How close is the US economy to collapse?

The fiscal deficit issue seems to be a more recent one, though.

You, on the other hand, will be fighting rabid dogs in the street over a half-eaten buffalo wing. Also, watch out for replicants.

The dollar is going to suffer and I don't see any painless way out. That will bring much higher inflation than we've seen since 1983, but with no corresponding improvement in employment numbers. When it happened in the post-Vietnam era it was called stagflation. I look for a reprise.

Since most of the Social Security trust fund is in US Treasury bonds, Bush's wild deficit-growing policy will soon ensure that the trust fund will take an enoromous hit, as those securities lose a large part of their value in the open market.

Basically the Us economy is fucked unless it tightens it's belt, reigs in is demand for oil and other commodities, drops ridiculous trade tariffs. Us paper is no longer as gilt edged as it used to be wich will encourgae flows to Europe and Asia. At some point in the near future i can see a chinese or an indian government bond being more secure than a US one.

An interesting book, if a touch repetative and overbearing. The concern for the US has to be that with oil increasing, a recession again, now would be disasterous, as it would take the US into deflation.

Well, it is Options and Futures trading, pretty much. But that does mean that the uninitiated normally are those that get the worst end of things.

Depends on how you see it. You can't really use Black & Scholes on horse racing, or any such model. Currency markets are efficient, you just have to know how they work and why (which itself asks a lot).

I believe (but might just have dreamt up) that currency trading is illegal in most places, and the US is an exception - is this correct?

I would never view markets and trading per-se as gambling. Futures floors scare me, and trading of options is ridiculously technical, especially exotics. Most people are in the market for a reason though, and everyone takes their spread and has to check positions so regularly it is scary, and a lot more educated than horse-racing (these people have huge mathematical models, and currency's are pretty much stable, rather than "new horses" or whatever). There are rules for people moving markets as well, so there is little opportunity for abuse.

All the financial markets are is a very liquid version of anything else you can buy and sell, but with an opportunity to make/lose a lot of money if you know what to do (or don't). Dependent on knowledge and facilities available decides for me whether it is gambling or not.

(x-post)

I might add that a national sales tax would have some of the same implications and benefits as a Tobin tax, without looking so protectionist.

Till about then, apparently!

Has anyone in Bush-land been heard talking about a VAT, since they seem to like consumption taxes so much? Or is a value-added tax too "French"?

And Ed, why aren't investors demanding a higher premium right now to hold their dollars? Since interest rates are so low, shouldn't the dollar have tanked already?

FWIW, Stephen Roach's note today said that Chinese planners have told him that the U.S. press may have gotten ahead of itself in saying the yuan peg is near its end. How does that change the dollar dynamic?

People like Paul Krugman have been predicting an Argentina-like collapse for several years (and others longer than that) and maybe if he'd start writing about his economic specialty more often, we'd have more liberal insight on this issue. That his more dire predictions have been wrong aren't all that important to me.

I'd say increased US productivity has certainly helped stave off a larger fall over the past 12 months, but clearly it's still a vulnerability. As I noted earlier, trade issues are going to be increasingly vital over the next decade and I'm not exactly confident of anyone in Washington to come up with prudent strategy--nobody's willing to be voted out of office over this.

A major terrorist act would surely be catastrophic to the dollar, and it's hard to imagine that, say, a 30% or more rise in oil prices wouldn't cause a large shock to the system.

It's also a good idea to diversify your assets--you know, split up your millions among different investments in order to mitigate risk.

What with the political climate being what it is, with Bush in for another 4 years, Tom Delay running the House, and the kind of fiscal discipline I associate with sailors on a drunken spree, we could see some very rocky times ahead for God's own nation.

Boom's dead, folks. Don't buy long bonds now because interest rates can only go up from here. Buy a tiny house and get a low rate mortgage, if you can afford it and qualify for the loan. Pay off your credit cards. Don't overextend yourself. Save what money you can. You'll do OK.

why must fate be so cruel?

or does a US collapse = world collapse, or EU/chinese ascendance?

i dunno. another great depression might be kinda fun, who knows? it would definitely build character.

If you liked imported oil, you're going to love imported food.

I still say "stagflation" is the term that applies these days, at least in reference to the cost of housing relative to income.

Anything over $100,000.00 should come out of there muy pronto. Take what you have withdrawn and invest it into candles, toilet paper and styrofoam peanuts. According to my stochastic models, these shall hold their value better than clothespins, hairspray or roofing nails.

