10 Links for Thursday
Here are 10 items to keep you busy this afternoon. (All links are guaranteed to be gluten and lactose-free).
• The Roubini Backlash Begins: Roubini is clearly an intelligent fellow who has produced some interesting works. However, just as clearly, he is not a prophet or anything close. More accurately, Roubini has disingenuously promoted himself as nailing the crisis, when truthfully he was wrong until other hard working analysts fixed his broken crystal ball. (Wall St Cheat Street)
• UBS Money Laundering: What Did Phil Gramm Know? (Robert Scheer, Nation) Current Senators for rent — ex-senators for sale cheap!
• No Bull! Rally Hits the Wall (Barron’s) The equity market has hit a wall, declared Mohammed El-Erian, the chief executive and co-chief investment officer of Pimco. After soaring on a “sugar high” induced by earnings reports that topped Wall Street analysts’ lowered expectations, stock valuations have gotten ahead of fundamentals, he told Reuters television.
• Replay of 1930? (Econbrowser)
• Bernanke, a Hero to His Own, Can’t Shake Critics (NYT) Front Page article on the Fed Chief: He has been frustrated that many in Congress do not give the Fed what he believes is enough credit for what it has accomplished. Indeed, Mr. Bernanke has met privately with hundreds of lawmakers in recent months to explain the Fed’s strategy. Yet fellow economists are heaping praise on Bernanke for his bold actions and steady hand in pulling the economy out of its worst crisis since the 1930s.
• Will the Fall Economic “Holiday Celebrations” Come Early this Year? (Northern Trust) We had been expecting that real economic growth would emerge in the fourth quarter of this year, coinciding with the celebrations of the Thanksgiving and Christmas holidays. We now think that it might emerge, albeit, just barely, in the third quarter, in time for the Labor Day celebration – although labor will have little to celebrate. We arrive at this conclusion from observing some economic variables that typically signal the end of a recession.
• How to Manage Your Online Life When You’re Dead (Time)
• We Know it’s August, But C’mon (Marketbeat) But besides the meanderings of the Dow and S&P some market watchers have been eyeing volume numbers which have been pretty piddling lately. True, it is August, when plenty of Wall Street players skulk away from muggy Manhattan for their share of sun and sand in the Hamptons. So a bit of sluggishness is to be expected.
• Introducing Google Social Widgets
• Can Game Theory Predict When Iran Will Get the Bomb? (NYT Magazine)
Bueno de Mesquita is one of the world’s most prominent applied game theorists. For 29 years, de Mesquita has been developing and honing a computer model that predicts the outcome of any situation in which parties can be described as trying to persuade or coerce one another. Since the early 1980s, C.I.A. officials have hired him to perform more than a thousand predictions; declassified C.I.A. studies find his predictions “hit the bull’s-eye” twice as often as its own analysts did.
Anything else tickling your fancy?
August 20th, 2009 at 12:31 pm
Southern California Home Prices Fall on Foreclosures (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601087&sid=aN3quz_Z5r8U
Hedge fund bets millions that gas price will triple (FT)
http://www.ft.com/cms/s/0/e8a82d0e-8cee-11de-a540-00144feabdc0.html
Home Prices: There’s No Quick Recovery Ahead (WSJ)
http://finance.yahoo.com/real-estate/article/107533/home-prices-theres-no-quick-recovery-ahead.html
Developed markets feel China impact (FT)
http://www.ft.com/cms/s/0/f056342e-8ce9-11de-a540-00144feabdc0.html
Jackson Hole: Is Bernanke savior or should he be shown the door? (NYT)
http://dealbook.blogs.nytimes.com/2009/08/20/bernanke-a-hero-to-his-own-cant-shake-critics/
El-Erian says global coordination breaking down (Bloomberg)
http://www.bloomberg.com/apps/news?pid=20601109&sid=av_._ayG1vEU#
Commercial vs Residential Real Estate
August 20th, 2009 at 12:37 pm
Maybe they could plant one of these at either 83 or 87 Broad, NYC
Giant Plant Eats Rodents
http://news.yahoo.com/s/livescience/20090820/sc_livescience/giantplanteatsrodents
excerpt:
“Though some have approached McPherson to ask about the likelihood of cultivating the monster plants as mouse traps for rodent-infested regions like New York City…”
August 20th, 2009 at 12:47 pm
And now… I have just pledged my FULL SUPPORT for nationalized healthcare!
