Brilliant:
Hat tip Josh
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Source:
Pinhead Vs Patriot? Jon Stewart Goes On O’Reilly Factor For Ideological Debate
Colby Hall
Mediate, September 22nd, 2010
http://www.mediaite.com/online/pinhead-vs-patriot-jon-stewart-goes-on-oreilly-for-political-repartee-and-ideological-debate/
Larry Summers’ Departure Signaling a Shift?
CNBC, 22 Sep 2010 | 6:05 PM
http://www.cnbc.com/id/39311908
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Tonite I will be on Fast Money on CNBC at 5:30pm discussing markets, Larry Summer’s exit, and our cautious (50% cash) bullishness, along with the 10 things making me nervous.
I’ll post the video when it goes live.
Should be fun!
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UPDATE: Video is here
Last month, we discussed the great Pro-Publica investigation of self-dealing (and now bailed-out) banks, buying their own crappy paper when no one else would.
They just put out an interactive graphic showing the relationships between banks and specific derivatives
Have at it:
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click for interactive gaphic
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Previously:
No One Left to Sell CDOs To? Sell to Yourself! (August 27th, 2010)
Combined with the recent rise in commodity prices (CRB raw industrials index, which doesn’t include energy prices, is less than 1% from its record high) and the Fed’s reiteration yesterday that they badly want inflation, the implied inflation rate in the 10 yr TIPS has risen to 1.88% today, the highest since late June and is up 10 bps over the past two days. Also, the 5 year 5 year forward breakeven, which measures inflation expectations in 5 years for the following 5 years in order to block out the short term noise, is up to 2.56%, also the highest since June, higher by 12 bps in two days and up from 1.92% one month ago.
Congrats to Dan Gross, who joined Yahoo Tech Ticker:
Source:
Yes, America’s Still Back, Says Our New Colleague (!) Dan Gross
Henry Blodget
Yahoo Tech Ticker Sep 21, 2010
http://finance.yahoo.com/tech-ticker/yes-america’s-still-back-says-our-new-colleague-(!)-dan-gross-535441.html
“What were the alternatives to the bailouts?”
In light of the Summer’s resignation, its worth looking at the question I still hear from time to time.
This article, Stopping a Financial Crisis, the Swedish Way, published exactly 2 years ago today, provides an answer:
“A banking system in crisis after the collapse of a housing bubble. An economy hemorrhaging jobs. A market-oriented government struggling to stem the panic. Sound familiar?
It does to Sweden. The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent.
But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.
Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government.
That strategy held banks responsible and turned the government into an owner. When distressed assets were sold, the profits flowed to taxpayers, and the government was able to recoup more money later by selling its shares in the companies as well.” (emphasis added)
The result of the Swedish method? They spent 4% of GDP ($18.3 billion in today’s dollars), to rescue their banks. That is far less than the $trillions we have spent — somewhere between 15-20% of GDP.
Final cost to the Swedes? Less than 2% of G.D.P. (Some officials believe it was closer to zero, depending on how certain rates of return are calculated).
In the US, the final tally is years away from being calculated — and its likely to be many times what Sweden paid in GDP % terms.
Of all the articles that were ignored since the crisis began, this September 2008 Times piece is probably the most important.
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Source:
Stopping a Financial Crisis, the Swedish Way
CARTER DOUGHERTY
NYT, September 22, 2008
http://www.nytimes.com/2008/09/23/business/worldbusiness/23krona.html
Chinese Economy Next Enron: Chanos
Why the entire Chinese economy is the next Enron, explains James Chanos, Kynikos Associates.
Why the entire Chinese economy is the next Enron, explains James Chanos, Kynikos Associates.
Airtime: Tues. Sept. 21 2010 | 7:05 AM ET
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Fair Taxes or Class Warfare?
Airtime: Tues. Sept. 21 2010 | 7:45 AM ET
Insight on taxes and politics, with with Gov. Chris Christie (R-NJ), and James Chanos, Kynikos Associates.