Actually you may do well to go long on wooden clothespins and hedge by shorting plastic pins. Long-burning wooden pins have a high degree of utility as sources of heat and energy in any post-dollar-crash apocalyptic future, while the high melting viscosity and unpleasant odor of burning plastic clothespins to keep warm is a significant disutility.

Though if the US collapses we feel it too. But we can pretend.

So, what should I do? Do I really need to take all my money out of the bank?
No, just take out ten or so darts and tape up the quotes from your local paper.

Why not?

Wait, you mean I won't be able to practice religion freely and that the official state line on religion is atheist? Hmm, China is starting to sound better and better all the time.

OTM

http://news.bbc.co.uk/1/hi/business/4025139.stm

Things not looking to great for Europe either. A lot of gas comes through the ukraine and gas supply could get very tight this winter (prices come later; gas comes in long term supply contracts). Europe is very dependent on gas for a lot of power and heating and a lot of it comes through pipes that pass through the ukraine. Things are not looking great for anyone right now.

My favorite: "The dollar is going to suffer and I don't see any painless way out. That will bring much higher inflation than we've seen since 1983..."

Hu? The trade deficit has absolutely no impact on the value of the dollar! The value of the dollar is determined by monetary policy. Simply put: if the fed supplies more dollars than the world demands, the value of the dollar falls. And with gold right now (5ameastnov25) at 451.50, there are too many dollars in the world. Inflationary pressures are building, but that's because most investors are focused on the trade deficit - and not the Fed(more on this in a few). I'm more worried about an accomodative Fed policy than I am about the trade deficit (I do this for a living).

Let me explain something. When US consumers or businesses buy goods from foreigners, US dollars flow overseas. These dollars must be used in one of three ways - to purchase goods and services (exports) from the US, make investements in the US, or trade for another currency. If they are traded for another currency, then someone else has the same three choices. Every dollar that leaves the US must come back to the US. For example, Wal-Mart bought N$ amount of goods from China last year. Chinese companies gave those dollars to the government in exchange for yn. After buying oil on world markets, or financing Chinese import demand for US goods and services, the Chinese central bank then invests whatever dollars left over in US assets - typically in government or agency debt. OPEC makes the same choices. Unless interest rates fall below zero, foreign central banks will not store those dollars in a warehouse.

The dollar system is a closed system. There can be no leakage. Every dollar that US companies send overseas must eventually return to the US! If they do not, they will not earn interest - an opportunity cost rational individuals or insitituions will avoid (trust me, they do).

Now for the "what happens if they stop investing because a loss of faith" people. What will foreigners do with the dollars they are accumulating from exporting goods to the US? Those dollars do not disappear, the still must be used. And since foreigners will not store the dollars in crates, they would have no choice but to buy goods and services from the US, which would erase the trade deficit. And if the trade deficit were erased, then you got all excited over very little.

Anyway, my tidbit: the bond market will pay the price for ignoring market indicators.

(Take into account that a large portion of the U.S. net foreign indebtedness is nominal and is denominated in dollars. The further the dollar falls, the more U.S. gross indebtedness to foreigners shrinks.)

You do have a point about the srinking value of dollar debt versus other currencies but there is one cloud. The US and indeed most of the rest of the world has grown use to valuing intelf in dollars. Therefore commodities, raw materials etc. are largely traded in dollars so as commodities get more expensive in dollars it hurts the the US economy disproportionately. The price of oil has been driving the price of commodities higher. But in Europe this has been partially offset by the fall in the dollar. The US gets the full whack.

The problem for the US is not existing debt but future debt, if the dollar looks unattractive so does dollar debt, returns on government bonds have been wiped out several times over by the fall in the dollar. Dollar debt get's more unnattractive and it has to get more expensive .

This is not a matter for nationalist gloating. If the US fucks itself the rest of the world gets fucked too.

http://news.yahoo.com/s/ap/congress_debt_limit;_ylt=AkQVyLPzm_k_UL3SfeKU3Z.s0NUE;_ylu=X3oDMTA2Z2szazkxBHNlYwN0bQ--

and don't know if I read it right. But it has me worried. Does anyone who understands high finance have any soothing words for me (a total simp when it comes to money) or is this really something to fret about?

Every single Democrat voted against this, along with Jim Jeffords, and the batshit Tom Coburn and Conrad Burns.

