Last night, we mentioned the Fed’s emails trashing BofA CEO Ken Lewis.

This morning, the WSJ released excerpts — you can find them in the Think Tank.

Great snarky stuff . . .

Category: Bailouts, Federal Reserve, M&A

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

84 Responses to “Excerpts: Nasty Fed Emails”

  1. CNBC Sucks says:

    Ritholtz, I hate to say this, but other than comments from Malcolm Alfriend and Skeletor Paulson, I hardly found those emails “nasty” or “snarky”. If I had been working at the Fed, you might have seen something like:

    “OMFG, are you saying that unless we radically reprice the US dollar (to the downside, for you slower peeps), there is no way we can compete with the rest of the world to reverse our deficits, and the only way we can maintain a relatively stable economy is to print money up the wazoo to reflate assets, continue to stimulate consumption beyond our means, and cross our fingers that decoupling doesn’t happen too soon?”

  2. laughingAllTheWay says:

    Bearish rational is looking very risky.

    TODAY
    Retail – up
    unemployment claims – down
    foreclosures – down

    The economy is adjusting to the new rules and the new game. Stabilization is happening, then slow growth.

    Green shoots are real. Don’t get locked into thinking one way.

  3. The Curmudgeon says:

    “Green shoots are real.”

    Not if the money used to account for them is fake.

  4. VennData says:

    Mark Haines referred to the current bears as “people talking their own non-book” this AM.

    Snarky? Yes. Serious? Yes. Nasty? Well.. if you got killed in ’08… listened to the GOP media machine “Obama’s a Socialist” meme and are getting killed in ’09. Yes… it’s nasty. Time to re-think your media outlets.

  5. call me ahab says:

    @laughing-

    the following chart doesn’t look to green shooty to me- the economy is like a boxer that was knocked on his ass- stumbling to get up- then as his knees buckle- he is hit yet again for the knockout blow

    http://cr4re.com/image/RetailMayYoY09.jpg

  6. franklin411 says:

    @Laughing
    Yep…construction spending is rebounding–exactly what you’d expect, considering construction led us down.

    And the initial claims numbers were very good:

    The largest increases in initial claims for the week ending May 30 were in Connecticut (+816), Louisiana (+809), Tennessee (+672), Arizona (+618), and Nebraska (+576), while the largest decreases were in Florida (-6,655), Illinois (-4,496), Michigan (-4,385), California (-3,551), and Texas (-2,886).

    If we’re about to have a “big leg down,” why are initial claims falling in the hardest hit states? Florida (housing), Illinois (manufacturing), Michigan (autos), California (dimwitted voter base, Governor Steroids). If we’re about to have a “big leg down,” then unemployment should be worse in these states, not better.

  7. laughingAllTheWay says:

    “fake it, til you make it.”

    We had the crash. The crash is in the past.

    Even inept government intervention will find it difficult to cause another crash because behavior is changing to fit the new economic reality. This behavior will trump the difficult circumstances because it is an adjust to overcome, and should succeed. Slow progress, lower expectations, hard work will win the day.

    There are a few possible paths to economic and societal destruction (there always are), but the probability we take those paths is low, and therefore can’t be the basis of realistic decision making.

    Investing is possibly a different matter, as it is 66% mass psychology based. Individual time horizons and risk tolerance and investing style will determine where your money is put. But the economy is stabilizing and adjusting to a new reality. The post crash era is here.

  8. laughingAllTheWay says:

    Ahab – don’t be fooled by looking for a bounce back to the bubble numbers. This recovery is not like the last few decades of recessionary recoveries where a new bubble will replace the old one (thank goodness).

    The stats will stabilize first, not recover. The recovery will be different, and look different, because it is a long slow adjustment to a new reality. But people will adjust, and progress will be made.

    The difficulties in the next few years are known, and this time will not be ignored (like sub-prime) until they produce a crisis.

  9. call me ahab says:

    laughing-

    wow- sounds great- so . . . why then would I invest in stocks?

