Thursday’s Reads
By Barry Ritholtz - February 4th, 2010, 3:30PM
Today’s readings look pretty interesting:
- Volcker Rule unabridged (Marketwatch) How the former Fed chairman can sharpen his proposal
- Never short a country with $2 trillion in reserves
- 41% Fine With Budget Deficit If Taxes Are Cut (Rasmussen Reports)
- Five myths about America’s credit card debt (Washington Post)
- Fed’s Warsh: Regulatory Reform Needs International Cooperation (Real Time Economics)
- Kill Your Favorite Subsidy to Win the Deficit War (Bloomberg)
- Hollywood’s Top 40 Earners (Vanity Fair)
What are you reading ?
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February 4th, 2010 at 3:45 pm
41% Fine With Budget Deficit If Taxes Are Cut
50% of the population is below average intelligence.
February 4th, 2010 at 3:47 pm
Rasmussen’s automated phone methodology is always suspect.
February 4th, 2010 at 3:53 pm
Let’s just get it over with already…
http://www.bloomberg.com/apps/news?pid=20601039&sid=a4mPCXeGTl4Y
http://www.marketwatch.com/story/our-debt-time-bomb-is-ready-to-go-ka-boom-2010-02-02
February 4th, 2010 at 4:16 pm
“Zombie dance party” – the ever-quotable Christopher Whalen …
http://www.marketwatch.com/story/banks-10-billion-problem-loan-repurchases-2010-02-03
From the article –
Just when they thought the worst of the mortgage crisis was behind them, billions of dollars in bad loans from the debacle may be rising from the dead and creeping back on the balance sheets of the largest U.S. banks.
Christopher Whalen – “The wave of loan repurchase demands on securitization sponsors is the next area of fun in the zombie dance party, namely the part where different zombies start to eat each other”
Mortgage insurers such as MGIC Investment /quotes/comstock/13*!mtg/quotes/nls/mtg (MTG 6.11, -0.51, -7.70%) have rescinded, or refused to pay, roughly $6 billion in claims from delinquent home loans since January 2008, rating agency Moody’s Investors Service estimated in a December report. That could leave banks that originated the loans on the hook for losses.
Bond insurers are expecting to recover more than $4 billion from banks for breaches of representations and warranties on residential mortgage-backed securities they guaranteed, Moody’s also noted.
February 4th, 2010 at 4:22 pm
S&P valuations at 1929 levels…possibility of debt contagion throughout Europe…job report tomorrow with a possible 1 Million job downward revision…Dow sitting on pyschological 10,000 level.
Non-linear event alert.
February 4th, 2010 at 4:31 pm
Steve, do you see this reverting to 700-800?
February 4th, 2010 at 4:41 pm
I guess it is a good thing that China has no bond market.
February 4th, 2010 at 4:43 pm
Steve Barry, what is a non-linear event? Do you mean a mathematical event? That effects wave planes and frequencies? Holy Systems Theory Batman!
February 4th, 2010 at 4:44 pm
.
Small Business Owners Gather in Nation’s Capital to Fight the Swiping of America
http://www.prnewswire.com/news-releases/small-business-owners-gather-in-nations-capital-to-fight-the-swiping-of-america-83566677.html
Some excellent quotes. Worth checking out.
(Any chance to revive quote of the day Barry?)
.
February 4th, 2010 at 4:57 pm
remember the stress tests?
http://baselinescenario.com/2010/02/04/remember-those-stress-tests/
taxes and economic results?
http://baselinescenario.com/2010/02/04/taxes/
no business should be TBTF?
http://baselinescenario.com/2010/02/04/kevin-warsh-%E2%80%9Cno-firm-should-be-too-big-to-fail%E2%80%9D/
is Austrian economic theory?
http://economistsview.typepad.com/economistsview/2010/02/is-austrianism-serious.html
February 4th, 2010 at 5:00 pm
inequality and the guard economy, hows that working out for us? or not?
http://economistsview.typepad.com/economistsview/2010/02/inequality-and-guard-labor.html
February 4th, 2010 at 5:06 pm
@transor:
New lows are probable. Remember they didn’t fix the debt problem one iota…they made it worse.
