Credit Card Chargeoffs vs Exhaustion Rate
By Barry Ritholtz - June 25th, 2009, 7:49AM
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
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I suspect we can do the same studies with Unemployment Rates also . . .
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Hat tip Shawn!
June 25th, 2009 at 8:33 am
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.
June 25th, 2009 at 8:35 am
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!
June 25th, 2009 at 8:42 am
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.
June 25th, 2009 at 8:42 am
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 …
June 25th, 2009 at 8:57 am
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?
June 25th, 2009 at 9:03 am
Brown shoots
http://www.marketwatch.com/story/jobless-claims-highest-since-mid-may?siteid=bnbh
June 25th, 2009 at 9:05 am
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
June 25th, 2009 at 9:09 am
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
June 25th, 2009 at 9:10 am
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.
June 25th, 2009 at 9:12 am
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.
June 25th, 2009 at 9:22 am
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
June 25th, 2009 at 9:23 am
wow, even the uber-left is catching on GS et all gaming the economy.
http://www.alternet.org/workplace/140889/gas_pump_thievery:_who%27s_really_behind_the_rising_prices_at_the_pumps/?utm_source=feedblitz&utm_medium=FeedBlitzRss&utm_campaign=alternet
June 25th, 2009 at 9:27 am
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.
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.
June 25th, 2009 at 9:29 am
Re above: I have no idea how that happy face got in my post. Editor, please change it if you can.
June 25th, 2009 at 9:33 am
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
June 25th, 2009 at 9:34 am
@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.
June 25th, 2009 at 9:37 am
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$D seeing 2010?”
June 25th, 2009 at 9:41 am
“The combination of household mortgage and consumer debt as a share of disposable income has moved up to a historically high level. But the upward trend in the series reflects, in part, financial innovations that have increased access to credit markets for many households. These innovations include the development of a deep secondary market for home mortgages, along with the advent of credit scoring and automated underwriting models that have enhanced the ability of loan officers and credit card companies to identify good credit risks. These innovations lower the risk level of any given amount of debt.”
Alan Greenspan, American Hero
Remarks before the Economic Club of New York, New York City
December 19, 2002
http://www.federalreserve.gov/boarddocs/speeches/2002/20021219/
June 25th, 2009 at 9:46 am
Mark E Hoffer Says:
June 25th, 2009 at 9:37 am
What I, still, can’t quite understand is why so few see the Risk, extant, to the U$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.
June 25th, 2009 at 9:48 am
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.
June 25th, 2009 at 9:52 am
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…
June 25th, 2009 at 9:53 am
[...] [...]
June 25th, 2009 at 10:01 am
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.
June 25th, 2009 at 10:01 am
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
June 25th, 2009 at 10:04 am
@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
June 25th, 2009 at 10:07 am
[...] 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.” [...]
June 25th, 2009 at 10:10 am
and why the bounce in stocks?
June 25th, 2009 at 10:13 am
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.
June 25th, 2009 at 10:15 am
@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.
June 25th, 2009 at 10:16 am
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.
June 25th, 2009 at 10:17 am
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…
June 25th, 2009 at 10:19 am
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.
June 25th, 2009 at 10:21 am
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.
June 25th, 2009 at 10:26 am
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.
June 25th, 2009 at 10:26 am
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.
June 25th, 2009 at 10:27 am
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.
June 25th, 2009 at 10:29 am
@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.
June 25th, 2009 at 10:29 am
@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…
June 25th, 2009 at 10:29 am
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??
June 25th, 2009 at 10:33 am
“Even the ants… saved in a Noah’s sugar pan.”
-”Ark of the Convenant” – The Congos
http://www.youtube.com/watch?v=8gCR0qGap4Q
June 25th, 2009 at 10:36 am
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.
June 25th, 2009 at 10:37 am
@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?
June 25th, 2009 at 10:41 am
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.
June 25th, 2009 at 10:43 am
Happy face test
Above “8″ + “)” = happy face
June 25th, 2009 at 10:47 am
@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.
June 25th, 2009 at 10:48 am
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.
June 25th, 2009 at 10:54 am
@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…
June 25th, 2009 at 10:59 am
@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.
June 25th, 2009 at 11:03 am
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..
June 25th, 2009 at 11:06 am
@MEH
or as Steve Miller would put it…
“…they headed down south & they’re still runnin’ today”
June 25th, 2009 at 11:10 am
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.
June 25th, 2009 at 11:11 am
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
June 25th, 2009 at 11:21 am
@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!
June 25th, 2009 at 11:28 am
@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…
June 25th, 2009 at 11:31 am
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.
June 25th, 2009 at 11:31 am
Now that’s a top I would get long…
June 25th, 2009 at 11:32 am
Cvienne,
I believe Lebron James was saying the same as Giselle wasn’t he? Jay-Z too if I recall.
June 25th, 2009 at 11:33 am
I-man,
Lol. I was thinking the same thing. Tom Brady is a bastard.
June 25th, 2009 at 11:36 am
@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…
June 25th, 2009 at 11:39 am
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!
June 25th, 2009 at 11:44 am
“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.
June 25th, 2009 at 11:44 am
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.
June 25th, 2009 at 11:46 am
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
June 25th, 2009 at 11:46 am
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
June 25th, 2009 at 11:47 am
@Thor
LOL…That’s classic…
You have to pass that one on to BR…That could be a topic thread!
June 25th, 2009 at 12:00 pm
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).
June 25th, 2009 at 12:01 pm
IOU mucho dinero
nada, zilch
Aaaarnold what happen to ye?
June 25th, 2009 at 12:05 pm
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.
June 25th, 2009 at 12:06 pm
@CNBC
you forgot to mention
(D) The horse that Franklin rode in on…
June 25th, 2009 at 12:07 pm
@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.
June 25th, 2009 at 12:08 pm
Changing subject…
Anybody thinking about getting a little SHORT crude here…or just about?
June 25th, 2009 at 12:09 pm
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.
June 25th, 2009 at 12:10 pm
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?
June 25th, 2009 at 12:10 pm
Maybe tomorrow on the open…OR, just after the Friday ‘quitters’ cover up into the weekend…
June 25th, 2009 at 12:12 pm
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
June 25th, 2009 at 12:13 pm
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.
June 25th, 2009 at 12:15 pm
@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”…
June 25th, 2009 at 12:18 pm
cvienne,
as any Cowboy knows: “It ain’t the Herd, that is the Risk, it’s the Stampede.”
June 25th, 2009 at 12:18 pm
@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…
June 25th, 2009 at 12:19 pm
@MEH
Cowboy wisdom is often best…
June 25th, 2009 at 12:19 pm
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.
June 25th, 2009 at 12:21 pm
@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).
June 25th, 2009 at 12:23 pm
Thanks ben22. I am looking to reenter $DUG under $18.50.
Also don’t forget my short call on $COF. They are doomed.
June 25th, 2009 at 12:24 pm
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.
June 25th, 2009 at 12:26 pm
[...] On the relationship between unemployment exhaustion and credit card charge-off rates. (Big Picture) [...]
June 25th, 2009 at 12:26 pm
@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
June 25th, 2009 at 12:28 pm
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?
June 25th, 2009 at 12:29 pm
@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…
June 25th, 2009 at 12:31 pm
Look at the headline at google right away:
S&P 500 positive for year, Dow-30 gain tops 100
June 25th, 2009 at 12:31 pm
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.
June 25th, 2009 at 12:33 pm
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.
June 25th, 2009 at 12:33 pm
@Thor
It’s not just the Mayans…
June 25th, 2009 at 12:36 pm
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.
June 25th, 2009 at 12:37 pm
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.
June 25th, 2009 at 12:38 pm
@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”)
June 25th, 2009 at 12:38 pm
Now sunspots actually make sense, as does the imminent flipping of the Earth’s polarity.
June 25th, 2009 at 12:41 pm
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.
June 25th, 2009 at 12:42 pm
@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…
June 25th, 2009 at 12:46 pm
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!
June 25th, 2009 at 12:47 pm
@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.