  10. schoolsout says:

    for some reason, I’m laughing all the way to my ciggy break at this time…

  11. franklin411 says:

    @Ahab
    Where else are you going to put your money? CDs/savings accounts/bonds/mattresses are paying a negative return. Shoot, even the prices of guns and ammo are falling after the gun nuts went into a buying frenzy in February, so that’s a bad investment.

    Gold? Remember the Arabs: their petrodollar gold, purchased in the late 1970s, has barely turned positive. For 30 years they lost money!

  12. call me ahab says:

    oh Karen- where are you?- a few comments from Volcker- who knows a thing or two about inflation-

    “A long slog, with continuing high levels of unemployment, seems to be in store,” Volcker, a former chairman of the Federal Reserve, said.

    “This is not an environment in which inflationary pressures are at all likely for some time to come,” he added.

    last line is the money line- you can’t argue with Volcker can you?

  13. Pat G. says:

    And to think some of these guys took a vow to uphold the Constitution before they took office. Doubt if most of them have even read it.

    laughing–

    How about that Treasury bubble?

  14. schoolsout says:

    franklin411 Says:

    June 11th, 2009 at 10:03 am
    @Ahab
    Where else are you going to put your money? CDs/savings accounts/bonds/mattresses are paying a negative return. Shoot, even the prices of guns and ammo are falling after the gun nuts went into a buying frenzy in February, so that’s a bad investment.
    ————————————–

    are you serious about the weapon comment?

  15. laughingAllTheWay says:

    Ahab,

    Not “great,” but not terrible either. A repeat of last September to March is very low probability.

    Stocks. I don’t know why YOU would invest in stocks. This is not going to be a market that floats all boats. This is a difficult market for investors, and being on the sidelines is reasonable. Stocks market advice would currently have to be tailored to an individual, and most likely would be individual company stock focused (based on in depth analysis), asset class diversification focused (asset classes picked as carefully as individual companies), with high concern for capital preservation, and avoidance of “bets.”

    Traders always have opportunities, and in general don’t care about the underlying economy.

  16. Pat G. says:

    f411–”CDs/savings accounts/bonds/mattresses are paying a negative return.”

    Good propaganda comrade. We’ll see about getting you a promotion.

  17. schoolsout says:

    call me ahab Says:

    June 11th, 2009 at 10:05 am
    —————-

    Didn’t Volcker also “endorse” (per se) the mark to fantasy change?

  18. call me ahab says:

    laughing Says-

    ‘Traders always have opportunities, and in general don’t care about the underlying economy.”

    fair enough

  19. call me ahab says:

    Pat G-

    your a funny guy- what’s the next bump after comrade?

    schoolsout-

    not sure on that without googling it- but- do know that Volcker understands inflation- since his claim to fame was battling it in the 70′s/80′s

  20. Pat G. says:

    @ahab

    Looked at M3 lately? Of course not. The Fed stopped publishing that number. Wonder why? Monetary inflation begets price inflation.

  21. laughingAllTheWay says:

    Pat G – Treasury bubble

    I’m not sure I call the 25 year bull market in treasuries a bubble. The psychology of chasing returns irrationally (bubble) didn’t seem to play out in the treasury market. It was more of a panic into treasuries (due to a crisis) at the very end of a long bull run. Kind of a poetic end at that.

    I can see the case for calling it a bubble, but I always thought it was referred to as a bubble (recently) as more of an analogy (it’s too high and will reverse quickly), then as a result of actual bubble psychology being at play.

  22. franklin411 says:

    @School
    Yes, I’m serious. If you read “deal” forums like fatwallet or slickdeals, you’ll notice an uptick in the number of firearm and bulk ammunition deals over the last 2 months.

  23. call me ahab says:

    sorry Pat- not saying it won’t happen- but don’t see it anytime soon- too much deflationary pressure currently- as in-

    the people that aren’t working and will not be working- at least in jobs that paid anyway near what they made previously

  24. Pat G. says:

    @ laughing– “25 year bull market in treasuries”

    If the sheer length of that bull doesn’t constitute a bubble, I’m not sure what does.

    ahab–

    Not sure what rank comes after comrade. I’ll give D.C. a call.