The Fast Money team are all dumbfounded by this…very scary.
February 4th, 2010 at 5:13 pm
It’s getting interesting again. Today feels like a “sell the rumour” day, we all think tomorrow’s NFP will be weak.
Now that Steve Barry has returned, the non-linear event is getting closer… Thanks for the balanced commentary, BR. I am looking forward to a reprise of your discussion of how market crashes don’t occur from overbought levels but from oversold levels. That was interesting and enlightening to me in 2008.
February 4th, 2010 at 5:17 pm
Michael Pettis (on never shorting China) loses me right off the bat:
“although I have no doubt that [NYT columnist Thomas Friedman] is a very smart man when it comes to getting politics right, especially in the Middle East, which I believe is his area of specialty…”
Oops.
February 4th, 2010 at 5:20 pm
Hey lefty! Here’s some popcorn. Have a seat. To bring you up to speed on the movie so far:
The ship hit an iceberg 15 months ago that compromised all of the watertight compartments. Since then, deckchairs have been rearranged, the band has been playing nonstop, and Kate and Leo have fallen in love. But I’m afraid now there’s a very loud creaking from below decks…
I think this is the part with the special effects coming up. :-)
February 4th, 2010 at 5:23 pm
Cuomo suing BAC & Lewis.
I guess it’s only civil but given the magnitude of the fraud it should be criminal.
One thing leads to another…maybe we’ll gain some insights into the sunday night skullduggery of BB, Geithner, Paulson. Maybe they’ll get adjoining cells.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aApap90JaEIQ
February 4th, 2010 at 5:26 pm
No, China Will Absolutely Not Collapse
http://www.forbes.com/2010/02/03/china-economy-bubble-leadership-citizenship-rein.html?boxes=Homepagetoprated
February 4th, 2010 at 5:28 pm
TZ: If I remember correctly, the Titanic popped up out of the water very nicely as the front was full of air, but then the whole bloody thing went down vertically….
Luckily, LB abandoned the risk asset ship a long time ago. I am a bit worried that Johnny Retail and Felicia 401K may be stuck below decks, although Brian the Broker is in the lifeboat over there, smoking a big stogie.
February 4th, 2010 at 5:36 pm
Nasdaq Bullish index, despite today’s plunge, DID NOT BUDGE…still at 75%…stubborn bulls out there.
February 4th, 2010 at 5:42 pm
Let me add this to the readings
Banks told to comply on bonuses or lose UK banking licences in shock FSA ultimatum.
It’s called “having kahunas”, something the Brits civil servants appear to have in spades, contrary to their US counterparts. Maybe Brits just act more patriotic, instead of talking about it.
Patriotic…you know? As in working toward the common good of the country.
February 4th, 2010 at 5:45 pm
And as coincidence would have it, I’m right in the middle of the second more destructive wave part of the market crash of the GD in the book “Lords of Finance” when there was a crisis basically every day around the world. Interesting timing on Mannwich’s part?
February 4th, 2010 at 5:46 pm
LOL FrancoisT – it’s called “having cojones” – and yes, those Brits have them in spades.
I’m short both gold and silver right now…
February 4th, 2010 at 5:46 pm
@FrancoisT: “Patriotic” in this country equals loyalty and love of money.
February 4th, 2010 at 5:49 pm
BB, please caLL the plunge protection team!
I guess the Fed and their co-conspirators should have started liquidating the equity positions they built up in the past year immediately after BB reappointment. Will they be exempt from market circuit breaker regs
February 4th, 2010 at 6:20 pm
fwiw, 99% downside volume on the amex, 90% on the nazz, overal a/d about 85/15
February 4th, 2010 at 6:45 pm
bankers in cahoots?
http://www.businessinsider.com/does-jpmorgan-santander-email-reveal-secret-banker-plan-to-rig-markets-2010-2
February 4th, 2010 at 6:52 pm
For the glass is half empty:
http://kunstler.com/blog/2010/02/the-jive-economy.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+clusterfucknation+%28Clusterfuck+Nation%29
For the Glass is Half full:
http://www.theglasshammer.com/news/2010/02/01/voice-of-experience-lynn-tilton-ceo-patriarch-partners/
For the Middle Class:
http://firedoglake.com/2010/02/04/danger-falling-middle-class/
Who can get ideas for making a few extra bucks from:
http://www.newdeal20.org/?p=8079
February 4th, 2010 at 7:11 pm
@FrancoisT: Thanks for the link.