June 25th, 2009 at 12:47 pm
I can already tell you where the new north & south poles are going to be if you’re interested…
June 25th, 2009 at 12:49 pm
@Thor:
I caught the Nostradamus show with Orson Welles also. But Leonard Nimoy’s show “In Search Of” was more my generation. The 70s was the heyday of UFOs and ancient astronauts, astrology/mysticism, satanism, lost empires, “unexplained natural phenomena,” etc. Good stuff, especially when you aren’t old enough to be able to think critically. Scary to think how many people are never old enough to outgrow that stuff.
June 25th, 2009 at 12:50 pm
Karen,
How strange, we must be connected somehow. Where is LB today? I think he was in mostly cash going in to today but looking for that 880, I think the low print recently was 889. Do you think we are carving out the right shoulder?
Re: Sunspots
I didn’t mean to say they had anything to do with the end of the world, but very close study of them reveals some things about the market, it just does, it’s a hell of a better predictor than p/e ratio.
June 25th, 2009 at 12:51 pm
crude (oil) update.. changed my mind on DUG. trying for some after all here since there wasn’t much of a pop on the “nigerian incident”
June 25th, 2009 at 12:53 pm
CNBC – sad, but true, I’m in IT and I see what these kids do all day, sadly CNBC is right – Emo/Indie, Facebook/Twitter, that’s about it. They’re definitely in for a rude awakening though, life isn’t working out quite the way their boomer parents convinced them it would.
June 25th, 2009 at 12:54 pm
Ben, you know i think we are in a belabored trudge to 1k plus that is going to drive the bears crazy : )
June 25th, 2009 at 12:56 pm
@CNBCS
I’m 28, and none of the people I hang out with that are my age even know where money comes from. I also get made fun of a lot by them for how much I save, and how much I work.
Sad.
June 25th, 2009 at 12:59 pm
@Thor
“I’ve been keeping track of all the end of the world predictions since then.”
well, don’t keep us in suspense…how many of them came true?
June 25th, 2009 at 12:59 pm
ben22 @ 12:09
“Karen and DL are maybe (B)…?”
Yeah, I don’t think that the “debt chickens” are going to come home to roost within the next three years. Could be quite a bit longer. However, I do think that the higher the debt levels are, the more fragile the economy becomes. The next recession could be worse than average, just like this one has been.
June 25th, 2009 at 1:00 pm
karen,
me too, I’ve seen some calls on here lately that seem really smart about collapsing in July, bottom in Oct. basically just following the “best six months strategy” but I’m still holding to my target from months ago which was 965-1k. This countertrend rally should really make the bulls extremely confident and the bears want to give up but I don’t see that just yet.
June 25th, 2009 at 1:03 pm
I’m 27.
Please, don’t judge us by “The Hills” or reality TV – my generation doesn’t care for the idiot box. These convos have become my “Must See TV”
Oops I’m just a spectator not a poster, going back to my corner now.
June 25th, 2009 at 1:04 pm
Well it’s really a reflection of the privatization of the social safety net.
I mean, it’s only fair that the publicly insured/subsidized [by US Government] private financial institutions should make money on those who are suffering unemployment through the mismanagement of the US economy by financial institutions.
Nonsense you say, circular logic…ask your Congressman or Senator…and it doesn’t matter which party they belong to, because the pillaging of the average American is a “post-partisan” thingy.
June 25th, 2009 at 1:05 pm
@ben22
I’m not with you at the moment on that 965-1k call…(unless we get above 930 by July 7th)…At that point, I’d jump back on board…
June 25th, 2009 at 1:07 pm
Alright, we have Hoffer, cvienne, lefty, and ben22 on Team (A), and we have karen, DL, Mannwich, and myself on Team (B). Sounds like a pretty good game of shirts and skins.
Team (B) will, of course, go skins.
June 25th, 2009 at 1:09 pm
ben22 Says:
June 25th, 2009 at 1:00 pm
This countertrend rally should really make the bulls extremely confident and the bears want to give up but I don’t see that just yet.
comment:
———————
ben22,
I don’t think the bulls and bears paradigm applies at this time and hasn’t for a couple of months at least. It’s iBanks, computers, pumpers, and a minuscule number of small time day traders who feel lucky. It’s a mostly private game in a private club now. You and others just get access to the lobby and a couple of amenities. Given the low volume and lack of normal reaction to fundamentals, it is not the same stock market we used to play around in. It only looks the same superficially.
Your’s and other’s day trading ideas are probably amusing to the computer programmers who are running the show at this time.
June 25th, 2009 at 1:15 pm
We need Andy T to com in and settle the score…
Those are some mighty scratchy EW lines being drawn…Looks to me like hobo’s computer programmers are either DRUNK, or in a rush to get somewhere…
June 25th, 2009 at 1:19 pm
In fact, I would not even describe the market as a greater fool’s game right now.
On a small scale you have this …
One or two powerful computers are backed up by massive capital. Someone decides what program to run. Today it’s the “pump hard and suck in” program. Other computers, managed by financial scientists who think they can win someone else’s game, get triggered by manipulated market moves and tricked into making buys. Manager two thinks he can win if he thinks a little faster than the team that started it. It’s not investing. It’s more of a competitive sport. Team 2 doesn’t mind playing a rigged game because any new money sucked in will be fleeced by both teams.
June 25th, 2009 at 1:20 pm
see…you could buy the SDS right now (with the S&P at 922) and get the hat coming down from 6/2, along with a 50% FIBO retrace…
Then you see it trade down to 903 by next Tuesday…
Then be frustrated as it makes a move to 930 on July 6th or 7th…
June 25th, 2009 at 1:22 pm
Bubba – none of course. No one can predict the future. They’ve been predicting the end of the world since before Jesus was crucified. Napoleon was the anti-christ, then Hitler, then Reagan, then Saddam Hussein, now it’s Osama. On and on.
June 25th, 2009 at 1:22 pm
ben22 Says:
June 25th, 2009 at 12:07 pm
Re: Dollar
I’m mostly in cash myself. I don’t actively trade, and have a hedge against the dollar in some long positions in oil and gold (which have done well). I think being in cash is as smart as anything. It gives you flexibility for when it appears the break-out comes, whichever way it breaks. I personally don’t feel the dollar is doomed, at least not in relation to its counterparts (Euro and Yen) short-term, but by 2012, well, given it’ll be time to find a new savior and there are those sunspots, it may be interesting.
My son graduates high school in 2012 (what a year to start adulthood), so I’m a bit longer in the tooth than you. But you are quite wise. As I tell my son all the time: Knowledge without wisdom is at best useless, at worst dangerous.
June 25th, 2009 at 1:27 pm
Mortimus and Ben – I’m close enough to your generation to remember my teens and 20’s well. When I was a kid everyone was worried about our future because we spent too much time playing PacMan and Tron. In our 20’s we were labeled Gen-X – now I’m not sure how you’d categorize us – The “Who Cares” Generation? The “Meh” Generation?
June 25th, 2009 at 1:32 pm
cvienne – are you referring to this
Pole shift & Pole reversal in 2012
http://www.survive2012.com/geryl1.php
June 25th, 2009 at 1:36 pm
@CNBC
I think you have one too many teams. I would describe the commentary on this board as:
A. Those who think we will have some sort of reckoning *from which America will never ever ever ever never ever ever ever never never never never* recover. The main point of contention amongst these folks is whether the US will cause the extinction of all humanity as it declines or whether the Andromeda Strain can be contained to the Western Hemisphere.
B. franklin411
June 25th, 2009 at 1:36 pm
@Thor
What makes me laugh when people want to point a finger at me and turn me into some kind of a joke because I talk about these things I’ve done and preparations I’ve made…
Let me put it to you this way…
It’s not like I’m sitting in a shack quivering in the corner or anything…
And here’s the positive side…
- I eat better because I grow my own food.
- I don’t waste energy driving back and forth to the supermarket to buy something in plastic.
- I produce MY OWN energyon the margin…Very little CO2 footprint…
- I share ideas with others on how to do these things and don’t ask a fee.
- I help my neighbors.
- I enjoy myself fishing, exercisisng, doing labor around the house & farm.
I simply don’t understand any criticism that comes from individuals who are holed up in little boxes in the big city breathing polluted air, telling ME I’m weird!
June 25th, 2009 at 1:38 pm
Ah Thor, just saw your musings on “Nostradamus, The Man Who Saw Tomorrow.”