  25. call me ahab says:

    pat g-

    funny- tell me what “the word” is from DC

  26. laughingAllTheWay says:

    Pat – I guess we define bubble differently. Based on your definition (25 year secular bull run), I guess you would call it a bubble.

  27. Mannwich says:

    @laughing: Your posts are a clear sign to me that we’re nearing a top. Haven’t heard from you before and these were the kinds of posts we saw in October ’07.

  28. schoolsout says:

    franklin411 Says:

    June 11th, 2009 at 10:20 am
    @School
    Yes, I’m serious. If you read “deal” forums like fatwallet or slickdeals, you’ll notice an uptick in the number of firearm and bulk ammunition deals over the last 2 months.

    ——————————-

    I live in a more affluent town (Mount Pleasant, SC) and a buddy owns the largest (locally owned) fishing tackle/hunting store and prices are still way up. Higher than the period when Obama was the newly elected President, no. But, they are way up and as soon as guns/ammo come in, they go out.

    Buddy, who also works that store, was saying about a month or two ago, they had a guy come in and buy some ammo…same type ammo, but one box was from a previous order and another two were from the most recent order. The most recent order was 40% more than the previous.

  29. laughingAllTheWay says:

    Mannwich – I’m always open to that possibility. I have to second guess my own “psychology” and not get married to an opinion.

  30. laughingAllTheWay says:

    Full disclosure – 95% cash.

  31. laughingAllTheWay says:

    vennData – “people talking their own non-book”

    Now I’m REALLY laughing. That’s funny.

  32. Mr. C. Cheese says:

    It seems like all the manure salesmen are inside today …..

  33. Pat G. says:

    @ f411– “But, they are way up and as soon as guns/ammo come in, they go out.”

    I think that’s more a function of the fear of anarchy which some perceive will happen when the shite hits the fan in this country than an increase in hunting enthusiasts. I personally don’t own a gun. I figure all that Kung Fu they taught me in the military will help. If I can just get close enoughto them before they shoot. lol

  34. danm says:

    Sure sign of a bubble:

    When you start reading about whether or not there is a bubble.

    Where there’s smoke there is fire.

  35. Mr. C. Cheese says:

    Honey, let’s say we didn’t go to the cabin in Mount Pleasant this weekend…

  36. ToWi says:

    forget everything else. the biggest DIFFERENCE between now (the past couple of months) and the “great decline” is that the panic is over. the forced selling is over. the fear driven dash toward the cliff is over. everything else is as it was – only now it is all out in the clear… hence: no panic. let’s go on with our usual programming.

  37. call me ahab says:

    headline-

    World stocks get lift from US retail sales news

    http://finance.yahoo.com/news/World-stocks-get-lift-from-US-apf-15500239.html?sec=topStories&pos=main&asset=&ccode=

    and yes- the world is alive with hope that yet again- Americans- will carry on with their over consuming ways-

    oh- I’m bored- let’s go shopping and buy some shit we don’t need- that way China can still crank it out- and we can all be happy-

    what a joke

  38. schoolsout says:

    Mr. C. Cheese Says:

    June 11th, 2009 at 10:46 am
    Honey, let’s say we didn’t go to the cabin in Mount Pleasant this weekend…

    ——-

    I don’t get it

  39. danm says:

    To get the economy growing again you will need either:

    1. an increase in consumption
    2. an increase in investment
    3. an increase in government spending

    We can also boost GDP growth by under-reporting inflation.

    So yes it is possible that the GDP will grow with a LOT of government spending but I think a lot of companies will need to change their business model and/or go out of business with such a huge change in the structure of the economy.

    And I am not sure how well this infrastructure spending can be played.

    Here in Canada, contractors tend to be private firms. And construction businesses are often shady and involved in the black market. Yay.

