Cards payments from 2% to 5% at Chase.

Now, lets see what happens if we can put those two together:
>

Unemployment Exhaustion Rates and Credit Card Charge Offs

charge-card-exhaustion-rates

>

I suspect we can do the same studies with Unemployment Rates also .  . .

>

Hat tip Shawn!

Category: Credit, Employment

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

280 Responses to “Credit Card Chargeoffs vs Exhaustion Rate”

  1. dead hobo says:

    Charge offs hit a 10% annual rate and may go to 12% soon. In personal terms, this is an indication of a lowered quality of life. After reading the below link about the history of GS, I can only do two things

    1) Want to start punching people

    2) Campaign for chargeoff rates to go from 10% – 12% to as much as you fricken don’t want to pay off. These banks don’t care about anyone but themselves. Why should anyone who is feeling a little crimped worry about paying them off? They’re all criminals and don’t play using the same rules. Why should those who are paying the highest prices care about these thieves?

    http://zerohedge.blogspot.com/2009/06/goldman-sachs-engineering-every-major.html

    At this time, almost everything in finance is a rigged came, courtesy of Uncle Stupid and clever crooks of finance, with help from an incompetent and often complicit media.

  2. Mike says:

    Wow – as someone who has two Chase cards, I’m thankful they’re paid off. Reading what so many people were posting, Chase is playing some high stakes game of chance. Either they’re significantly worsen their portfolio by having a ton of accounts written off, or they’ll make a fortune through all the accounts that default but aren’t written off, raking in 30% penalty rates and late fees.

    I really hope this story gets serious national attention as it exemplifies the worst behavior from a credit card company. Lure in people with low balance transfer rates, then more than double their monthly payment. What I found curious was that Chase repeatedly told people they HAD to accept the new terms. They could not close the account under the old terms, in essence opting out of the new terms. How is that? My understanding was that any change in the terms of your card holder agreement could be refused by closing the account. Unless they already had terms allowing them to set the monthly minimum to whatever they wanted.

    I think the federal government should change the terms on the TARP funds Chase got. Oh wait, they can’t since Chase just paid them all back. Coincidence? I think not!

  3. Concerned American says:

    This was always an issue but got much worst under the shrub. This recession is all about employment or lack there of. Thanks again George. Came to these conclusions 4 or 5 years ago and no one has proven them wrong yet. He helped business over the average American to the point that we are no longer the super power we once were. He did much worst things but that is another story. I for one am not buying he was just that stupid.

    Bring back jobs and the country will come back. Any other manipulation is just for show.

  4. constantnormal says:

    I find it not so interesting that these things go hand-in-hand, but that they are both trending upward, with both the peaks and valleys moving higher over time.

    The other interesting thing is that the frequency in the credit card chargeoffs signal appears to be about twice that of the exhaustion rate signal. It might be just noise, especially during the dot-com recession, and for sure I can’t imagine a (believable) story that would explain differing frequencies.

    If this “recession” is over, then the next one is really gonna be a doozie …

  5. cpmhughes says:

    Can anyone tell me why Chase would do this?
    It will force people to default or leave or go bankrupt.
    How is that good(profitable) for the bank?
    Is the Fed backstop in play here?

  6. willid3 says:

    i found this
    Year

    Household Debt/Disposable Income

    2008

    130%

    2003

    116.4%

    1998

    92.6%

    1993

    86%

    1988

    81.2%

    1983

    66.4%

    1978

    68.7%

    1974

    63.5%

    Average:

    88.2%
    and it looks to me that it proves the lack of jobs is the root cause of all of this grief

  7. call me ahab says:

    dh Says-

    “Why should anyone who is feeling a little crimped worry about paying them off? They’re all criminals and don’t play using the same rules.”

    I have made this same point- hostility against the banks may get to the point that folks who would normally want to do the right thing will just tell the credit card issuers to screw themselves and quit paying- where is their special treatment?- where is their bailout?- especially now with record bonuses being reported-

    here are the keys to my house- thank for the 2 or 3 years I lived in it . . .oh . . .and by the way, those credit cards- I won’t being paying those in the future either

  8. CNBC Sucks says:

    As the peeps all agree, we must be careful to take charts with a certain grain of salt, but you posit a powerful hypothesis there, Cranky. That in itself would be sufficient to give pause, until you realize little will drive job growth here for the foreseeable future, unless you can get the Japanese, Germans, and Koreans to expand their manufacturing on our own shores. But somehow, as illustrated by that data, I am disinclined to see hardship making Americans less delusional and more thrifty, much less more intellectual, less divided, more innovative, be better risk taking, and have a more solid overall set of values.

    There will be no job growth here until the value proposition of Americans – the value they offer the world “market” relative to their cost – becomes competitive with comparable countries. Right now, the best skills we offer the world are making airplanes and tractors, fighting wars, farming, and consuming.

    Which brings up the question for the world over the next thirty years: Is America – or are Americans – worth saving? More and more, it becomes evident the future will come down to THAT.

  9. manhattanguy says:

    Well why do you think I am short $Capital One from $25?? I will cover when the stock goes back under $15. Capital One will be the most to suffer because of their exposure to customers with subprime loans.