Believe me when I say that that movie scorched my young psyche to the point where even to this day I have an unhealthy obsession with Orson Welles (and Saudis in floating spaceships…not sure why that clip sticks out but it does) Vincent Price also creeps me out because of some weird toddler association
Here’s my favorite clip that helped me subdue my Orson fear (and the end of the world)
http://www.youtube.com/watch?v=o5LkDNu8bVU
June 25th, 2009 at 1:39 pm
CNBC: Mark me in the A column.
thanks.
June 25th, 2009 at 1:39 pm
cv –
you are in a great way
nobody should be making fun of you for that
…and you right to be po’d if we bail out CA
June 25th, 2009 at 1:40 pm
Cvienne – that wasn’t a put down directed at you. Sorry if it came off that way.
June 25th, 2009 at 1:40 pm
@manhattanguy
I suppose that’s just one of the sites…There’s about a million of them these days (mostly copying each other)…
I’M GOING TO SAY THIS ONE LAST TIME BECAUSE OBVIOUSLY NOBODY UNDERSTANDS MY POV ON THIS…
I COULD CARE FUCKING LESS IF THE WORLD ENDS IN 2012 OR NOT…I FRANKLY DON’T BELIEVE IT WILL…
WHAT WORRIES ME ARE THE MORONS OUT THERE WHO ARE GOING TO CREATE A STAMPEDE AHEAD OF THAT EVENT (especially if things don’t get better -faster – in the economy)…
I think Mark E. Hoffer is the only one getting my gist here…
June 25th, 2009 at 1:40 pm
Unemployment numbers and revisions were hemlock to the green shooters today…as was European manufacturing.
June 25th, 2009 at 1:40 pm
Hobo,
All due respect but everything the stock market does is saturated with paradox so reading extreme levels of sentiment is always going to be something I use. As for my ideas or others here being amusing, my portfolio has destroyed that supercomputer simons trades with this year. It’s one of the most powerful computers in the world. I’m laughing all the way to the bank. Here is a list of others performance that are part of that “private club” that I have more than beaten since this all started:
Performance from 10/12/07 – 3/6/09
Leuthold Core Investments: -37%
Berkshire Hathaway -42%
Fidelity Contrafund -49%
Columbia Acorn Fund -56%
CGM Focus Fund -60%
Calamos Growth Fund -60%
Third Ave. Value Fund -62%
Dreman High Return Equity -66%
Legg Mason Value Trust -71%
JH Classic Value -72%
Gabelli Equity Trust -77%
Rationalization follows upon mood change. Mood change comes first, and attempts at reasoning come afterward. Social actions follow upon mood change, because they are results, not causes. Social events then provide a basis for rationalization about the stock market. All thinking that attends these events derives from mood changes that have ocurred in the past and proceeds without a clue as to mood changes that lie directly ahead. Paradox after pardox results.
- Prechter
Not trying to be rude but it seems to me that the people being loudest about market manipulation are doing exactly this. I believe there were 6% bulls at the March 6 bottom on the AAII.
All that said, I love your comment at 1:09 and if I’m right about how low this goes before it is all over it will be the attitude shared by most, not just a few dead hobo’s. Record desire for cash instead of equity or debt should be seen at the bottom.
June 25th, 2009 at 1:42 pm
@cvienne
take a chill pill dude and get off caffeine. You sound like a grumpy old man sometimes.
June 25th, 2009 at 1:44 pm
ben22,
If you were describing a real market, I would be on board with you. This one is too manipulated to consider as anything other than a bet on red. Congratulations on being able to keep track of what cup the pea is hidden under.
June 25th, 2009 at 1:45 pm
OK, Bruce. I am going to claim Donna to make it 5-on-5.
Team A (shirts): Hoffer, cvienne, lefty, ben22, Bruce
Team B (skins): karen, Donna, DL, Mannwich, myself
Team B will win because lefty will be too distracted to play any defense.
June 25th, 2009 at 1:46 pm
@1:42 -
just ignore the caps lock, and he is fine
June 25th, 2009 at 1:46 pm
Franklin:
Did you sell your two shares of bgu yet? If you did, when are you getting back in the market?
June 25th, 2009 at 1:48 pm
Cnbc:
And lefty is not allowed to bring the Swedish twins to our sideline…until after the game..
June 25th, 2009 at 1:48 pm
Oh come on Thor, I was being facetious. Yes, NO ONE can predict the future, not even the great Leftback. The best one can do is make educated guesses and these can often times be right. And of course one can also get lucky with ones “predictions”. But this is not the same as clairvoyance. Anyone that claims such powers is a crackpot….like the folks who ascribed divine stature to a mere mortal — Jesus (if indeed he even existed).
June 25th, 2009 at 1:48 pm
Curmudgeon,
I’m not wise at all, I just put almost all of my time into this and I’ve probably made more mistakes trading my own money than most people twice my age, so I learn from it. I get most of my best ideas from somebody else. In the large scheme, I’m just joe blow ben22 on TBP. Nothing to see there.
I think the best thing for me is that I spend most of my time with people a lot older and more experienced with things than me, part of the reason I come here. As iron sharpens iron, so one man sharpens another.
@franklin,
You still don’t know what a “bear” is do you? Nope, not a predictor of the end of the world. Wrong.
June 25th, 2009 at 1:49 pm
@hobo,
Congratulations on being able to keep track of what cup the pea is hidden under.
It’s only 6/25, lot of year left before I can say it was truly a good one.
June 25th, 2009 at 1:50 pm
Mortimus – great link!
Cvienne – Again, nothing directed at you. I told you last night I thought your preparations were a good thing.
June 25th, 2009 at 1:51 pm
OT, for those of you all in cash with statistics skillz looking for something to do:
http://www.chathamhouse.org.uk/files/14234_iranelection0609.pdf
I read about this in today’s Boston Globe online which led me to the paper above.
http://www.boston.com/news/local/massachusetts/articles/2009/06/25/statistics_wizard_from_winchester_makes_a_splash_in_iran_election/
———————–
Reinforces the idea that statistics is now sexy. IMO the work being done on the financial blogs like TBP to parse out government and industry-provided economic numbers to separate shit from shinola is a pro-democracy movement.
@CNBCS: Not (c). Beyond that, I leave the forecasting to you guys with real knowledge and skin in the game.
June 25th, 2009 at 1:51 pm
@CNBC Sucks
In that case, I vote that Team B has Franklin as it’s waterboy…:-)
@manhattanguy
I’m not pissed my friend…I’m just trying to find a better way to get people to understand what I’m SAYING, instead of what I’m saying…
June 25th, 2009 at 1:53 pm
Although (a) and (b) are possible, I’m in the “we will do Japan, American style!” camp.
The gov’t is increasingly powerful, and as long as their political lives depend on whitewashing any societal pain, (a) and (b) can only happen if the gov’t truely loses control. So, if there is a shock to the system the gov’t can’t whitewash, or if their political lives no longer are attached to amelioration of societal discomfort, then we are Japan, otherwise “drop and roll!”
June 25th, 2009 at 1:54 pm
@ B22:
You said: “I just put almost all of my time into this and I’ve probably made more mistakes trading my own money than most people twice my age, so I learn from it. ”
Glad I’m not the only one, Holmes.
Team 30 and Under… You could call us “Young Guns”. Franklin, you’re not on the team.
June 25th, 2009 at 1:54 pm
great charts. This idea of exhaustion rate of unemployment benefits is very interesting….I guess that’s why U-6 is the better unemployment measure.
Interesting snap back day. It makes the move down from 956 look like a “corrective” pattern. 922 – 930 is clear resistance zone. Anyone would looking for a nice H&S top would love to see a peak and reverse into 930. A corrective move lower from here fits into the theory that we’re in the beginning stages of carving out a big triangle (huge whipsaw congestion) all summer…..could be nauseating.
June 25th, 2009 at 1:54 pm
Bruce, kudos on the second-best comeback to Franklin so far. The prize still belongs to cvienne, but keep working it.
http://www.ritholtz.com/blog/2009/05/sentiment-reading-mixed/#comment-168761
http://www.ritholtz.com/blog/2009/05/resilient/#comment-168860
June 25th, 2009 at 1:56 pm
@cvienne: no problemo… i wanted to make sure you are not misinterpreting my comments
June 25th, 2009 at 1:58 pm
hopeImwrong Says:
Although (a) and (b) are possible, I’m in the “we will do Japan, American style!” camp.
