No Bottom Yet

From Bloomberg:

Home Prices in 20 U.S. Cities Declined 16.3% in July

House prices in 20 U.S. cities declined in July at the fastest pace on record, signaling the worst housing recession in a generation had yet to trough even before this month’s credit crisis.

The S&P/Case-Shiller home-price index dropped 16.3 percent from a year earlier, more than forecast, after a 15.9 percent decline in June. The gauge has fallen every month since January 2007, and year-over-year records began in 2001.

The housing slump is at the center of the meltdown in financial markets as declining demand pushes down property values and causes foreclosures to mount. Banks will probably stiffen lending rules even more in coming months to limit losses, indicating residential real estate will keep contracting and consumer spending will continue to falter.

“The fact that house prices quickened their slide before the worst point in credit markets hit this month does not bode well,” said Derek Holt, an economist at Scotia Capital Inc. in Toronto.

Home prices decreased 0.9 percent in July from the prior month after declining 0.5 percent in June, the report showed. The figures aren’t adjusted for seasonal effects so economists prefer to focus on year-over-year changes instead of month-to-month.

Prices dropped in 13 cities month-over-month, compared with 11 in June. Las Vegas saw values fall 2.8 percent in July, the largest decline.

Economists forecast the 20-city index would fall 16 percent from a year earlier, according to the median of 23 estimates in a Bloomberg News survey. Projections ranged from declines of 14.5 percent to 16.5 percent.

Compared with a year earlier, all 20 areas showed a decrease in prices in July, led by a 30 percent drop in Las Vegas and a 29 percent decline in Phoenix.

“While some cities did show some marginal improvement over last month’s data, there is still very little evidence of any particular region experiencing an absolute turnaround,” David Blitzer, chairman of the index committee at S&P, said in a statement.

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235 Responses to No Bottom Yet

  1. grim says:

    From the AP:

    S&P: Home prices post 16 pct. annual drop in July

    A closely watched index shows home prices tumbling by the sharpest annual rate ever in July, but the rate of decline is slowing.

    The Standard & Poor’s/Case-Shiller 20-city housing index released Tuesday fell a record 16.3 percent in July from the year-ago period, the largest drop since its inception in 2000. The 10-city index plunged 17.5 percent, its biggest decline in its 21-year history.

    Home values in all 20 cities fell year-over-year, with Las Vegas prices plunging the most at nearly 30 percent.

    However, the pace of declines has slowed over the last three months, but there is still no sign of a bottom, one of the index creators said.

  2. grim says:

    From MarketWatch:

    U.S. home prices down 16.3% in past year, Case-Shiller says

    Home prices in 20 major U.S. cities fell 0.9% in July and were down 16.3% in the past year, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s. In the smaller sample of 10 cities, prices fell 1.1% in July and 17.5% in the past year. Prices fell in 13 cities in July, led by a 2.8% drop in Las Vegas and a 2.7% decline in Phoenix. Prices have fallen in all 20 cities in the past year. “There are signs of a slowdown in the rate of decline across the metro areas, but no evidence of a bottom” said David M. Blitzer, chairman of the index committee at S&P.

  3. mneer1 says:

    Do you have a link for data breakouts in excel?

  4. lisoosh says:

    Shore/lost –

    I don’t even think that people look at just Wall Street and don’t care.

    Reasonable ‘within their means” people also look at their neighbours who are credited out to the max and don’t care if credit dries up and the playing field is leveled.

    People are tired. They are tired of being two income families who never see their kids and yet still either have trouble making ends meet or pulling ahead a little. The same easy credit used to promote a “lifestyle” has also caused extreme stress in those who don’t like to play fast and loose with their futures.

    I think their is a vast underestimation of the willingness of many to let the chips fall where they may.

  5. SIMONfromLYNDHURST says:

    “How to Survive A Mortgage Crisis”
    wise words from a JC developer =P

    “Paul is an African immigrant and a homeowner for two years who lives in the Heights section of Jersey City with his wife.

    Paul, a teacher in the Irvington school system, is currently trying to unload – albeit unsuccessfully – his $475,000 house for $390,000, so that he can get out of his $4,700-per-month mortgage.

    Coupled with all his other bills during this recession, Paul is having trouble making the mortgage payments. Adding to the frustration, said Paul, is that a tenant living in the house did not pay rent for seven months.

    Looking back, he regrets taking out mortgages on the property for $380,000 at 8.9 percent interest and $95,000 at 12.7 percent interest, respectively. It was a lot of interest, but it allowed him to buy without any down payment.

    These sorts of risky mortgages, given to people who might not be able to keep up with the payments, are often cited as a cause of the current financial downturn.

    “I think before I ever decided to buy a house, there should have been a course where you need somebody to tell you that you can’t buy without any down payment,” Paul said.”

    Paul’s last quote is what is wrong with this country today. Nobody is at fault for their own stupid decisions. it’s always somebody else’s fault.

  6. SIMONfromLYNDHURST says:

    Oops…the rest of the article here

    “Mortgage” has become a dirty word recently as millions of unpaid mortgages across the United States have created a crisis amongst homeowners, financial lenders, home builders, and just about anyone else who is impacted by mortgages.

    In particular, sub-prime mortgages, or mortgages issued by lenders to borrowers with less-than-stellar credit reports, have created much of the problems in the mortgage and credit industry.

    The ripple effect has reached major Wall Street firms such as Lehman Brothers, which declared bankruptcy recently and Merrill Lynch, which was sold for $50 million to Bank of America.

    In New Jersey last month, there were 6,475 foreclosure filings, according to California-based RealtyTrac, a company that tracks foreclosures. That is a 49 percent increase from August 2007.

    Foreclosure is a process in which a lender takes title or forces the sale a property to satisfy the debt of a borrower.

    For Hudson County, RealtyTrac listed, as of last week, 2,800 properties going into some stage of foreclosure.

    Of those, 2,039 were at the pre-foreclosure stage, a grace period when homeowners are allowed by a lending institution to sell a house to avoid foreclosure.

    Jersey City had the most listings in Hudson County, with 1,383, followed by 378 in North Bergen and 200 in Union City.

    Is there a sliver lining?

    Some local experts offered advice recently about the crisis.

    Don’t overextend; keep it short

    Tony Deluco is a Jersey City developer and real estate manager who has been in real estate for over 20 years. He said people facing foreclosure can cope with the current mortgage crisis by being aware of the procedure known as a “short sale.”

    That’s where the homeowner sells their property for less than the outstanding balance of the mortgage. All of the proceeds go to the lender to pay off a majority of the debt and the lender forgives the rest. However, the lender would have the right to approve or disapprove of a proposed sale.

    Laura Skolar has been in the real estate business since 1982, working as an agent at Century 21 Plaza Realty in the Heights section of Jersey City.

    Skolar said her agency currently has clients in Jersey City, North Bergen, and Bayonne whose homes are in various foreclosure situations, and they are trying to sell their home.

    She offered advice to potential buyers who have been tentative about buying a home because of the problems with the mortgage industry.

    “If you are ready to buy, you have the money, and interest rates are good, and as long this is where you are going to make your home and you are not speculating, then it is a good time to buy,” Skolar said. “Be conscientious and don’t overextend yourself, which is what people were doing before.”

    Greg Malave is an employee in the Jersey City Mayor’s Action Bureau and a licensed mortgage broker.

    Malave said people should do research on how much they want to pay and on the kind of mortgage they can afford. He said they should make sure they qualify, rather than “jump into water where they can’t swim.”

    But Malave said he is optimistic that the current crisis will be resolved in the “next two years.”

    Comments on this story can be sent to

  7. Shore Guy says:

    In response to a question about who bears responsibility for various losses on Wal Street, this citizen offers one explination of how things work, or at least seem to. I am sure that Clot/Kettle/John and some others can offer something more technical but, for what it is worth:

    “Doesn’t that mean they took risks with other people’s money?”

    Of course they took risks with other peoples’ money. Why would they risk their own. Look, you hand them your money and they take it to Vegas. If they win, they take half of the winnings, use your winnings to offset their travel expenses, and then pay you the remainder. If they lose, you pay to cover their travel expenses.

    Got it?

    Here is the short version. The profits are theirs; the losses are ours.

  8. Shore Guy says:

    Gingrich speaking at National Press Club. He is hitting all the correct points.

  9. Shore Guy says:

    He just said:

    “If you try to have capital-ism on the way up and social-ism on the way down, you end up with social-ism everywhere.”

  10. lostinny says:

    7 Shore
    Again, thanks for dumbing that down for me.

  11. randy says:

    US$ rallying strongly today… “what’s up with that!”


  12. kevin says:

    Does Sarah Palin sound like Frances McDormand from “Fargo” or is it just me?

  13. Shore Guy says:

    Newt just asserted that this would become one of the two biggest scandals and tied to campaign dollars and the Administration is too tied to GS and they are not doing other things to work out the problem is that they “just want the money.”

  14. chicagofinance says:

    Let’s all agree on something…..regardless of the soap opera around us, the key is real estate prices. If you don’t believe that real estate will stabilize until 2009-2010 or later, then that opinion should color everything else. Don’t lose focus on the important driver here. One of the arguments about the $700B “allocation” of capital for investment (please let me use this phrase) is that it will stabilize the system and also real estate prices. Such an argument is patent folly. Regardless, what I focus on is the coagulation of the life blood of our economy (i.e. daily cash flow). I have run a money market desk for a large multi-national corporation. I ran it across Y2K. Don’t underestimate how messed up things are. The fact that this is cutting across a quarter end (9/30/08) is a disaster. The other critical component is the “turn” (i.e. 12/31/08). We need Gunnery Sergeant Hartman from Full Metal Jacket here….–LDQ

  15. chicagofinance says:

    randy Says:
    September 30th, 2008 at 10:42 am
    US$ rallying strongly today… “what’s up with that!” NO BAILOUT!

    r-man: short covering and/or expectation of a revised bill passing.

  16. Shore Guy says:

    Newt just said “This is such an appearance of corruption and Paulson so misunderstands the role of Treasury Secretary” AND has just called for Paulson to resign.