P.S. Fuck you, Bush voters.

Teenagers in the former Soviet Union understood general economic theory better--without the benefit of inexpensive portable laptop computers, etc.that were embargoed by cheney-rove's predessors.

i will now shit on a park bench and look at you funny.

quack quack!

I like the movie threads too.

Okay, actually its not that interesting.

IN RUSSIA, YOU DON'T OBTAIN CREDIT ... CREDIT OBTAIN YOU!

Nope.

(Some of them have updated slightly, and diversified into selling domain names)

-- Mr Jones (lesbaxter300...), March 18th, 2006.

in middle school my sister had a rabbit named thumper. we called his droppings "thumpets"

And of course, raise taxes.

alleviate or elevate?

As mentioned up thread, the debt ceiling has just been raised by 52-48 vote to $9 trillion. Good times.

Good times.

The truly breathtaking thing is how rapidly the Bush administration and the Republican Congress have been inflating the debt. Obviously, this pace of borrowing is going to have to slacken some time, and the longer the reckoning is put off, the more dramatically it will blow back on us when it does come.

But the perspective to remember is that the impoverishment of the USA in the next decades will relative impoverishment and the dramatic fallout will be relatively dramatic. We aren't likely to resemble, for example, Brazil overnight. And a great many people live quite happily and comfortably in Brazil.

What is unconscionable about the policies of the Republicans and the Bushites in particular, is that there is nothing inevitable about the decline in the USA living standards that they are hell-bent on imposing on us. A simple return to the fiscal policies of the Clinton administration would work wonders on slowing down, or even reversing, this decline.

We should all be angry, not because the USA is doomed to collapse, but because it is being badly abused by leaders who are either actively malevolent or just plain incompetant - and millions of people will be hurt as a result.

http://biz.yahoo.com/ap/070723/dollar_gold.html?.v=6

Sucks for me. Earning dollars blows. Expect to see more Europeans buying yr US "blue jeans" and "sneakers". Oh, and property.

Oh, and property.

Especially at bankruptcy-lowered prices!

http://www.inman.com/inmanstories.aspx?ID=63974

California mortgage defaults hit 10-year high
More borrowers expected to lose homes in second half of year
Tuesday, July 24, 2007

Lenders sent California homeowners the highest number of mortgage default notices in more than a decade during the second quarter, the result of flat or falling prices, anemic sales and a market struggling with the excesses of the 2004-2005 home-buying frenzy, a real estate information service reported.

Lenders filed 53,943 notices of default (NoDs) during the April-through-June period, up 15.4 percent from 46,760 for the previous quarter, and up 158 percent from 20,909 for second-quarter 2006, according to DataQuick Information Systems of La Jolla.

oh dont worry, we're just a little bit further behind on the curve than you. we're all headed down the same path in the end

yay doom

Sucks for me. Earning dollars blows. Expect to see more Europeans buying yr US "blue jeans" and "sneakers". Oh, and property.

-- admrl, Tuesday, July 24, 2007 9:52 PM (28 minutes ago) Bookmark Link

'homicide: life on the street' box sets.

How worried should I be about the collapse in the US subprime market?

if you mean...is it all coming here? then yes of course it is. the fraud/subprime may be lower here but the sums are larger. dont know why anybody would think that subprime is some isolated bubble that won't affect the rest of a market

but worried specifically in what way? losing job? too much debt? doesnt it depend on your particular scenario as to how worried you should be?

I have money in equities that I'd be planning to use as a deposit on the purchase of a first-time flat. I don't want the value of that to shrink just at a point where I need it most, especially if it's the precursor to a housing slump that means I bought at the top of the market. Oh, and I suppose I'm not so keen on the idea of a general economic recession, either.

doesnt it depend on your particular scenario as to how worried you should be?

-- Filey Camp, Friday, August 10, 2007 11:55 AM (32 minutes ago) Bookmark Link

only up to a point.

agreed. but if you are in a particularly risky place you could try get on safer ground..but yes, this is only to a point, the recession isnt going to be pleasant no matter your situation

Alba, I think this depends on where your money is invested. Having been forced to read up quite a lot on this over the past few days you should be alright if it's in something reasonably stable and in the UK.