I would say I’m much more in line with this. We’ve fallen off the edge of the cliff, we might fall off another one in the near future, but we’ll skid along the bottom for years (decades?)
June 25th, 2009 at 2:01 pm
the future is not bi-polar, it is more than multi-polar, it is a continuum of possibilities
why do so many want to make thinks either/or?
CNBCS, i am with Thor on this categorization stuff, and with you on the cup size (there is more than two, errr, sizes, that is)
June 25th, 2009 at 2:01 pm
Correction to previous last sentence:
So, if there is a shock to the system the gov’t can’t whitewash, or if their political lives no longer are attached to amelioration of societal discomfort, then “drop and roll!”, otherwise we are Japan
June 25th, 2009 at 2:02 pm
Andy! nauseating?! come on. let’s call it “fun” instead.
June 25th, 2009 at 2:06 pm
@ AT:
I’m with you amigo (as usual)… that H&S top has got to be in play… triple shoulders though. I had thought that the third Left Shoulder was just part of the Head… now I’m not so sure after the move down from 965… looks like the triple shoulder is correct though.
Sloping neckline kind of weird though… no?
June 25th, 2009 at 2:06 pm
Hi Karen…
June 25th, 2009 at 2:07 pm
CNBCS@1:54 -
cv’s best comment to F411 had to be deleted…
remember-
“Waterboarding in not persuasion”
June 25th, 2009 at 2:08 pm
Cvienne:
I kind of like what you are doing ’cause I have done something a little like it myself. I moved from a very large city to the mountains of East Tennessee. I am not energy self sufficient, but certainly could be. I now own a tractor, have a garden, nearest neighbor is 3/4 mile away, and so forth. Now my weekends are my own, and I am delighted. I think my wife could make rocks flower and bring forth fruit if she were of a mind to do it..
June 25th, 2009 at 2:08 pm
Karen. Indeed! For me nauseating is synonymous with “fun.” Will be a difficult trading environment for most people looking for a “trend.” To make money, you’ll have to be willing to buy the big move down 750-800 and be willing to sell the subsequent snapback on the “successful” test of the March lows….etc…etc…bulls and bears should both look foolish next several weeks…..
June 25th, 2009 at 2:09 pm
I-man,
We do exist here and there. Franklin can be on the team but he gets a different uniform and he’s only allowed to watch, no actual playing time.
@ hobo,
This is not intended to be rude, but I want to try to draw this out some more. When did it stop being a “real market”? Do you have a date when it became too manipulated? I’m trying to figure out how you are even defining this exactly.
June 25th, 2009 at 2:11 pm
Plus… a move back up to 930, after a move down from todays high at 922 would carve out a beautiful falling price channel.
I have the base of the channel starting at 6/1 open at 923… touch at this weeks momentum low at 888… Only thing missing is a move up to 930.
Top of the channel I have at 965 momentum high.
A move back to 930 and a reversal would most certainly be the “lower high” that keeps being so damn elusive. We’ll see.
June 25th, 2009 at 2:14 pm
@AT @I-man
Occam’s Razor…The simplest solution is best…
Draw 930 on 7/6/09…You’ve got a .618 FIBO retrace…
The market doesn’t even NEED to hold on for the rest…I mean LOOK AT IT, it’s tired…I don’t even think the punks in Washington want it higher…Rahm Emanuel said it best himself…”We don’t want to waste a good economic crisis”…
So why make things any better? It’s time for Crisis part 2 (so that they can come riding in on their white horses again)…
Part 1 is losing it’s VERVE…It’s time to rattle things up again…
Hell…”W”…did the same thing…Everytime things got too cozy, some other crisis, or threat had to surface to keep the “sheeple’s” attention…
That’s how government works!
June 25th, 2009 at 2:14 pm
“I-Man Says:
June 25th, 2009 at 2:06 pm
@ AT:
Sloping neckline kind of weird though… no?”
With so many people now picking up on H&S patterns, there will be fewer of them going forward. I heard Bill Griffeth blathering about a H&S pattern…when that dude is citing it, it demonstrates that a certain pattern is becoming too mainstream.
So, in the future I’m expecting either a) less H&S patterns developed or b) contorted H&S forms with “sloppier” necklines and/or less balance to the shoulders.
My 2 cents on in it.
June 25th, 2009 at 2:17 pm
@Bruce in Tn…
This year I started my own mini-winery…So I hope to be sitting on my deck next to my pool in 2012 and drinking my first vintage
June 25th, 2009 at 2:17 pm
I-Man, “that H&S top has got to be in play.” Laughing, nothing’s gotta be anything in this market. What Andy said above is the absolute truth, “Will be a difficult trading environment for most people looking for a “trend.””
btw, watch the spx on a 15 minute chart… the candles forecast well in the short term.. today is looking iffy again. i feel a headache coming on, lol.
June 25th, 2009 at 2:18 pm
Karen – for those of us who don’t speak stockese – what do you mean by “iffy”?
June 25th, 2009 at 2:21 pm
@Andy T
“So, in the future I’m expecting either a) less H&S patterns developed or b) contorted H&S forms with “sloppier” necklines and/or less balance to the shoulders.”
EXACTLY
I’ve been eyeing those ’sloping’ H&S patterns for a bit of time now…I even made a few posts on this site about it…
June 25th, 2009 at 2:22 pm
Actually, Bruce also had another good Franklin comment here: http://www.ritholtz.com/blog/2009/06/crisis-responsibility-reagan-vs-bush/#comment-182541
Anytime Bruce mentions “bullet” and “Franklin” in the same comment, I pay attention.
Thor, hopeImwrong, and Wes – you guys have convinced me to add Team D, and I promise not to merge you with Franklin. But I am shocked that no one has picked up on karen having to go skins.
June 25th, 2009 at 2:23 pm
cvienne. Well yeah man. That’s the classic setup for a H&S. The b-wave retraces 61.8%, which seems to always coincide with the opposite shoulder, then you get the powerful c-wave down which is 161.8% of a-wave, which renders that target of the “head’s height” measured from the neckline breakout. To carry on with the coincidences, if this H&S does play it we’ll end up with a target that gets very close to a 50% retrace around 811 (a target that will inevitably bring out the sheeples).
June 25th, 2009 at 2:25 pm
bought some SDS earlier- hoping for a fade at the end of the trading hour- we’ll see what happens
CNBC-
put me in camp A- I think this is the recovery- you are looking at it- and is probably as good as it gets- will we have a higher SPX- possibly- but ultimately it will go down-
if there is one reason to believe in economic recovery- please let me know-
that is why the can can’t be kicked down the road- because we are already at the end of the road
June 25th, 2009 at 2:25 pm
@CNBC
“But I am shocked that no one has picked up on karen having to go skins.”
That was the FIRST thing I thought of…But I wanted to try and be politically correct (hey – isn’t that an oxymoron)?
June 25th, 2009 at 2:27 pm
Thor: I would never speak for Karen, but in this case “iffy” for me would mean…”it’s looking wobbly…and it’s looking wobbly right into an exact 50% retracement of the down move….maybe it’s time to get out if you’re a day trader with a long position.”
June 25th, 2009 at 2:27 pm
Thor,
Is that you flexing in your picture? Where is your hammer?
June 25th, 2009 at 2:28 pm
@karen (2:17)
Yeah – if you’re right, we make a beeline for 908
June 25th, 2009 at 2:36 pm
This post is just to draw LEFTBACK into the mix…
lefty – the break below 880 will come on July 14th my friend…
June 25th, 2009 at 2:40 pm
I think he’s traveling today.
June 25th, 2009 at 2:40 pm
CNBC, you know how i like to ignore you. : )
I have a bigger question at the moment, the department stores (BG, NM and SAKS, for instance) are loaded with thousands of women’s handbags priced at well over $1k each ON SALE. Where are the buyers to come from? And the new fall bags are arriving daily.. I would love to own the new black satin grosgrain Valentino shopper to tote my macbook around in but at $1795 and 8.75% sales tax?