  40. Cursive says:

    @ Laughing et al

    This is a thread on the Fed e-mails. I concede we all get a little off topic every now and then, but do you have anything to say about the shakedown that Ben Bernanke proposed in his December 21st e-mail? I realize that we are all somewhat numb to the actions these kleptocrats have taken in the last year, but I challenge anyone to defend those few comments as belonging to a rational, objective organization whose sole purpose is to manage the money supply. Can anyone make that claim?

  41. plantseeds says:

    BREAKING NEWS……….Ken Lewis is a spineless, gutless, weasel and he is FOS. Lucky for him, he has more brains than his pals at fed have, and he is a much more polished spin master.

  42. schoolsout says:

    danm Says: Here in Canada, contractors tend to be private firms. And construction businesses are often shady and involved in the black market. Yay.

    ———————–

    I work at a commercial truck dealership that sells mostly construction related stuff (dump trucks, day cabs, dump trailers, lowboys…)

    Not exactly sure what you meant by your comment, but I will add that the companies around here are very tight-knit. They contract out to their buddies…so, I see monies being kept within a small circle (initially). Wondering how fast that will trickle down when many companies here are needing cash to shore up loans and other expenses they have recently occured.

  43. Pat G. says:

    @ahab

    You sound so repulsed, sarcastic. This is the way it’s been for years. How are we ever going to pay off those generous Chinese who support our buying their “shit” by buying our shit (Treasuries)? They call this globalization. It is the new world order. It is the greatest invention since the wheel. It’s the greatest Ponzi scheme ever invented. Now, there’s some sarcasm for you. Now take your meds, it’ll all be better in the morning.

  44. schoolsout says:

    Cursive Says:

    June 11th, 2009 at 10:57 am
    @ Laughing et al

    This is a thread on the Fed e-mails. I concede we all get a little off topic every now and then, but do you have anything to say about the shakedown that Ben Bernanke proposed in his December 21st e-mail? I realize that we are all somewhat numb to the actions these kleptocrats have taken in the last year, but I challenge anyone to defend those few comments as belonging to a rational, objective organization whose sole purpose is to manage the money supply. Can anyone make that claim?

    ————————–

    I get off topic easily, and for that, I apologize.

    This event just goes to show how much sludge is in the system…what gets me is most people don’t care about this…or even know about it. They don’t realize the importance of what is going on at the top levels and are stuck on stupid.
    I pray that the Fed (and others involved in lying, cheating and usurping the Constitution) are dealt with accordingly. I am sad to say that I haven’t seen much, though.

  45. rootless_cosmopolitan says:

    “Full disclosure – 95% cash.”

    Full disclosure here as well:

    My current allocations are about 70% cash and 30% stocks in my trading account (this changes somewhat on a daily basis). In early March, the allocations were 0% cash and about 700% stocks (due to leveraging)

    I am still 100% in a money market fund in my retirement account (since spring 2007).

    rc

  46. call me ahab says:

    pat g-

    dude- I am so sick of what this country has become I can’t take it anymore- everyone pinning their hopes on the stupid American’s to continue on with their mindless ways-

    fucking embarrasing

  47. Marcus Aurelius says:

    ToWi:

    There was no panic before there was panic last time, too. If you can’t see the next wave coming, yo aren’t being duly diligent. Check the horizon.
    _______________

    Mannwich Says:

    “Your posts are a clear sign to me that we’re nearing a top.”

    Exactamundo. And the irrationality is happening at all levels. To paraphrase Greenspan: “it’s not a bubble, it’s foam.”
    _______________

    laughingAllTheWay Says:

    “Traders always have opportunities, and in general don’t care about the underlying economy.”

    Those “opportunities” are 50-50, suceed/fail, at best. Broke traders aren’t traders (but like the burgeoning ranks of the chronically unemployed, we don’t count them anymore).

    I suggest you put everything you have into the market, heavily leveraged, of course.

    _______________

    “Buy stocks now, or be priced out forever.”

    Sounds familiar.