    This is something worth listening to from the start.

  17. Shore Guy says:

    Chifi. I think the plan should be renamed the Bush Income Transfer Plan


    Bush-it Plan

  18. chicagofinance says:

    Shore Guy Says:
    September 30th, 2008 at 10:54 am
    Chifi. I think the plan should be renamed the Bush Income Transfer Plan or Bush-it Plan

    That is so Bush League ;-)

  19. chicagofinance says:

    Side note: If you see people wigging out about the LIBOR and the TED spread, just remember that there are certain items that are technical in nature that cause it to peel away from fundamentals. The quarter ends and the turn are very important. It is one of the major reason that most of The Street shifted off a calendar reporting year and had a 11/30 fiscal year. When you see people hyperventilating, watch with a discerning eye…….they may be just overacting to grab your attention (or wallet – or purse…excuse me).

  20. chicagofinance says:

    Hunter came to me last night at 7:15PM and said “…bay-boh….Mets…tee-vee…” I had to tell him the bad news. So I went and found some construction truck videos on You Tube.

  21. ben says:

    “I think their is a vast underestimation of the willingness of many to let the chips fall where they may.”

    I’ve always been willing to let the chips fall where they may. I’m in graduate school. Letting the chips fall where they may means I’m probably going to have a very very tough time getting a job when I graduate next summer. I know what’s better for the country and every American family in the long run. People are so short sighted and want to delay the pain. We did it in 2001 and we have a bigger mess. We are trying to do it again. The fallout will be much worse.

  22. chicagofinance says:

    Shore Guy Says:
    September 30th, 2008 at 10:50 am

    Shore: why didn’t they talk this way from the beginning? Stupid louts! Always in CYA mode. He is a lame duck anyway.

  23. lisoosh says:

    Chi – that is the most bearish I’ve heard you be in a while.

    Interesting – while crawling through you tube for CNBC videos (don’t have cable) I noticed a lot of the pro people talking incessantly about “saving the system”. Not the economy. The “system”. The way they like it.

    In terms of the public, “the system” is of no interest. Curious how Clots revolutionary stance appears to actually be a rather common sentiment.

  24. chicagofinance says:

    L: Bear something in mind. There is a lot of moralistic commentary out there, but look at this unrepentent douch bag here. He is a smart guy, is well versed in what is happening, and yet is he a pure political opportunist, and is willing to take the country down……check out the first video on this page. The guy is Culberson…..pathetic useless bag of plasma….

  25. Tom says:

    I have a really crazy idea regarding a bailout. Maybe we can flesh it out and see if it’s any good.

    I got the idea while I was listening to 1010wins. There was a commercial that went something like “got a car you don’t want, doesn’t run and you can’t sell?” Sound familiar “donate it”.

    Now what if it the plan was for the assets to be donated/sold cheap to another bank or financial institution. Actually, why not any company or person that wants to buy them? The buyer would have it in their interest to determine an appropriate value. The seller gets a tax credit. So they bargain to set the right price.

    That way, all financial institutions can work on solving the problem, rather than setting up a new entity to buy and sell them.

    The Fed and Treasury gives some incentive to banks on both sides participating in the program.

    I told you. It was crazy. But could be cheaper and faster. It also spreads the work out and lets other people take some of the burden, not just the government. If the bailout is good for everyone, you’d think big companies would be willing to help out to keep the economy going.

  26. randy says:

    these banks are throwing a tantrum because they want to see a bailout in some form or another… so they’re taking their money and hoarding it more than ever. if the bailout was taken completely off the table we’d see these strains ease quickly.


  27. Shore Guy says:


    “Make your toxic paper a kidney toxic paper”?

  28. HEHEHE says:


    I saw that Culberson guy yesterday. Complete moron. That being said there’s plenty of practical and rational reason’s to be against this plan.

  29. chicagofinance says:

    Just found this…..

    Naysayers…back to reality….hopefully douche bags such as Culberson will have these issues epoxied to their reputations…..

    Be careful watch you wish for masters of schadenfreude……

    Market’s Got You Worried? Just Watch for the Layoffs

    “It’s all RIFs. A lot of RIFs.”

    That’s reduction-in-force. Business-speak for layoff. And in the words of one top corporate handler last week, the cuts are being prepared across the economy, just days before the presidential election.

    Impending cuts would follow in part from the past 12 months of economic woe. But a more acute link to layoffs has emerged in the past 12 days, a period when the credit markets have squeezed shut.

    Many seem to view these changes as arcane Wall Street machinations. If only.

    The credit connection is clear in a look at General Electric, a company at the top of the corporate pecking order. GE is regarded as such a stable, reliable company, that it also runs a bank. That stability helps it borrow at a very low cost, which it can then use to lend to others at a higher rate.

    One such type of borrowing is called commercial paper — short-term, low-cost loans often made for just a month. Commercial paper is like the WD-40 of corporate finance, lubricating the joints of the financial system, helping sellers bridge costs between the time they deliver a product and when they get paid, for instance. Without commercial paper, the economy rusts over.

    GE for long has gorged on commercial paper — with some $97 billion outstanding at the end of June, or about 18% of its entire debt load.
    The problem is that the market has contracted sharply, as lenders grow weary of anyone holding on to their money for longer than a few weeks.

    Many companies such as Morgan Stanley aren’t even trying to access this market. GE at least has some clout left. But it has to pay extra for the privilege of borrowing.

    These days, debt traders say, GE commercial paper is priced at 0.4 percentage point higher than in recent months.

    That may seem like a minuscule amount, until one realizes it is spread across about $90 billion of standing commercial-paper balances. It means, roughly, an extra $360 million of costs straight off GE’s bottom line.

    That is partly why the company last week announced that for the first time in 30 years it wasn’t raising its dividend. And that is why it slashed its overall earnings forecast for this year by about 10%.

    Holding Out for 15%

    But that isn’t the half of it. People who traffic in bonds say that some of GE’s longer-dated debt — at about nine months — was swapping between traders at a price Monday that gives a 10% annual yield.

    That is a stunning number, they say, given that this type of paper just months ago was priced in the 4% range.

    “That’s the best credit around,” said one trader yesterday. His strategy: Hold out for a 15% yield.

    Remember, this is GE, one of the few AAA-rated companies, and a bedrock of American industry. And as its costs go up, it also is likely to charge others more to borrow from it.

    Unless a sharp uptick in confidence sweeps through the markets, higher rates will cascade across less-solid companies, if they can get hold of cash at all.

    The scary part is that few companies have the same financial cushion as GE. And as their borrowing costs increase, they will have to scramble to cut their fixed costs.

    And what is the No.1 cost of business? People.
    Right now the unemployment rate is at about 6.1%, up substantially since the beginning of the year, but still well below the highs of the early 1980s.

    It was, in fact, late 1982 when unemployment reached its modern peak. Nearly 11 out of every 100 working-age Americans was without a job. Nearly 11 out of every 100 working-age Americans who wanted a job didn’t have one.
    If these sorts of numbers still seem arcane, just wait. The RIFs will soon make them all too real.

  30. chicagofinance says:


  31. Tom says:


    This wasn’t a joke when people were trying to stop it years ago either.

    Time for these guys to beg forgiveness and cough up some of the funny money to help fix it.

  32. Shore Guy says:

    “But that isn’t the half of it. People who traffic in bonds say that some of GE’s longer-dated debt — at about nine months — was swapping between traders at a price Monday that gives a 10% annual yield.

    That is a stunning number, they say, given that this type of paper just months ago was priced in the 4% range.

    “That’s the best credit around,” said one trader yesterday. His strategy: Hold out for a 15% yield.

    Remember, this is GE, one of the few AAA-rated companies, and a bedrock of American industry. ”


  33. Orion says:

    Starting with FNM and FRE ex-executives.

  34. chicagofinance says:

    Tom: Companies and decisionmakers that were prudent are going to deal with draconian consequences. Do not misunderstand me. These developments are not binary, and to draw conclusions in that manner is counterproductive. I am fundamentally committed to constant evaluation and rigor. In the grand scheme, I hate the idea of this action, but we do not have the latitude of anything other than a blunt force instrument.

    Are we going to have picketpockets as we walk through the crowd? Yes. Is this just? No. Just remember, these cretins are always there, they are just more visible that usual.

  35. Here’s a Q… Will the Fed inflate fast enough to counter dollar destruction from writedowns (implicit or explicit)? I won’t even ask if they should :p

    I can see an awful lot of folks selling real things (like oil, gold, shares, kidneys) to throw good money after bad…

  36. Tom says:


    “Starting with FNM and FRE ex-executives.”

    Freddie was the toilet, fannie mae was the vomitorium.

    The meal was our a huge buffet of credit.

    The bill was supposed to be paid for by people spending 4-5x or even more of their incomes on houses.

    The wait staff was amazed and disgusted but didn’t care since they still had a job.

    The restaurant was our Chez Economy and Financial Stability. No reservations required.

    Guess you know who the fat guy sitting at the table having a coronary is.

  37. Tom says:


    The economy grew too big on unrealized gains. When reality set in, companies that over extended themselves got in a lot of trouble.

    Just like homeowners that bought houses they couldn’t afford, these people built businesses they couldn’t sustain.

    It all sucks. But this is why I was for forclosure relief and loan modifications.

    I thought it would be good for both the lenders and borrowers. Lenders seemed to be very resistant to it. In some cases it’s because they know they have no leverage, in the case of many secondary line holders at least.

    Also in the case of many of these highly leveraged companies that can’t handle a loss in value to their assets.

    It sucks royally but the train’s been heading off the tracks for years and nobody heeded the signals.

    Funny thing is they don’t want to stop the train, they want to keep it going. Maybe they think tracks are optional.

  38. Nicholas says:

    I saw my representative in front of congress last night talking about the bailout. Which motivated me to write him an email.

    I wrote my representative Steny Hoyer and let him know that I wasn’t happy with his support of this bailout.