  10. call me ahab says:

    willid-

    that is why Americans should just default on a massive scale- they have been sold a bill of goods- the only way they could stay ahead of things is through an illusion induced by debt- false prosperity- all the while- real jobs paying livable wages were packed and sent abroad-

    the banks were only too happy finance your American dream- that is why they should be the one’s holding the bag when people decide they can’t take it anymore

  11. dead hobo says:

    I’m feeling especially pessimistic this morning. I’m starting to think that talk of a recovery in a few months is completely wrong. We’re on a plateau on our way down to the new normal.

    1) Massive CC charge off rates forecast to go higher

    2) High unemployment compensation exhaustion rate likely to go much higer

    3) Massive initial claims and both increasing massive continuing claims

    4) Poor real estate market

    5) Poor retail sales

    6) Recent stock market increase probably partially due to liquidity injection into markets for the purpose of making it easier to sell new bank stocks at best prices. Fed injected liquidity possibly gone.

    7) Durable goods orders up BUT shipments, inventory and backlog down substantially. Orders much less than shipments. A growing market would show orders exceeding shipments and an increasing backlog, just like any growing business would show. Inventories not being replenished.

    8) Massive continuing failures in auto business

    9) Transportation companies describing dismal current and dismal expected future conditions

    10) Speculator driven high oil prices, choking the economy of sustainable life

    11) I can’t find even ONE good thing that points to growth, with the possible exception of people changing behavior and downsizing their consumption behavior, improving the business of low price substitutes. If any real green shoots exist that have real economic effect, please enumerate.

    I’m at a loss to see a green shoot here. I think a new level of down is coming. Once computers lose interest in jiggling the stock markets, look out below.

  12. dead hobo says:

    Re above: I have no idea how that happy face got in my post. Editor, please change it if you can.

  13. call me ahab says:

    dh-

    this was posted a few days ago- can’t remember who- however- I think we can build a whole new economy on it- and the fact that it’s called the green box- well how much more green shooty can you get-

    http://www.youtube.com/watch?v=gQBjJjpkjl0

  14. Transor Z says:

    @willid3:

    Nice. I think household debt servicing as a % of monthly expenditures would be good to slap on here, as well, since overall debt can include long-term stuff (student loans, mortgages) in addition to plastic, which obviously is the real killer. IMO that’s a good measure of debt saturation at the ground level.

    I’m thinking expenses feed this cycle, as well, not just availability of credit/abdication of lending standards. I keep going back to that terrific Elizabeth Warren lecture, available on YouTube and also at this site (ignore the otherwise tinfoil content):
    http://www.disclose.tv/viewvideo/13534/The_Coming_Collapse_of_the_Middle_Class/

    Increased health care costs, day care, education, etc. It occurs to me also that I haven’t seen much in the way of studies looking at generational spending habits, since we’ve known for some time that standard of living will decrease for the generations following the Boomers. Just theorizing here, but I wonder if the natural tendency to want/expect what you grew up with and see advertised/promoted as status norms might result in a generation that follows the impulse to ape their parents’ behavior rather than do the household budget math. It’s been established that plastic took off with the Boomers but it would be good to see data on the next generations coming into peak earnings.

    With a low savings rate and highly leveraged households it would be shocking to not see a correlation between unemployment and credit charge-offs.

  15. dh–

    the “Green Shoots” agitprop, and subsequent Ramp, were, merely, to stall the momentum of peep coming to conclusion that they’ve been Raped, Pillaged, and Plundered.

    Now, after a Quarter of such Happy-Talk, coupled with even more Proof, and No Turnaround in sight, peep are starting to see, again, what they started to see in Oct-Mar..

    What I, still, can’t quite understand is why so few see the Risk, extant, to the U$D, its ownself..

    I’ll ask again: “Who has bets on the U$D seeing 2010?”

  16. Transor Z says:

    “The combination of household mortgage and consumer debt as a share of disposable income has moved up to a historically high level. But the upward trend in the series reflects, in part, financial innovations that have increased access to credit markets for many households. These innovations include the development of a deep secondary market for home mortgages, along with the advent of credit scoring and automated underwriting models that have enhanced the ability of loan officers and credit card companies to identify good credit risks. These innovations lower the risk level of any given amount of debt.”

    Alan Greenspan, American Hero
    Remarks before the Economic Club of New York, New York City
    December 19, 2002
    http://www.federalreserve.gov/boarddocs/speeches/2002/20021219/

  17. dead hobo says:

    Mark E Hoffer Says:
    June 25th, 2009 at 9:37 am

    What I, still, can’t quite understand is why so few see the Risk, extant, to the U$D, its ownself..

    comment:
    ——————
    I read several of the dollar crisis books a couple of years ago. Logically, they were tight and described what looked certain. Today, the dollar is as common as Charmin but it still has value.

    I think there’s some economics involved we don’t completely comprehend.

    It somehow ties into the dollar being the best of the worst, as opposed to it being of strong value. It also has something to do with asset bubbles not being a part of the inflation calculation since the officially don’t exist until they burst.