  48. Pat G. says:

    Gotta run now. BB and I have a lunch date to print some more money. Actually, I’m going to see Land of The Lost. Sounds downright American now doesn’t it? lol

  49. laughingAllTheWay says:

    @cursive – The Fed and the US government has been “out of control” for too long. Their hubris makes it hard for me to keep my lunch down. The emails are no surprise to me. We are a banana republic, so what more is there to say?

  50. Onlooker from Troy says:

    ToWi

    But now the panic is INTO the stock market. There’s almost a forced buying as all the lemming money managers are afraid to be outside of the herd and will therefore keep bidding this market up regardless, until it fails. And we’ll have a whole new round of “how did this happen?”

    The world and especially the U.S. economy is getting more and more unstable and volatile due to this massive leveraging and now all the antics of government to try to keep the balls in the air. That also makes is much more difficult to figure out which way it will veer next. Any perceived calm and stability should be viewed skeptically as it’s more likely just a pause before the next storm.

    As to the Fed emails,

  51. laughingAllTheWay says:

    It is very interesting how my comments are being interpreted as a call to get back into stocks. Because, I did NOT say get back into stocks.

    The reaction is very interesting, and says a lot about the reader of my comments.

    It reminds me of a few girlfriends I had in the past. I kept having to say, “it is interesting you heard “that,” because that is not what I said.”

  52. plantseeds says:

    It depends on what the meaning of the words ‘is’ is.

  53. Cursive says:

    @ schoolsout

    Have you heard about HR 1207? It’s a good start.

    @laughing

    Not name calling here, but your posts seem schizophrenic. Banana republics do not make for great investments. Please clarify.

  54. Cursive says:

    @laughing 11:17

    “Green shoots are real. Don’t get locked into thinking one way.”

    “We had the crash. The crash is in the past. ”

    “Investing is possibly a different matter, as it is 66% mass psychology based. Individual time horizons and risk tolerance and investing style will determine where your money is put. But the economy is stabilizing and adjusting to a new reality. The post crash era is here.”

    Yes, I’m confused by what you are saying. These comments seem to say it is safe to get back in the water. I don’t agree.

  55. Marcus Aurelius says:

    laughingAllTheWay:

    “The economy is adjusting to the new rules and the new game. Stabilization is happening, then slow growth.

    Green shoots are real. Don’t get locked into thinking one way.”
    ___

    “The post crash era is here.”
    ___________

    Maybe I’m misinterpreting your comments. If not stocks, are you saying I should buy a house? A car? A flat-panel TV? Are you saying nothing? ‘Cause it sure seems like you’re saying something.

    Maybe your past girlfriends were mistaken in trying to find any meaning whatsoever in your communications.

  56. Bruce N Tennessee says:

    Just mulling over the figures from today…electronics…down…most of the gain was gasoline sales (up 3.6%)..and since gas prices have been rising steadily, I imagine that 3.6 was due to higher price, not more gas pumped…now is that a green shoot or not? Conversely, if gas is higher, does that act as a tax, rather than a constuctive increase in spending?

  57. FromLori says:

    GREEN SHOOTS ARE about as real as your chances of winning the lottery.

    PROOF: There Are No “Green Shoots”

    http://market-ticker.denninger.net/archives/1112-PROOF-There-Are-No-Green-Shoots.html

  58. plantseeds says:

    And the 2008 Banker of the Year Award Goes to … Ken Lewis.
    Way to go! Keep up the good work!

  59. Marcus Aurelius says:

    BnT:

    “gasoline sales (up 3.6%)”
    _____________

    Hasn’t the meme been that demand was way down? I’ve been doing a lot of driving lately, and I don’t see any fewer cars on the road (or fewer cars at the gas stations). I also don’t see any reduction in plastic packaging or products.

    Do you think the “lower demand” crowd is trying to blow smoke up our collective ass?

  60. laughingAllTheWay says:

    Cursive and Marcus -

    I’ll try to clarify.