    I dissaprove of the lack of time spent on understanding and putting together a rescue plan for the enconomy. Congressional hearings should be held over months to determine how to right our economy and to uncover the real causes of our failing economic policy.

    I let him know that I wouldn’t be led by someone who shoots from the hip, and drives with fear.

  39. Tom says:

    I still like my original idea best.

    Take Orszag, Paulson, Bernanke and maybe one or two other economists like Schiff and Roubini and lock them in a room. Come up with a better plan. $1bln each up front, $1bln each after some time to see if it works.

    Ok slightly modified from original plan but these things take time as we’ve seen.

  40. Shore Guy says:


    Something like that, locking in a room the policy makers, might work if there were some stark incentive to get a good deal done. Maybe it can be a new reality show where they go in and come up with a plan. They announce it on national TV and the public votes using telephone. If the public likes it, the plan goes to congress. If not, they get waterboarded and sent back to try again.

  41. Orion says:

    I’m not an economist and I understand the credit markets are frozen, etc., etc.

    But, imho, keeping the US Dollar strong trumps everything else. Period.

  42. lisoosh says:

    Chi – the economy is broken. Layoffs are coming no matter what.

    If people really thought this was a joke, they wouldn’t be extracting cash, buying up food stocks and digging for gold.

    Schadenfreude or fatalism? That is the real question.

  43. Tom says:


    I figured $2bln and preventing the end of America would be plenty of incentive. $2bil is about 3x Paulson’s current net worth so it would also allow him to not worry about his GS stocks or be influenced by Wall St.

    But, I got no problem keeping waterboarding on the table. I just think we should go with the carrot before the stick.

  44. Shore Guy says:

    When the possibility for disaster exists, there is far less of a downside to over prepare than to under prepare.

  45. Tom says:


    But make sure they see the stick.

  46. Orion says:

    If a televised debate with BB, HP, Roubini, Schiff, Ron Paul were to happen, I think it would break world records of viewership. Heck, I’d even pay to see it! Imagine the possible revenues worldwide? Silly me.

  47. kevin says:

    I think they should just sit a bunch of hollywood actors…get Penn, Robbins, Crowe, Gibson and maybe throw in Madonna just for fun…and have them come up with a plan. That would be the answer I think.

  48. Shore Guy says:

    ” I just think we should go with the carrot before the stick.”

    The other carrot could be congress saying, ” Fix this NOW and we won’t pass a law declaring your past 10-years income a theft, and we will spare you prison to boot.”

  49. Shore Guy says:

    “But make sure they see the stick.”

    With a few 16d nails hammered through it?

  50. lostinny says:

    Completely OT:
    If anyone is going to the Delerium show tonight, shoot me an email.

  51. Shore Guy says:

    “But make sure they see the stick.”

    Is that the NAR house band? If so, doesn’t Paulso play bass?

  52. lisoosh says:

    Peter Schiff:

    “The urgency for passing this bailout bill is based on the claim that the American economy will collapse if nothing is done. If the government were to stay out, and allow the market to function, there will certainly be a great deal of economic pain. Companies will go bankrupt, banks will fail, real estate and stock prices will keep falling, and many people will lose their jobs. However, government action will not prevent any of this. At best, it will merely delay the inevitable, but only at the cost of increasing the severity of the underlying problems, thus making their ultimate resolution that much more painful to endure.

    The bottom line is that there is no way to resolve our economic problems without a severe recession, and our politicians need to level with the public. As a nation, we gambled on the alluring riches of real estate and we lost. The price must be paid. Contrary to the Bush Administration rhetoric, the fundamentals of our economy are not sound. If they were, we would not be in this mess. Recessions are meant to restore balance, purge excess, and liquidate mal-investments. On that score we have a lot of work to do.

    We are being told that this plan will help the economy by keeping the spigots of consumer credit flowing. However, to really address the fundamental problems, those spigots must be tightened. Since we have already borrowed and spent ourselves into bankruptcy, the last thing we need is for consumers to borrow more.”

  53. Orion says:

    Amen, Peter.
    Truth hurts.

  54. lisoosh says:

    More from Schiff. (from Euro-Pacifics website).

    Chi – really all Schadefreude or the gut feeling that “the system” is broken?

    “Our leaders maintain that without this bailout consumers will not be able to borrow money to buy cars. So what is wrong with that? We already have plenty of cars, and if we are broke, why do we need to buy more? Instead, we need drive our old cars longer, pay off our underwater auto loans, and produce more cars for export. It is also argued that without access to credit parents will not be able to borrow money to send their kids to school. That’s fine by me as it will force Universities to reduce tuitions to levels families can actually afford. They will either have to cut out all of that bureaucratic fat, or go out of business for lack of customers.

    In the end it is impossible for the American economy to be rebuilt on a sounder foundation of savings and production without a lot of economic pain. Government efforts to reinforce the shaky foundation of borrowing and consuming will result in the entire structure falling down around us.”

  55. BC Bob says:

    lisoosh [54],

    hear, hear.

  56. Shore Guy says:

    Add this citizen’s voice to the Amen Corner.

  57. lisoosh says:

    Perhaps the best analogy of of the economy as a runaway train. Either slam on the brakes, get thrown about a bit and endure some bruises.

    Or grease the wheels to keep it running until it hits the wall.

  58. Clotpoll says:

    The only way to cure the patient is to kill the patient.

    Let it go to hell, wipe out the deadwood, and let it grow back when the disease is purged.

    I still have yet to hear any call for the bailout state that it will be a lasting, permanent and guaranteed solution. All the arguments also revolve around- or conclude at- a desire to avoid short-to-medium term pain.

    Well, what I think we’ve all discovered is that a lot of people are willing to bear the pain to allow a sure-fire solution- Mr. Market- do his work. The cries from the bailout proponents that we must be protected from ourselves and that we don’t know the consequences of our choices is patronizing, elitist and disgusting in the least.

    This patronizing, elitist attitude is how a coalition of egghead liberals and rapacious, opportunistic faux-conservatives formed a bastard coalition to try and vote this thing through. They are united in their common disdain for the average American and surprisingly in agreement as to how we should be dealt with.

    And that common ground that the jackals and the feral cats have forged is, quite frankly, scarier than any financial crisis could ever be. IMO, it is- appallingly- 1930’s Germany-type stuff.

  59. randy says:

    Schiff is a genius… he and Roubini have such a firm grip on economic fundamentals. they have a way of cutting through the rhetoric and politics. i’m sure Schiff’s Euro Pacific Capital is doing a booming business!

  60. Shore Guy says:

    In recent days, the American public had an opportunity to see how citizen pressure could stimulate lawmakers to action.

    I have already sent my e-mails and made my calls.

    Inasmuch as Paulson, with George Herbert Hoover Bush’s approval, made a greedy money and power grab and his credibility is shot, folks mighr do well to call and e-mail members of congress and the White House calling for Paulson to be cashiered. He might even like the idea, since it sounds like he will be handling money.

  61. Clotpoll says:

    Shore (62)-

    Yet it’s amazing how a citizenry awakening from decades of apathy is then derided as naive, self-destructive and stupid.

  62. Shore Guy says:


    You didn’t go to Andover, Yale, and Harvard did you?

  63. kettle1 says:

    lisoosh Says:
    September 30th, 2008 at 11:37 am

    “Producing legislation is complicated, and it can be contentious. It matters little what a path a bill takes to become law. What matters is that we get a law.”

    That is an outright criminal statement!

    The law is NOT the point. The point is the debate that allows americans and their political representatives to debate the subject at hand and come to a tolerable stance.

    law for the sake of law is no different then rule by decree. ALl hail king george

  64. BC Bob says:

    Unfortunately, the only answer is to increase savings, build our current account balance and stop exporting $2B a day to terrorists. Yes, there will be pain. Too f-ing bad. It’s only the beginning of a long cycle, so buckle up. There is no country in the history of mankind that has printed their way to prosperity. We will not be the 1st.

    Nobody is entitled to anything; a house, a hummer, exotic vacations, etc.. You earn it. Going forward, consumption will be fueled by savings. Get used to it and prepare. Pay down debt and start saving.

  65. Shore Guy says:


    This is the same public the prez and his minions honor when it does what they want it to do.

  66. lisoosh says:

    #6 ket – just to be clear I was quoting Bush. That is not my opinion.

  67. kettle1 says:

    Schiff/Roubini Tciket for president????

  68. Shore Guy says:


    BINGO. Now tell me what policies the two candidates have proposed that will promote serious saving in short order? I don’t see much. I don’t see much in way of spending cuts either.

  69. lisoosh says:

    In Schiff mode now:

    LOVE this interview from 2006. The jokers laughing at him look like buffoons. Especially with hindsight.

    What is this Art Laffer promoting these days?

  70. lisoosh says:

    Is it too late for Bloomberg to throw his hat back into the ring for Pres?

  71. BC Bob says:

    “What is this Art Laffer promoting these days?”

    Apple carts.

  72. Shore Guy says:

    I wonder about the workability (If it were not a word before, it is now) of a credit tax — that is a tax on unpaid credit card bills and consumer credit that lasts longer than 3/4 of the anticipated economic life of the asset.

  73. BC Bob says:

    Shore [70],

    That’s the problem. It would be political suicide for anybody to run on that platform.

  74. lostinny says:

    72 Lisoosh
    Yes. They’re talking about giving him a third term as mayor.

  75. Shore Guy says:

    Maybe make it effective as of a certain date and tax new debt. Maybe also provide a tax credit to those who not only do not add to debt but who pay off existing debt.

  76. Clotpoll says:

    Shore (64)-

    Not quite.

  77. Clotpoll says:

    Shore (67)-

    Good chimp, good chimp.

    This chimp is not pulling the lever and waiting for the gubmint to drop a pellet into his bowl anymore.