One executive faced with dealing with the new ultimatum said: “It was pretty amazing but we actually chuckled because it’s the sort of hard ball we would have played if we’d been in the FSA’s shoes.”
A lot like the ultimatum the NY Fed issued to the AIG counterparties. Not.
February 4th, 2010 at 7:48 pm
All Links are very good read, Barry!
Saves time for us on the run…can check out through the day.
Amazing Market Stuff, today…isn’t it?
February 4th, 2010 at 8:02 pm
Rasmussen: “94% of voters o.k. with ‘having cake and eating it too’”.
February 4th, 2010 at 8:12 pm
Up this weekend the G-7 meeting where Tim will talk to others about keeping aid going. LOL, I can see it now, all somber and happy and nodding heads at one antoher, then they all run home and do as much cya as they can, it is each country for themselves now, everyone knows it, except tim and ben
February 4th, 2010 at 8:20 pm
BR…these ratings seem kind of arbitrary…..check out Florida’s “Triple AAA” and yet we who read are hearing they are the next state in dire trouble after CA!
Nevada…the same.
I take heart that NC…My State…is listed as AAA…but I’m also aware that the Next Shoe to drop in NC is all the Construction Loans outstanding and the defaults from NC figuring that it would be the “NEW FLORIDA” and they did a building BOOM that still has to play out as to whether all those Boomers are gonna flock there and that folks in the already bust States of FLA/AZ, Nevada, Colorado…are going to be able to seel their homes there to come down to NC. And, it also depends on how PA,NY,CT,VT,NH and the rest are going to be able to cash out their homes to retire down in NC.
Something about these charts and numbers and ratings just seemed to be hokey….sort of some “old model” and missing some financial info from latest statistics …but it was an interesting read.
February 4th, 2010 at 8:39 pm
Barofsky’s a GUY.
http://www.housingwatch.com/2010/02/03/top-tarp-cop-warns-the-bubble-is-back?icid=main|main|dl4|link3|http%3A%2F%2Fwww.housingwatch.com%2F2010%2F02%2F03%2Ftop-tarp-cop-warns-the-bubble-is-back
Hope that link works. If not you can go to housing watch and google barofsky.
The housing bubble is back and growing worse, as are state and local revenue issues.
Ratings??????
February 4th, 2010 at 8:41 pm
financial innovation is the cause of both the 2001 and 2007 bubbles?
http://blogs.reuters.com/felix-salmon/2010/02/04/how-financial-innovation-causes-bubbles/
February 4th, 2010 at 8:41 pm
3% sell off- only 38% more to go to breach the last low-
definitely doable(-:
February 4th, 2010 at 9:23 pm
Okay, so when do we know whether China has shifted into trade deficit?
February 4th, 2010 at 9:25 pm
@Transor: Ask Tom Friedman. He’s an expert on everything.
February 4th, 2010 at 9:38 pm
TZ-
your web page is the Yahoo page?
I was expecting some lawyerly banter–
you know, party of the first and party of the second part, wherefores and heretofore’s(-:
February 4th, 2010 at 9:40 pm
Manny have you read any of Taibbi’s takedowns of Friedman? They’re brutal.
http://trueslant.com/matttaibbi/2009/04/23/tom-friedman-strikes-again/
I was just looking at Albert Edwards’ Nov. 2009 China black swan thing. That plus the Chanos videos. US dollar going higher.
Saw today’s piece by Robert Lenzner, who I think is part The Man and part WS shill:
http://www.forbes.com/2010/02/04/china-copper-gold-personal-finance-streettalk-silver-oil.html
Yesterday reading the open thread on 1038 I was thinking about how basic materials have been huge in this “bull run” that ended about oh, today, and thinking it’s investors thinking manufacturing is going to lead the way out of this, like usual recessions. And then I see this Lenzner piece and wonder if he’s just being a shill and coming up with a fabricated run on commodities to keep people buying. Again, where is this supposed demand coming from? On the one hand you’ve got Chanos and Edwards saying China is gonna blow up real good and then you’ve got Lenzner saying believe the growth.