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Obama’s Path On Wall St.
Airtime: Tues. Sept. 21 2010 | 8:19 AM ET
Wall Street is digesting President Obama’s answers during his exclusive CNBC Town Hall Meeting, with Andrew Ross Sorkin, New York Times, and James Chanos, Kynikos Associates.
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Short Story on the Markets
Airtime: Tues. Sept. 21 2010 | 8:47 AM ET
Insight on the markets and auto bailout, with James Chanos, Kynikos Associates.
Karl Smith is a Professor at UNC-CH and blogger at Modeled Behavior. He was a graduate fellow at the Institute for Emerging Issues, where his work was focused on state and local tax reform. Smith holds a BA and a PhD in economics from North Carolina State University.
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The Conservator’s Report on Fannie and Freddie is out.
Fannie Mae and Freddie Mac are members of a long list of individuals and entities including Gary Condit, Tom Delay, Michael Jackson, Rod Blagojevich and JonBenet Ramsey’s parents. These are folks who were unjustly tried and convicted in the popular press essentially on the grounds that they were creepy or otherwise unsavory characters.
As I hope to continue to argue, being creepy, a bad person, or even a usual suspect does not make one automatically guilty of any particular crime. In this case government subsidies in the housing market are a bad idea for a host of reasons and have been for years. I will testify to this with vigor and passion.
However, that does not mean that Fannie or Freddie caused the housing bubble. Indeed, by my count they were among the biggest victims of it.
The proper question is not: What story is consistent with my general philosophy or worldview?
The proper questions is: What story is consistent with the facts?
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Indeed, conventional loans represented less than a third of all mortgage originations during the peak price acceleration years.
This was a phenomenon of private-label non-conventional loan securitization.
1.1 Peaking in 2006 at a third of all mortgages originated, the volume of Alt-A and subprime mortgages was extraordinarily high
between 2004 and 2007. In 2005 and 2006, conventional, conforming mortgages accounted for approximately one-third of all
mortgages originated[ . . .]
1.2 Private-label issuers played a large role in securitizing higher-risk mortgages from early 2004 to mid-2007 while the Enterprises
continued to guarantee primarily traditional mortgages.
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That is, during the boom not only did the fraction of loans securitized by Fannie and Freddie fall, but the absolute number fell. At the same time the absolute number of private-label securitizations rose.
There is a simple and obvious reason for this. The development of structured products meant that for many consumers the free market offered a more attractive loan than the government subsidized one.
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A good MD knows that when a particular treatment doesn’t work, it’s always prudent to try something else. Dr. Bernanke (not an MD but a PhD) and the FOMC said yesterday however that they will continue with the same treatment, if need be, towards the economy, that of cheap money, but with bigger doses even as the patient responds less to the medicine. A real Dr. would change the antibiotic if the 1st one stopped working. Another case in point, the MBA said that even with historically low rates, refi’s fell to a 6 week low and purchases dropped to a 3 week low. My last cynical comment of the morning is this, the Fed is punishing creditors and savers thru the desire to inflate in order to bail out overleveraged borrowers. Sorry for another Fed rant. The $ index is breaking below 80 for the 1st time since mid Mar and gold is at a fresh high. ABC confidence fell 3 pts to a 6 week low. Irish 5 yr CDS is rising to a new record high.
"I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -Thomas Jefferson (letter to John Taylor in 1816)
After 3 quarters in a row that averaged just 1.2%, Q4 GDP grew 2.8%, a touch below expectations of 3.0% BUT Nominal GDP grew well below forecasts. Because the price deflator was up just .4% vs the estimate of 1.9%, Nominal GDP was up 3.2% vs the estimate of 4.9%. Personal Consumption rose 2.0% vs the forecast of 2.4%. Fixed Investment rose 3.3% helped by a 5.2% increase in equipment and software spending and residential construction rose by 10.9%. Trade was a slight drag on GDP growth and government spending was as well led by a 12.5% decline on national...
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