  78. rhymingrealtor says:

    Lisoosh #4,

    I agree and have said the same, yes we know what will happen, we welcome it. We want to suffer so our children will not be burdened with debt, we can teach them the benefits of living within or below their means. A hard lesson for us.
    Having said that, try harder to show us it is a true crisis, don’t leave town for a holiday in the midst of what you are saying is the “Worst financial crisis ever!” How can we believe this. Stocks fell on news -no bailout- Stocks rally on hopes of bailout. Come on, convince us.
    Also convince us you’ll spend this money and we won’t have a crisis, this will not take us out of a recession will it? Won’t it still rob us of our savings via inflation? That trillion we lost in the market yesterday did we have it? The money we are recouping today do we have it? Is’nt nothing unless it’s in your hands? Have’nt we been taught the equity in your home is’nt there till you sell it. You were $50,000 richer in home equity yesterday, but you did’nt sell so were you richer?.


  79. Barbara says:

    Oh WSJ, thou protests too much.

    This is rich

    sorry if already posted

  80. MJ says:

    “Let’s not call it a bailout. Let’s call it a rescue,” McCain told CNN.

    O.K. And I call McCain a criminal and a traitor.

  81. Tom says:

    Nobody likes the junk mortgages for cancer idea?

  82. Shore Guy says:


    I would be happy if they would just stop pi$$ing in the water hole.

  83. kettle1 says:


    That was clear. My ire was directed at babby bush

  84. 3b says:

    #66 BC Bob: All ture. However, it will take years. As in how long will it take the average American to pay off all the debt thay they have accumulated, before they can even start saving?

    I know just from hearing people talk, that many hold what I consider staggering amounts of CC debt, car loans/leases,and Heloc’s not to mention over size mtgs.

  85. ricky_nu says:

    chi-fi – while I dont agree with this Culberton character, what do you think the suspension of mark-to-market accounting would have done for this market had it happened months ago?

    I suspect it would have done a lot of good, since the auditors etc are defining the market as “let’s call a bank and ask for a bid”. The problem with that is that if liquidity is thin there are no bids. Stuff gets marked down to unrealistic default/recovery levels, balance sheets are affected, capital raising follows, lending stops etc. There are super-senior tranches out there being marked to 30 cents/dollar, implying 70% default rate with 0% recovery rate, which I suspect will not happen.

    I think that at least some of this crisis (if not a lot) stemmed from this handling of the accounting rules.

  86. Tom says:

    I’m really ticked off.

    There was this video of this woman talking about the bailout. She made Palin sound smart. I wanted to post it here with the question… What do you guys think? Tarnished trophy wife? or Hedge Fund secretary?

    Can’t find it now.

    Did you guys realize that besides news clips, tv show clips, funny commercials and teenage girls dancing around in their thongs, you tube has a lot of crap.

  87. Orion says:

    One sign that capitulation is imminent is when you see 15 “people boxes” on cnbc.

  88. Clotpoll says:

    Can’t e-mail anybody in Congress today…their e-mails are overloaded!

  89. Tom says:

    “I think that at least some of this crisis (if not a lot) stemmed from this handling of the accounting rules.”


    I disagree. All it would do is allow these companies to continue to build debt with air as collateral.

    Imagine someone suggested that we can solve the foreclosure prices if we allow troubled homeowners to appraise their houses at 20% above what they owe on it. That will allow them to refinance. We all know… Actually we saw, that it just forestalls the inevitable.

    Some of these assets may have value but many are utterly worthless.

    If I wrote you a check for $1,000,000 would it be a good idea to be able to secure a loan based on just that? Awe, what if we let them have $900k at least?

    By the way, you couldn’t cash a check for $1mil from me.

    It’s all garbage.

  90. Nicholas says:

    Don’t you realize that the defeat of the bailout bill will mean thousands of buinesses will not be able to continue?

    The short term credit swaps have seized up which puts into jeopardy the source of funding for essential buisnesses in America. Payday lending, cash-advance, and title loan buisnesses have no access to 30 day sources of credit to continue their buisness model.

    Where will the average American consumer get the funding they need to buy essential commodities like lottery tickets or bingo plackards?

    *sarcasm off*

  91. Shore Guy says:


    Under the Paulson Plan, the USG would, it seems, be willing to purchase that cheque for $1.5Mil.

  92. Tom says:


    Servers probably got a little toasty yesterday too. Lots of sites getting a lot of traffic.

    Bill Gates wants the bail out too.

  93. DL says:

    CNBC is so in the tank for this bailout. The gang of four was hammering on how the unwashed masses just don’t understand that this isn’t about Wall Street, little people, it’s about MAIN STREET. Then they cut to an analyst who explains that because the poor car dealerships can’t get short term loans, they’re dying as sales dry up because poeple with good credit can’t get financing. Never mind that a great number of previous sales were financed with home equity loans and the price of gas is up and the dealers got stuck with gas guzzlers and the same poeple who are now upside down with their mortages can no longer afford houses. No, all this would go away if only Congress would pass the bail out. I have to stop watching CNBC.

  94. Tom says:


    I’ll give you 10% if you can find me the right person to hand it to.

  95. lisoosh says:

    #81, #91 –

    The WSJ has been showing its stripes recently. Lack of in depth analysis and incessant rah rah cheerleading interlaced with derision for dissenters leaves me singularly unimpressed.

  96. DL says:

    Meant to say “can no longer afford cars vice houses. My bad.

  97. lisoosh says:

    # Tom Says:
    September 30th, 2008 at 1:28 pm

    “Bill Gates wants the bail out too.”

    Well duh. When you have to use your cash, a brand new shiny computer with another slightly dodgy headache of an operating system becomes a purchase you think more about making. Not like the days of disposable purchases made on credit.

    When it comes down to real necessities, it is amazing what we can live without.

    Should be good for the environment anyway this recession.

  98. #76 – I keep hearing that he wants to run again, I’m not sure how good of an idea that would be though. He might want his face to be out of the public eye for the next few years, there’s been a lot of acrimony built up over the direction of NYC; whether he likes it or not and whether it is true or not he’s going to be associated with it.

  99. Har says:

    Section 8 of the Paulson proposal states:

    The plan would grant the Secretary of the Treasury unprecedented power to spend,[11] proofing his or her actions against congressional or judicial review. Section 8 of the Paulson proposal states: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency

    Ha – Is this a joke no one can ask questions about where the money is going.

  100. Tom says:


    Didn’t they take out section 8?

  101. Tom says:


    It could just be the administration calling in their marker for helping him avoid major anti-trust penalties.

  102. skep-tic says:


    “fact that this is cutting across a quarter end (9/30/08) is a disaster.”

    I am getting hammered today

  103. skep-tic says:

    sorry, the sad truth is that the average american has no idea what is going on

  104. randy says:

    104 – skep – “I am getting hammered today”

    what, are you short the market?

  105. randy says:

    the PPT should be in action again today, but not in it’s traditional role of propping up the market. this time they’ll crash the market to help grease the skids for the bailout.

    PPT works both ways…

  106. rhymingrealtor says:

    Bill Gates wants the bail out too.

    So, let Bill Gates pay for the bailout. All’s well.


  107. skep-tic says:

    “what, are you short the market?”

    no, not that. just seeing general chaos at work due to quarter end credit issues

  108. kettle1 says:

    Skep, 105

    You are right that many do not have any idea what is goingon. However, A surprising number of people are at least trying to understand what is going on and a larger percentage can “fee” that something is wrong but dont know what it is.

    The Americana public is like someone who’s alarm just went off at 3am. They are groggy and blinking. if we can keep them awake, they might actually start to see what s going on around them.

  109. Nom Deplume says:


    John Bogle was on CNBC once and he was asked about investing, and his tip was “Don’t watch CNBC–it will make you poor and stupid.”

    Astonishingly, he has been back since.

  110. Tom says:


    “sorry, the sad truth is that the average american has no idea what is going on”

    I would disagree. For years the average american has been seeing some of their neighbors spending beyond their means. Then they found it they were using their house as an ATM machine.

    Now they realize Wall St was using the same house as an ATM machine too.

    Don’t you think it’s a bit hypocritical for you to have been bashing those greedy homeowners for all this time and now to be lobbying for this bailout to save these poor highly leveraged companies.

    We’re all taking a bath. That’s how we begin to clean off the crud.

    I think I subconsciously had you in mind when I wrote this.

  111. lisoosh says:

    So -which currencies are looking good as a hedge?

  112. skep-tic says:

    Tom– it is all the same ball of wax. There is no dividing line between Wall st and main st. that is what is so foolish about this whole backlash

  113. Tom says:

    “Tom– it is all the same ball of wax. There is no dividing line between Wall st and main st. that is what is so foolish about this whole backlash”

    Well then you should have been for attempts to help homeowners stay in their homes and avoid foreclosure so the banks could keep getting money.

    That’s what’s foolish about what you’re saying.

  114. Tom says:


    “A surprising number of people are at least trying to understand what is going on and a larger percentage can “fee” that something is wrong but dont know what it is.”

    I agree. A couple weeks ago I started seeing a lot of visitors that were hitting pages related to what’s been going on. Last week there were even more.

  115. skep-tic says:

    #115 I was for the bankruptcy modifications. But if the goal is to shore up the banking system, the most direct way is to recapitalize the banks themselves, rather than give money to millions of individuals.

  116. max says:

    hearing more and more credit lines,(equity)
    bieing cancelled.

  117. chicagofinance says:

    It is Sept 30. I stated my viewpoint. A number of you reflexively dismissed it. Fine. Someone check back with me in 120 days and see if your provocative tough talk was the medicine we needed. Regardless, you have your way now, but Congress is going to move forward without you. The people that needed to CYA (or CTA as it were) have done so. We are $crewed….should I quote Bobby Knight?

  118. Victorian says:

    Can anyone explain to me how the banks will get recapitalized if the government pays market prices for the illiquid assets?

  119. lisoosh says:

    skep – I’ll summarize the rest of the thread for you.

    The banking system is an empty shell. The economy is scr*wed and both Wall Street and Main St. are in the hole.

    Difference is Main St. appears to have accepted the fact while Wall St. hasn’t.

  120. Victorian says:

    Here is an explanation from Hussman.

