Id like to know or see comparisons of the economy before all the stimulus and cash for clunkers etc and now after the fact and see if it had any effect on the average american family. Im of the mindset that only the executives in big business came out ahead from these plans. If a family cant afford to pay their mortgage and put food on the table what good is trading their car in for a newer one going to do?
What IBM is doing is nothing but a nasty business! Of course they will not have to be accountable to anyone for what they are doing but definitely it’s all about humanity and business ethics. I think the way IBM is going… its reputation will be destroyed very soon.
Am I in this world which honors and values people for what they are? How can it be? Such a great scientist who used to work in NASA, how can he be treated like that?? I am asking, everyone, can you give any explanation of that? How mean it is! He needs to work for hourly just $10 rate! I feel ashamed for being a part of this nation who maltreated such a great man.
Excellent blog with an outstanding synopsis by Bloomberg's writers on this matter (although they could have been far more damning in the long term design of the derivatives situation).
When they quote Ms. Tavakoli, they didn't give her enough room to elaborate: namely by camouflaging the risk, the banksters were enabled to do superleveraging, thus creating the foundation of present and ongoing economic meltdowns.
The Bloomberg's article quote of Mr. Zubulake was spot on, such that the bankster derivatives dealers would refuse to utilize the already existing Chicago Mercantile Exchange (CME) since they didn't own it, correctly inferring the ownership of InterContinental Exchange (ICE) and and ICE US Trust. (If one of those business news services would run a chart explaining the original financing and ownership of ICE, ICE US Trust, Markit, Markit Wire, TradeSpark, Climate Exchange Plc, etc. --- Then no one would have any excuse to remain clueless.)
That very interesting quote from the Bloomber article:
"-- JPMorgan, Goldman Sachs, Bank of America, Morgan Stanley and Citigroup Inc. -- held 95 percent of the $291 trillion in notional derivatives value of the country’s 25 largest bank holding companies at the end of the first quarter..",
reflects something I previously mentioned awhile back, namely that from BIS and Fed reports I had gleaned that the notional derivatives exposure holds true: JPMorgan at $80 trillion, Citigroup and BofA at approximately $40 trillion apiece, Goldman at $30 trillion (still uncertain as to the exact amount of exposure by understated Morgan Stanley).
SPECULATION: Given the recent activities mentioned in this blog, articles, and reports, and given the previous blog on the Tradable Insurance Credits (the Fed's recent contingent-CDS financialization invention), and given the extreme pushback by the Clearing House Association (ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo) and Geithner against an audit of the Fed, it could be suggested that there is a focused move to concentrate not only the pricing of capital by the Fed, but also the pricing of commodities, precious metals, etc., by way of overseeing Credit Default Swaps, new CDS instruments, and the complete lack of transparency in their money infusions.
not a good time to hit that submit button. So sorry, what a really absurd mistake...oh yeah, the entire Chinese treasury holdings went to zero overnight. (what a way to spread crapola!) I woke up, checked out the site and was horrified at what I had done!
Very nice touch...almost a "terrorist threat level" system for sycophants.
He was one of many I was referring to in that not all economists with high track records, credibility are claiming there is a cycle inflection point (i.e. recovery) at the Q2 2009 window.
My 2 cents is the cliff diving appears to be over and also could be classified as a panic. Then, I especially liked Krugman's new classification of Economic Purgatory as a element in an economic state machine. ;)
On the rest of this...
I'll leave the declarations up to the big dogs and the NBER and stick to looking at the details for now.
Let me now clarify what this change in our little friend's countenance does not signify. First, it is not an Econbrowser Declaration that the recession is over-- that will have to wait until our GDP-based recession indicator index falls below 33%.
Nor is this a less formal "all-clear" signal. Far from it. I still don't see the evidence that employment has started to pick back up, and as long as the number of people with jobs is falling, there is plenty of potential for destabilizing feedback. Lower employment can aggravate mortgage defaults and put further stress on key financial institutions. As long as employment continues to fall, things could rapidly deteriorate.
But the situation definitely looks better than it did.
But in terms of the U.S., two problems, #1, is they expect to export their stuff to the U.S. for their own economic gain, (instead of focusing in on their own domestic consumer economy), and #2 is they are the largest holder of U.S. debt ($800 Billion).