It's not an isolated bubble, but it's unlikely to tip the European/world economy into recession either. One of the things about having a global economy of this size is that its capacity to absorb things like this is much bigger than it would have been 10, 20 years ago. The further you are from the centre the less the impact is. That doesn't mean there won't be an impact, but it's considerably less likely to mean a crisis.

the fraud/subprime may be lower here but the sums are larger

I don't think the sums are larger. The average house price here maybe larger (or may not be, I don't know) but the volume so much smaller.

the recession isnt going to be pleasant no matter your situation

It's quite handy if you're a first-time buyer with a secure job.

maybe, but in such a scenario your money will cost more to borrow, and the lenders may want a heftier deposit

im not saying us subprime is going to kick off european/world recession, but the most of europe/aus/nz followed the us down this path in the first place, so they'll all end up in the same place soon enough surely

Depends on whether there was such widespread fraud at every step of the process, and whether or not Europe/Aus/NZ was stupid enough to overlook the warning signs?

I have no idea whether or not this is the case, I'll admit.

well the uk certainly wasnt, spain and ireland same, i think is true for aus/nz

not sure about the others

dont necessarily think fraud is the much of a player here (though the self-certification stuff seems a bit silly), but overexhuberent loans

It's quite handy if you're a first-time buyer with a secure job.

-- Alba, Friday, August 10, 2007 12:46 PM (23 minutes ago) Bookmark Link

lol 'secure job'

What do you mean by 'overexhuberant'? If you mean could a similar thing happen here then maybe but the scale of the impact would be smaller because the subprime market is much smaller here than in the US (proportionally speaking) and the lending market, while no means perfect, is still way more conservative.

subprime will probably be less of a trigger here than in the US, rather just one of many contributory factors, but even if subprime is smaller here, how small (% wise) does it have to be not to bleed into the normal market?

If a debt crunch happens because of lending in the US, most UK banks are so exposed to it that they would have to increase the cost of borrowing over here or reduce availability of loans. Sub-prime is less of a problem over here than general over extension. People are so heavily geared over here at all levels in the market that the whole market is in danger of collapsing.

right, thats pretty much what i was trying to say

theres no if about it, it happens there, it happens here

subprime will probably be less of a trigger here than in the US, rather just one of many contributory factors

Yes I agree with this and what Ed says is true as well really, the question is whether this is a precursor to a global credit crunch or a wobble/cooling off/correction (this sort of goes back to what I was saying upthread about the extent to which the global economy can or can't absorb things like this).

(xpost)

This is the first time the ECB has poured anything like this much cash into the system, right? And they did that because the interbank lending system basically stopped -- banks no longer trusted other banks to pay them back at 4%. I need to be reading some more stuff, but that doesn't seem good.

Alba: Remember who we ultimately work for!

it could be a correction but 'busts' tend to be around the same amount of time as 'booms', plus even a 'correction' in the overleveraged uk economy could see a lot of overzealous speculators run aground (which is presumably why they were scared to try head this off at the pass when they had more of a chance a couple of years ago)

if its any longer, which surely it must be, then its not long before you start running into things like prices of natural resources rising etc (and when you consider the length of some of these loans vis a vis peak oil etc....)

or, to put it another way, what evidence is there to suggest any downturn would be merely a correction? corrections are when things are nipped in the bud, before they get too big, not when things have runaway out of control

My stock portfolio is bleeding like crazy. Nearly one year's worth of potential gains down the gutter...

How about five years?

lol 'secure job'

You don't tend to see teachers and doctors laid off in a recession.

question is, recession or depression?

Urgh this is awful. When do you decide to jump ships and save what can still be saved?

I just made my first investment, in a mutual fund, in June.

I shoulda bought gold.

http://www.galmarley.com/ChartApp/Images/USD_Line_5years_300x150.gif

I always had the impression it was much easier to get a small loan in the UK. No Americans I know have ever gone to the bank and said "I need a 7 thousand dollar loan - here's why" but it seems almost routine over here.

kittens, you guys

oh i just saw the news, didnt realise it was all actually kicking off today

Is this bigger than the Stock Market slump earlier this year?

(Or possibly last year)

http://chart.bigcharts.com/custom/cnnmoney2/interact-chart.img?ClientID=44711&symb=djia&sid=1000001643&pg=ch&time=ytd&freq=1dy&comp=%2C&compidx=aaaaa%7E0&ma=0&maval=60&uf=0&lf=1&type=2&charts=0&mocktick=1&symbtype=0&country=US&rtsid=1000001643&style=2108&size=2&rand=4875

Oh sorry, that's year to date

I don't really think the U.S. economy is teetering on the brink of complete collapse, but a recession seems possible.