    Let’s return to the basic balance sheet of a typical financial company before the writedowns:

    Good Assets: $95
    Questionable Assets: $5
    TOTAL ASSETS: $100

    Liabilities to Customers: $80
    Debt to Bondholders: $17
    Shareholder Equity: $3

    Now let’s write down the questionable assets – not all the way to zero, but to $2:

    Good Assets: $95
    Questionable Assets: $2

    Liabilities to Customers: $80
    Debt to Bondholders: $17
    Shareholder Equity: $0

    This shortfall of protection on the liability side of the balance sheet is what causes a run on the institution, because once shareholder equity is gone, the only way to get at the debt to bondholders is for the company to declare bankruptcy.

    Hussman then explains why the Paulson plan as originally sold didn’t provide any real answer to the problem:

    The Treasury plan seeks to buy up those questionable assets and thereby protect the institution against failure. Problem is, suppose the Treasury buys those questionable assets at their going value of $2. Here’s the result:

    Good Assets: $95
    Cash Proceeds from Sale of Questionable Assets to Treasury: $2

    Liabilities to Customers: $80
    Debt to Bondholders: $17
    Shareholder Equity: $0

    Does this transaction protect the institution against failure? No! If you buy the bad assets off the balance sheet at their market value, nothing changes on the liability side!

  121. lisoosh says:

    Chi – I don’t think anybody has dismissed your viewpoint. Many have disagreed though.

    There is a difference.

  122. BC Bob says:

    Chi [119],

    This Quote?

    “Most people have the will to win, few have the will to prepare to win.”

  123. Clotpoll says:

    chi (119)-

    Talk is not what’s needed. What we need is some good, old-fashioned INaction.

    Let it burn, baby! Gotta learn to love the pain. Kill the patient to save the patient.

  124. lisoosh says:

    Actually Chi –

    Feel free to discount any opinion I may have. I’m not a finance person. I don’t dabble in “the market”. Maybe I’m a moron who just “doesn’t get it”.

    But instead of dismissals and vague statements and “you’ll see in a few months”, do me a favor – tell me exactly WHY Schiff, who DOES deal with these issues on a daily basis, who was spot on in predictions YEARS ago is 180 degrees wrong.

    After what, 3 years on this board(?), do that for me.

  125. Nicholas says:


    What was your viewpoint?

    I went back to the begining of this thread and all I saw was that you were regretful for the situation and that you approve of using a blunt force object, aka bailout.

    We are $crewed, but there are quite a few of us here that don’t believe that this bailout, or “capital investment”, is the right thing to do.

    I get the distinct feeling that people have been set into panic mode by the comments of the administration and that hysteria abounded.

    Guess what, I went to Chipotle today and people were still ordering food and talking about sports. Me and office-mate had discussions about what his doing over the winter holidays. We are not ignorant of the situation, we just decide to focus on being productive and responsible spenders.

    Thanks for your doomsday scenario but I am going to have to disagree with you that we are headed for another great depression. I believe that things will be bad, but I just won’t be controlled by fear, or people who lead that way.

    Let me know when this board starts up their credit union, I have some dollars to transfer.

  126. max says:

    consumer confidence rose. humm. sounds
    like a bs story to me… but then
    jon,,,, he’s on cnbc saying consumers are
    downbeat. who ya going to believe?

  127. max says:

    corzine,,, says one thing on cnbc,,, but
    then does something else when in Trenton.

    what a DB

  128. rhymingrealtor says:

    Some people would prefer death over life on life support. Do they know the consequences of their preference?


  129. John says:

    Chicagofinance just has his shorts in a bunch. No big deal. I am for the bailout plan only cause I want to dump some bank bonds I bought plus I work on Wall Street.

    Consumers are downbeat, my friend sells yachts and mobile homes to the mega rich and told me people are turning them in and taking what they can get. Mind you these are people two years ago were able to buy a 500K boat for cash. BMW and Mercedes are having it real tough near me. Ford has its Focus, Chevy its Malibu, Toyota its Corolla, but BMW and Benz swings for the fences, 60K cars are a tough sell when people only want to get from a to b without breaking down. A lousy used Saturn can do that for 3K.

  130. jcer says:

    Chicago is not entirely wrong here, without the existence of working financial markets, which is the case if many of the banks go under there will be spillover into other businesses triggering a massive recession/depression. That being said, Roubini’s idea of recapitalizing the banks and allowing the market to deal with the bad assets seems better. The original bailout plan is a gift to unsecured creditors, if the company is insolvent bring in gov money as a large equity stake, hurt the shareholders and unsecured creditors but keep the business afloat. The taxpayers have given a convertible loan, where if not payed they get equity, big equity at todays price. This provides a way of keeping the banks alive while effectively not totally ripping off the taxpayer.

  131. Nicholas says:

    Is that all you have rhyming? More fear-mongering?

    Why are the options death or life-support?

    I am going to reject your twisted version of reality that *everyone* in some sort of collossal wreck that will result in us dying or being marginalized.

    This country is full of smart, capable people who will rise to the occasion to bring order and stability back to the forefront.

    I certainly know the consequence of my preferences. I would prefer that it be done in a well thought out manner instead of in the midst of this panic that we are seeing.

  132. jcer says:

    John, boats are a tough sell, totally illiquid, no loans anywhere to be found. Boating is a cash game, 750k for a boat, plus 20k+ yearly maintenance/slippage costs, very high fuel costs, and this is only for a 45ft boat, big money and forget it if you have a captain add at minimum 50k+ per year. I know someone with a 56 Viking it probably costs him 150k+ annually to run the boat, forget about the 2.5m purchase price.

  133. Nicholas says:

    Chicago hasn’t made a point to be wrong on that I could see.

  134. Shawn212 says:

    Hey Guys – long time lurker here. Came across this plan. Proposed by Congressman David Davis…seems pretty reasonable to me. Apologies if it was posted earlier.

  135. Shawn212 says:

    btw – the friend that gave me the link just sent me the following email
    I just got off the phone with Congressman Davis’s legislative coordinator. He said the plan Rachel referenced above can be referred to as the “Republican Study Committe Alternative Plan” and it’s H.R. 7223. He said the plan was developed by a group of conservative Republicans in the House. Maybe Dr Paul was involved? I should’ve asked… They presented it to the Executive branch and it was rejected. Then Nancy Pelosi and the House leadership squashed it before it could reach the floor. So there IS an alternative plan which isn’t a $700 billion slush fund! From now on when I call my representatives I’m going to point them to this plan. I’m soooo tired of hearing “well, it’s not a perfect plan but nobody is proposing any alternative and we’ve GOT TO DO SOMETHING.” Here’s a sensible alternative plan which doesn’t cost the taxpayers a dime.

  136. Shore Guy says:

    where is spot gold right now?

  137. BC Bob says:

    “There is at least one key difference between casino gambling and CDS trading: Gambling has strict government regulation. The federal government has long shied away from any oversight of CDS. The CFTC floated the idea of taking an oversight role in the late ’90s, only to find itself opposed by Federal Reserve chairman Alan Greenspan and others. Then, in 2000, Congress, with the support of Greenspan and Treasury Secretary Lawrence Summers, passed a bill prohibiting all federal and most state regulation of CDS and other derivatives. In a press release at the time, co-sponsor Senator Phil Gramm – most recently in the news when he stepped down as John McCain’s campaign co-chair this summer after calling people who talk about a recession “whiners” – crowed that the new law “protects financial institutions from over-regulation … and it guarantees that the United States will maintain its global dominance of financial markets.”

  138. watergapnomad says:


    I saw your Delerium post…any chance you’re going to The Sisters of Mercy show on Nov. 3rd at the Fillmore?

    Now, if AE would just get off of his duff and put together one last great album.

  139. jcer says:

    Is anyone really sick of the calls to eliminate mark-to-market accounting rules. Yes while the market is illiquid and it is difficult to price the asset, fundamentally many of these “products” are non-performing assets at this point or will be soon. We can point the finger as much as we like at the accounting but the truth is the real villain is leverage and lax lending practices(the quest for yield at the expense of safety). What business banks had having all of these toxic assets on their balance sheets I don’t know and the dollar values they were playing with where mind boggling. I guess we could mark to yield vs. carry cost but that would just delay the inevitable.

  140. rhymingrealtor says:


    I think you’ve read my post wrong, it seems to me that we’ve heard about what will happen if this bailout does not take place, we just have not heard what will happen if it will. I have not been convinced in favor of a bailout, some of us want death, so to speak.

    Please we’ve heard what happens if it’s not done, tell us what happens if it is? Will all be well again?

  141. lostinny says:

    139 watergapnomad
    Nope no Sisters for me. I’ve seen them few times and I’m sorry to say, I can’t pay to be bored by Mr. Eldritch anymore.

  142. lostinny says:

    139 watergapnomad
    Who’s AE?

  143. kettle1 says:

    May i suggest we look to the russian financial crisis of 2000.

    The russian banking system ground to a halt. While standard of living decreased every day life continued. I am not suggesting that it was a pleasant experience, but it shows that people will generally persevere. Every day commercial activity continued on in a black/barter market.

    The russian financial crisis was certainly different in some key aspects, however it can still be used as a model to see how the population responds to such situations

  144. Tom says:

    Oooh.. another crazy alternative to the bailout plan.

    The root of the problem according to Bernanke and Paulson is the correction in housing prices and foreclosures.

    Average salary on Wall St was something like $400k, average salary at Goldman was something like $600k. Billions of dollars in bonuses and it couldn’t all have gone to coke and hookers.

    Lets see if the median $48k/yr american family could by a $303k house… Then the average Wall St employee can buy like 7-8 houses at 10% above 2005 prices.

    That could be like 2million houses just from Citi. A little less for BofA.

    Then they just need to hold on to them until their values are no longer supressed. Talk about eating your own dogfood. That should build confidence.

    Solves all the problems and doesn’t burden tax payers. And we don’t just pretend prices have increased in quarterly filings, they actually did. See millions of people paid a premium to buy them.

    I’m not even sure if I’m being sarcastic.

  145. Nicholas says:


    My apologies for misinterpreting your statement.

    I’m just getting fed up with all the fear.