Doctors Prescribing LSD?
http://www.nbcnewyork.com/news/health/Doctors-Prescribing-LSD-53804327.html
excerpt:
“Have a headache ‘This Big’ that even Excedrin can’t touch? A little LSD will do the trick, according to report on the Daily Beast. You’ll forget your headache, your mortgage, your boss (and job), the cratering economy, healthcare reform, health, and that weird giant insect that’s crawling through the kitchen. If ever there was a time for heavy mind-altering narcotics, this is it.”
August 20th, 2009 at 12:49 pm
Well, tomorrow is the day I have my weekly osteoporosis treatment…at this time, I can truthfully say, my bones are in fine shape…..
http://www.bio-medicine.org/medicine-news/Beer-to-Ward-off-Osteoporosis-10127-1/
“Recent research has revealed that drinking beer in moderation, about one to two a day can help prevent osteoporosis. Researchers led by Professor Jonathan Powell// , at King’s College and St Thomas’ Hospitals in London have found that the alcohol in beer appears to suppress the hormones that promote bone loss.”
August 20th, 2009 at 12:49 pm
How about this?
http://pragcap.com/are-lumber-prices-forecasting-another-housing-downturn
Interesting correlation between lumber prices and housing seasonality. Wonder if we could get a graph of both lumber prices and home prices/sales.
August 20th, 2009 at 12:54 pm
Bernanke’s on the loose!
http://news.yahoo.com/s/nm/20090819/od_nm/us_britain_putpockets
Bennie, what happened to the helicopter??
August 20th, 2009 at 12:59 pm
http://english.caijing.com.cn/2009-08-20/110227359.html
Andy Xie: New Bubble Threatens a V-Shaped Rebound
“Many policymakers actually don’t think along the line of Keynes versus Schumpeter. They think in terms of creating another bubble to fight the recessionary impact of a bubble burst. This type of thinking is especially popular in China and on Wall Street. Central banks around the world, although they haven’t done so deliberately, have created another liquidity bubble. It manifested itself first in surging commodity prices, next in stock markets, and lately in some property markets. Will this strategy succeed? I don’t think so.”
…From Seeking Alpha…
August 20th, 2009 at 1:01 pm
@Bruce N Tenn
That’s GREAT NEWS… Because I drink about 2 a day…
Wait…. Does it still count that the two a day I drink are “40’s”?
August 20th, 2009 at 1:02 pm
@cvienne:
I am of the opinion, that for some treatments, more IS better…
August 20th, 2009 at 1:09 pm
I’m doing LEFTBACK’s work for him today…
But if you must know, the following is why we might not be graced with with & insight by LB today…
http://www.cricinfo.com/engvaus2009/engine/current/match/345974.html
… either that, or the TWINS!
August 20th, 2009 at 1:10 pm
@Bruce
Doctor, my friend… Between the “beer” and the LSD… I can’t imagine a care in the world!
August 20th, 2009 at 1:13 pm
Barry,
Saw that…again, you guys do this for a living…but I cannot imagine any sort of strength next year if foreclosures keep going up, taxes go up (as seemingly they must), unemployment stays very high, and global government stimulus programs start to wind down.
This just does not compute.
August 20th, 2009 at 1:14 pm
Inside allegations that the terror alert levels were manipulated for political purposes…
http://www.politico.com/blogs/bensmith/0809/Politicizing_the_terror_alerts.html
August 20th, 2009 at 1:29 pm
“I am not writing this article because I care about Roubini.”