  18. The Curmudgeon says:

    And Jonathan Weil of Bloomberg exposes Capital One for the fraud that is its accounting:

    June 25 (Bloomberg) — What’s in Capital One Financial Corp.’s wallet? About $3.6 billion less than what was in there two weeks ago, now that the credit-card lender has returned its taxpayer bailout cash. This is one decision the bank and its regulators could end up regretting.

    Last week, Capital One finished buying back the preferred shares it sold to the Treasury Department in November as part of the Troubled Asset Relief Program. It was one of 10 major U.S. banks that received approval this month to repay $68 billion to the government.

    There’s a big difference, though, between Capital One and the rest of those companies. While investors appear to be relatively confident in the asset values on the other nine banks’ books, they don’t trust Capital One’s, with good reason.

    As of Dec. 31, for instance, Capital One disclosed that its loans were worth about $10.1 billion less than what its balance sheet showed. That was almost as much as the $12 billion of year-end capital the government gave Capital One credit for under its much-hyped stress tests. The government’s figure didn’t take the loans’ fair market values into account, suggesting a lot of the bank’s regulatory capital may not exist in real life.

    http://www.bloomberg.com/apps/news?pid=20601039&sid=aqKzeC4W0dZU

    @DH, thanks for the link to the article on GS. Discussing things in the world w/ my wife last night, I told her that perhaps the only way to save American economy would be to dispatch a Navy Seal team to do to the GS, the pirates of Wall Street, what they did to the pirates of the Maersk Alabama. Once finished there, they’d need to head out to California to “discuss” matters w/ the boys at PIMPCO.

    This is all spiraling rapidly out of control, even if the illusion of a green-shooting economy remains.

  19. cvienne says:

    I hope every American just utterly defaults on everything (mortgages, credit cards, the whole thing)…

    It’s time to shove it straight up the stovepipe to the banks and their newfound whores in Washington…

  20. Joe Retail says:

    Every time I think I can no longer be surprised by what the banks will sell …

    An example: I have a friend who recently declared bankruptcy because he could no longer make the minimum payments on his credit cards (not surprising, since he’s on welfare). His bankruptcy has not yet been discharged, and he just received a personalized invitation to receive a new credit card at a low introductory interest rate.

    Oh, yes, he has mental health problems as well.

    I’m not usually an advocate of more regulation, but these organizations are preying on people who don’t have the knowledge or skills to defend themselves, probably enriching the banks, but in the long run making a bad situation worse. I think more financial education is needed, but at the same time more control over these marketing practices would be beneficial.

  21. call me ahab says:

    TZ-

    Greenspan the visionary- increased debt load not a problem- “financial innovation” have made it possible to expand debt indefinitely-

    what a dumbass- I’ll go back to the old school methodology- save then buy

  22. The Curmudgeon says:

    @cvienne, I agree almost completely. Makes me want to go out and run up some credit card debt just so I can screw the man.

    But there’s nothing “newfound” about the whores in Washington. If you have any doubts about that, check out the Bankruptcy Reform Act of 2005, bought and paid for by banking pimps:

    http://en.wikipedia.org/wiki/Bankruptcy_Reform_Act_of_2005

  23. [...] Credit Cards and Jobless Benefits: On his Big Picture blog, Barry Ritholtz has an interesting chart showing a correlation between credit-card charge offs and the exhaustion rate for jobless benefits. “On Monday, we looked at the impact of the Exhaustion Rate on Continuing Unemployment Claims (See Continuing Claims “Exhaustion Rate” and Exhausted Claims part II). Those charts and tables made it clear that Continuing Unemployment Claims were dropping not due to folks getting jobs, but simply using up all of their benefits. Wednesday, we learned of a) record credit card chargeoffs and Increasing minimum Credit Cards payments from 2% to 5% at Chase. Now, lets see what happens if we can put those two together.” [...]

  24. call me ahab says:

    and why the bounce in stocks?

  25. I-Man says:

    The 10:30am short is going to be money today… Gotta love the “gun up” this morning. So entertaining! Let’s trap some more longs, it’ll be fun.

  26. franklin411 says:

    @Hobo:
    The raw data shows the green shoots. The states that led the downturn are seeing reductions in unemployment–MI was in recession months (if not longer) before the rest of the nation. So are the sectors that led us down–construction, manufacturing, textiles (imagine!), autos.

    Many of the states that are responsible for the increases have special situations. AZ has a large budget deficit–larger than CA’s on an apples to apples basis. CA has a large deficit and it is a failed state politically speaking. PA had huge cuts as well, IIRC. I have no idea why Puerto Rico is counted on the list of “states.” June is the beginning of the fiscal year for most states, and a source at the Labor Department explained that the increases are due to school employees being laid off at the beginning of the new fiscal year. It’s sad, stupid, and incredibly short-sighted to be hurting our future economic competitiveness by being penny wise and pound foolish, but most people have no ability to see beyond today. http://www.bizjournals.com/triangle/stories/2009/06/22/daily46.html

    And one state in particular seems to be responsible for most of the increase. What’s going on in Florida that explains the huge increase there?