  146. PGC says:

    #145 kettle1

    And look where they are now. The oil money in the hands of a few people and the market in turmoil.

    Where’s RE101 these past few days? Not like him to miss basking in the glory of the R’s riding to the rescue. (Oh wait!)

  147. watergapnomad says:

    139 watergapnomad
    Who’s AE?

    Andrew Eldritch, TSOM’s front man.

    I’ve now missed seeing The Sister of Mercy about four times since 1997. It’s been like a curse – I get tickets, and something comes up. So, I’m determined to go see them this time around, as I’ve never seen them before.

  148. BC Bob says:

    “we just have not heard what will happen if it will.”


    RE will remain distressed, debt losses will accelerate as the underlying collateral decays. In addition to this, the job market is crumbling, credit will remain tight, real incomes will continue to decline and consumer spending will decrease.

    As the slump accelerates, the world recession will take center stage. Debt will have to be serviced; federal, state, municipalities and consumer. At least Japan wasn’t buried in debt when they were spiraling downward.

    Doom and gloom? No. Just an old fashioned gut wrenching, deep recession, possibly worse. Are we entitled to sidestep this hardship? Have we earned it? The positives, the consumer will learn to save, we won’t be throwing away $2B a day to feed our addiction and we will rise to much greater heights.

  149. watergapnomad says:


    You also have to consider the rise in crime that will almost certainly accompany an economic slowdown such as was experienced in Russia. That could be compounded by cuts in law enforcement should tax revenues dip.

  150. lostinny says:

    149 watergapnomad
    I don’t know where my head is. :)
    Sorry to hear you haven’t seen them live. I hope you enjoy them when you finally get to see them.

  151. Tom says:

    jcer 141,

    I agree. I like to boil things down to things I can understand. What they’re trying to do by that is like saying we should appraise houses in foreclosure higher so that the owner can refinance to a better loan.

    Basically banks either don’t have the equity to borrow against and want to pretend they do.

    This is actually a type of foreclosure scam and sometimes done through a straw buyer. In this case Paulson might be the straw buyer but the taxpayer is going to be holding the bag.

    If you go on to the story of that man in Newark, he actually did work hard to improve his property to get it appraised higher. Putting in sweat equity. Then he was able to get a reverse mortgage. Doesn’t sound like a great situation but he got to keep his home.

    Problem is, these people holding these bad mortgages and mortgage related assets do not want to put in the work to improve their value. They just want to pass them off to the taxpayers and pretend as if they never existed.

  152. kettle1 says:

    Tom 146:

    That does solve the problem. Assume that all the bankers were required to buy the homes (ignoring personal rights issues for the moments).

    We now have 10 homes per banker scattered across the country when 99% of bankers are in NY, Chicago or NC.

    A neighborhood full of empty homes, whether for sale, or owned by an absentee banker is still a neighborhood full of empty homes. You would have problem with squatters, fires, vandalism etc. Surrounding home values drop because no one wants to live in such a neighborhood.

    the entire problem we face is that a huge number of finanical instruments are valued based on home prices that are inflated to historic highs and that are unsupportable at such a level.

    The governments plan of finding a way to maintain home prices and “fix this mess” is no different then a junkie who veins are collapsing telling you that he is going to solve the problem of collapsed veins not by getting off of heroin, but by finding a new vein he hasnt tapped yet.

    We all know how the junkies story ends. he either gets off of the sauce immediately or he dies. The worst possible outcome is that he finds 1 more vein. If he does then muddles on for a while until that vein collapses and by then he has gone way beyond any hope of ever recovering.

    like the junkie, the US has run out of veins of debt. We can either quit immediately and deal with the withdrawal or keep looking for a vein.

    Skeptic has pointed out that we should let the system down slowly. While i do not necessarily agree with him, I can respect his point. The problem is that none of the politicians have talked about a slow let down. All you hear is how we must stabilize home prices and save the market. home prices MUST and WILL drop whether we like it or not. Any plan to “stabilize” home prices is not a plan to slowly deflate the bubble, but a plan to maintain the status quo.

    I would also argue that a slow let down is near impossible. This is a global event. even if we were to try a slow let down all it would take is for world markets to react negatively for our banks to be in just as much trouble as they are now.

  153. PGC says:

    #136 Shawn212

    That’s one POS plan.

    So my reading is that we repair the balance sheets by giving the banks a massive tax writeoff. We would have to mail the 700bn to the IRS to cover the tax refunds. The tax payer would see zero money back.

    On top of that we give Wall St a big windfall tax break as they bring all the capital they have been sheltering offshore back to the US.

    The end result of any plan is “The Banks will hoard cash”. So if we do nothing it may force some banks and companies bring the capital back and pay taxes on it.

  154. 3b says:

    #146 Tom: Also a credibility factor here, from the begining. Pauslon all is well up until 2 weeks ago, and than it is armageddon.

    Than we have yesterday’s selloff, and it is armageddon again, only to be followed by most of the losses being made up today. Again the credibility factor.

    So many are terrified of a recession, perhaps that is because a whole generation has avoided a serious one like the one in the early 90’s.

    As far as the bailout who knows if we truly need one.

    Perhaps Paulson and Bergabe are just whinging it, and have no idea as to whether it will work or not.

    But yelling and screaming that the sky is falling, is incredibly unprofessional, and immature. It could have and should have been handled differently.

    I doubt Hank would have conducted himself in that manner during a client presentation at GS, nor would Bergabe in one of his Economic classes at Princeton.

  155. Nom Deplume says:

    ” . . . Now that the bubble has burst and the “systemic risk” is apparent to all, Frank blithely declares: “The private sector got us into this mess.” Well, give the congressman points for gall. Wall Street and private lenders have plenty to answer for, but it was Washington and the political class that derailed this train. If Frank is looking for a culprit to blame, he can find one suspect in the nearest mirror.”

  156. kettle1 says:

    PGC Says:
    September 30th, 2008 at 3:44 pm

    #145 kettle1

    And look where they are now. The oil money in the hands of a few people and the market in turmoil.

    And how is that so very different from where we are in the US?

    # watergapnomad Says:
    September 30th, 2008 at 3:51 pm


    You also have to consider the rise in crime that will almost certainly accompany an economic slowdown such as was experienced in Russia. That could be compounded by cuts in law enforcement should tax revenues dip.

    That happens in any slow down, recession or depression. people are much less courteous when you have an empty belly,

    The point of the russian example is that commercial activity continues even if the “offical” market stops functioning. There is a market of last resort even if government abhor it because they cannot readily control or tax it.

    I am not trying to glorify the russian example. but it does show how people respond. You see a very similar reaction during the Argentinian financial crisis of 2001

  157. John says:

    Actually most of wall street get a 100% bonus so base is like 200K, now you are only supposed to spend 2.5X income not including bonus so the average wall street person can afford a 500K house.

    Hence the problem the 48K people were buying houses in NJ that only Wall Street people could afford.

    Tom Says:
    September 30th, 2008 at 3:43 pm
    Oooh.. another crazy alternative to the bailout plan.

    The root of the problem according to Bernanke and Paulson is the correction in housing prices and foreclosures.

    Average salary on Wall St was something like $400k, average salary at Goldman was something like $600k. Billions of dollars in bonuses and it couldn’t all have gone to coke and hookers.

    Lets see if the median $48k/yr american family could by a $303k house… Then the average Wall St employee can buy like 7-8 houses at 10% above 2005 prices.

  158. sas says:

    “$700 billion bailout? You ain’t seen nothin”

  159. skep-tic says:

    European Banks May Raise Loan Rates as Libor Surges to Record

    By Caroline Hyde and Tim Culpan

    Sept. 30 (Bloomberg) — European banks may pass on increased borrowing costs to companies in the form of “market disruption clauses” after overnight dollar rates rose the most on record.

    “Certainly some U.K. borrowers found their banks discussing the use of the market disruption clause,” said John Grout, policy and technical director at the Association of Corporate Treasurers in London. The agreements, common in loans, enable banks to increase the rates charged to borrowers so that they reflect their true cost of funds, according to the ACT.

  160. BC Bob says:

    “European Banks May Raise Loan Rates as Libor Surges to Record”


    They are in worse shape than our banks, levered higher.

  161. skep-tic says:


    “skep – I’ll summarize the rest of the thread for you.

    The banking system is an empty shell. The economy is scr*wed and both Wall Street and Main St. are in the hole.

    Difference is Main St. appears to have accepted the fact while Wall St. hasn’t.”

    Lisoosh– I respectfully disagree. I think the average american believes a few rich guys will go down, but they do not see the connection to them. And it may be inevitable that everything goes down, but I don’t think the public had such a far reaching view in mind when they reacted negatively to the bailout

  162. Shore Guy says:

    A story of a frustrating afternoon, I found a dealer who had some Au, and confirmed with him that he priced based on the spot market. I dig up some cash and head up. We have 16 oz on the table in an assortment of 1oz,1/4 oz, and 1/10 oz coins on the counter. It looked pretty impressive, actually. We agree on the spot price, it was 864 at the time and calculate the cost. In round numbers $14,000.00

    So, I put a briefcase on the counter and start pulling out stacks of 50s, 20s, and 100s. This is not a normal afternoon for me. Now with the cash and gold on the counter it looks like something from a movie.

    It is at this moment he announces he will need an additional 10%. Extra dealer profit I suppose.

    At this point I was ticked and just reloaded the case with the cash. If you ever had to babysit a briefcase full of cash until the bank reopens in the morning, you know it is not a great deal of fun.

  163. Tom says:


    If banks stuck to the price to income ratio of around 3 that was the norm for a while we wouldn’t be in this mess.

    We’re in it and they want to keep it going. So instead of loaning money to those that don’t have it. Loan it to those that do/did/shoulda saved.

    I’m willing to come down to 4-5 houses per, but then I think we need to throw actors and athletes in there too.

    If it was a good idea to lend out 6x income to low to mid income people, it should be a good idea to do so with those that made more.

    Plus with the foreclosure propblem being solved, house prices increasing, they should be able to keep their bonuses.

