Interview with Nassim Nicholas Taleb, author of The Black Swan, on Squawk Box - discussing the financial meltdown, mark-to-market accounting and ways to build a more robust economic system.
Hat Tip Jerry!
Tuesday, March 31, 2009
A new perspective on things
Seige (a comment contributor in this Blog's open forum) has offered us all a brand new perspective to ponder.
Link to his relevant and very enlightening thoughts - (see second comment):
The Stimulus package is a facade - popup comment window
The Stimulus package is a facade - same link, but in a non popup window
And please feel free to add to this discussion.
Link to his relevant and very enlightening thoughts - (see second comment):
The Stimulus package is a facade - popup comment window
The Stimulus package is a facade - same link, but in a non popup window
And please feel free to add to this discussion.
The Quiet Coup
The must read, hard hitting article at link below was written by Simon Johnson, a professor at MIT’s Sloan School of Management, and chief economist at the International Monetary Fund during 2007 and 2008.
Mr Johnson accurately suggests that our finance industry has effectively taken control of our government and we're now handling the crisis like a Banana Republic.
Simon gauges our handling of this crisis through a brief look at IMF history in dealing with similar situations and states this recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
The Atlantic: Quite coup
Mr Johnson accurately suggests that our finance industry has effectively taken control of our government and we're now handling the crisis like a Banana Republic.
Simon gauges our handling of this crisis through a brief look at IMF history in dealing with similar situations and states this recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time.
The Atlantic: Quite coup
Monday, March 30, 2009
DOW Update
Back on Mar 5th (DOW a historical perspective) I noted that the markets were becoming severely oversold, but stated that I still expected a test of the 6,400 level before finding support and then staging a rally to 8,000.
Verbatim:
Updated DOW Chart (from today) below:
If you noticed, four days after that March 5th post the DOW indeed did test the 6,400 level then followed it up with a huge rally - nearing 8K.
That rally however may now be close to an end... If you take a look at the green circled area, you will note that the Percentage Price Oscillator (PPO) lines have moved out of the oversold areas and the Black (shorter term) line is turning downward. If the black line crosses back through the red line, it will likely continue falling for a bit.
Also note that the Chaikin Money Flow (CMF)has shown a nice reversal and has pulled out of it's previous condition.
With all this said, the contentious G20 meetings start this week and various US economic data points/reports will be released throughout the week (e.g. Consumer confidence; ISM Index; Motor Vehicle Sales; Construction Spending; Factory Orders; And the Big Ones -- Jobless Claims and Employment situation). I anticipate many of these data points and the news from London to be bad - and with market oversold conditions now somewhat resolved, I expect the DOW (and other Major US indices) to close lower this Friday than they did today.
Just my 2cents - not investment advice
Regards
Randy
Verbatim:
"with more bad news streaming in throughout the week, I anticipate we'll close lower next Friday than we did this last Friday and expect that we may even test the 6,400 levels throughout the week."
"I anticipate (based on oversold conditions/falling PPO and quickly approaching 1995 support levels) that we may see some further downside in the days ahead, but due to these same issues the DOW will likely find downside support soon and then it will follow up with a nice rally (8K) - before falling to new (significantly lower) depths."
Updated DOW Chart (from today) below:
If you noticed, four days after that March 5th post the DOW indeed did test the 6,400 level then followed it up with a huge rally - nearing 8K.
That rally however may now be close to an end... If you take a look at the green circled area, you will note that the Percentage Price Oscillator (PPO) lines have moved out of the oversold areas and the Black (shorter term) line is turning downward. If the black line crosses back through the red line, it will likely continue falling for a bit.
Also note that the Chaikin Money Flow (CMF)has shown a nice reversal and has pulled out of it's previous condition.
With all this said, the contentious G20 meetings start this week and various US economic data points/reports will be released throughout the week (e.g. Consumer confidence; ISM Index; Motor Vehicle Sales; Construction Spending; Factory Orders; And the Big Ones -- Jobless Claims and Employment situation). I anticipate many of these data points and the news from London to be bad - and with market oversold conditions now somewhat resolved, I expect the DOW (and other Major US indices) to close lower this Friday than they did today.
Just my 2cents - not investment advice
Regards
Randy
Sunday, March 29, 2009
G-20 Preview
G-20 begins first full day of official meetings on Thursday in London.
WSJ: G-20 Set to Fall Short of Grand Goals
What emerges from this week's G-20 meeting "is expected to be a long way from the early high expectations," says Simon Gleeson, a London partner at the law firm Clifford Chance who has advised the U.K. government on financial regulation. "Even the little things seem to be contentious."