That's the problem with keyword "recovery", one can have a technical recovery, yet as the statistics show very clearly....that can mean nothing on main street where standards of living, wages, income have decreased steadily for about 30 years.
So first thing to do is separate in your head that keyword recovery does not mean main street is recovering...it's a business cycle economic term really.
call this a recovery. Unemployment and its effects on mortgages and impact on financial sector and CRE. We will see in a few months whether sales of homes and cars were boosted by gov't supports or whether these slight bumps can be sustained.
Oh, yeah, China - the world's economic driver. Something tells me that China's economy may not be as healthy as some would like us to believe.
I'm just reading the various economists out there with pretty damn good track records as well as the various LEIs, EIs out there directly.
I also think, like waves....if I just try to time the peak and the valley, focus all of my attention on getting that right, it's not telling me much about the ride or where I'm gonna land on the beach.
For example, I suspect we could see positive GDP for Q3 and Q4, which would make it a technical recovery if I understand the definition....that said, if G in the GDP equation is where it's all coming from....I frankly don't think that's good or sustainable. It's better than negative, but not really the long term structural changes I believe need to be there.
Just like Q2 2009, well, awesome, global trade collapsed, U.S. consumer way down and thus imports cliff dived more than exports...and that helped U.S. GDP numbers. Ok, but that doesn't erase the fact U.S. exports are way down.
i.e. I'm looking for structural economic growth, where the money is for the middle class, sustainable, a shift to a production economy....
i.e. I'm with midtowng on this one, where is the long term sustainable growth, the thing that grows the U.S. middle class going to come from?
I'm also not so sure about the double dip either and while I see recent UI reports which imply only the initial claims have gone down to "normal" recession levels...they are not at 300k range.
I don't have an answer but can massive unemployment literally bring down on a Macro economic level economy? I wish that were so frankly, because the economy is supposed to be for all Americans...but is this a tipping point?
I do not have answers but I am assuredly not willing to proclaim that impossible at this point.
Now today we just had a city region ISM turn +50..finally. Now that's awesome, but I'm going to wait for the national. I mean great for Chicago, but it's one area. Same with Philly area recently.
Not all believe it's a recovery, there are many discussing "double dip". Many, including myself believe we will see some sort of positive GDP, I believe due to increases in government spending. But even by the technical definition, not all economists have proclaimed end of Q2 2009 the "recovery inflection point".
If you note, I am making fun at that need to predict, to declare as if somehow that erases all of the other states of the economy, which it does not.
Kind of a "I'm first, you're wrong, I'm right" kindergarten experience.
Mixed in with a real story that the bond market is not behaving as if a recovery is imminent.
Sorry! I put this up last night and realized the major mistake this morning, which is now corrected. China has not lost $800 Billion dollars which is their entire holdings of U.S. Treasuries.
China is worried about major losses due to dollar devaluation and an increase in interest rates and obviously so, considering it's holdings!
My apologies again, I know people expect us to have a certain standard of well cited, credible posts and I just screwed the pooch on that one!
Notice the quote from the article: "“The bond market does not believe we will see rapid robust rates of growth,” said Jeffrey Caughron, an associate partner in Oklahoma City at The Baker Group Ltd."
The debate is no longer about whether there will be a recovery (+GDP growth) or not. Per the above quote, the fact of growth is accepted. There is a Recovery and it is here now.
The debate is about the following:
1. how robust will the Recovery be?
2. how long will the Recovery be?
3. how much of the Recovery will be confined to the plutocrats and how much of it will manage to filter through to the plebes?
every analysis starts from first principles, and in the case of economies, there are basically two ways of understanding economic life that are at the center of the debate now.
The assumption that exists in what you say is that the economy is essentially composed of individuals and firms that are atomized and essentially interchangeable. Labor is deskilled and technical specifications are largely ignored.
What I mean is that a car, for example, is composed of several thousand components. A number of them conform to the expectation that you have, that there is more than a single supplier. For example, many parts like a muffler will have an aftermarket. This means that firms other than the original equipment manufacturer (OEM) will produce replacement parts. However, an aftermarket exists for only a fraction of the components in a vehicle.