    UNADJUSTED INITIAL CLAIMS FOR WEEK ENDED 06/13/2009
    STATES WITH A DECREASE OF MORE THAN 1,000

    MI -5,414 Fewer layoffs in the automobile industry.
    NY -5,299 Fewer layoffs in the construction, trade, and service industries.
    NC -4,714 Fewer layoffs in the transportation, textile, furniture, and construction industries.
    TN -4,414 Fewer layoffs in the transportation equipment, rubber/plastics, fabricated metals, industrial machinery, and trade industries.
    OH -3,802 Fewer layoffs in the manufacturing industry.
    SC -3,492 Fewer layoffs in the textile and fabricated metals industries.
    KY -2,316 Fewer layoffs in the manufacturing industry.
    IN -1,987 Fewer layoffs in the automobile and manufacturing industries.
    OR -1,598 No comment.
    WA -1,577 No comment.
    MS -1,356 Fewer layoffs in the manufacturing industry.
    TX -1,351 Fewer layoffs in the trade, service, mining, and manufacturing industries.
    AR -1,255 No comment.
    MN -1,211 No comment.

    STATES WITH AN INCREASE OF MORE THAN 1,000
    AZ +1,604 No comment.
    CA +2,540 No comment.
    PR +2,561 No comment.
    MO +2,874 Layoffs in the construction, transportation, warehousing, and manufacturing industries.
    PA +3,191 Layoffs in the transportation equipment, transportation, and service industries.
    FL +8,383 Layoffs in the construction, trade, service, and manufacturing industries, and agriculture.

  27. dead hobo says:

    call me ahab Says:
    June 25th, 2009 at 10:10 am

    and why the bounce in stocks?

    reply:
    ————-
    Maybe I was hasty in my belief that the pump is over. Computers programmed to buy when certain behaviors are seen are probably being tricked again.

  28. cvienne says:

    This is all going to just get worse and there is nothing anybody can do about it…I’ll layer this with a couple of points and then put a cherry on the top.

    - We all know about unemployment benefits running out
    - We all know the jobless ranks are swelling
    - We all know that there are NO indicators that the economy is improving (or will anythime soon)
    - We all know that our taxes are going to INCREASE to pay for Obama’s spending
    - We all know NOW that there is no moral responsibility coming from Washington (so why should we be expected to be prudent)?
    - We’ve all seen our investment nest eggs cut in half (or many of us have)
    - We know that pension systems across the board are going broke
    - We know that Social Security will run out of money ‘sooner’ rather than ‘later’

    NOW THE CHERRY

    Folks, this is going to drag on…And what’s going to start to happen as we approach the year 2012 is that many are going to start feeling the weight of WHATEVER PROPHECY holds…

    Don’t discount that notion that a lot of people are just going to give up or flip out…Given the situation, I don’t think it’s going to just be a mild Y2K type event…I think there’s going to be widespread behavioral change (borne out by the stress of being broke & unemployed)…

    I’m not saying anything particular is going to happen on December 21st, 2012…There are numerous prophecies already attached to that date, so I don’t need to provide another…I DO FEEL though that the “anticipation” of that event (in an otherwise depressing environment), is going to cause things to happen that Americans just don’t realize yet…

  29. dead hobo says:

    Franklin,

    taking a pound or rocks out of one pocket and putting two pounds of rocks in the other isn’t proof of weight loss just because the left side now weighs less.

  30. drollere says:

    it’s true … you can lay any chart over any other chart … provided the distribution axis is on the same variable …

    what does this overlay tell you, exactly? what conclusion do you draw from it? what insight does it provide that you can’t get in any other data display?

    cvienne, btw, is drinking some nasty koolaid. some people just love doom and gloom.

  31. Transor Z says:

    Alan Greenspan on bubbles:

    “Some argue that bubbles can be prevented or defused by financial regulatory initiatives. It is observed that asset bubbles have often been associated with rapid credit expansion, and hence it is claimed that restraining credit growth could quash nascent bubbles. A bubble could conceivably be defused by restrictive credit regulations that stifle economic growth. It is by no means clear, however, that such a regime would be more conducive to wealth creation over time than our current regulatory system. Also of relevance, in a vibrant financial system, such as exists in the United States, there will always be many avenues available to investors for financing a bubble.”

    Alan Greenspan, American Hero (and genius)
    Remarks before the Economic Club of New York, New York City
    December 19, 2002
    http://www.federalreserve.gov/boarddocs/speeches/2002/20021219/

    The Greenspan philosophy is clear:

    1. Credit bubbles are an unavoidable by-product of the American capitalist system;

    2. The only thing a central bank can do is try to smooth things over after they burst (always violently and abruptly, but there’s nothing we can do to soften that) to transition to the next growth cycle;

    3. The only regulation that would effectively minimize bubble formation would “stifle” economic growth — not “limit,” not “slow” — stifle (i.e., smother, kill, destroy).

    4. And besides, if you regulate against one kind of bubble those crafty American investors will just find another bubble.

  32. dead hobo says:

    Franklin,

    Also, hypothetical job losses decreasing from 625,000 to 615,000 (to make a point) is not a green shoot by any intelligent measure. Grow a fucking brain.

  33. Moss says:

    To game the Credit Card ripoff artists one should NOT pay for 90 days then offer to pay off half.
    I believe they need to write it down to zero when not paid for 90 days and will be motivated to take half.