Dunno. I’m thinking shill.
February 4th, 2010 at 9:44 pm
@ahab: I kept a blog for a while but gave up on it. That’s why I pound Barry’s blog with over-long comments. So if he says GYOFB I can say IHMOFB but don’t want to do it anymore.
You might be able to still find some of my content out there on splogs that ripped it off. :-)
February 4th, 2010 at 9:49 pm
yeah BR can temperamental- and regarding GYOFB-
my blog is post free! but I do have my own blog!!
so- therefore- carte blanche to bitch- right?
February 4th, 2010 at 9:59 pm
I liked when his lawyer referred to you as “ilk.” :-)
I started getting traffic from crazy political sites when I wrote a piece about the Henry Louis Gates arrest and Massachusetts law on disorderly conduct. Some people are just psycho rabid. One guy was all DYKWIA because he’s a big poster on Glenn Greenwald’s site. Whatever. That was the highlight of my blogging experience.
If I blog again it won’t be anonymous.
February 4th, 2010 at 10:05 pm
So the herd came after treasuries today. Bet they will be back after gold. They can’t keep cash in the accounts they have at an uninsured level.
Much more pain to come. Look at some stock earnings expectations for 2011! I have CAT shorted after it’s earnings came out. They are looking for some 50% profit growth in 2011. Common, get real. Once the MM’s go back to figuring out what earnings growth likely is they will walk away from the bid on these stocks very quickly. Typically the market will have a big hiccup day and go down do to negative speculation. But then, people will wonder what the fuck happened and then they will start looking for it. Suddenly then, they will see all the things that are wrong right in front of them.
I have TLT long, cash long, and GLD long. Short I have CAT, ANF (just added today what a gift, it’s always great when other shorts cover in a panic and don’t really understand what they are doing over the medium term) and TOL.
There’s a disaster coming. We either have to isolate the US or tax imports to fix the trade imbalance. We can’t have our citizens coming off unemployment insurance on a massive scale like this nor can we extend benefits forever because policy has made jobs go overseas.
February 4th, 2010 at 10:07 pm
@TZ: Yes, I have read them. Pretty brutal. He’s since moved onto David Brooks in two equally brutal takedowns in recent weeks. Here’s the most recent one.
http://trueslant.com/matttaibbi/2010/01/27/populism-just-like-racism/
February 4th, 2010 at 10:09 pm
TZ-
that was a show- Gates- what can be said- dude was out of line-
obviously thought he was “immune” to questioning by the police- as if he’s that important
February 4th, 2010 at 10:31 pm
@Manny, I read that the other day but it was worth a re-read just now. I’ve been noticing the term “thought leaders” lately. That’s a Luntzian re-wording of “elite” I think.
Remember Hamlet’s soliloquy:
The oppressor’s wrong, the proud man’s contumely,
The pangs of despised love, the law’s delay,
The insolence of office, and the spurns
That patient merit of the unworthy takes…
Same shit, different century. But speaking of the Brits, let’s hear it for the FSA! Awesome.
@ahab: Crowley’s a good guy. I listened to a 20-min. interview of him on the radio and he’s just solid.
February 4th, 2010 at 10:37 pm
Transor: Brooks and Friedman are sycophant tools of the elite. They’ve been sucking up to the elite in D.C. and around the world for so long, they’re as captured as our financial “regulators” are……maybe more so. Brooks barely even tries to hide his elitism anymore. Read his op-ed on the Haitian disaster.
I wonder how much they’d love an earth that’s “hot, flat, and crowded” if the axe fell on them and they lost their jobs to some foreign worker making a fraction of the salary they made?
February 5th, 2010 at 11:18 am
Deflator Mouse, his commenters take him to task for that. I think he’s just being polite, and the rest of the article, and the comments, are quite thought-provoking. But I too almost stopped at that line. Glad I didn’t.
call me ahab, Yeah a guy who was crippled as a child by a racist white doctor should really get past that. Can’t imagine what is problem could still be.