    1) I think the dooms day scenarios for the US are overblown, and low probability: but not Zero probability.
    2) Making decisions based on the expectation of a repeat of the crash is probably not the best plan. Investing decisions or other decisions. But this don’t automatically imply getting into the market.
    3) Investing should not be based on “belief” of a repeat of the crash or a “belief” of stabilization. There are individual factors (goals, time horizon, risk tolerance, expectations, style), and mass psychology factors which are probably much more important. The economy and the stock market are not tightly coupled enough to have this be a simple decision, and there is nothing about the current situation which makes investment decisions a “no brainer.” Investment decisions are very hard to make with a reasonable level of confidence right now.
    4) Even with out banana republic government, we have the best banana republic government available.
    5) Currently, there is a reasonable expectation (even odds?) that the US population can overcome the government BS and get on track for slow (very slow possibly) growth after a period of stabilization (1-2 years?).

    Unless you believe we are in for another broad asset class crash, we are in the post crash era.
    That’s not an automatic endorsement of stocks. It’s a factor in developing a plan of action.

  61. cjcpa says:

    looked at the graph from CR today too. I love graphical formats.

    It looks like retail sales have reached terminal velocity at a negative 10% yoy rate.
    Like so many have said, that is not improvement, increasing revenues, increasing profits, or anything that would lead to job gains, or should lead to stock gains.

    It is good news that we are not continuing to accelerate downward. Mad Max looked like a tough enviro to raise a family. So I’m glad we’re not accelerating down. But less bad is not good. Still contracting at 10% annual pace. That is actually bad. I am either schizo or arguing with myself. But I don’t see a reason for stock prices to go up with a negative yearly rate.

    Trying to reconcile my own feelings here, I think continuing downward to a -20% rate of decline would cause me to buy canned food and ammo.

    -10% decline…. might start to buy stocks in a buy and hold mindset when the yoy change has a trajectory towards, and is close to, positive territory. From the graph, clearly not pointed decidedly upward.

    cjc

  62. laughingAllTheWay says:

    CORRECTIONS (excuse the errors – typing too fast)
    2) But this doesn’t automatically imply getting into the market.
    4) Even with our banana republic government, we have the best banana republic government available.

  63. laughingAllTheWay says:

    I don’t think anyone can endorse “buy and hold” in this environment without huge juicy rationalizations.

  64. Bruce N Tennessee says:

    http://briefing.com/Investor/Public/Calendars/EconomicReleases/claims.htm

    Highlights

    Initial claims for the week ended June 6 fell 24,000 to 601,000. That was better than the median forecast of 615,000 and brought the four-week moving average down to 621,750 from 632,250.

    True to prevailing form, though, continuing claims continued to rise. For the week ended May 30, continuing claims jumped 59,000 to 6.816 million, which left the four-week moving average at 6.751 million versus 6.693 million in the prior week.

    …Continuing claims…that means still out of work, does it not?

  65. Marcus Aurelius says:

    laughingAllTheWay:

    In light of how the last “crash” happened (that is to say, what caused it), what do you think will happen when the following occur:

    Alt-A mortgage resets/failures/defaults, Option ARM resets/defaults, Commercial RE resets/defaults (see earlier TBP post), CC defaults.

    Each and every one of these events (Coming soon to an economy near you!), will make the “subprime” fiasco look like small potatoes. Being that we’re already no longer shocked and appalled at the $T word, maybe anything short of a global cataclysm looks too bad.

    As for your point #5, what would lead you to that assumption? (I don’t see it as being a reasonable expectation, by any evidence or measure).

  66. call me ahab says:

    bruce, bruce, bruce-

    don’t you understand- unemployment claims are ONLY 601,000-

    time to celebrate- buy stocks- go long- party is just starting and it’s only going to get better-

    America- the best country ever- we don’t make anything- we just buy things- makes me proud

  67. Marcus Aurelius says:

    correction:

    “. . . maybe anything short of a global cataclysm doesn’t look too bad.”

