Here is what’s worth reading this afternoon:

• VIX curve implies a ‘systematically important shock event’ (FT.com) see also In Crisis Mode, Hedge Fund Managers Turn To The VIX (Kenneth Rapoza)
• Business networks (‘cept CNBC) rush in with Weeeknd downgrade coverage (Yahoo Finance)
• The Business of Austerity (New Yorker) see also Defining Economic Interest (Economix)
• Subpoenas For High Speed Trade Firms (WSJ) but see Criminal Mortgage Probes Fizzle (WSJ)
• Wall Street’s Tax on Main Street (NYT)
• National debt by U.S. presidential terms (Wikipedia) see also The Meltdown’s True Villain (The Daily Beast)
• How Bad Is It? (New Yorker)
• Kass: Change Is What We Need (The Street) see also Voters Want a Change Politicians Can’t Deliver (NYT)
• The Root of All Sovereign-Debt Crises (Project Syndicate)
• The Curse of the Triple-A Rating Is Still Haunting the U.S. (WSJ) see also Banks say they had prepared for downgrade (FT.com)

What are you reading?

Category: Financial Press, Markets

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.

39 Responses to “Monday’s Crash Reading”

  1. Lots of good stuff today:

    Cheap housing luring Canadian marijuana growers into U.S.: RCMP report

    http://www.vancouversun.com/news/Cheap+housing+luring+Canadian+marijuana+growers+into+RCMP+report/5220346/story.html

    Since you guys are paying for the stuff you may as well deal with all the policing that goes with it. Have fun! :)

    ‘Lucky’ woman who won lottery four times outed as Stanford University statistics PhD

    http://www.dailymail.co.uk/news/article-2023514/Lucky-woman-won-lottery-times-outed-Stanford-University-statistics-PhD.html

    Terrorist Group Setting Up Operations Near Border

    …..The former agent, referring to Shi’a Muslim terrorist group Hezbollah, added, “They certainly have had successes in big-ticket bombings.”

    Some of the group’s bombings include the U.S. embassy in Beirut and Israeli embassy in Argentina.

    However, the group is now active much closer to San Diego.

    “We are looking at 15 or 20 years that Hezbollah has been setting up shop in Mexico,” the agent told 10News…..

    http://www.10news.com/news/27780427/detail.html

    New Head of OPEC is Iranian Military Hardliner

    If we had thought the world’s economy wasn’t in enough turmoil, how will Iran’s top revolutionary guard commander with his hand on the tiller of world oil prices sound to the world oil market?

    http://www.energytribune.com/articles.cfm/8164/New-Head-of-OPEC-is-Iranian-Military-Hardliner

  2. franklin411 says:

    The cartoon is spot on, and it reflects Thomas Frank’s thesis from his book The Wrecking Crew–the current GOP is actually anarchist in its strategies and outlook. They have failed to convince the American people that conservative policies are better, so they think they can inch us towards the same outcome by convincing people that government can’t solve problems. From there, it’s less of a leap to state that the rest of society ought to let people starve if they can’t make it on their own.

  3. Jojo says:

    When will the USA marches start up?
    ———–
    Israelis plan million-strong march as protesters call for social justice
    Campaigners vow ‘more pressure and more people’ after 300,000-strong demonstration across country
    guardian.co.uk, Sunday 7 August 2011

    Activists behind spiralling protests in Israel plan to build on one of the biggest marches ever seen in the country by piling on “more pressure, more people, more tents and more protests” culminating in a million-strong march in 50 cities next month.

    An estimated 300,000 people took to the streets on Saturday to press their demands for social justice and lower living costs in the largest demonstrations over social issues ever seen in the country. Despite scepticism that turnout could surpass previous events, almost twice as many people joined marches in Tel Aviv, Jerusalem and other towns and cities.

    Binyamin Netanyahu, Israel’s prime minister, was forced to respond to the spiralling protests with the establishment of a committee to “listen to the distress” and recommend action.

    The protests, which began with a handful of tents erected in Tel Aviv, have unleashed a national fury at the government’s failure to respond to the needs and complaints of middle-income Israelis. Tent cities have mushroomed in more than 40 locations across the country as well as daily demonstrations and roadblocks over the cost of housing, childcare, fuel, food and electricity.