Take my 2003 Pontiac Sunfire. Last month, I discovered that something which looked like a stick was hanging to the ground form beneath my car. So I crawl up underneath to pull it out, and I realize that it's the bracket the loops around my muffler and connects it into the frame of the vehicle. Specialized components like this for which there is a high degree of technical specification (where do the holes belong, how big is the muffler, what the bracket orientation, etc.) often aren't going to be a profitable aftermarket. So you basically have something that you have to go to the OEM for. If that OEM goes out of business, and the machine tools that are used to produce the pieces have been sold in a liquidation sale to a company in China, a new producer isn't going to pop up overnight. Now anyone wanting to enter the market for this part has to retool their machines to the specifications required by the auto company. And that can be extremely expensive, particularly when you have to finance a new piece of specialized equipment that may take 10-20 years of full out production to repay. This in an environment where credit has dried up. The idea that firms are basically interchangeable breaks down.
The second way of looking at the economy recognizes that the economy is basically a network, and that removing any particular link may impact a number of other links to collapse. It's a contagion element.
Id like to know or see comparisons of the economy before all the stimulus and cash for clunkers etc and now after the fact and see if it had any effect on the average american family. Im of the mindset that only the executives in big business came out ahead from these plans. If a family cant afford to pay their mortgage and put food on the table what good is trading their car in for a newer one going to do?
What IBM is doing is nothing but a nasty business! Of course they will not have to be accountable to anyone for what they are doing but definitely it’s all about humanity and business ethics. I think the way IBM is going… its reputation will be destroyed very soon.
Bloomberg.
But I'm not so sure what the stock market or betting against a rally says about calling a recovery...
although he's quoted as saying if it happens it's not sustainable.
Roller coaster analysis, econ 101 has arrived.
Am I in this world which honors and values people for what they are? How can it be? Such a great scientist who used to work in NASA, how can he be treated like that?? I am asking, everyone, can you give any explanation of that? How mean it is! He needs to work for hourly just $10 rate! I feel ashamed for being a part of this nation who maltreated such a great man.
Excellent blog with an outstanding synopsis by Bloomberg's writers on this matter (although they could have been far more damning in the long term design of the derivatives situation).
When they quote Ms. Tavakoli, they didn't give her enough room to elaborate: namely by camouflaging the risk, the banksters were enabled to do superleveraging, thus creating the foundation of present and ongoing economic meltdowns.
The Bloomberg's article quote of Mr. Zubulake was spot on, such that the bankster derivatives dealers would refuse to utilize the already existing Chicago Mercantile Exchange (CME) since they didn't own it, correctly inferring the ownership of InterContinental Exchange (ICE) and and ICE US Trust. (If one of those business news services would run a chart explaining the original financing and ownership of ICE, ICE US Trust, Markit, Markit Wire, TradeSpark, Climate Exchange Plc, etc. --- Then no one would have any excuse to remain clueless.)
That very interesting quote from the Bloomber article:
"-- JPMorgan, Goldman Sachs, Bank of America, Morgan Stanley and Citigroup Inc. -- held 95 percent of the $291 trillion in notional derivatives value of the country’s 25 largest bank holding companies at the end of the first quarter..",
reflects something I previously mentioned awhile back, namely that from BIS and Fed reports I had gleaned that the notional derivatives exposure holds true: JPMorgan at $80 trillion, Citigroup and BofA at approximately $40 trillion apiece, Goldman at $30 trillion (still uncertain as to the exact amount of exposure by understated Morgan Stanley).
SPECULATION: Given the recent activities mentioned in this blog, articles, and reports, and given the previous blog on the Tradable Insurance Credits (the Fed's recent contingent-CDS financialization invention), and given the extreme pushback by the Clearing House Association (ABN Amro, Bank Of America, The Bank Of New York, Deutsche Bank, HSBC, JP Morgan Chase, US Bank and Wells Fargo) and Geithner against an audit of the Fed, it could be suggested that there is a focused move to concentrate not only the pricing of capital by the Fed, but also the pricing of commodities, precious metals, etc., by way of overseeing Credit Default Swaps, new CDS instruments, and the complete lack of transparency in their money infusions.
Read about males buying underwear as an economic predictor.
Now if this doesn't lighten things up, I just don't know what else to do.