Sometimes busts can operate like booms - a buzzword can equally panic or excite. Just like everyone can whip themselves into a froth chanting "dot com!" they can reduce themselves to terror crying "sub-prime!" -- but I don't think anyone can be completely sure of the outcome of this because economies are just too complex to predict accurately [ / truism ]

I'm ruined.

Sometimes busts can operate like booms - a buzzword

well of course, the stampede to the well, the stampede from the well

http://imagecache2.allposters.com/images/pic/PTGPOD/286331~Man-Wearing-Barrel-Posters.jpg

: (

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Sub-prime is less of a problem over here than general over extension.

From what I understand (probably not much), sub-prime is a problem over here, because European banks have massively exposed themselves by investing in bundled sub-prime loans. It was a French bank that started the panic selling yesterday by freezing funds.

US sub-prime loans: underpaid, overstretched and over here.

http://media.washingtonpost.com/wp-srv/photo/homepage/hp8-10-07a.jpg

How worried should you be about the subprime mortgage lender implosion? I haven't been following it very closely, because the news media is unlikely to tell me the most important facts that would answer this question. They like to focus on the most superficial aspects of the story instead.

However, the key question about a situation like this is how much liquidity is poised to disappear as a result of liquidating bad debts. I will attempt a simple explaination of the dynamics going on here.

When a lender makes a loan, be it subprime or otherwise, that lender gets to carry it on its books as an asset. The asset is the anticipated interest to be earned on the loan. The world is asked to believe that the lender has protected its interests in this transaction and everything about this loan in in apple pie order.

However, because none of this interest or principle has been paid back, yet, it is also something of a sleight of hand trick, but -shrug- that is how credit works. In effect, the asset is accepted as real today and can be bought, sold or borrowed against today, even though it is nothing more than a legal promise to pay for a hamburger Tuesday that the borrower ate today. This is why lenders are said to 'create money by fiat', as in when God said, "Fiat lux" and there was light.

What's happening now is that the subprime lenders created a large bubble of bad assets and the markets accepted them as good assets. Now the market is barfing on them.

So long as the loans were still on the books, they still had a fictitious asset value and the smoke and mirrors were still effective. In the past six or eight months, the subprime lenders have been forced to declare vast chunks of their asset portfolios as worth far less than their face value. Furthermore, they are doing all they can do to turn these loans back into 'actual' money - to liquidate them, so they can recoup whatever they can from what is otherwise a dead loss.

This process of liquidation deflates the asset bubble the lenders created, and is the reverse process of the fiat creation of money from thin air. So, in essence, a lot of money is being destroyed during this liquidation process and accounting books are being rewritten all over the markets to reflect this 'new reality'.

Where this process could get out of hand is if the amount of liquidity in the markets (i.e. money the skittish markets now accepts as 'valid') shrinks too far it can affect the price of everything that is bought or sold - a revaluation of asset values across the board.

In theory, this is just the market correcting itself, or rethinking what is the correct ratio of money supply to real assets. But the bigger the 'correction', the more likely it will be to affect ordinary joes who don't own many assets beyond a small bank account and the prospect of continued employment.

So, that's why the key question is how much liquidity is disappearing from the market, because that is what will drive the correction. The bigger the gap between the old reality and the new reality, the more of a dislocation society suffers. A small gap hurts mostly speculators. A medium-sized gap can turn into a recession. A huge unwinding (think 'unraveling') can set off a depression.

Sit tight. I don't see any evidence that this will get as bad as all that. But stayed tuned. Most of the bad news may still be buried and has yet to emerge.

An hour ago, after the fed injected liquidity, he headline said "Stocks Rebound after Fed injects liquidity"

Now the Dow is at about the same place it was then, and it says "Stocks fall as Fed injects liquidity

If the Fed is already injecting liquidity that is actually a bad sign, imho. It shows me they genuinely fear a market correction. Hmmm.

So what's a joe like me with not much more than a small bank account and the prospect of continued employment to do?

Watch impotently.

Sweet.

Later on, of course, you are permitted to seek revenge.

I like to think my job is more secure than average b/c it's a service for attorneys, I handle one of the company's busiest territories, and the job is already done by about as few people as could possibly do it (there isn't even an office here). I mean barring the company just failing, the only way they could cut me would be to replace me with someone paid less. Which is possible.