    Despite Israel’s relatively healthy economic growth and low unemployment, wage disparities are big, wealth and corporate power are highly concentrated, food prices have increased almost 13% since 2005 and many people spend 50% of their incomes on rent or mortgages.

    ….

    http://www.guardian.co.uk/world/2011/aug/07/israelis-march-protesters-social-justice

  4. GetReal1 says:

    Your nuts if you blame the tea party for what happened today. The only reason we haven’t seen crashes like this much sooner is because all of that all the deficit spending has been hiding what actually is ailing this country, the lack of jobs. If more people understood that we’ve been shipping too many jobs and too much money overseas for the past 20+ years then politicians would have had to fix the real issue with jobs much sooner. I guess it’s easier to spend money than it is to use your brain and fix your own problems.

  5. Liquidity Trader says:

    If you think Tea party nothing to do with the S&P downgrade, you are a clueless fool.

    The S&P downgrade led to today’s selloff.

    Therefore . . .

  6. Chief Tomahawk says:

    Bank of America getting whack-o-moled!

  7. Bill in SF says:

    Spied on back of Tea-Shirts;

    “Peas? We don’t need no stink’n Peas!

  8. Sechel says:

    This bashing the tea-party needs to stop. Left bashes the tea-party on spending, saying we need gov’t to replace the consumer when the truth is the gov’t doesn’t need to get bigger, but the consumer(and the banks) need debt restructuring. Another truth is the left believes the gov’t is better at spending and delivering services than the private sector which is the antithesis of what the right believes.

    ~~~

    BR: I call nonsense on this.

    What the criticism of the Tea Party derives from is you don’t balance the budget during a recession or weak recovery. Think the 1937 recession.

    Thats the issue

  9. Bob A says:

    all i can say is i hope all those tea party people lost a whole lotta money

  10. DrungoHazewood says:

    The TP are corporate shills just like all the rest of them. The incomprehensible part is that some people think our present economy is actually viable. Just more good money after bad, and viola! were back on track. Just funnel more money to the thieves that got us here. The FIRE economy sellouts think its great , and are confident that 40 years of lies, overspending and bullshit will be fixed by the same old tricks. It is going to end one way or the other. BO has bet his reputation on the largest ponzi scheme in the history of the universe holding together for a few more years. Good luck with all that.

  11. frodo1314 says:

    So let me ask this: If the Tea Party had not been a part of the recent negotations, and some other deal had been agreed to, say with less of a cut and the $1.2T in increases Obama was looking for, do we all feel this whacking would not have taken place? Isn’t it taking place because Mr. Market does not see the current situation of spending and revenues healthy in the long term and that they see us on the road to ruin ala the PIIGS? Does anyone really believe that without the Tea Party Congress and the President would ahve gotten to a solution that would have looked good for the longer term? Were there equivalent Tea Partiers in teh PIIGS driving their collapse?

  12. Chief Tomahawk says:

    From Doug Kass’ piece:

    “4. Fix housing. Over 15 million homeowners are underwater with their mortgages, the shadow inventory of unsold homes is a drag on a housing recovery, and we must find a way to find a way to reemploy over 2 million former housing-related workers. We need a Marshall Plan for housing. I would suggest that the Obama administration reach out to the two most knowledgeable and smartest guys in the residential real estate markets, Eli Broad and Bob Toll. I would have them all meet in a locked room with Fed Chairman Ben Bernanke, Treasury Secretary Geithner and President Obama (and his economic team).”

    I don’t have a whole lot of confidence in those folks.

  13. MaxThrax says:

    frodo1314 , it’s probably not deficits and spending Mr Market is responding to, but rather that the far right wing of Congress appears insane. From the S&P statement:

    “Compared with previous projections, our revised base case scenario now assumes that the 2001 and 2003 tax cuts, due to expire by the end of 2012, remain in place. We have changed our assumption on this because the majority of Republicans in Congress continue to resist any measure that would raise revenues, a position we believe Congress reinforced by passing the act.”

  14. rktbrkr says:

    Pressure on Fed to act.
    Markets can only go up, it’s the new normal!

    http://www.cnbc.com//id/44064026

  15. hammerandtong2001 says:

    BAC is done.

    And IMO, that’s a good thing. The market is doing what DOJ could not, or would not, do. Deliver “justice.”

    Shall we bail them out a 2nd time? So they can pay themselves multi-million dollar bonuses for another 24 months?