  34. AmenRa says:

    @ahab

    I’ve been thinking the same thing. Since the green shoots were mowed over by the Weekly Claims, I figured today would be a slow grind down.

  35. cvienne says:

    @drollere

    Let me see…

    Noah = “doom & gloomer”

    American dimwit who spends their entire day text messaging, consuming mass quantities of food & energy (and wasting the rest), watching American Idol & The View, & pinning their future on a paper messiah = GREAT POSITIVE CITIZEN OF THE WORLD…

    Take your pick…

  36. Init4good says:

    agree w cvienne

    Anectdote: I just (Monday) tranferred a CC balance to Capital One at 3% xfer rate, rough $5000. – they offred zero % interest for 12 mos. They said if I had any other balances to xfer to give them a call. I wonder what they would say now??

  37. I-Man says:

    “Even the ants… saved in a Noah’s sugar pan.”

    -”Ark of the Convenant” – The Congos

    http://www.youtube.com/watch?v=8gCR0qGap4Q

  38. The Curmudgeon says:

    4. And besides, if you regulate against one kind of bubble those crafty American investors will just find another bubble.

    They will so long as you are giving them the air w/ which to blow the bubble for free (i.e., you are steadfastly committed to a policy of currency debasement).

    So it is a self-fulfilling prophecy.

  39. cvienne says:

    @init4good

    Please keep us in the loop as to whether or not you eventually plan to pay that balance back so we can get on with “shorting” stock…

    Anecdote 2…Obama just got the same notice from Capital One saying he could transfer the $2 trillion for another year with no interest…And now that THAT balance is on the Capital One card, his other ones are free to run up and max out…

    What’s in your wallet?

  40. Init4good says:

    Folks, what’s happening now, regarding bank fees, bank bailouts, bankruptcys (sp) in my opinion, is what happens when you mix a downward sloping economy with a “government” run by private sector principles.

  41. dead hobo says:

    Happy face test

    Above “8″ + “)” = happy face

    8) 8) 8)

  42. Init4good says:

    @cvienne

    Of course I plan to pay it back, lest I be labeled a scofflaw.

    My credit rating is top-notch and I plan to keep it that way.

    BTW I re-fied my mortage recently, JUST before that bump in 30yr rates. I got in at 5% for 30yr.

  43. I-Man says:

    And on charge-offs…

    I-Man will pay his babylon debts because it is the right thing to do. They let me spend when I had no money and was broke in college. Admittedly… since then I have at times used CC’s to pay for shit I shouldnt have bought because I didnt have the money… a couple of dinners at expensive restaurants and bar tabs come to mind… and I have paid my interest, and made my payments. I’m not going to just walk away from I and I debts. That’s almost more babylon then reckless credit lending. Just my take.

  44. cvienne says:

    @hobo

    Hobo I wouldn’t get concerned about THE PUMP…

    I postulated over these past days that we’re coming to the end of the quarter…

    The “computers” will carry the market a few rounds to close the 1st half ’09 at 903 (or somewhere thereabouts)…

    The work last week was done to establish the RANGE 956 high 889 low…You’ve got a .618 FIBO retrace back to the high at 930 (if the market wants to go there – which I think it might – but probably on July 2nd or July 6th)…

    I’m not making any bets as to whether it breaks that to the upside, but my inclination is to say it probably won’t…That will signal the rally is OVER and 880 should be taken out to the downside soon thereafter…

    But that leaves us about 6-7 days to sit here and twiddle our thumbs and talk politics…

    Note: One thing I’m expecting to see in these days is s slight retrace back up in oil (not much, but a little)…and a move into EXPENSIVE stocks (like AAPL, IBM & GOOG that have 3 digit handles), plus stocks like CSCO that have a huge float…

    In other words, during these 6 days, money has to stay in the equity markets, but it will flow over to areas that soak up a lot of capital in those ways…

  45. Transor Z says:

    @Curmudgeon at 10:36 am:

    The whole damned approach was a self-fulfilling prophecy, wasn’t it?

    So let’s take that at face value. Believing that credit bubbles are an unavoidable part of the business cycle, explain to me why there is no moral duty to loudly and repeatedly broadcast to the public that “fact” and why there are no genuinely attractive tax or other incentives to encourage consumer rainy-day savings. Kinda like knowing that a category 4 hurricane will hit New Orleans at some point but failing to upgrade the levies. Whether it’s caused by incompetence or indifference, the result is the same when the floods come.

  46. dh–

    the “best of the worst” delusion only holds true for a Fixed Universe of options..

    cvienne,

    What’s better is that Noah financed The Ark with Junk Bonds. You should have heard the heckling he was taking from those Jackals looking for their double-digit while they were still in P-I-K mode..

  47. cvienne says:

    @MEH

    or as Steve Miller would put it…

    “…they headed down south & they’re still runnin’ today”

  48. ben22 says:

    Here are the easiest two calls in the world which is why they will most likely be wrong:

    1. Dollar collapse
    2. Inflation

    The dollar is not the best of the worst. It is the sickest currency in the world. More debt is denominated in dollars than any other currency. When this debt implodes to 0, remaining dollars will go up. But hey, if people want to keep betting against the dollar, when everyone else is right now, feel free. I prefer not to run in herds. While you are at it you might want to buy some stocks, lots of people bullish on stocks according to the DSI. It would only make sense if you were a dollar bear to do so.