The appropriate scapegoats in the case of the unraveling of a wildly-leveraged bubble market are, in the parlance of an earlier age, the fat cats and speculators. Our benevolent employers are merely the victims in this scenario and our humble public servants in office were merely the dupes of these venal and unscrupulous criminals. This goes without saying, almost.

hey my neighbor's house got foreclosed on a while back, if anyone wants to pick up a two-family for $150K/£75K.

Watching impotently is how I handle most everything.

We got a letter from our "financial advisor" this morning trying to set up a new meeting to "move forward" on our financial planning. The last meeting we had we made it abundantly clear we had no spare cash at all and he just wouldn't believe us. He kept saying that if we didn't put such and such aside we would be poor in our old age and to get this amount we would need to put away this amount and we said well we can't put anywhere near that amount away so we're gonna be poor later, why should we also be poor now?

He went on and on and on about a stock portfolio (and his stock portfolio in particular) is it too early to phone him up and go "ha ha" down the line?

I read somewhere that there was one place in the US where 49% of subprime borrowers didn't even make their first payment and the lending agents weren't the slightest bit bothered because they were making commission based on the volume of loans they managed to shift and not much else. You'd think someone might have seen this coming.

I was in Tupelo this morning and saw a crappy little strip-mall storefront called The Mortgage Factory.

Ha - that wouldn't be at all remarkable in the UK.

the KrugMan's latest about all this

ha they did see it coming...anyone with any brains that is...been coming for 2 years+

http://upload.wikimedia.org/wikipedia/commons/3/35/Toast-3.jpg

if y'all aren't already doing so, y'all may want to read the calculated risk blog which, from my limited understanding, breaks down pretty well what the fed's (and the european equivalent of the feds) actions really mean. if he's correct, then i'm more interested in what's going to happen NEXT week, if these Fed. Reserve repos get paid back (as they're supposed to) or not.

as always, pay as little attention to the financial blabbathons and folks like cramer as possible. SERIOUSLY, put yer contrarian corny indie fuXor instincts to use with these folks -- your bottom line will thank you :-)

which ISN'T to say that anything connected with subprime mortgages -- or anything mortgage- or housing-related -- isn't fucked. it is, very much so. and i think that there will be further "corrections" to come -- between the facts that (a) we haven't really had one in 5+ years and it's long overdue; (b) selling off securities in blue-chips (like GE or utilities) is a good way to raise short-term cash in place of buying toxic CDOs and other private mortgage-backed flaming bags-o'-shit; and (c) nervous types deciding to get out of either/both equities and commercial-paper money markets and into treasuries (T-bonds/bills and money markets).

i'm just not quite ready to hit the panic button b/c of fed. reserve/eurobank open market operations just yet -- though who knows? then again, i'm not an economist or an investment banker so i may be just as full of shit as Jim Cramer :-(

if this sub-prime meltdown puts an end to all those incredibly annoying mortgage banner ads, it will have been worth it.

if this sub-prime meltdown puts an end to all those incredibly annoying mortgage banner ads, it will have been worth it.

indeed -- that alone would make allmusic.com 1,000% better. no more dancing aliens clogging up bandwidth as i read the review of the new spoon album!!

If you stopped reading about Spoon albums your experience would improve 2000%

ha

teehee

truth be told, i'd sooner buy bonds backed by subprime mortgages than any spoon record.

everyone happy now?!? even ben bernanke agrees with me!

do Spoon still get Pixies heckles when they play live? I guess they don't sound as much like them anymore...

if you guys want to stop seeing banners just dload some fukkin pluginz yo

https://addons.mozilla.org/en-US/firefox/addon/10

https://addons.mozilla.org/en-US/firefox/addon/1136

and the US economy has about 5-10 years to go before an immobilizing stroke, give or take some geniuses and a few million young immigrants

i'm a little confused about some of the comments upthread made by british ILXors. i've read, and heard, anecdotally that the U.K. has a real estate bubble of its own that is at least as bloated as the one here in the U.S. it's also the excuse of every flipper/donald trump-wannabe realtor over here in manhattan as to why manhattan real estate prices are so absurdly obscene -- i.e., that a $1.5M generic condo is a bargain to euros (there's also the weakness of the dollar compared to the pound and the euro to take into account with that, though). maybe the U.K. mortgage market doesn't have the ridiculous, fiscally-unsound mortgage products that we have over here -- or you do, they aren't as prevalent (?) -- but if there IS a U.K. bubble then something has to be inflating it no?!?

also nick -- isn't kind of risky to put your real estate purchase money in equities?!?