    I’m at the intersection of sarcasm and hate today. But it does everything that we need to do to keep this farce going. Which is what Paulson is saying in regards to the bailout.

  164. sas says:

    A must watch for all.
    I don’t think its on the google video or the you tube.
    I think you may be able to get from Amazon.
    I should up load it on the you tube for all to watch.

    Memoria del Saqueo (Memory of the Looting, a Social Genocide)
    A film by Pino Solanas, in Spanish w/English subtitles.

    The film highlights how, after the fall of Argentina’s military dictatorship in 1983, the political class, the judiciary, the labor unions and social institutions sold out to the international financial institutions and brought Argentina to the massive social rebellion of 2001.

  165. sas says:

    This is the title:

    Memoria del Saqueo (Memory of the Looting, a Social Genocide)

    A film by Pino Solanas

  166. skep-tic says:

    this is the difference between our financial system collapsing vs russia’s or argentina’s. companies the world over go to our banks (or british or a select few others) to get funds to run their businesses. when our financial system catches the plague (as evidenced by the explosion of libor), the world gets infected very quickly. there is no “decoupling” possible. you guys may dismiss chifi’s claims above, but the damage is being done right now in the credit markets

  167. kettle1 says:

    SHore 165

    What did you say your address was?

  168. All Hype says:

    Cannot wait for the Wall Street people to buy all the empty houses in NJ. We are saved!!!!

    Also we need to start a pool to see who gets the money first. Cause let’s be serious, this is just to bailout the banks with the CDS exposure…..So my guess is Citigroup.

    Followed by:
    Goldman Sachs
    Bank of America
    Morgan Stanley
    JP Morgan

    That should use up the first 700 billion….

    So when does the 2nd 700 billion go to King Henry?

  169. kettle1 says:


    Almost everyone here agrees with you and chifi. yes the damage will be global. No one will be spared unless you happen to have a private island.

    Call it bandaid theory. Quick sharp pain is better then long slow drawnout pain.

  170. kettle1 says:


    downloaded and watched it the other day. Excellent film!!!

    will try and upload it tonight!

  171. sas says:

    “downloaded and watched it the other day. Excellent film”

    were you able to get the englsih subtitles?

    my spanish is too slow.


  172. Tom says:


    So we need to borrow from foreign companies to shore up our financial services so once the dollar tanks we can attract foreign investors that will further recapitalize the banks so we can lend to foreign businesses.

    Don’t you think they’ll catch on and cut out the middle man to save the $10 wire transfer fee?

  173. Shore Guy says:

    Corner of Walk and Don’t Walk. I am the guy sitting on the briefcase holding a machette.

  174. kettle1 says:


    yes, i downloaded the subtitles separately and added them to the film so i have 1 AVI file. There are a few programs that do this for you.

    The sync of the subtitles is perfect.

  175. kettle1 says:


    never bring a knife to a gun fight….. ;)

  176. skep-tic says:

    Tom– I think everyone agrees that the system is unsound. The reality is that a new alternative is not going to emerge overnight. So everyone the world over (short of hunter/gatherers) has an interest in not letting the system fail in the short term. It is like when you see a new bridge being built next to an old, crumbling one. Everyone agrees that the new bridge will be better, but meanwhile, thousands of peole a day still are crossing the river. You don’t let the old bridge collapse until the new bridge is done.

  177. kettle1 says:


    the only place i was able to find the video for purchase was outside the US and in PAL format. SO i just did that whole EVIL download thing.

  178. BC Bob says:


    I’m not dismissing anyone’s claims, I agree. The credit markets have been ringing bells for the past year. Too bad more were not listening then.

    That said, the major point is being neglected. The problem is not the freeze in the banking system, it’s the collapse of the housing market. How do you artifically pump up housing prices and subsequently free up capital? We have already done that. The result? The world’s financial institutions imploded.

    We have lent, borrowed, lent more and borrowed again. Net result, bankrupt. Now we want to repeat the process?

  179. sas says:

    “never bring a knife to a gun fight”

    I bring both :)


  180. kettle1 says:


    I really am not trying to be mean, BUT…..

    The powers that be ARE NOT tyring to let the bubble down slowly. They are trying to maintain it! Any real solution regardless of how fast or how slow must include the destruction of the inflated derivatives. no one in power is seriously talking about this.

    I understand your point, but you dont seem to get that no one is talking about the otion you suggest

  181. sas says:


    u should post that file/link the the boards.
    maybe Grim can post?


  182. John says:

    Well part of the problem with housing is the rules changed. I bought my house on the premise that at 4x income my income would more than double in the next few years and my home price would go up each year making a penny pinching frozen bagel pizza coupon existence for 2-3 years into a free ride down the road. However the 2006 600K cape crowd is looking at less take home in 2009 and a house now worth 475K. They better start eating those pizza coupons and hanging out at the bagel joint at closing time if they want to eat, but it is ok it is only for the next 10-15 years.

    The other funny part is my Mom had her house for 30 years and when she sold it the doors, most of the windows, electricity etc. was the same. Heck basement was stil unfinished after 30 years. The crowd who bought late 90s also drank the kool aid as when their 200K cape became a 600K cape they cashed out took home equities loans and dormed it, put new kitchens in and new bathrooms and somehow now that their 200K cape is worth 450K they are underwater. But wait it is wall street greed that is the problem.

  183. kettle1 says:


    would be more then happy to get you a copy of the video? get my e-mail from grim. or suggest a way to do the transfer. sneakernet or internet?

  184. bi says:

    not all spots are as dark as you thought on the national housing map. atlanta, boston, dallas,denver, detroit, minneapolis and tampla are in positive column. NY area is down only 7% YOY. but if you look at town by town, you will it is virtually flat in desirable NJ towns.

  185. kettle1 says:


    if you have a pulse you are guilty!

  186. bi says:

    the market is back to the exactly same point before yesterday’s voting. this 500 pts swing is best opportunity i have ever seen since it is caused by political factor rather than economic force.

  187. Guy fawkes says:

    The stock markets lost $1.2 trillion yesterday. Do you need a better proof that what goes in the House over $700 billion is posturing, and bad drama posing as reality TV? Money and credit is leaking out of the world economy so fast you’d need a Paulson plan every single day to keep it cranking along.

    Every penny available is hoarded by banks trying to save their butts. You will next see central banks cutting interest rates as if the pit is indeed bottomless. That is an attempt at creating another carry trade. And no, that will not have any effect either. They can not make banks lend to each other who have far more debts than whatever portion of that $620 billion, or the next and the next after that, it is that they can get their hands on. They are gone, drowning in a sea of losing bets, and all the lifeboats left are leaking. Bad.

    The Real Markets have marked the “troubled assets” down to zero. They’re just waiting for the assets to come out of their hiding places. And what we see happening now, is that the real markets are losing patience. They will increasingly start forcing the troubled assets out of their dark holes. And while I am not the only voice talking about this, I think it’s still poorly understood: this poses a very serious concern that the economic system, as it exists today, will collapse in its entirety. $700 billion is just one tenth of one percent of the estimated $700 trillion in outstanding derivatives. It’s like owing $100, and offering a dime as full and final payment.

  188. scribe says:


    Where can I find the statistics about foreign investment in US government bonds?

    I’ve seen you cite stats on net new purchases and redemptions.

    Treasury data?

  189. Shore Guy says:


    Mrs. Shore and looked at a nice lake house a bit over a year ago. The house was nice. The owner was asking way over comps and we engaged him to see I’d we could come to terms. It turns out there was a smaller house there and they bought, toredown, and overpaid for the new construction.

    His decision to pump huge amounts into the property, and create his own ideal getaway is one thing. There is something to be said about having just what you want. But, to expect others to buy into and pay for your vision and pay more than comps, in a declining marker no less, is not realistic.

  190. Kettle1 says:


    If we have a GTG in the next few eeks, i will burn a bunch of CD’s for who ever wants one.

    Guy Fawkes

    Bingo my friend. the 700 – 800 trillion derivative is being firmly ignored by everyone in the room. We squabble of the meaning of 700 billion.

    the real monster is 100 times the size of our cute little 700 billion dollar squeeker.

  191. Kettle1 says:

    1 trillion in value lost in one day?!?!

    now who wants to debate inflation vs deflation?

    Western world will become significantly less wealthy

    In one fell swoop, the House of Representatives has applied a sledgehammer to the American economy. The staggering plunge in the value of publicly quoted stocks in the US last night – a $1.2 trillion fall – shows more clearly than anything else just how much it had been holding out for a financial bail-out.

  192. sas says:

    “If we have a GTG in the next few eeks, i will burn a bunch of CD’s for who ever wants one”

    ok, bloke.
    but I may be going to China sometime in Oct.
    (just don’t hope to hell I don’t end up in Iran).


  193. sas says:

    “now who wants to debate inflation vs deflation?”

    yes, that is a good debate.
    I lean towards inflation, but I can see the points for deflation.


  194. bi says:

    after this bail-out, the fed government is more like a mega-corporation.
    for financial related bills, the voting power of the house reps should be weighted by the ammount of tax paid in his/her constituent. the reps from poor district should have less saying since they paid less tax.

  195. skep-tic says:

    kettle– I hear what you are saying. No one is explicitly saying what I am saying and I may be reading between the lines incorrectly. I just do not see any capacity for going back to the way things were in terms of credit. the euphoria is gone. new regs are coming (actually some are already in place due to transition to bank holding company status). the environment overall is just completely different. but there is a second order event happening now which is total lack of trust due to complete darkness surrounding the value of these securities. no one seems willing to stick their neck out on this, so something needs to get the process moving (in my view) in a controlled way. I see this as the only real possibility in what is being attempted. but again, maybe I am wrong

  196. BC Bob says:

    guy [189],

    Yes, a bucket of sand on the beach.

    They gambled and lost. Vegas has much better risk management policies. Just as short sellers help in the discovery, of stock prices, the credit markets are doing the same. They are now being called out to the floor. The tsunami has hit, any bill passed, they’ll just be pissing in the wind.