Of course not, people are always driven to write scathing articles about people they have no strong feelings about.
August 20th, 2009 at 1:29 pm
http://www.marketwatch.com/story/bank-stocks-shrug-off-jobs-report-2009-08-20
Business as usual.
August 20th, 2009 at 1:34 pm
It’s good to be an LLC. (The new bank mantra).
August 20th, 2009 at 1:34 pm
I linked the Andy Xie article above, but maybe he’s been lost like Ben Stein during the last 4 years….or maybe not….
http://www.morganstanley.com/views/gef/archive/2005/20050830-Tue.html#anchor0
Bubbles All Around Us
Aug 30, 2005
Andy Xie (Hong Kong)
“The world may be in the middle of the biggest bubble in history. The bubble (e.g., property, stock, commodities) could exceed 50% of global GDP in value. The key cause of the bubble is that the major central banks failed to lower inflation targets to account for the combination of productivity acceleration due to IT and the new upward stickiness in wages due to the influx of three billion people into the global economy since the mid-1990s.
The major central banks mistakenly released too much money in the past decade, justifying it with the low inflation relative to the recent past. The monetary excesses have led to the rapid expansion of asset valuation relative to income. The global economy has become dependent on the demand spillover from asset inflation.
The global bubble economy has unusually been resilient despite the rising Fed funds rate because: 1) the increasing use of leverage in financial markets is temporarily offsetting the liquidity impact of the Fed raising interest rates, and 2) some bubbles could prop up each other. The persistence of these bubbles expands the excesses in the global economy and makes the eventual correction more painful.
The end of the global bubble economy may be near. Mr. Greenspan recently recognized the role of the Fed’s monetary policy in the US housing boom, its associated consumption boom and the US savings shortfall. The Fed may be in a campaign to pop the bubble. The global economy could experience a big downturn or many years of slow growth to correct the past excesses.”
…it continues, so you get the idea…Andy says today we are still unstable, and the earlier posted article may be worth a read…
August 20th, 2009 at 1:35 pm
@mcHAPPY
That’s the “mcHAPPY” Super Value Meal
August 20th, 2009 at 1:36 pm
@Bruce
Andy Xie & Ben stein should NEVER be used in the same sentence…
… oops I did it… My bad…
August 20th, 2009 at 1:46 pm
Cash for Clunkers Coming to your Kitchen and Laundry Room
Trader Mark says it better than I could re: CFC and all the other “stimulus” plans (AKA politically motivated giveaways using money we don’t have).
August 20th, 2009 at 1:48 pm
Alt-A, Option ARM, and Subprime Loans will Turn California into a Zombie Mortgage State.
Dr. Housing Bubble’s latest analysis.
August 20th, 2009 at 1:50 pm
Bernanke should retire while everyone thinks he’s a hero. If he gets reappointed and serves his full term, he will one day be more villified than even his predecessor. The conceit that the Fed, or any institution, or any individual, can magically create a robust economy where none existed before is akin to believing economists can turn lead to gold. Financial alchemists shook the foundations of the economy (with Greenspan’s help, of course). Economic alchemists are apt to do much worse. Belief in them requires faith surpassing all reason.
August 20th, 2009 at 1:55 pm
@TC
Agreed… Give the job to Larry Lounge Lizard… at least then we’d have a REAL VILLAIN to paint a joker face on…
August 20th, 2009 at 2:09 pm
Roubini article was fantastic – best line for me was “Like countless others, he is a talking-head trying to make money in a capitalist system”
August 20th, 2009 at 2:21 pm
Hoffman cites this quote(s) from Roubini concerning a future financial crisis and the reasons it could occur, “Among other factors, Roubini cites ‘trade protectionism and asset protectionism; hedgy and trigger-happy investors and rising geopolitical risks; the risk of a disorderly fall in the U.S. dollar; a slush of financial derivatives that are a black box that no-one understands … frothy markets where years of too easy money have created bubbles galore – the latest in housing – that are ready to burst; a bubble of thousands of new hedge funds with inexperienced managers … a housing market whose rout may trigger systemic effects …’”
He then goes on to say, “Usually, there will be a group willing to hang on to the one correct cause out of the many incorrectly asserted.”