June 25th, 2009 at 2:40 pm
O shit! Is peter costa reading this blog? He just talked about the H&S top and that 930 was a resistance level….
That seals it folks…We will NOT see a H&S now…..
June 25th, 2009 at 2:41 pm
I-man
Were you watching that match yesterday?
June 25th, 2009 at 2:44 pm
@karen
I heard that CHOO and everyone else are drastically reducing the number of designs they come out with…
So I suppose that’s their attempt to not let margins collapse, but VOLUME is clearly an issue…
June 25th, 2009 at 2:44 pm
Andy, thank you, for clarifying my iffy : )
cvienne, as per a previous LB post, yesterday i think; he is returning to ny today from someplace “sunny.” Guess he wasn’t with you, visiting your favorite clubs by evening. I can imagine the two of you together quite well.
June 25th, 2009 at 2:45 pm
karen: are you asking for us take up a collection for you? For the black satin grosgrain Valentino…..I don’t even know what that means….
June 25th, 2009 at 2:46 pm
karen,
buy the bag in my state, no tax.
June 25th, 2009 at 2:46 pm
Well, I will say this for the mother country. When they’ve tried to air the house out and it still stinks, they will at least say so..Lefty…
http://www.independent.co.uk/news/business/news/king-warns-of-the-long-hard-slog-to-clear-britains-debt-1718035.html
“The Governor of the Bank of England, Mervyn King, has warned that the nation faces a “long hard slog” to recovery, criticised the Government for running too high a level of borrowing as the nation entered the present crisis, and called on the Chancellor to produce a “credible statement” of how he plans to get the borrowing down.”
Reminds you a little of Churchill during the War. I have yet to see one of our politicians (in a position of power, anyway) come anywhere close to this degree of honesty. Too dern many green shoots and not enough straight shootin’……
June 25th, 2009 at 2:48 pm
Ben22 – yes, that’s me flexing in the picture. It’s a Superman reference from my partner – as well as the Fat Panda I’m holding in the crook of my arm.
June 25th, 2009 at 2:48 pm
I think Sunny is one of the Swedish twins….
June 25th, 2009 at 2:48 pm
Karen-
is there really a difference between a fall bag and a summer bag?- and if so- why?
just trying to understand- I wouldn’t notice a handbag ever- unless it glowed in the dark or something
June 25th, 2009 at 2:49 pm
I know, karen. That explains your *** ****** ** ** **** and our ***** *************. But I never kiss and tell
As for your question about the handbags, you as a trader should know the price MUST come down. Or are women’s handbags too illiquid a market to anticipate a buy?
June 25th, 2009 at 2:50 pm
@ CV:
I DVR’d it and watched it last night. Awesome. All I gotta say is two words:
TIM HOWARD!!!
June 25th, 2009 at 2:50 pm
@karen
“Guess he wasn’t with you, visiting your favorite clubs by evening. I can imagine the two of you together quite well.”
just trying to do my part getting $$ back into the economy
June 25th, 2009 at 2:54 pm
Speaking of handbags, and OT of course. One of my all time favorite “what’s wrong with people today” moments is from last summer. I was at a discount food store and I noticed that the lady in front of me was paying with food stamps – food stamps she was talking out of her Louie Vuitton purse. I think the story speaks for itself.
June 25th, 2009 at 2:55 pm
Bruce, you’ve earned my funniest comment of the day, probably week, award.
Ahab, the fall bags are NEW.. new for fall, new colors, new designs, all new. And they’ve really outdone themselves.
Andy, then there is the Valentino Gemme Framed Shoulder Bag, only $2,980.00. To die for, really. : )
http://www.bergdorfgoodman.com/store/catalog/templates/P6.jhtml?itemId=cat80014&parentId=cat20062&masterId=cat261004
June 25th, 2009 at 2:55 pm
@I-man
Howard gets a lot of credit…There were a lot of BOMBS coming in there late in the match that he was very wise just to bat away…
I’ll say something though, he was getting a lot of help on defense too…Not that the defense was playing all that well technically, but somehow they managed to get a head, toe, or body on a lot of flack that came shooting through the box…And there was a TON of it!
June 25th, 2009 at 2:56 pm
ben22 Says:
June 25th, 2009 at 2:09 pm
This is not intended to be rude, but I want to try to draw this out some more. When did it stop being a “real market”? Do you have a date when it became too manipulated? I’m trying to figure out how you are even defining this exactly.
reply:
————
Are you serious? Haven’t you noticed the bizarre powered-up moves since the relief rally started. The rally has been gamed since maybe S&P850. There’s no real investors in it, just computers and day traders. Low volume. Frequent medium and massive jumps on no news or horrible news, such as GM bankruptcy. Shorts are apparently afraid to seriously enter the water due to mysterious liquidity popping up and washing them away. Anyone thinking buy and hold for a few months or a couple of years is seriously uninformed.
Insides are said to be selling at one of the highest historical rates known. Few insider buyers.
The market and economy are seriously out of step. The economy is bad and likely to get worse before it gets better. Commodities are inflated due to speculative dollars only, not demand for the underlying.
It’s Vegas only. Not a store of value. Not a safe place for retirement income. It’s not especially regulated. It’s basically a bet on red, with fancy charts that look mathy with obscure terminology thrown into add credibility.
All this plus Bubblevision. OK, CNBC would hype a flaming bag of crap if it’s sponsors asked them to, regardless of the market. They don’t count.
June 25th, 2009 at 2:57 pm
thor, surely it was a fake… most of them are!
June 25th, 2009 at 2:59 pm
@karen
How about this one?
http://www.sustainableisgood.com/blog/2007/10/wal-mart-reusab.html
or this? (this one has wheels for you BIG SHOPPERS)
http://www.walmart.com/catalog/product.do?product_id=10161107
June 25th, 2009 at 3:00 pm
Thor,
Let’s just pretend that bag was a fake as to not upset ourselves about shit like that. One more question about your picture, do you have a Mohawk?
I used to have one when I ran XC. Sadly, that is not even close to appropriate for my job.
Speaking of bags, I wanted to buy a nice bag for myself for when I go out as I hate carrying a wallet and I’m not a big fan of money clips. Any ideas, seems like all you guys are really into fashion. lol.
June 25th, 2009 at 3:03 pm
thor-
probably a knockoff from Hong Kong- got to be stylish no matter the occasion or current impoverished status-
Karen-
get a Northface backpack- all the rage I hear- all the women are carrying them- and only $50
June 25th, 2009 at 3:06 pm
b22-
money clip and one credit card is all I ever carry- but a cool manbag- well- I don’t know- I could change my mind
June 25th, 2009 at 3:06 pm
Long Man Purse.
June 25th, 2009 at 3:09 pm
@karen
For the same price you could fly to Italy and go to the “outlets” off the A1 near FIRENZE…
The Prada, Jill Sander outlet is off the Valdarno exit, & the Pucci, D&G, Armani, Gucci outlets are off the Cilegi exits…Cavalli is inbetween…
I thought you were going to Venice…Might as well make a side trip…
June 25th, 2009 at 3:12 pm
looks like we are getting some buying into the close
June 25th, 2009 at 3:15 pm
All – Oh I’m sure it was a knock-off, I just thought it was telling that even people who are so poor that the government buys their food want to be seen with a Louie Vuitton bag.
Ben22 – no, I don’t have a mohawk – or a feux-hawk for that matter. Just very short. I know what you mean about work appropriate style. I have a few tats though, luckily they’ve now become “work appropriate” here in LA.
June 25th, 2009 at 3:16 pm
Market up and buying the long bond too?
As Vinny Barbarino would have said, “I’m so confused!”
June 25th, 2009 at 3:19 pm
so Lennar’s sales numbers were up- as was Bed Bath & Beyond’ numbers (after the BK of their main competitor)-so outside of that-
why is everyone wetting themselves?
June 25th, 2009 at 3:20 pm
@ben22
Ben you’re going to love this…
‘Dangerous Time’ to Avoid Stocks, CLSA’s Napier Says
http://www.bloomberg.com/apps/news?pid=20601213&sid=axHWS_QU0OCQ
Was he that guy in the suspenders at your meeting the other day?