    I’m a dollar bull with AT.

    As for anyone that seems to be bullish on stocks right now and thinks that earnings will rebound to justify the current prices, all I can say is that it might be a good idea to act according to real data readings, rather than your hopeful prediction of what the market might do.

    I had a huge jug of Credit Deflation Kool-Aid this morning. It tasted…… real.

  49. call me ahab says:

    I-Man-

    I am with you- my point only being- that if I was upside down on a house- and deep in CC debt- and was struggling to stay afloat- I may be inclined to do some jingle mail and send my house keys back to bank and stop paying the CC bills- that way-

    I would survive- the animosity towards banks due to the bailouts and preferential treatment- could make people think twice about the struggle to “keep it all together” and be a good citizen and follow through on their commitments

  50. cvienne says:

    @ben22

    “The dollar is not the best of the worst. It is the sickest currency in the world”

    Correction:

    The sickest currency in the world will be the IOU’s (denominated in dollars) that California (& probably the US Government) will soon start passing out…:-)

    I’m with you on credit deflation…Hell – if BB were worried about the dollar going down, he’d already be at least TALKING about taking rates back up again…There were a lot of “indirect bidders” at that $40 billion auction earlier in the week…Seems the world can’t get enough of dollar denominated debt!

  51. cvienne says:

    @ben22

    My favorite “currency” story was last year when Tom Brady’s bubbleheaded Brazilian supermodel “Giselle” announced that she wanted her FEES paid in Euros (not dollars) going forward…

    It should hereafter be called the “Giselle top” because the Euro tanked pretty hard after that…

  52. ben22 says:

    Cvienne,

    As much as people want to believe it to be the case, it isn’t up to BB anymore. No central bank has any power against credit deflation. We can make up a lot of fancy terms to describe what they are doing but it’s all just desperation. They been trying since late 07 and it is not working.

    Anyway, I’m happy to stay in the minority on this one.

  53. I-Man says:

    Now that’s a top I would get long…

  54. ben22 says:

    Cvienne,

    I believe Lebron James was saying the same as Giselle wasn’t he? Jay-Z too if I recall.

  55. ben22 says:

    I-man,

    Lol. I was thinking the same thing. Tom Brady is a bastard.

  56. cvienne says:

    @ben22

    I’m not saying that it is up to BB…The Fed is CLEARLY out of bullets now…Hell – they were out of bullets before the whole thing even started…

    What I’m referring to is more the “notion” of a Fed move would still convince a lot of idiots that the course would lead to some predetermined conclusion…Hell – Steve Liesman would be more than happy to tell you all about it…& Santelli would just sit back and laugh…

    Credit is a sattelite that has lost it’s orbit…Nuff said…

  57. cvienne says:

    Yeah – LeBron was hinting of going over and playing in Europe…

    Now he’s got the SHAQ attack!

    I hope he wins his ring before the franchise goes bust and the NBA folds up!

  58. The Curmudgeon says:

    “The whole damned approach was a self-fulfilling prophecy, wasn’t it?”

    and,

    “I’m a dollar bull with AT. ”

    There is not a single example in history of an empire that did not ultimately debase its currency–even empires that did not operate with a central bank, such as the ancient Roman empire. The motivation is too great, as the empire fades, to trade on its past glory instead of creating a viable future.

    The American empire, standing at the pinnacle of power and influence for two decades now, in a world that moves much faster than it did 2,000 years ago, has only one direction in which to go. As it fades, the script says it will debase its currency. This is precisely what is now happening.

    Of course, the Fed has had for some time a STRATEGY (sorry, cvienne) of currency debasement, promoting 1-2% inflation as normal. In that regard, they are doing nothing different as always. Even as assets have “inflated” 35% in the last couple of months, the Fed claims there is no inflation, because the CPI is showing overall price declines, which are actually movements along the demand curve as demand collapses, and have little to do with the underlying value of the currency. If the Fed weren’t so busy blowing a new housing bubble, consumer prices and housing might fall far enough in price until people could afford to live and eat. But their default position is rising prices=good, falling prices=danger.

    I could see where a trader (like B22 and Andy T) might take a contrarian view to the dollar. I’m not a trader–more just a political and economic observer, but do appreciate the insights of the traders that frequent here. Short-run, I haven’t a clue where the dollar is going relative to other currencies, especially the Euro and Yen, both of which are currencies of the American empire’s client states. The dollar may look better than either as a trade, but in my long-term view, all three, the dollar, Euro and Yen, are all doomed.

    Just as there was a new world order after the Berlin Wall fell, we are entering a another new world order as the American empire crumbles and falls. $2 trillion in deficit spending and we aren’t under attack from an existential threat is all you need to know about where the empire, and the dollar, is headed.

  59. Transor Z says:

    BTW, anybody have a look at initial claims today?

    Also, take a gander at BB’s prepared statement over at Zero Hedge. Talk about talking out of both sides of your mouth!

    1. We didn’t strong arm BoA to keep them from exercising the MAC. Our lawyers reviewed the docs and determined that BoA had no basis for invoking. Just be aware, however, that the entire financial system would have collapsed if BoA had successfully done so, or had even tried to do so because of the transaction costs involved.