  68. rootless_cosmopolitan says:

    I agree with laughingAllTheWay regarding that we have had a crash. “Post crash era” doesn’t mean there will be a new bull market. The conditions have changed dramatically compared to 2007, or even September 2008. Betting on the stock market going down back then was easy money for people with clear thinking. In contrast, betting on new lows in the stock market below the March 2009 lows has become a high risk game now. Stocks are currently overvalued somewhat, supposedly, if you don’t expect a return to the exceptional profit margins companies reported before the recession. But this doesn’t mean the stock market will go down from here dramatically. Markets and reality can stay disconnected for a long time. Only if perception and reality become too divergent and are not reconcilable through some reasoning anymore, even if this reasoning is delusional rationalization, the probability of a significant downturn will be high. This happened in 2007/2008. Right now, I guess there would have to be a flood of bad news first, or some exceptional event that contradict the expectations in the markets to a large degree, to go down from here again significantly. And even if it breaks the lows of March 2009. How further will it go down? The lower it gets the riskier the bet on new lows. It doesn’t mean it will go up from here significantly. I think the uncertainty is high in both directions, currently. Perhaps, there will be wide trading range from here for a long time, maybe for years, w/o any clear directions. I consider this the most probable outcome, currently.

    rc

  69. Marcus Aurelius says:

    rootless_cosmopolitan:

    As I said to Laughing:

    Alt-A mortgage resets/failures/defaults, Option ARM resets/defaults, Commercial RE resets/defaults (see earlier TBP post), CC defaults.

    You don’t see this as a flood of bad news?

  70. laughingAllTheWay says:

    Marcus –

    #5 is based on history. I’ll admit, it’s a “little shaky” because how certain things will play out is not known at this point.

    As far as what will happen when the next set of financial problems you describe hits, there will probably be a combination of things: bankruptcies, bailouts, government intervention. The reason I don’t think it will cause a “bigger” crisis is because we are fighting the last war (sub-prime) with the issues you mention on our radar. Therefore, if there is a systemic shock coming, it will come from where we are not looking.

  71. laughingAllTheWay says:

    Rootless – I’m on the same page as your post 12:04.

  72. Bruce N Tennessee says:

    @Marcus:

    I do know I am thankful that there are so many fewer semis on the road…Interstate 40 (near where I live) used to be a nightmare…now it is really pleasant to drive…especially when no semi pulls out to pass another semi on a mountain incline….

    Interesting times…

  73. Marcus Aurelius says:

    BnT:

    Haven’t been looking for big rigs, now that i think about it. Hmmmm…

  74. rootless_cosmopolitan says:

    @call me ahab:

    “don’t you understand- unemployment claims are ONLY 601,000- ”

    No, this is not the number of unemployment claims, it’s the number of initial unemployment claims. It’s the number of people who go into the unemployment pool. To know the balance, whether the number of unemployment goes up or down you also need to know the number of people who get out of the unemployment pool. You could have a high number of initial claims w/ lower unemployment numbers, if the turnover is high, i.e. people only stay unemployed for a short time. Or, you could have a low number of initial unemployment claims w/ high unemployment numbers, if people stay unemployed for a long time. In a thought experiment, the number of initial claims could go to Zero and everyone could be unemployed.

    rc

  75. schoolsout says:

    Cursive Says:

    June 11th, 2009 at 11:21 am
    @ schoolsout

    Have you heard about HR 1207? It’s a good start.

    ——

    Yes, I am a Ron Paul supporter

  76. call me ahab says:

    rootless-

    thanks for the history lesson- initial claims are 601,000- continuing claims are 6.8 million- a record- additionally- last weeks continuing claims were revised from -15,000 to +6,000. That initial claims were 14,000 less than anticipated does not hit me as exceptional news-

    was my only point

  77. rootless_cosmopolitan says:

    @Marcus Aurelius:

    “Alt-A mortgage resets/failures/defaults, Option ARM resets/defaults, Commercial RE resets/defaults (see earlier TBP post), CC defaults.”