June 25th, 2009 at 3:22 pm
cvinne, i do use canvas bags for my groceries… and i don’t buy water in plastic bottles, fyi : ) first class to italy is well over $2k : )
ben22, i would be happy to assist you with further information. last year, i bot my sons’ paul smith striped card holders when school ended, smaller than a wallet but holds bills, too. Or did you want a men’s purse? try salvatore ferragamo… and don’t forget ebay..
June 25th, 2009 at 3:24 pm
@karen
First class FOR ME to Italy is free because I have so many frequent flier miles (over 1.6 million)…
Sorry, I just ASSUMED…
June 25th, 2009 at 3:25 pm
I prefer the purple asparagus rubber bands… stacked with 5s and 10s with a couple benji’s on the outside…
Yeah…
June 25th, 2009 at 3:28 pm
That ‘Dangerous Time’ to Avoid Stocks was spectacular! I’d like to wave that in a few faces, and tell them to stay out of the market just the same : ) Preaching to the choir in my case, of course.
June 25th, 2009 at 3:32 pm
@I-man
Starp a few of these between those purple asparagus rubberbands…
http://media.photobucket.com/image/1992%20California%20IOU/blackfridayarmy/money/CA-IOU.png
NOW YOU’RE LIVIN PHAT & LARGE Amigo!
June 25th, 2009 at 3:33 pm
http://www.cnbc.com/id/31547817
Cash-Strapped California to Issue IOU’s
I owe you
You owe me
We’re just one big family…(my kids used to watch Barney)
“State Controller John Chiang says he will be forced to issue the “registered warrants—also known as IOUs” starting July 2 unless an immediate budget solution is passed quickly.”
Payment of the IOU’s will be in Zimbawe sovereign funds…..
June 25th, 2009 at 3:36 pm
Ooops…I see you guys have been talking about this already…my bad.
June 25th, 2009 at 3:38 pm
I stopped using my credit card 2 years ago before the financial mess started. Even if I do use occasionally (for car rentals), I pay off on time. I am the worst target customer for credit card companies. I only use my debit card and cash in my everyday transaction. I take my reusable bag for groceries (just like Karen). I wish more people use them and not use plastic bags.
June 25th, 2009 at 3:39 pm
Cvienne-
thanks for the link- guy seems to be all over the place on his predictions- inflation, delfation- one line I didn’t buy was-
“After a few years of gains “the Fed will launch its final attack on inflation and it will take us into a fairly terrible situation. They’ll let go and we’ll head for inflation.”
why a final attack on inflation? maybe they want inflation- and- what “terrible situation”? – high interest rates?
so if the Fed does it’s final attack- where was the intital attack? Than he goes on to say-
“While many investors are consumed with the rapid expansion of the Fed’s balance sheet and money supply, the ongoing contraction of the household balance sheet is a far more pronounced event that renders deflationary risks the more predominant near-term risk,” the economist wrote in a June 19 report. “The rally really looks fatigued.”
man- this dude is all over the map- which is it- deflation or inflation
June 25th, 2009 at 3:42 pm
@ manhattanguy:
Seriously… do you know what the credit card industry lovingly refers to customers like you as?
“Deadbeats.”
I’m not making that up either. If you dont run a balance, they call you a deadbeat. Fascinating.
June 25th, 2009 at 3:42 pm
manhattenguy-
commendable- I still use the plastic bags because I re-use them as my garbage bags- call me cheap- but I am not going to pay for plastic bags to put garbag in
June 25th, 2009 at 3:46 pm
cvienne Says:
June 25th, 2009 at 3:20 pm
‘Dangerous Time’ to Avoid Stocks, CLSA’s Napier Says
comment:
——————
No disagreement on the inflation, only how it will show up this time. State of the art financial engineering requires inflation to not appear in anything that would resemble a Phillips Curve or wage-push cost increases. This would require central banks to raise rates and soak up liquidity to fight textbook inflation. This is your father’s inflation. Not ours.
We get to see it in the form of asset bubbles, which nobody important can see until they explode. Then central banks will have more to do by fixing the problems they just caused.
We will see inflation, but not in the way you expect. We’ll probably have another real estate bubble in a few years, but without the securitization problems. This will help pay for extortionate oil and food prices, which are also due to central bank inflation. A new housing bubble will ‘pay’ for inflation, but, magically, it won’t really be inflation. It will be invisible asset bubbles. The new value will be used to pay for invisible second round effects from things excluded from core CPI. These payments will come from a new round of home refinancing.
This is our likely future in maybe 3 to 5 years. Just like the last one. But without the CDO problem.
June 25th, 2009 at 3:51 pm
@ahab
“I still use the plastic bags because I re-use them as my garbage bags- call me cheap- but I am not going to pay for plastic bags to put garbag in”
Congratulations – you have all taken the FIRST STEP…
Now the NEXT step is to figure out that MOST TRASH AIN’T TRASH…About 80% of what you toss in the garbage (from rotting vegetables – to egg shells – to coffee grinds – to paper) is reuseable…
You toss it into a compost bin and it provides the RICHEST nutrient base to the food you grow (which saves you trips to the supermarket – meaning you don’t burn gas from your car)…
How long is going to take b4 you people stop thiking of me as some kind of space alien?…
June 25th, 2009 at 3:52 pm
dh Says-
“These payments will come from a new round of home refinancing. ”
are you suggesting the re-emergence of the equity line- equity withdrawals to pay for basic living expenses?
I don’t buy that at all- that would take incredibel foresight to take money out- set it aside- and draw down to pay for food and energy- people would typically expect those type of expenses to be covered by their wages
June 25th, 2009 at 3:53 pm
SRS might be a buy right here on the close…
June 25th, 2009 at 3:53 pm
cvienne:
I used to watch X-Files…some of the aliens were actually rather normal, at least they’d fit in here in East Tennessee…
Long as you don’t have a tail and two horns…
June 25th, 2009 at 3:54 pm
Bruce – you are my favorite poster today. We did talk about the IOUs, but they actually deserve their own thread or eight. The IOUs to me are the single most telling tangible development of how bad things are since this whole economic meltdown began. Stock prices come and go. The Fed expands and contracts monetary supply. But it’s not often that a state issues its own legal tender. Sure, California did it in 1992, but that was before a huge tech boom. I don’t see a new tech boom coming.
June 25th, 2009 at 4:01 pm
@cviene: i have a compost bin going here too. I plan to take it to my father in laws july 4th w.e to use in his farm.
June 25th, 2009 at 4:01 pm
strong close- opposite of what I had hoped for
June 25th, 2009 at 4:04 pm
@manhattanguy
Good man!
June 25th, 2009 at 4:09 pm
call me ahab Says:
June 25th, 2009 at 3:52 pm
are you suggesting the re-emergence of the equity line- equity withdrawals to pay for basic living expenses?
reply:
———-
Actually, yes. Home refinancing and the last asset bubble helped finance and institutionalize commodity inflation. People were feeling so affluent from stock market gains and increasing home values they ignored rising oil prices to a large degree. In essence, they could afford it and it ’seemed’ natural to go up, after all. Now we’re stuck with it unless Uncle Stupid grows a backbone.
The same psychological effect will happen if home prices reignite. High end consumption will also take off if people fall for it again, which it likely.
On the other hand, if what I described is full of crap, then that must mean people won’t fall for it again and the stock market is off limits for everyone except computers, day traders who feel lucky, and rich stupid Uncles who provide necessary liquidity when required. It also means dismal times are ahead unless real incomes improve, as opposed to stock market inflationary ‘wealth effects’ or housing inflationary ‘wealth effects’ cause people to spend more than they should.
Inflation has to go somewhere. Wages are off limits. This leaves prices, which are defined as commodities and, likely, houses. I think Uncle Stupid will continue to push the problem off to the future via financial engineering and happy talk news.
Later, a Republican will eventually win the White House and Congress. Then we will use wars as means to pay for current excesses.
June 25th, 2009 at 4:10 pm
@cvienne, and per an earlier segment of this thread…
Composting, # acres on your farm, ways and means of the literate small-footprint life you’re carving out for yourself and your family… these are questions I have that I know don’t fit on the TBP comment threads… but consider blogging or commenting on such things. I’m still collection and trying to absorb the ‘how to trade’ concepts so generously shared by leftback, karen, ben22, MEH, I-Man and others, but you’ve definitely got a pool of knowledge even more valuable and vital.