    2. We never told Ken Lewis to withhold information about the ML financial condition from BoA shareholders. Just be aware, however, that we did have an interest in the disclosure of that information because doing so could have collapsed the entire financial system.

    I am now happy to take your questions.

  60. Thor says:

    Cvienne – they’ve already come up with a design for the IOU’s

    http://media.photobucket.com/image/1992%20California%20IOU/blackfridayarmy/money/CA-IOU.png

  61. Christopher says:

    2% up to 5% minimum payments…..I wonder if that also be enforced on SCRA accounts.
    SCRA=Servicemembers Civil Relief Act
    Fixed 6% rate, no fees…..

    We’ve been carrying ~10K on a Chase SCRA account for couple years….never bothered me much because of the reasonable interest rate. The rate expires in Oct2012 when my better half retires out.

    I picked up some SRS this morning looking for some of that LB magic.

    F411′s post reminded me of this…LOLOL
    http://www.youtube.com/watch?v=EOnRLhHcTok

  62. cvienne says:

    @Thor

    LOL…That’s classic…

    You have to pass that one on to BR…That could be a topic thread!

  63. CNBC Sucks says:

    Guys, and I do mean guys, can I summarize the discussion by dividing this blog into three distinct groups:

    (A) Those who think we will see some sort of “reckoning” for our private- and public-sector debt within the next three years – Hoffer, cvienne, ben22 more or less, anyone else?

    (B) Those who think we have kicked the can, but will see an even worse reckoning for our private- and public-sector debt after the next three years – me, Mannwhich if I recall, anyone else?

    (C) Franklin

    Did I capture the situation accurately? Anyone I didn’t mention, please slot yourself into (A) or (B).

  64. Wes Schott says:

    IOU mucho dinero

    nada, zilch

    Aaaarnold what happen to ye?

  65. Thor says:

    CNBC – I’d add (D) – those of us who think that there are several different outcomes for the future, all dependent on one variable or another, many of which are not yet fully clear.

  66. cvienne says:

    @CNBC

    you forgot to mention

    (D) The horse that Franklin rode in on…

  67. ben22 says:

    @curmudgeon,

    Make no mistake, I’m not saying I’m a very long term dollar bull, but the dollar isn’t going to 0 this year or in the very near future imho. At this point, the dollar could have one more small leg down or it has already put in it’s bottom and is set to rally, there is a clear relationship with the “all one market” trade going on if you follow the dollar index vs. everything else, it’s plain to see over the last 12 months. So yeah, I’m trading it.

    I said the other day that all of us can say with confidence that eventually the dollar will be doomed becuase it is fiat. Even if we did not have a recession or a credit implosion as we do now we could say that with confidence couldn’t we? That said, I wouldn’t want to wait around for very long to be right though when I have money on the line. I maintain the best thing right now for people that don’t want to trade is to stay in cash or the safest cash equivalents (now all the inflationists can yell at me)

    As for the CPI, since it was brought up, one thing to pay attention to is that the annual rate of change on the CPI has turned negative to the greatest degree since the 1930′s.

  68. cvienne says:

    Changing subject…

    Anybody thinking about getting a little SHORT crude here…or just about?

  69. ben22 says:

    CNBCS,

    Drollere is in C. I think Lefty is in A with some of us as is AT, maybe also Bruce in TN but they can clarify.

    Karen and DL are maybe B? We need to include Karen, she might be the best trader on here.

    The real question is where are you? You can do more than just cup sizes on CNBC, you seem like a pretty smart guy.

  70. AmenRa says:

    The Fed is now extending many of its programs into 2010. Does that mean the Fed sees the green shoots withering? Is this just another attempt to pump the market until the quarter end?

  71. cvienne says:

    Maybe tomorrow on the open…OR, just after the Friday ‘quitters’ cover up into the weekend…

  72. Greg0658 says:

    to cvienne at 10:17am .. thats some believeable list .. as far as scripted life from 100s of years ago … I find time travelers as hard to believe .. do we have people who can pop in and out of worm holes in space time? doubt it

    more likely I believe that history repeats itself when it comes to human nature set in structures

    on the 12/21/2012 date .. if science is to be believed on stated facts of the universe alignment of the day .. I feel a gravity tidal wave is possible

  73. ben22 says:

    Cvienne,

    manhattanguy has made some good calls on shorting oil lately. I played the oil short last year, I’m just watching now. I’d rather keep spying the ZSL some more, or trying to make a few trades on the long side if I see a good chance to make a few points in BA or MON.

  74. cvienne says:

    @Greg0658

    Personally, I’m not so afraid of the FIRE in the theatre…

    I’m afraid of the knucklehead that’s going to mow me down and trample on me when he panics after someone YELLS “fire”…

  75. cvienne,

    as any Cowboy knows: “It ain’t the Herd, that is the Risk, it’s the Stampede.”