    Yes, I know. I have mentioned it here myself. And there is also the issue of the total credit market debt to GDP ratio of 370%. But this is real economy. I am talking stock market. This is a probable flood of bad news for the stock market in the future. But not now. And not really for the rest of the year. The reset/recast schedule will go up later this year and peak in 2011. Then you also have to consider a lag before an increasing number of defaults leads to writedowns of bad loans and before it affects other sectors of economy. Before this happens and before there may be a not reconcilable disconnect between the perception in the stock market and reality the market could have gone up further from here. Maybe to 1100? Thus, if it crashes back from there, it just might go the range of the February/March 2009 lows again. It depends on where the starting point is before it retreats again. I really don’t have any opinion where it will go from where it is now. It could be further up, it could be down again. Test the March lows. Or not. Betting on either of both directions is risky right now. In contrast, in 2007/2009 I had a clear opinion. I sold all my stock funds in my retirement account in spring 2007 and put everything into a money market fund. I am not going to change this for now. I only do short term trading in my trading account.

    As for the 370% credit to GDP ratio. It’s a huge number, it can’t go up forever, since debt has to be serviced at some point. I expect a day of reckoning regarding this. But you shouldn’t underestimate the ability of governments to make debt. What is the public debt to GDP ratio in USA? About 70%? Japan’s is at almost 200%. Other countries have also higher ratios. Thus, still way to go for the United States. Thus, before the debt burden of the capitalist world economy crashes over all of us, it still could take many years. This recession might not be it.

    rc

  78. rootless_cosmopolitan says:

    @call me ahab:

    “thanks for the history lesson”

    I can’t help it. It’s in the family. Many teachers. :)

    rc

  79. laughingAllTheWay says:

    Rootless – Great post 12:52. Thanks. I also agree strongly with your comment, “I really don’t have any opinion where it [stock market] will go from where it is now.”

  80. Thor says:

    I know this sounds overly simplistic but my personal opinion is as follows.

    It was really bad, it got worse, people panicked. Things aren’t as bad now as they were last fall and this spring. We’re no longer falling off a cliff. We may or may not be coming off the lows, we may or may not be going through a dead cat bounce or a W shaped severe depression. Things may or may not get better from here. We might have deflation, we might have inflation . . . . etc

    I guess what I’m trying to say is that there are equally valid points made by both the bulls and the bears. Economic data can more often than not be interpreted in any way you want to interpret them (less bad = good!). I think Ahab makes a very good point 601K new claims is considered good news. Is this government and media propaganda or is this the psychology of a population coming out of panic?

    End result – no one really know where we’re headed – frankly, that’s more terrifying to me that anything.

    Tangent – is there a term for someone who is neither a bear or a bull? Equity Independent?

  81. laughingAllTheWay says:

    Thor – I would not call your opinion overly simplistic. I would call it realistic. Uncertainty is high. This is why believing the bullish case or the bearish case is risky at this point.

    Big picture, long term, history can be a guide. But, visibility into our specific path forward is limited right now.

    Equity Independent – day trader with no overnight exposure?

  82. danm says:

    schoolsout:

    The people I know in the construction world are more crooked than the bankers. Now we’re throwing even more money their way. Out of the oil into the frying pan. That’s what I meant.

  83. danm says:

    The reason I don’t think it will cause a “bigger” crisis is because we are fighting the last war (sub-prime) with the issues you mention on our radar. Therefore, if there is a systemic shock coming, it will come from where we are not looking.
    ———–
    Well I was looking at subprime and it sure came.

    It will come from where YOU are not looking.

  84. danm says:

    It was really bad, it got worse, people panicked.

    True.

    ————–

    Things aren’t as bad now as they were last fall and this spring.

    Banks are not failing right now so the panic has gone. But the crap is still there, the fed et al. have just put it in their freezers. But when the electricity gets cut off because you can’t afford to import your oil anymore or when your freezer gets full, the stench will come back.

    ——————–

    We’re no longer falling off a cliff.

    It’s like in Road Runner, you know when the edge of the cliff is cracking but the coyote is still stanidng there.

    —-

    The crap is still there.

    You are still net importers of oil yet printing money and about to embark on infrastructure expansions and mainteance project galore which means your energy demand will only increase.

    Your consumer debt servicing ratio has never been higher while rates are at all time lows.