It is already clear that the summit will mostly fall short of its original lofty goals. Over the past few days, European leaders continued to insist they wouldn't agree to U.S. and British calls for further fiscal stimulus for their ailing economies. According to a draft of the communiqué set to be released when the meeting adjourns, the G-20 leaders will tout a global bailout totaling up to $2 trillion, though that includes a host of measures already announced.
Over the weekend, White House officials sought to back off their once high hopes for coordinated global action. They played down fiscal-stimulus targets they were urging on Germany and other European nations earlier in the month and instead focused on more modest objectives, such as new rules for tax havens and international coordination for financial regulation.
WSJ: G-20 Set to Fall Short of Grand Goals
What emerges from this week's G-20 meeting "is expected to be a long way from the early high expectations," says Simon Gleeson, a London partner at the law firm Clifford Chance who has advised the U.K. government on financial regulation. "Even the little things seem to be contentious."
It is already clear that the summit will mostly fall short of its original lofty goals. Over the past few days, European leaders continued to insist they wouldn't agree to U.S. and British calls for further fiscal stimulus for their ailing economies. According to a draft of the communiqué set to be released when the meeting adjourns, the G-20 leaders will tout a global bailout totaling up to $2 trillion, though that includes a host of measures already announced.
Over the weekend, White House officials sought to back off their once high hopes for coordinated global action. They played down fiscal-stimulus targets they were urging on Germany and other European nations earlier in the month and instead focused on more modest objectives, such as new rules for tax havens and international coordination for financial regulation.
Bleak Unemployment Picture
BLS Regional and State Employment and Unemployment Summary - 27 March 09
Regional and state unemployment rates were nearly all higher in February. Forty-nine states and the District of Columbia recorded over-the-month unemployment rate increases, while all 50 states and the District of Columbia had higher rates than a year earlier, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The national unemployment rate rose from 7.6 percent in January to 8.1 percent in February, which was 3.3 percentage points higher than a year earlier.
In February, the West and Midwest again posted the highest regional jobless rates, 9.2 and 8.6 percent, respectively. The Northeast recorded the lowest rate, 7.7 percent. All four regions registered statistically significant unemployment rate increases from January, led by the Northeast (+0.6 percentage point). All four regions also reported significant jobless rate increases from February 2008, the largest of which was recorded in the West (+3.9 percentage points).
In February, Michigan again reported the highest jobless rate, 12.0 percent. The states with the next highest rates were South Carolina, 11.0 percent; Oregon, 10.8 percent; North Carolina, 10.7 percent; California and Rhode Island, 10.5 percent each; and Nevada, 10.1 percent.
Note: The National Unemployment Rate will be updated this Friday. The rate of unemployment ( as captured in the widely reported yet severely understated BLS's U-3 Data) is expected to rise from 8.1% to 8.5%.
The current (released on March 6th) BLS U-6 Unemployment Data however - which includes discouraged workers, marginally attached workers, and those who work part time for economic reasons - is a whopping 14.8% (see figure circled in red below - click pic for larger image)
John Williams at Shadowstats.com goes even one step further in representing the true figure. By adjusting for measurements that were defined away during the Clinton Administration and then adding them to the existing BLS estimates of U-6 unemployment data, the picture becomes a staggering 19% National Unemployment Rate (Blue line below):
C-Span Interview w/Economist John Williams on the Real Unemployment Rate (Late Jan 09). John calculates the jobless rate is a full 10% higher than that which the government is reporting:
Here's another video. Feb 09 MSNBC Interview with Dan Gross from Newsweek - who says the BLS figures are a complete myth and should be doubled:
Bottom Line and Your Takeaway:
We're much closer to Great Depression Unemployment levels than the Gvt wants you to believe - and it's likely to get much worse in the months/potentially years ahead.
Regards
Randy
Regional and state unemployment rates were nearly all higher in February. Forty-nine states and the District of Columbia recorded over-the-month unemployment rate increases, while all 50 states and the District of Columbia had higher rates than a year earlier, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. The national unemployment rate rose from 7.6 percent in January to 8.1 percent in February, which was 3.3 percentage points higher than a year earlier.
In February, the West and Midwest again posted the highest regional jobless rates, 9.2 and 8.6 percent, respectively. The Northeast recorded the lowest rate, 7.7 percent. All four regions registered statistically significant unemployment rate increases from January, led by the Northeast (+0.6 percentage point). All four regions also reported significant jobless rate increases from February 2008, the largest of which was recorded in the West (+3.9 percentage points).
In February, Michigan again reported the highest jobless rate, 12.0 percent. The states with the next highest rates were South Carolina, 11.0 percent; Oregon, 10.8 percent; North Carolina, 10.7 percent; California and Rhode Island, 10.5 percent each; and Nevada, 10.1 percent.