  76. cvienne says:

    @ben22 (12:13)

    Thanks…

    I’m just twiddling my thumbs here but since this market seems to be making a premature move to where I think it’s going to go, I want to be ready…It looks like crude is the first thing that wants to establish its lower top and then we can get this party rolling in earnest…

  77. cvienne says:

    @MEH

    Cowboy wisdom is often best…

  78. karen says:

    I don’t fit neatly into B. I think the plan is to inflate our way out of any debt that wasn’t forgiven. I’m not sure how many years that will take…

    As for shorting oil, i sold my DUG and would rebuy closer to 18.. still holding and cursing my DTO, because i shoulda traded that as well. Bot RSX and EPI the other day.. will sell the RSX about the time I rebuy DUG.

  79. CNBC Sucks says:

    @ben22 – I categorized myself as (B) in the post.

    @Thor – your (D) would make the categories MECE, but less fun. Of course, ANYTHING can happen, like an asteroid, the Chinese become very disorganized and misplace all their US bonds, or the federal government wins the New Jersey lottery.

    I will allow (D), but you risk getting combined with (C).

  80. manhattanguy says:

    Thanks ben22. I am looking to reenter $DUG under $18.50.

    Also don’t forget my short call on $COF. They are doomed.

  81. ben22 says:

    While we are on the topic of 2012 there are some interesting patterns going back to 1900 with Sunspots. Charles Collins was an early stock market technician and you can see his work that tracks sunspots all the way back to 1872. For 137 years it has been a pretty reliable guide for stock prices.

  82. [...] On the relationship between unemployment exhaustion and credit card charge-off rates.  (Big Picture) [...]

  83. cvienne says:

    @karen

    Thanks karen, on oil…

    I haven’t been in that trade since oil has been over $50, but if the whole market is going to roll over, crude is going to have to lead the way down…

    I really think this last breath to keep the S&P above 903 for the 1st half is this last push up in oil…

    Maybe after tomorrow, we can book our tickets for a return to $52

  84. ben22 says:

    I was hoping to drag Karen out by mentioning her name.

    @CNBCS,

    Sorry, missed that. Also, I think I missed the whole emo vs. indie explanation. What does that mean?

  85. cvienne says:

    @ben22

    “sunspots all the way back to 1872. For 137 years it has been a pretty reliable guide for stock prices”

    Thank you ben for wearing my tin foil hat for awhile…My head was getting sweaty…

  86. ben22 says:

    Look at the headline at google right away:

    S&P 500 positive for year, Dow-30 gain tops 100

  87. Thor says:

    Hasn’t this whole 2012 thing been pretty thoroughly debunked? Most especially by Mayan historians? There isn’t even complete agreement that they’re doing the conversions correctly. Some scientists believe the actual date their calendar resets is December 11, 1614 while others think it’s August 12, 2532.

    Most importantly the Mayans didn’t predict that the world would end, simply that their calendar would reset.

  88. ben22 says:

    haha, Cvienne, I was wondering how soon before somebody made fun of me for that one. I’ve got a whole tin foil suit on right now, no suspenders though.

  89. cvienne says:

    @Thor

    It’s not just the Mayans…

  90. ben22 says:

    also, as funny as the sunpots idea may sound, Simons from Renaissance paid millions of dollars to study it and he will not reveal to anyone what he found.

  91. Thor says:

    Cvienne – I know, asteroids, planets lining up, sunspots. I’ve been following end of the world predictions since I was a kid. Anyone remember “Nostradamus, The Man Who Saw Tomorrow” with Orson Wells in 1981? I saw that as a kid and had nightmares about it for years. I’ve been keeping track of all the end of the world predictions since then.

  92. cvienne says:

    @ben22

    “Simons from Renaissance paid millions of dollars to study it and he will not reveal to anyone what he found”…

    Sounds like the US Government with regards to bailing out the financial system (but spell that million with a “t”)

  93. Thor says:

    Now sunspots actually make sense, as does the imminent flipping of the Earth’s polarity.

  94. karen says:

    ben, i posted a comment at 12:09 on a newer thread.. the very time you were mentioned my name above.. i was hoping to prove that i had posted before you mentioned my name, but alas, it must have been ESP. : )

    i’m going to take special pleasure in ribbing LB if the spx doesn’t see 880 this week.

  95. cvienne says:

    @Thor

    It’s in the I-Ching as well, as well as Sumerian literature…Science also acknowledges happenings of shifts in the Earth’s magnetic field that cause crust displacement…

    BTW – I’m not a doom & gloomer…I HOPE IT HAPPENS…It would save us all from another season of American Idol…

  96. Thor says:

    Cvienne – I’ll add those to my list – I might actually be ok with the end of the world if it meant no more American Idol!

  97. CNBC Sucks says:

    @ben22: No worries, and thanks for your recent compliments. The whole “emo or indie” mtheme (a combination one-man meme and theme) was my way of poking fun at how the whole rest of the world is obsessed with trivia but completely oblivious to the crucial issues that we continually and so very passionately debate on this blog. Present company excluded, I doubt you will find many people under 30* who care about this stuff, but they are preoccupied with whether they are emo or indie (http://img187.imageshack.us/i/emovsindiebycatoninetaibi1.jpg/)

    That said, I still haven’t figured out if I am making fun of the peeps on this blog or the rest of the world.

    * The over-30 crowd also has its fair share of banal trivialities, but I have yet to select a mtheme.