I have a plain old wallet, but I’m definitely more ‘purple rubber band’ than Louis Vutton when it comes to stuff I want around me.
June 25th, 2009 at 4:13 pm
Long purple rubber bands.
Short ridiculous end of day pumps in XLF, SPY, & IYR.
June 25th, 2009 at 4:16 pm
Well hell evienne….I’ll bite.
Where are the North and South Poles gonna be??
We’re looking at buying a small farm in 3 years or so….probably NE quadrant of OH….lots of natgas and fresh water. Family ties and strong value….although I wish it had some of those WV mountains. You’re in some beautiful country over there.
June 25th, 2009 at 4:25 pm
I-Man @ 4:13-
undoubtedly
June 25th, 2009 at 4:32 pm
Bruce – RE: CA. guess I was wrong
Let’s see if they can beat the record (two months) of IOU’s from 1992. The only thing that stopped it then was banks refusing to accept them as payment anymore.
June 25th, 2009 at 4:35 pm
Thor:
My only brother lives in Los Altos…I’ll have to give him a call and see what he thinks of the IOU business…(I also like to get a rise out of him about the California government)…he thinks Pelosi is the space alien…
June 25th, 2009 at 4:35 pm
@pfmorrisonfl
I’ll continue to do as much as I can…But this ISN’T my blog and I only offer my ideas in which ways I can mingle them with the threads that are already going…
As you have probably been able to determine…I get a lot of criticism EVEN HERE on these ideas…I admit that it “sounds” like it’s coming from the tin foil hat section, but I can assure I’m a sane person…
I figured out a long time ago that there was no SUSTAINABILITY to the American lifestyle…The brief story is this…
- In the past, empires were built on the backs of SLAVE labor.
- America started off that way, then decided to abolish slave labor.
- America actually basically CONTINUED slave labor (on the backs of immigrants & small children) throughout the industrial revolution.
- Then America found itself as the largest industrial exporter as the rest of the world fought World Wars.
- America was forced eventually to join that fight.
- Eventually, America emerged as the ‘de facto’ winner of those wars and thereby commanded access to cheap global resources for many generations.
- It built itself a propserous FRONT as it depleted those resources from abroad.
- Along came a time where Americams had CONSUMED most of what was necessary…In order to continue to grow, it had to establish a system of new markets.
- New markets require more trade, and so not only did America need cheap materials to prosper, it also needed CHEAPER labor (so ’slavery’ was exported)…
- If you continue to run the above scenario (from the British Empire – to the USA – to China/India/or Brazil in the future, you run into a situation where there will be NO MORE RESOURCES at some point…
So either we play this out until the end (and kill ourselves by doing so in terms of overpopulation versus scarce food & water)…
Or, we start living in a different way (where less is consumed – and more is made renewable)…
It’s not just ENERGY…It’s ‘pollution’, and mainly it’s WATER & IRRIGATION…
The next World War will be fought over WATER RESOURCES…
I’ve gotta go now so this is my last post of the evening (until perhaps very late)…
June 25th, 2009 at 4:37 pm
Personally I am one of those (as they call them) “deadbeats” that pay my balance every month. However, I will never get a Chase credit card, because I would not want to go to hell for the immorality of supporting such bastards.
June 25th, 2009 at 4:40 pm
Bruce – I grew up just north of Los Altos (San Mateo). Your brother must be doing very well for himself to afford to live there.
In the future, please don’t ever mention Nancy Pelosi in my presence. I remember her from when she was only in local politics. I’m sorry we’ve inflicted her on the nation. In our defense, she is an Easterner
June 25th, 2009 at 4:41 pm
“you run into a situation where there will be NO MORE RESOURCES”
I assume you are not a Libertarian, cvienne?
June 25th, 2009 at 4:46 pm
@Christopher
Wait…I lied…(I just caught your post as I posted my last comment)…
New NORTH POLE will be about 1200 miles off the coast of Chile (just under wht is presently the Tropic of Capricorn)…
New SOUTH POLE will be very near the region of the Himilayas…
It’s hard to see this on a standard two dimensional map…You need to have globe in your hands to see it visually…
June 25th, 2009 at 4:51 pm
@CNBC
Sorry…”no more resources” is a bad way of putting it…
It’s meant to say NOT SUFFICIENT resources for which people today (especially Americans) identify as being necessary…
In other words…If everyone were to just DUMB IT ALL DOWN, we’d live fine…Without that, there’s going to be trouble…
Now the PROBLEM is that the American economy is based on that standard of consumption for trade or profit…so something has to give eventually…
June 25th, 2009 at 4:53 pm
Thor:
It would be interesting to see if the emmigration rate rose once IOU’s were instituted..
June 25th, 2009 at 4:57 pm
cvienne – still, you embrace the concept of resource contraints. I am not yet aware of any Libertarians who would acknowledge the possibility of such madness. Do you or do you not have “Libertarian leanings”?
June 25th, 2009 at 4:58 pm
Bruce, you will be happy to know that Franklin will be paid for his teaching assistant duties with IOUs.
June 25th, 2009 at 5:03 pm
Well, from verbally going back and forth with the Frankster, I suppose he will think that is ok…
However, he may find that reality bites…that theory is one thing, but grading papers gratis will probably lose its luster…
June 25th, 2009 at 5:10 pm
Bruce – I don’t think so. For one, this isn’t the first time they’ve done it. In 1992 the issues IOU’s for a little over two months, I remember it well because I was working as a teller at WFB, we’d take them and cash or deposit them just like a regular check. As for emigration, we’ve been a net importer of people from other states up until about 5 or 10 years ago, the population here is now going up mostly because of birth and international immigration (much like NYC).
Also, keep in mind that there are over 36 million people living here. 1 in ever 9 Americans lives in California. We’re not all here because the government is run well (joke) or the housing market was so lucrative. We live here because it’s a great place to live. I know that’s hard for many of you living in other states to understand but it’s true. No one is stuck here, and no one should feel sorry for us because we live in CA, we’re a lot like Texans. Last, when you talk to people who have moved here from other states and ask them what they miss the least about where they came from you get pretty much the same answer across the board – Winter. For someone who was born in CA, I cannot comprehend why a person would live in a place where it get’s colder than the inside of your freezer during the winter – I mean you could literally DIE just being outside!
June 25th, 2009 at 5:14 pm
Finishedatthesaltminefinally! Whew. Another slamming day.
Later. (Agree with the cold weather thinking, Thor. Anytime I get to thinking that, I just rent “Fargo” and come back to my senses…)
June 25th, 2009 at 5:20 pm
Thor@3:42 –
in CA, use the iou’s to pay your state income taxes
June 25th, 2009 at 5:26 pm
Wes – Hah, wish I could!
June 25th, 2009 at 5:37 pm
Thor – turn about is fair play
June 25th, 2009 at 6:16 pm
Michael Jackson, Farrah Fawcett, and Ed McMahon all in the same week – what are the odds of that?
June 25th, 2009 at 6:20 pm
Michael Jackson?
June 25th, 2009 at 6:23 pm
yeah – Michael Jackson is dead, different reporting from different sources but local radio here in LA is saying he’s dead.
June 25th, 2009 at 6:24 pm
oh, i just looked at the newswire…how would’ve thunk it
June 25th, 2009 at 6:59 pm
Weren’t we just talking about NAMBLA yesterday? This is a big loss for them.
June 25th, 2009 at 7:00 pm
“yeah – Michael Jackson is dead, different reporting from different sources but local radio here in LA is saying he’s dead.”
Hopefully not because of too much debt?
June 25th, 2009 at 7:10 pm
TZ –
funny, but i am startin’ to wonder how all u guys no the acronym, hmmmm?
June 25th, 2009 at 7:12 pm
manhattanguy -
he almost died of too much debt previously
now he was trying to inflate his way out of the problem
probably blew a gasket, or whatever, heart attack – workin’ out w/Lew Ferragamo, apparently
June 25th, 2009 at 7:32 pm
I don’t understand why it is ok to be relieved if one hasn’t been victimized by Chase bank. Why is it ok if someone else has been victimized but you haven’t ?