    No. The time has come to face the truth.

    Absolute “liquidity preference” is a direct result of “absolute distrust.”

    It is past time to face the music, and the truth.

    .

    .

  16. philipat says:

    Agree that the presesent is no time to balance the budget. But that is music to the ears of Congress. Keynsian economics states that Governments should run defecits during down cycles AND SURPLUSES DURING UP CYCLES, to fund the former. I think that Congress forgot the former.

    What is needed is a longer-term plan towards a balanced budget which, IMHO, needs to include both budget cuts AND tax increases. To the latter extent, I disagree with the TP, to the extent that there is a need for fiscal responsibility and recognition of the fact that the US cannot, as a matter of routine, continue to borrow 43 cents of every dollar it spends, I agree with them.

  17. jswap says:

    That cartoon reminds me of those who blamed the Great Depression on “people not believing in America”.

  18. rip says:

    The issue is the U S has become less than Mexico.

    Unemployment rate?

    Just ask Carlos Slim. I met his son many years ago working for a consulting company that understood, and actually helped him. $$$$

    The big dogs have their money off-shore, and their gated mansions elsewhere (Mexico?, or maybe Clinton’s favorite- Haiti ).

    And make it someone else’s fault.

    Time for the big dogs to cash out and pretend to care.

    We are there.

  19. RW says:

    @Chief Tomahawk – agreed.

    I’m confident Broad and Toll are very smart and knowledgeable about their RE business — actually I’m more than confident of that in the case of Broad although he’s more focused on art than RE these days — but that business is new homes/housing developments and given current inventory overhang that is the last thing that needs to be under discussion WRT real estate.

    If Kass thought it through he would say get Bill McBride (AKA Calculated Risk) and the RE economist, Tom Lawler, in the room. They would be worth listening to and any advice they offered would be solid.

  20. powerpenguin says:

    Can someone help me please explain something about all of this that doesn’t make any sense to me:

    If markets are reacting to the S&P downgrade of US treasuries, why is all of the money flowing out of stocks and into treasuries? It seems like people are responding to the downgrade by moving money into what was downgraded.

    Thanks!

  21. powerpenguin says:

    Sorry for all the typos in that first line.

  22. rktbrkr says:

    Q.Does anyone really believe that without the Tea Party Congress and the President would ahve gotten to a solution that would have looked good for the longer term?

    A Yes

  23. call me ahab says:

    Marshall plan for housing . . .laugh the fuck out loud,

    what a dumb ass Kass is. .and then to mention Bob Toll as a someone we should get advice from,

    let me see, his answer: it may be. . .it might be . . .it just could be . . .let’s build more houses!

    what a joke

    and BR, pulease . . .with your finger pointing, scapegoating nonsense,

    it takes two parties to have a budget impasse . . .

    duh

  24. MayorQuimby says:

    I call nonsense on Barry’s ‘you don’t balance the budget during a recession”.

    You don’t bankrupt yourself either.

    Still looking for a pain free way out eh?

    ‘aint gonna happen. If we keep this up what WILL happen is total protonic reversal – a real, 3rd world style collapse. 60% – 80% loss of market cap with no bounce. Real panic. Don’t think it can’t happen. We’ll be auctioning off military bases and the like.

  25. Robespierre says:

    @powerpenguin Says:

    “Can someone help me please explain something about all of this that doesn’t make any sense to me:

    If markets are reacting to the S&P downgrade of US treasuries”

    IMO the market is reacting to a future contraction due to a lack of aggregate demand. Now the economy was slowing down but there was always a hope that perhaps there was going to be more stimulus spending. With the down grade both political parties are very unlikely to propose more spending ergo rally on bonds dump on stocks.

  26. Robespierre says:

    @MayorQuimby Says:

    “You don’t bankrupt yourself either.”

    And yet after the downgrade US bonds rally. Funny how your logic never seems to fit real outcomes.

  27. MayorQuimby says:

    Robes-

    Stocks were rising into the housing bust were they not? Then all at once, “WHOOOOSH!”. You will see. At any rate – bonds aren’t typical assets because wealthy individuals have NO OPTION other than to park their money in bonds. FDIC only insures $250K. So they are forced to put their millions into something. That something is usually bonds. They are also front running the possibliity of a Fed cap on rates.