Which one of those causes didn’t in one form or another contribute to the crisis? I really didn’t think Hoffman’s arguments had any depth. Am I wrong?
August 20th, 2009 at 2:26 pm
from Jesse’s Cafe Americana by way of naked capitalism (yesterday — I can’t be everywhere at once):
… The Chief Economists
August 20th, 2009 at 2:33 pm
@TripleB 1:14 pm
” … the terror alert levels were manipulated for political purposes …”
Once we went into Iraq and were unable to find (and also unable to fabricate) any credible evidence of nukes or bioweapons, that should have been obvious to anyone with two functioning neurons to rub together.
I get so mad when I go through our national security charade every time I fly that it makes my blood boil.
August 20th, 2009 at 3:33 pm
@cn
It makes DOUBLE sense that the new boss has deployed additional brigades to take care of the ROCKS & POPPY of mass destruction in Afghanistan…
August 20th, 2009 at 3:49 pm
I have one to add:
John Mauldin’s Outside the Box e-mail I received this morning, mentioned your little fishing trip to Maine, which, I guess, had discussions about everything worldly, while sipping and smoking around the campfire. The recommended reading was Iraq Endgame, By George Friedman. I browsed through it and the central point of dependancy on our actions seemed to revolve, to some degree, around oil. How can that possibly be? George W. Bush ASSURED us that oil was not the reason for the Iraq invasion. The President of the U.S. wouldn’t lie to us!?!?
August 20th, 2009 at 4:49 pm
I found this kind of funny, heavy trading in Motor Liquidation Corp.
http://finance.yahoo.com/news/Traders-keep-buying-old-GM-apf-111339779.html?x=0&sec=topStories&pos=6&asset=&ccode=
August 20th, 2009 at 4:59 pm
to follow up on constant’s ref to Americain’ Cafe’- his latest entry is a must read-
excerpt-
“The condition of the American economy is strikingly similar to the Soviet state economy of the last two decades of the 20th century. People are trying to sustain a system “as is” that is based on bad assumptions, unworkable constructions, conflicting objectives, and a flagging empire laced heavily with elitist fraud and corruption”
sounds about right to me
http://jessescrossroadscafe.blogspot.com/2009/08/why-austrians-keynesians-and.html
August 20th, 2009 at 5:42 pm
CFC dead on Monday? That was fast.
http://www.businessweek.com/bwdaily/dnflash/content/aug2009/db20090820_970887.htm
August 20th, 2009 at 6:02 pm
Derivatives Proposal Is Too Soft, Regulator Says
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/19/AR2009081903923.html
I can’t believe the financial types would come up with ways to skirt regulations. Just can’t be.
August 20th, 2009 at 6:42 pm
David Rosenberg talked about Bernanke this morning in his newsletter. He wasn’t all that complementary:
“WILL BERNANKE BE REAPPOINTED?
Despite the fact that the Fed Chairman has a legion of fans within the economics community given his vast academic credentials, this is still a tough call. The White House and Congress do not seem to be big fans and what investors should realize is that (i) Bernanke was Bush’s man and is a card-carrying Republican; (ii) this is a political appointment, do not make any mistake about that, and (iii) claims that Mr. Bernanke saved the world is a bit misleading because it was his actions (or inactions) while at the Fed as governor 7-8 years ago that contributed to the bubble. Bernanke was a giant cheerleader for the leverage-induced economy during his time as the chief economist at the White House and while he was aggressive (and likely broke every rule in the book of central banking) in getting the credit market and economy back on track, he failed at the outset to realize the severity of the credit collapse and treated it as a liquidity event only for months.