Note: The National Unemployment Rate will be updated this Friday. The rate of unemployment ( as captured in the widely reported yet severely understated BLS's U-3 Data) is expected to rise from 8.1% to 8.5%.
The current (released on March 6th) BLS U-6 Unemployment Data however - which includes discouraged workers, marginally attached workers, and those who work part time for economic reasons - is a whopping 14.8% (see figure circled in red below - click pic for larger image)
John Williams at Shadowstats.com goes even one step further in representing the true figure. By adjusting for measurements that were defined away during the Clinton Administration and then adding them to the existing BLS estimates of U-6 unemployment data, the picture becomes a staggering 19% National Unemployment Rate (Blue line below):
C-Span Interview w/Economist John Williams on the Real Unemployment Rate (Late Jan 09). John calculates the jobless rate is a full 10% higher than that which the government is reporting:
Here's another video. Feb 09 MSNBC Interview with Dan Gross from Newsweek - who says the BLS figures are a complete myth and should be doubled:
Bottom Line and Your Takeaway:
We're much closer to Great Depression Unemployment levels than the Gvt wants you to believe - and it's likely to get much worse in the months/potentially years ahead.
Regards
Randy
G20 protests
RT: Some 35,000 protesters have marched in London prior to next week's G-20 economic summit in the city.
AP: Thousands Protest G-20 Economic Summit
Pre G20 Rally in London
AP: Thousands Protest G-20 Economic Summit
Pre G20 Rally in London
Saturday, March 28, 2009
Thursday, March 26, 2009
Peter Schiff on Morning Joe - 25 Mar 09
Regardless of how you may or may not feel about Peter Schiff, this is an excellent interview and Peter makes numerous valid points about our economy.
Wednesday, March 25, 2009
Gvt under criticism for toxic waste bailout plan
Americans are becoming increasingly anxious over how the economic crisis is being handled. They are now taking aim at Wall Street, and are protesting over the multi-million dollar bonuses paid to executives at the insurance company AIG after it was bailed out using taxpayers' money.
Now economists fear that the US president's strategy for economic recovery will fuel inflation.
Now economists fear that the US president's strategy for economic recovery will fuel inflation.
Nevada's Unemployment Rate Hits 10.1%
Nevada’s unemployment rate has nearly doubled since last February when it stood at 5.5 percent and the unemployment rate is quickly approaching the highest rate ever recorded (10.7 percent, reached in December 1982).
Nevada’s unemployment rate continues to surpass the national unemployment rate, which was 8.1 percent in February. In the Las Vegas-Paradise, an estimated 102,500 workers were without a job, pushing the rate to 10.1 percent.
“Since the start of the recession, in December 2007, the unemployment rate has increased every month, nearly doubling over the period. Since September, the economy has shed over 50,000 jobs, suggesting the economy decelerated markedly during the final months of 2008 into 2009.”
Link to DETR Press release
Nevada’s unemployment rate continues to surpass the national unemployment rate, which was 8.1 percent in February. In the Las Vegas-Paradise, an estimated 102,500 workers were without a job, pushing the rate to 10.1 percent.
“Since the start of the recession, in December 2007, the unemployment rate has increased every month, nearly doubling over the period. Since September, the economy has shed over 50,000 jobs, suggesting the economy decelerated markedly during the final months of 2008 into 2009.”
Link to DETR Press release
Monday, March 23, 2009
FOFOA: All Paper is STILL a short position on gold
Great post from FOFOA dissecting the deflation/hyperinflation argument, paper money and gold - All Paper is STILL a short position on gold
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Superb, Must Read - The Big Takeover
The Big Takeover - The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution
A few snippets below:
The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.
"Do you believe that?" she says incredulously. "That's not what we had in mind."
Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.
While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of the newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.
No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.
So does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now?
Paulson and his cronies have turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.
The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex.
As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
A few snippets below:
The situation with the first TARP payments grew so absurd that when the Congressional Oversight Panel, charged with monitoring the bailout money, sent a query to Paulson asking how he decided whom to give money to, Treasury responded — and this isn't a joke — by directing the panel to a copy of the TARP application form on its website. Elizabeth Warren, the chair of the Congressional Oversight Panel, was struck nearly speechless by the response.
"Do you believe that?" she says incredulously. "That's not what we had in mind."
Another member of Congress, who asked not to be named, offers his own theory about the TARP process. "I think basically if you knew Hank Paulson, you got the money," he says.