  197. MJ says:

    prepare to be sad:

    i hear that lots of people who lost their shirts yesterday have called their reps in a panic begging for a bailout of the banks.

    essentially, the game being played by the banks is working. they are bullying in the public into giving them protection money.

  198. Kettle1 says:

    here is a fun bit….

    the Regulatory Relief Act of 2006 has a provision that allows banks to have 0% reserves as opposed to a standard 3%. The effective date was 2011.

    The tarp act changes that date to oct1 2008!

    Why would a bank actually need to hold reserves?????

    page 83 of the TARP act:

    14 Section 203 of the Financial Services Regulatory Re-

    15 lief Act of 2006 (12 U.S.C. 461 note) is amended by strik-

    16 ing ‘‘October 1, 2011’’ and inserting ‘‘October 1, 2008’’.

    Regulatory Relief Act of 2006 (12 U.S.C. 461 note)


    The amendments made by this title shall take effect October 1, 2011.


    Section 19(b)(2)(A) of the Federal Reserve Act (12 U.S.C. 461(b)(2)(A)) is amended–
    (1) in clause (i), by striking `the ratio of 3 per centum’ and inserting `a ratio of not greater than 3 percent (and which may be zero)’; and
    (2) in clause (ii), by striking `and not less than 8 per centum,’ and inserting `(and which may be zero),’.

  199. skep-tic says:

    “That said, the major point is being neglected. The problem is not the freeze in the banking system, it’s the collapse of the housing market. How do you artifically pump up housing prices and subsequently free up capital? We have already done that. The result? The world’s financial institutions imploded.

    We have lent, borrowed, lent more and borrowed again. Net result, bankrupt. Now we want to repeat the process?”

    BC– I agree that the two are linked, but the first (house price decline) has created a separate problem that is growing in importance and is developing a life of its own beyond this. Fine with me if credit is not available to pump up house prices again. Big problem if credit becomes scarce for everything, which is the situation which is developing. We need to take the housing issue out of the picture as much as possible so that it does not bring all of the healthy parts of the economy along with it.

  200. 3b says:

    #185 bi: Whatever you say grasshopper.

  201. Kettle1 says:

    correct to my previous comment:

    the real financial monster is 100 times the size of our cute little 700 billion dollar squeeker.

    The real derivative monster is ….1000 times larger then our cute little 700 billion squeeker.

  202. skep-tic says:

    #200 kettle– scary, isn’t it? Although is the tiny reserve otherwise kept really more assuring? banks like all other businesses are hostage to cash flow. credit is used to smooth out this cash flow.

  203. scribe says:



  204. jcer says:

    MJ, I have been out of the market for a while for this very reason. I have been disturbed by the activities “Wall Street” has been engaging in for a while and viewed the market as a very unsafe place to be since the beginning of 2006. Many people scoffed at me and I was even nicknamed the “Oracle of Chaos” because in 2006 I dared to even presuppose the markets could fail to function as they were overheating and valuations were not match realistically to intrinsic value, as I told them to flee the market and underweight your portfolio so equities make up less than 25% and avoid financials, people didn’t take me seriously. Yesterday my girlfriend and my father admitted they were foolish not to listen. MJ people didn’t lose the money because of the market etc., they lost it because largely brokerages are run by permabulls and nobody is paying attention to the position we are in. The writing was on the wall by 2004-2005, by 2006 it was becoming more obvious, by 2007 you had to be blind to miss it.

  205. Shore Guy says:

    Has anyone here ever heard of coins “suitable for IRA investment?”

  206. Tom says:


    The way I see it, someone taking out insane amounts of debt for their they can’t pay back equals suicide.

    An industry that is reliant on people taking out insane amounts of debt they can’t pay back, and in turn themselves take on too much debt, resulting in their demise and a major blow to the economy in general… well to me that’s more like suicide bombing.

  207. skep-tic says:

    not sure if already posted. so are Irish suckers?
    LONDON — Surging tensions in lending markets compelled the Irish government to take the extraordinary step of guaranteeing a wide swathe of debt issued by the country’s financial institutions, underscoring the severity of the banking crisis rolling through Europe.

    In the most ambitious measure taken by a sovereign state since the financial crisis began more than a year ago, Dublin said it will guarantee payments on as much as €400 billion ($578 billion) in bank debt, including deposits, securities and short-term borrowings. While small in comparison to the trillions of dollars in assets of the global banking system, the amount is more than double Ireland’s annual economic output, and rivals the size of a financial-markets bailout package being considered in the U.S.

  208. Kettle1 says:


    skep-tic Says:
    September 30th, 2008 at 5:18 pm

    #200 kettle– scary, isn’t it?

    Scary? Not really. Inevitable, is what it is.

    The solution is not credit. the solution is to actually hold reserves, and not reserves that are on loan from the FED. Currently 100% of reserves in US banks are on loan from the FED.

    US banks have 0 real reserves. this is no different then living off of my credit card and then borrowing money to pay my credit card bill.

    This is probably 1 of the number 1 reason why paulson and friends are so scared. We actually are facing a total collapse of the US banking system.

    And while i do not wish for pain, suffering, or general ill will; our system is rotten to the core.

    We are a junky who;s veins have all collapsed and are now looking for one last vein.

  209. cooper says:

    TED @ 3.4
    LIBOR 6.88

    nothing to see here people, keep moving… move along people

  210. BC Bob says:


    I agree it’s spreading to all areas. That’s the unfortunate part. Too bad somebody wasn’t watching the store. An economy of $13T,GDP, attached to the hip with 400-500T in derivatives?

    The fed’s balance sheet busted thru a trillion, for the first time ever. They just pumped $630B into the system the other day. It’s not like the fed isn’t addressing the problem. That said, it’s a whale of a problem to address.

  211. skep-tic says:

    kettle– I think we are on the same page re: the extent of the insolvency. the question is whether it is worth it to try to stave off collapse while banks recapitalize. I believe it would be much more painful to start from scratch than to try to work within the existing structure, however flawed it may be

  212. Kettle1 says:


    regarding the irish.

    Want to know the future?

    A global cascade of financial failure will start with one of the 3 following countries.

    Spain, Ireland, USA

    Any one of the three going down would be like popping the hatch in a submarine while under 1000 ft of water


  213. Nom Deplume says:

    [180] SAS

  214. Nom Deplume says:

    [180] sas

    (damn fingers)

    You bring both. I also bring an axe.

    Very good for road rage types as they think you are utterly nuts, get back in their cars, and leave quickly.

  215. Kettle1 says:


    I believe it would be much more painful to start from scratch than to try to work within the existing structure, however flawed it may be

    we need debate no further. This is the fundamental difference between us. in my opinion The current structure is fatally flawed and the core of our banking system has been consumed by these flaws.

    Light it up and get out the marshmallows.

  216. BC Bob says:

    kettle [215],


  217. skep-tic says:


    most importantly, what does this mean for the riverdance?

  218. cooper says:

    In other news today…

    Charge dropped against man accused of farting

    SOUTH CHARLESTON, W.Va. – A West Virginia man accused of passing gas and fanning it toward a police officer no longer faces a battery charge.

    apologies couldn’t resist

  219. skep-tic says:

    Good Morning America interviewed Representatives Marcy Kaptur (D-OH) and Marilyn Musgrave (R-CO) this morning; both were on Team Nay yesterday at the Patriot Act Rescue Bill game.* If you don’t have time for the six minute clip, just start paying attention at around 4:45. That’s when Kaptur says “I think one of the problems is that Mr. Paulson is a day trader.”

  220. Tom says:

    only 200 something posts today? Every one must be making a run for the bank.


    Kaptur said some good things back in June about subprime lending being a ponzi like scheme that caught my attention. Some of her speeches lately have also been good.

    But I’ve been getting the sense that she may not understand the issues completely and is just reading the speeches given to her. Not like Ron Paul who could talk about these issues in his sleep. DeFazio comes across as genuine though.

    There was a republican, Issa I think, that also called Paulson a day trader. I don’t think that’s too far off considering what Goldman was doing while he was CEO as well as many other firms. Too much short term emphasis.

    You wann find a good video for Kaptur there’s one on youtube where she confuses Bernanke with Paulson at a hearing.

    Raptur and other Dems picking up on the mark-to-market changes scares me.

    The way I see it, the bubble should started bursting aroudn 2002 when states were coming out with predatory lending regulations.

    2003 should have been the peak cause by market forces.

    The period of 2004-2006is is when lenders were pumping even more cash into the market to keep it afloat.

    2007 was when the GSE’s really ramped up efforts to take those bad deals from lenders. That’s what probably did them in, in my opinion. But they were just like expansion tanks trying to take pressure off the banks bad.

    This year the Fed has gone crazy trying to give away money and put out fires.

    To me it looks like it’s been 4-5 years that the economy has been propped up. We don’t need any more of that.

  221. chicagofinance says:

    cooper Says:
    September 30th, 2008 at 5:29 pm
    TED @ 3.4
    LIBOR 6.88
    nothing to see here people, keep moving… move along people

    coop: this is to get to tomorrow…..even though it is 3M-USD-L

  222. Shore Guy says:

    “DeFazio comes across as genuine though.”

    I know him and both like and respect him. He is, in fact, genuine.

  223. Orion says:

    Pelosi makes no tv appearance today and market goes up. Hhhhhmmmmm.

  224. Clotpoll says:

    skep (172)-

    Let it burn, baby!

  225. Clotpoll says:

    skep (182)-

    Poor analogy.

  226. Clotpoll says:

    bi (190)-

    You’ve now out-idioted yourself:

    “…atlanta, boston, dallas,denver, detroit, minneapolis and tampla are in positive column…”

  227. Clotpoll says:

    skep (206)-

    Wishing away the elephant in the room is not a solution. When you open your eyes, the elephant is still there.

    Housing was the fulcrum under the lever of all this madness. Things worked just fine on the way up. Things will work fine on the way down. The people who don’t like it just don’t want to experience the pain required to bring things back into balance.

    We all know where things are headed. The only disagreement we really have is over whether one can sugar-coat a slice of shit pie.

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