The Fed’s economic forecast that was published just over a year ago for late 2008 and 2009 is an embarrassment, to say the least. Valuable time was lost under his watch and the question is (i) does the Administration look at his entire record as opposed to his period as a White Knight, and (ii) will Mr. B end up being a scapegoat once the economy relapses in the fourth quarter and the unemployment rate makes new post-WWII highs along the way. See the front page of the NYT for more — Bernanke, a Hero to his Own, Still Faces Fire in Washington. The search committee is already out, by the way, and the likes of Blinder, Yellen, Ferguson and Summers are on it.”
What sticks in my mind was his famous statement that in 2007: “the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”
Two things wrong in that statement
1. It wasn’t contained.
2. It wasn’t just subprime, but the Fed who’s in charge of regulating lending had been so lax, it had no idea how bad other mortgages were.
August 20th, 2009 at 6:47 pm
@Mike: BananaBen’s gotta go, but you know who’s in line for the job? Probably Larry Summers. Personally, I think he’d be even worse.
August 20th, 2009 at 6:50 pm
Cohen
That article about old GM stock has got to be just about the most unbelievable thing I’ve ever seen. You’d think it was straight out of The Onion. It sure makes you shake your head.
This quote from an investing forum is funny, in a pathetic way:
“Today it went all the way up to $1.20 and I got greedy and thought I could get out around $1.30,” the trader wrote. “When I came home from work it tanked down to 0.73. Can anyone give me any reasons or signs why this happened?”
This guy is really asking for some rational reason why his completing worthless stock that’s being traded by gambler in a big game of musical chairs has dropped big that day. And he’s not even day trading it, watching it minute by minute (which is perilous enough). LOL What a tool!
August 20th, 2009 at 6:52 pm
“CFC dead on Monday? That was fast.”
Good riddance. But I’m sure they won’t be able to keep themselves from throwing some more money we don’t have out there for this worthless program, or something similar. They’ve got to save the economy, don’tcha know.
August 20th, 2009 at 6:55 pm
Re: Bernanke “The search committee is already out, by the way, and the likes of Blinder, Yellen, Ferguson and Summers are on it.””
God, not Blinder or heaven forbid Summers. Blinder is a huge Keynesian who just won’t be restrained from continuing to help us spend money we don’t have. He’s too much of an academic who won’t be able to keep from tinkering and trying to prove out his theories; kind of like Bernanke.
August 20th, 2009 at 7:12 pm
@ Mike
I hope they don’t get rid of Ben. I need him to stick around a little longer. His academic interpretation of the forces which created the GD and his determination to do whatever is necessary to fight deflation this time will result in his being blindsided by inflation. As you mentioned; his analysis of the economy has been so wrong for so long because he’s often in denial. If he’s in there and stays the course for just a little while longer…I should make a pile of money.
August 20th, 2009 at 9:52 pm
I thought this was very interesting.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aANQULxo2Gs8
August 20th, 2009 at 10:24 pm
Taibbi rips health care plan and Maria Bartiromo….
http://paul.kedrosky.com/archives/2009/08/taibbi_takes_on.html
August 20th, 2009 at 10:38 pm
Boo hoo. The world’s tiniest violin is out tonight….
http://www.nytimes.com/2009/08/21/business/economy/21inequality.html?hp
August 20th, 2009 at 10:41 pm
Taibbi tells the raw truth about health care, and expresses my (and others’) frustration with the politics in our nation that makes these things (e.g. health care, Social Sec, Medicare) unfixable. The dualing anecdotes (and outright lies and misrepresentations) from all over the spectrum just make for absolute gridlock. As with our financial system and our national budget, we’ll never fix it, and only when we absolutely hit that wall and self destruct will anything be substantively reformed. Until then we’ll just keep spirally downward.
Happy thoughts, eh?