I think i'm going to start a thread about how much shit we all know how to repair, and how much we know how to grow.

Not that things will necessarily go full-on post-apoc, but my jedi/spice-addled/wine-powered senses get the vibe that handyman skills will become increasingly more useful.

there's a reason I carry an eyeglasses repair kit, a multi-head screwdriver, adjustable wrench and leatherman in my man-purse every day. Used to have a maglite and an umbrella too but one's batteries ran out and the other got left in Tallinn. Need to work on that.

that reason is the same reason I listen to the Doobie Brothers every day

Not that things will necessarily go full-on post-apoc

Quit trying to scare the young 'uns. This is not going anywhere near post-apoc anything. Reading this thread you'd think there had never been a recession before.

a jewish dude told me that i should carry a leatherman for SELF DEFENSE

those stupid jews. I bet they also like spoon.

leathermans are awesome! especially when you get them for free from your in-lawz

isn't kind of risky to put your real estate purchase money in equities?!?

It's only about 25% of it, and it's been in it for years.

eisbar, the uk certainly has its own ridiculuous bubble, its not quite the same bubble, but its a huge bubble all right, cheap credit, amateur speculators. i believe its called a pyramid scheme

the crisis is being overdone. there are companies already picking up bargains at half the value of subprime portfolios. most of these people who are in trouble got loans with no down payment so there isn't a lot of risk of financial loss even if they lose their homes. the worst thing in the world would be a bailout that would justify the idiocy of lenders who made bad loans collected their fees and then packaged these loans and sold them off to someone else. that is the risk in that no one really knows who is exposed but it is also a positive in that the risk appears to be spread more widely and so will have less of an impact than say the s&l crisis. i am amazed at the 'sky is falling' people. perhaps it is only here but the economy is very strong, our business is growing by leaps and bounds and unemployent is 3.6%. hardly the stuff of calamity. but then i suppose this is the generation who believed that two quarters of contraction in 1991 was the worst economy of 50 years and economics education is sadly lacking. schumer's ready to shut off the credit spigot to low income households completely, not smart, but then he's not. scary talk of increasing gas taxes by 50 cents and not extending tax cuts, how exactly are these things a benefit to the economy, not to mention his idiotic 20% tariff on chinese imports.

These folks don't exactly sound very blithe.

"If you buy that $700 purse, it really cuts into your budget.""

well...sherlocks woken from slumbers on that one

Style is all. It's Southern California!

keyth's analysis seems fairly accurate in the short term, I don't think the subprime/re crash is that big a deal either - the long-term, though, is less free money for the echo boomers as they have to compete in a global economy and pay their parents' medical bills, which is DOOM AND A HALF

http://www.voxeu.org/index.php?q=node/466 is a good read on this.

riddle me this, economy-nerds: how come nobody's using the word 'inflation' even though gas, milk, and eggs are noticably more expensive than they were a year ago?

Because that means you dare question the wonderful job the Bush Administration has done with the economy.

i do not understand finance at all

you might want to start here remy

http://en.wikipedia.org/wiki/Consumer_price_index

So who's emigrating to Australia then? We could use some culture.

That sounds kind of fun. Are there good jobs in the sciences?

ie like zoology

OMG maybe I could achieve my lifetime dream of meeting a PLATYPUS!!!

an econo-nerd blog if you really wanna shit yer pants over the american economy

remy: http://bigpicture.typepad.com/comments/2005/09/the_history_of_.html

ritholtz has been caning this issue - what he calls inflation ex inflation - for as long as I've been reading him.

greenspan still insist on fuel and expendable proceeds for corn-on-cow action?

670 pounds of heroin for great justice

http://www.avclub.com/content/feature/whither_clarabelle_cow_11_semi

OMG maybe I could achieve my lifetime dream of meeting a PLATYPUS!!!

-- Abbott, Tuesday, November 27, 2007 6:13 AM (3 hours ago) Bookmark Link

watch out they are poisonous!

only bits of them.

massive unsubstantiated hearsay rumour alert: my friend knows some economist at UC Berkeley and he has taken all his money out of the bank and gotten rid of all of his stocks and claims that everything will continue to get worse for the next five years and then complete collapse ala Argentina in 2000/2001. Since I have no stocks or money in the bank, I should be free and clear!
― kyle (akmonday), Sunday, November 7, 2004 7:31 PM (4 years ago)

so we got one year left, huh?