    Finally – bond holders lay claim to real world assets in the event of a default. In Chicago, I believe Morgan Stanley collects a percentage of meter revenues instead of bond yield. In Greece – bond holders are trying to get the Greek gvmt to sell hard assets to make them hole.

    There are many reasons why bonds might rally for a long while or still catch a bid. But that should NOT be taken as a sign of long term stability. It’s much more complex than you think.

  28. MayorQuimby says:

    I want all you ‘stimulators’ and deficit spenders to have a look at this chart:

    http://www.bloomberg.com/apps/quote?ticker=CT786896:IND

  29. carleric says:

    BR, you say

    “What the criticism of the Tea Party derives from is you don’t balance the budget during a recession or weak recovery. Think the 1937 recession.”

    ROTFLMAO….what the criticism derives from is cutting government largress both for Wall Street and goverment’s suckling pigs. If we don’t start fixing it now, when would you suggest? How much longer do we kick the can down the road? Perhaps we should turn to Bernanke…surely he has it figured out or maybe the highly subsidized establishment members of Congress. :>)

    ~~~

    BR: If that was still a tea party issue, you’d be correct

  30. call me ahab says:

    so how much Robespierre? What’s the magic trillion dollar number?

    when does it all start clicking? When does all that money start creating prosperity?

    fools

  31. Robespierre says:

    @MayorQuimby Says:
    @call me ahab Says:

    For both of you the “cut at any price” I’ll direct you to one of those countries that decided to go the tea party way:
    http://www.guardian.co.uk/uk/blog/2011/aug/08/london-riots-third-night-live
    London riots: the third night – live coverage

    • Clashes between rioters and police across London
    • Violence spreads to Liverpool and Birmingham
    • Fires in Clapham, Croydon and Peckham
    • Prime minister returning from holiday
    • Blackberry messenger used to co-ordinate trouble

    You see the majority of people are willing to sacrifice until they realize that they are the only ones doing the sacrificing.

    So as to what is enough? Well cut the defense budget by %30 (our defense forces are not for defense they are for offense). Terminate the two wars. Remove the “temporary Bush” tax cuts. Spend trillions rebuilding: inter state system, Airports, Water works etc. You see those things that actually benefit the largest amount of people. You know the things that people use to do when they wanted to live in a great country

  32. RW says:

    What Robespierre said: Equity and Rebuild …or become less than what you wish to seem.

    Oh yes, and arguing things as if things were simple until that becomes ridiculous and complexity is invoked in defense is as incoherent and senseless as asserting that it takes two to create an impasse when any fool knows it only takes one to block.

  33. Michael says:

    Barry,

    I don’t understand your thinking that the Tea Party is to blame….

    I recall a President whose budget was rejected 97-0, but who then refused to submit another budget, only vague generalities that could not be scored by the CBO.

    I recall a Senate that has not submitted a budget since 2009, even though they are required by law to do so.

    I recall a budget, the Ryan budget, that did include major entitlement reform, passed by the House but rejected and ridiculed by the President [who is now calling for entitlement reform.]

    To me, one party has acted responsibly and another has acted irresponsibility. However, you and I disagree which party is which. You say you are a “Republican”, but really you are not.

    Regards,
    Michael

  34. frodo1314 says:

    @MaxThrax

    Yes the far right wing of Congress is insane for wanting to stop the runaway spending. And the far left wing that wants to continue it is completely sane. Got it. Does anyone else get the fact that if you raise taxes and give more revenue to the government they will find more ways (probably mostly ineffective) to spend it?

  35. number2son says:

    Does anyone else get the fact that if you raise taxes and give more revenue to the government they will find more ways (probably mostly ineffective) to spend it?

    Nope. What I do get is that you’ve cretinously bought into the lie that government doesn’t need money to work. I do and I’m prepared to pay my share of the cost for them.

    Now here’s a question for you: why is this plaint never, ever, ever accompanied by a demand to cut our obscene military expenses? Talk about ineffective uses of the people’s money!

  36. frodo1314 says:

    The National debt was 60% of GDP in 2010 the highest by far than it has been since 1970. Previous peak in that timeframe was 48% in 1994. It is on a trajectory to reach 90% of GDP by 2020. I think government has more than enough money to work.

    Yes, cut miltiary expenses- now that’s a good job growth plan.