August 20th, 2009 at 10:57 pm
Mannwich
Holy crap. McAfee sure could destroy some wealth. 96% losses! That’s what leverage will do; and investing in Lehman bonds and grossly overpriced real estate. Poor guy’s going to have to go back to work.
And there’s this:
“If anything, these economists say, any problems the wealthy have will trickle down, in the form of less charitable giving and less consumer spending. ”
I was going to make a snarky remark about the lack of trickle down. But I didn’t expect to see something like that in article. I can imagine where these economists are from (Cato, Heritage, hmmm).
I don’t begrudge the wealth of hard working, innovative, creative folks that create real wealth productive businesses (Gates, Jobs, etc.). But those who do it through political influence, skimming off of the economy, etc. are just leeches (think the banking and finance industry of the last decade, of course).
“We are coming from an abnormal period where a tremendous amount of wealth was created largely by selling assets back and forth,” said Mohamed A. El-Erian, chief executive of Pimco…
“You had wealth creation that could not be tied to the underlying economy,” he added, “and the benefits were very skewed: they went to the assets of the rich. It was financial engineering.”
Exactly. Leeches, not producers.
August 20th, 2009 at 11:03 pm
@Onlooker: But the economy is “rebounding” or “recovering”. Suuuurrrre, it is. We’re in like the 2nd or 3rd inning of an extra inning affair that could get halted/suspended due to curfew rules and started up again at another time. Pull up a chair, put some popcorn in the jiffy popper, and keep some powder dry.
August 20th, 2009 at 11:07 pm
@Onlooker: Some poor hoagie-maker just lost his minimum wage job because that McAfee guy pissed away $96MM on frivolous activities. What in the world would our economy do without those jobs?
The thing is – - what too many people don’t understand STILL is that none of us were as “rich” as we thought. Trading worthless paper and overvalued homes is not a path to prosperity for the many and certainly wasn’t for the many bag-holders. Until we get through out thick skulls, the cognitive dissonance will continue.
August 20th, 2009 at 11:07 pm
I know EXACTLY how you feel man. I can’t even watch the news much or listen to many things out there, because, as you said, the cognitive dissonance is overwhelming. And it just pisses me off, so I avoid it. Bad for the blood pressure. There’s not much useful info there anyway.
The let down will be huge and the disappointment will cause a backlash on Obama. Their confidence game will backfire.
August 20th, 2009 at 11:09 pm
@Onlooker: I thank God (and I’m not even religious) for sports and the Internet. I would cancel my DirecTV if wasn’t for my desire to watch sports as my sole form of “escapism”. Otherwise, I’d probably turn into the Michael Douglas character in “Falling Down”. I never watch anything but sports and some shows on HBO anymore. Some nights the TV never gets turned on. Someday I may just cancel it. They keep raising prices somehow in a Depression and someday I’m going to pull the plug entirely and just do everything on the Internet.
August 20th, 2009 at 11:18 pm
I hear you. I rarely watch TV but my wife is a movie and TV addict so we get a lot of value out of DirectTV with TIVO (sans any premium channels though).
I remember that movie. I’m sure we’re going to see a lot of that kind of sentiment and tone times 10 in the movie culture over the next few years. This “recovery” is going to be a brutal, grinding period that most people just don’t comprehend yet, I’m sure. Except the many who’ve already hit the skids, of course. But there’s a large section of our nation that just doesn’t get it, still.
August 21st, 2009 at 12:20 am
Yall see this shit? Looks pretty big time. Asia is getting whacked right now…
http://www.bloomberg.com/apps/news?pid=20601087&sid=aBz5u5ki3WHQ
http://www.bloomberg.com/markets/asia_index.html
August 21st, 2009 at 12:22 am
Nice… and so is wtic
http://www.bloomberg.com/markets/commodities/cfutures.html
August 21st, 2009 at 12:56 am
Interesting IMan. This China thing could just be the trigger to bring the hard slap of reality back to the markets; at least for a while. Damn, I knew I should taken those short positions today!
I’m not long either though. Cash