I don't even remember posting that. i wonder who I was talking about?

that friend of a friend, the same one who came home to find his dog choking and took it to the vet and the dog was choking on FINGERS and the police came and found a RAPING MURDERIST HIDING IN THE CLOSET MISSING TWO FINGERS!@

oh yeah that guy. i don't trust him anymore

I don't even remember posting that. i wonder who I was talking about?

― akm, Sunday, November 9, 2008 1:46 AM (9 hours ago) Bookmark Suggest Ban Permalink

ha!

times were so much simpler in the '04

yeah, bet those fuckers wish they'd voted for larouche right about now

times were so much simpler in the '07 too!

ahh... August '07. Those were the good times.

Even when I was 25 and superdepressed things seemed to be better then. I had like unsubstantiated fears. WOO

Don't look now, but I think you're superdepressed in 2009.

No economic system ever remains unchanged, of course, and certainly not after a deep financial collapse and a broad global recession. But over the past few months, even though we've had an imperfect stimulus package, nationalized no banks and undergone no grand reinvention of capitalism, the sense of panic seems to be easing.
http://www.newsweek.com/id/201935?from=rss
(zakaria's "capitalist manifesto")

don't trust it

we're so a third world country at this point
http://trueslant.com/matttaibbi/2010/04/08/jefferson-county-keiser-report-2/
or at least, second world

Canada’s Only Bullion Bank Gold Vault Is Practically Empty

During the interview, Lenny Organ states that he was in the ScotiaMocatta vault in 2008. What’s the situation now??? Anyone dealing with precious metals, especially precious metals certificates, should listen to this.

Central Fund of Canada investors, who aren’t just using that thing as a blinking number that updates in realtime, also need to listen to this.

Via: ZeroHedge:

Continuing on the trail of exposing what is rapidly becoming one of the largest frauds in commodity markets history is the most recent interview by Eric King with GATA’s Adrian Douglas, Harvey Orgen (who recently testified before the CFTC hearing) and his son, Lenny, in which the two discuss their visit to the only bullion bank vault in Canada, that of ScotiaMocatta, located at 40 King Street West in Toronto, and find the vault is practically empty. This is a relevant segue to a class action lawsuit filed against Morgan Stanley, which was settled out of court, in which it was alleged that Morgan Stanley told clients it was selling them precious metals that they would own in full and that the company would store, yet even despite charging storage fees was not in actual possession of the bullion. It appears that this kind of lack of physical holdings by all who claim to have gold in storage, is pervasive as the actual gold globally is held primarily in paper or electronic form. Lenny Organ who was the person to enter the vault of ScotiaMocatta, says “What shocked me was how little gold and silver they actually had.” Lenny describes exactly how much (or little as the case may be) silver was available – roughly 60,000 ounces. As for gold – 210 400 oz bars, 4,000 maples, 500 eagles, 10 kilo bars, 10 one kilogram pieces of gold nugget form, which Adrian Douglas calculates as being $100 million worth, which is just one tenth of what the Royal Mint of Canada sold in 2008, or over $1 billion worth of gold. As Orgen concludes: “The game ends when the people who own all these paper obligations say enough and take physical delivery, and that’s when the mess will occur.”

Also note the interesting detour into what Stephan Spicer of the Central Fund Of Canada, said regarding his friend at a major bank, who wanted access to his 15,000 oz of silver, and had to wait 6-8 weeks for its to be flown in from Hong Kong.

It is funny that central bankers thought they could take the ponzi mentality of infinite dilution of all assets coupled with infinite debt issuance, as they have done to fiat money, and apply it to gold, in essence piling leverage upon leverage. They underestimated gold holders’ willingness to be diluted into perpetuity – when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history.

when the realization that gold owned is just 1% of what is physically deliverable, you will see the biggest bank run in history

This is a non-sequitor. Even if all the gold speculators in the world got burned for a return of one cent on the dollar, neither commercial banks nor central banks rely on gold assets for their stability. So, why run the bank?

Even with as much as gold has been bubbling since mid-2008, it still represents a minimal percentage of all investment assets. It would probably be a good thing for that bubble to deflate.

guillotine time

http://www.newrepublic.com/article/112397/one-percent-gobbles-economic-recovery