While the rest of America, and most of Congress, have been bugging out about the $700 billion bailout program called TARP, all of the newly created organisms in the Federal Reserve zoo have quietly been pumping not billions but trillions of dollars into the hands of private companies (at least $3 trillion so far in loans, with as much as $5.7 trillion more in guarantees of private investments). Although this technically isn't taxpayer money, it still affects taxpayers directly, because the activities of the Fed impact the economy as a whole. And this new, secretive activity by the Fed completely eclipses the TARP program in terms of its influence on the economy.
No one knows who's getting that money or exactly how much of it is disappearing through these new holes in the hull of America's credit rating. Moreover, no one can really be sure if these new institutions are even temporary at all — or whether they are being set up as permanent, state-aided crutches to Wall Street, designed to systematically suck bad investments off the ledgers of irresponsible lenders.
So does anyone know what the hell is going on? And on the linear spectrum of capitalism to socialism, where exactly are we now?
Paulson and his cronies have turned the federal government into one gigantic, half-opaque holding company, one whose balance sheet includes the world's most appallingly large and risky hedge fund, a controlling stake in a dying insurance giant, huge investments in a group of teetering megabanks, and shares here and there in various auto-finance companies, student loans, and other failing businesses. Like AIG, this new federal holding company is a firm that has no mechanism for auditing itself and is run by leaders who have very little grasp of the daily operations of its disparate subsidiary operations.
The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex.
As complex as all the finances are, the politics aren't hard to follow. By creating an urgent crisis that can only be solved by those fluent in a language too complex for ordinary people to understand, the Wall Street crowd has turned the vast majority of Americans into non-participants in their own political future. There is a reason it used to be a crime in the Confederate states to teach a slave to read: Literacy is power. In the age of the CDS and CDO, most of us are financial illiterates. By making an already too-complex economy even more complex, Wall Street has used the crisis to effect a historic, revolutionary change in our political system — transforming a democracy into a two-tiered state, one with plugged-in financial bureaucrats above and clueless customers below.
Sunday, March 22, 2009
Federal Taxes: Pissed Off and Disgusted!
Just finished my 2008 Federal Income taxes and I'm both pissed off and disgusted...
Yes, I'm blessed in the fact my wife and I make pretty decent money, but with two kids in college and two more in public primary schools we are by no means "wealthy"... And knowing that we have consciously made many very difficult choices (i.e. still renting - sold in late 04) to keep us out of any financial quagmires - only to have our tax money going to BAILOUT every frigging loser corporation/individual who failed to make these same tough choices INFURIATES THE HELL OUT OF ME!!
On top of that, with our gvt PRINTING TRILLIONS and taking on MASSIVE NEW DEBT LOADS - only to eventually destroy our savings, investments and purchasing power through substantial devaluations in the dollar - makes matters that much worse.
Summary of Our Federal Tax liability for 2008:
- We had just over $15K automatically withheld in 2008
- Four kids living at home
- Two of them in College
- Max 401K contributions
AND I STILL HAVE TO SEND UNCLE SAM ANOTHER $2,000 by April 15th!!!
In total, we're talking over $1,400 a MONTH in Federal Income Taxes ALONE - a ridiculous amount of money that I could certainly put to good uses for my family, rather than throw it down the gvt's crapper!
Yes, I'm blessed in the fact my wife and I make pretty decent money, but with two kids in college and two more in public primary schools we are by no means "wealthy"... And knowing that we have consciously made many very difficult choices (i.e. still renting - sold in late 04) to keep us out of any financial quagmires - only to have our tax money going to BAILOUT every frigging loser corporation/individual who failed to make these same tough choices INFURIATES THE HELL OUT OF ME!!
On top of that, with our gvt PRINTING TRILLIONS and taking on MASSIVE NEW DEBT LOADS - only to eventually destroy our savings, investments and purchasing power through substantial devaluations in the dollar - makes matters that much worse.
Summary of Our Federal Tax liability for 2008:
- We had just over $15K automatically withheld in 2008
- Four kids living at home
- Two of them in College
- Max 401K contributions
AND I STILL HAVE TO SEND UNCLE SAM ANOTHER $2,000 by April 15th!!!
In total, we're talking over $1,400 a MONTH in Federal Income Taxes ALONE - a ridiculous amount of money that I could certainly put to good uses for my family, rather than throw it down the gvt's crapper!
(note: like you, we also pay a myriad of other crappy taxes too)
Now don't get me wrong. If I knew my taxes were going to something worthwhile I wouldn't be so upset, but I honestly believe we are throwing money into a bottomless bailout pit - with no end in sight - and nothing but HIGHER TAXES (in an unsuccessful attempt to pay it off) in our foreseeable future...
Closing:
Many thanks for reading this short rant... My hope however is that I'm not alone in my feelings of anger and disgust with the system...
Where/when does it all end and how do we "the people" finally get a voice?
Randy
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