Why are people so selfish.
http://www.daily-protest.com
June 25th, 2009 at 7:37 pm
How come it is ok to say that credit card defaults are rising without ever connecting the rise in interest rates to the rise in the default rate?
I believe there may be a default conspiracy in play in which banks make more money defaulting credit card customers and rejecting as many loans applications as possible, then the banks would make by actually helping people.
How can the banks help people? How about creating incentive based credit card debt paydown programs? How about approving loans that are completely covered by assets irrespective of income? The loan is already secured, what more can they want?
http://www.daily-protest.com
June 25th, 2009 at 7:37 pm
Credit card companies are not the only one to be blamed here. Majority of the blame goes on the stupid consumers who borrowed and spent beyond their means of living.
Some wise guy once said “You choose a lifestyle that you need, not the one you want”.
June 25th, 2009 at 7:42 pm
@Wes:
Everything I know I learned on South Park.
http://www.southparkstudios.com/episodes/103916
June 25th, 2009 at 8:07 pm
wow, I’ve been in meetings the last few hours, I can believe about MJ, that’s really sad. I know the guy was odd but I love some of his old tunes. Really sad.
Karen,
I was actually thinking more man purse. I’ll check out your recs, thanks very much for the advice.
Oh and yes, as for the great time to avoid stocks article. well, I think you all know my thoughts on that.
June 25th, 2009 at 8:10 pm
TZ -
thank god
now i understand
it is a different cult, whew………
June 25th, 2009 at 8:24 pm
ben
You might have misread that title. It says “Dangerous time to avoid stocks.” It’s a rather incoherent article, frankly. His case is kind of funny because he says the market’s going to keep going up and then crash to about 400 in a few years. I can’t fathom why it would be “dangerous” to be out of that kind of market. Sounds like a dangerous one to be in, like the last bull.
He’s afraid of inflation so I thought his thesis was that you need to be in the market to counter inflation, then sell just at the right time to avoid the crash. But then there’s this quote: “Stocks aren’t a good hedge against inflation, however, because accelerating prices eventually lead to a collapse in equity markets, Napier said.”
So I don’t know what the guy’s thought process is.
Overall the article is very poorly written and gets hard to follow, as apparently ahab found to be the case.
ahab – the deflation talk was Rosenberg’s perspective, not Napier’s.
June 25th, 2009 at 8:37 pm
@OT
Thanks for finally making my point…
I was the one who originally posted that article…
I found it TOTALLY incoherent…
This guy thinks it is dangerous NOT to be in a market that has no basis in fundamentals and is only bolstered by inflation fears…
He sounds like Franklin saying it’s DANGEROUS NOT to believe in Obama because he’s going to borrow 3 trillion to build an elementary school (the walls of which will be covered in graffitti in 6 months)…
June 25th, 2009 at 8:38 pm
Anyway…Rosenberg is the guy to listen to…
June 25th, 2009 at 8:53 pm
onlooker,
thanks, I didn’t even read it, the title was enough for me to take a pass. sounds pretty bad the way you describe it.
June 25th, 2009 at 8:54 pm
Manhattan guy, you may be oversimplifying the situation.
People go into debt because they have unexpected medical expenses, can be a crime victim, lose their job, start their own business, replenish equipment for their small business (an excellent economic growth stimulant), their kids education.
That is no reason to up rates to 30% on people who have never been late on a payment. sheesh.
Unless the company you work for or run DOES NOT accept credit cards, it is borders on naivety to imply that credit card debt is simply a lifestyle choice.
http://www.daily-protest.com
June 25th, 2009 at 8:56 pm
ben
Yeah, I almost passed on it too but got curious to see what the thesis was to help read the sentiment out there. It really wasn’t worth the effort though.
June 25th, 2009 at 9:03 pm
ben, the man purse works… one of the most masculine men i’ve ever known carried a purse.. bar brawler, cowboy, hunter/conservationist, practically world renown fly fisherman, womanizer (can’t leave that out), world war 2 infantry soldier, one of the original Mad Men of Sand Diego.. you just need a good girl to make sure you don’t leave it behind : ) i’ll do some searching tomorrow and send you some links.. (uh-oh, broke my vow not to post after 5 pm pacific time.)
June 25th, 2009 at 9:10 pm
karen,
you know joey from miami?
i have to admit, i carry one
it is convenient – and, very euro, he, he, he
June 25th, 2009 at 9:10 pm
re: the bloomberg article. doesn’t anyone have a sense of humor.. these are news stories… enjoy them. at least this one has an element of truth in it.. but i would still advise the average person to stay away from the market, the OPPOSITE* of the title.
*cvienne style
June 25th, 2009 at 9:13 pm
karen,
lol, that guy sounds like the man, what a full life. My wife will keep an eye on the man purse for me. I could care less what people think of a man purse, no shame in my game.
June 25th, 2009 at 9:30 pm
“People go into debt because they have unexpected medical expenses, can be a crime victim, lose their job, start their own business,”
As I said the blame goes around. When does people take personal responsibility? You save money for these type of medical emergency situation. Consumers are at fault here. You can’t just blame corporations/real estate brokers for your own problems. This is the same reasoning used by people who got into the subprime loans. Why didn’t you just use your brain to think you can’t afford a million dollar house when you were only making 50k in the first place?
June 25th, 2009 at 9:37 pm
ben, my turn to lol, just did a search on “no shame no game.” some explicit rap songs…
June 25th, 2009 at 9:39 pm
So you think 30% interest is not racketeering?
So you think it is ok to change terms and not allow the consumer the right to opt out on a pre-existing agreement?
Your wealth, if you have any, is primarily based ON CREDIT.
At the end of the day, it will be people like you that sink the entire ship by throwing the baby out with the bathwather.
Once interest savings rates hit 1% in the early-mid 90’s, it discouraged people from saving. Your are defending banks who have tricked people into a certain amount of debt, and then raised the interest rates on them afterwards.
I can only guess what field you work in.
http://www.daily-protest.com
June 25th, 2009 at 9:43 pm
I already said that blame goes around. Companies change terms to whatever they want. Just exactly how they rip you off. I acknowledge that. This is the reason why I don’t use credit cards. But to sit there and just blame everything on someone else for this debt problem is plain ignorant and demented.
June 25th, 2009 at 9:56 pm
This is synonymous to blaming fast food giants on your health problems. If you are concerned about fat food, why do you bother going to McD in the first place. Why blame food companies that make processed food? You know its NOT food, but its made of food “like” substances. As a consumer you make wiser decisions whenever you can.
June 25th, 2009 at 10:03 pm
manhattanguy-
I have to side with Alessandro- banks are the experts- they are always at fault when it is between the citizen and the bank-
the banks are always going to work it so they come out on top- regardless of the circumstances- and that they have been the unprecedented beneficiary of USG largess- than the banks have been sponsored by the very people they are trying to fuck-
doesn’t hit me as right- full disclosure- I carry no credit card debt and my mortgage is almost ZERO balance- so I have no ax to grind- but do not think it fair that people’s terms are changed mid-stream
June 25th, 2009 at 10:35 pm
When is it bedtime at Michael Jackson’s NeverNeverLand??
When the big hand touches the little hand.
June 25th, 2009 at 10:43 pm
0k, more of this nafmbla,
or whatever,
come on this is TBP,
June 26th, 2009 at 7:08 am
[...] you might also want to look at the credit card chargeoff rate versus the exhaustion rate:Credit Card Chargeoffs vs Exhaustion Rate | The Big Picture [...]
June 26th, 2009 at 9:43 am
Manhattan Guy, your fast food analogy is out of context. You have oversimplified the situation.
One can choose to no longer eat at a fast food place, but one can’t choose to pretend they don’t have debt, unless they file for bankruptcy.
Credit Card companies can make more money faster by defaulting their best customers then they can by helping them. Chase bank credit card division should be investigated for treason against the american citizen, probably Chase bank as well for rejecting so many home applications but keeping the fees they charged for the applications. Undervaluing home equity lines. Freezing home equity lines.
If the underpinning motivation is the desire to drop the credit scores of many people as fast as possible, then trying to pin the blame on the consumer is ridiculous.
Not being able to OPT OUT of a CHANGE IN TERMS from a pre-existing agreement spits in the face of what it means to be free.
http://www.daily-protest.com