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not a good time to hit that submit button. So sorry, what a really absurd mistake...oh yeah, the entire Chinese treasury holdings went to zero overnight. (what a way to spread crapola!) I woke up, checked out the site and was horrified at what I had done!
The sentence in the original is a bit ambigous--ohh, the dangers of a the dangling modifier!
Very nice touch...almost a "terrorist threat level" system for sycophants.
He was one of many I was referring to in that not all economists with high track records, credibility are claiming there is a cycle inflection point (i.e. recovery) at the Q2 2009 window.
My 2 cents is the cliff diving appears to be over and also could be classified as a panic. Then, I especially liked Krugman's new classification of Economic Purgatory as a element in an economic state machine. ;)
On the rest of this...
I'll leave the declarations up to the big dogs and the NBER and stick to looking at the details for now.
even a technical recovery is still in jeopardy because of the risk factors I mentioned. I just read this article and I agree w/ prof. Hamilton:
Econbrowser Emoticon shifts to neutral
RebelCapitalist.com - Financial Information for the Rest of Us.
But in terms of the U.S., two problems, #1, is they expect to export their stuff to the U.S. for their own economic gain, (instead of focusing in on their own domestic consumer economy), and #2 is they are the largest holder of U.S. debt ($800 Billion).
That's significant, with Japan #2 U.S. Treasuries, holdings.
That's the problem with keyword "recovery", one can have a technical recovery, yet as the statistics show very clearly....that can mean nothing on main street where standards of living, wages, income have decreased steadily for about 30 years.
So first thing to do is separate in your head that keyword recovery does not mean main street is recovering...it's a business cycle economic term really.
call this a recovery. Unemployment and its effects on mortgages and impact on financial sector and CRE. We will see in a few months whether sales of homes and cars were boosted by gov't supports or whether these slight bumps can be sustained.
Oh, yeah, China - the world's economic driver. Something tells me that China's economy may not be as healthy as some would like us to believe.
RebelCapitalist.com - Financial Information for the Rest of Us.
I'm just reading the various economists out there with pretty damn good track records as well as the various LEIs, EIs out there directly.
I also think, like waves....if I just try to time the peak and the valley, focus all of my attention on getting that right, it's not telling me much about the ride or where I'm gonna land on the beach.
For example, I suspect we could see positive GDP for Q3 and Q4, which would make it a technical recovery if I understand the definition....that said, if G in the GDP equation is where it's all coming from....I frankly don't think that's good or sustainable. It's better than negative, but not really the long term structural changes I believe need to be there.
Just like Q2 2009, well, awesome, global trade collapsed, U.S. consumer way down and thus imports cliff dived more than exports...and that helped U.S. GDP numbers. Ok, but that doesn't erase the fact U.S. exports are way down.
i.e. I'm looking for structural economic growth, where the money is for the middle class, sustainable, a shift to a production economy....
i.e. I'm with midtowng on this one, where is the long term sustainable growth, the thing that grows the U.S. middle class going to come from?
I'm also not so sure about the double dip either and while I see recent UI reports which imply only the initial claims have gone down to "normal" recession levels...they are not at 300k range.
I don't have an answer but can massive unemployment literally bring down on a Macro economic level economy? I wish that were so frankly, because the economy is supposed to be for all Americans...but is this a tipping point?
I do not have answers but I am assuredly not willing to proclaim that impossible at this point.
Now today we just had a city region ISM turn +50..finally. Now that's awesome, but I'm going to wait for the national. I mean great for Chicago, but it's one area. Same with Philly area recently.
n/t
Not all believe it's a recovery, there are many discussing "double dip". Many, including myself believe we will see some sort of positive GDP, I believe due to increases in government spending. But even by the technical definition, not all economists have proclaimed end of Q2 2009 the "recovery inflection point".
If you note, I am making fun at that need to predict, to declare as if somehow that erases all of the other states of the economy, which it does not.
Kind of a "I'm first, you're wrong, I'm right" kindergarten experience.
Mixed in with a real story that the bond market is not behaving as if a recovery is imminent.
Sorry! I put this up last night and realized the major mistake this morning, which is now corrected. China has not lost $800 Billion dollars which is their entire holdings of U.S. Treasuries.
China is worried about major losses due to dollar devaluation and an increase in interest rates and obviously so, considering it's holdings!
My apologies again, I know people expect us to have a certain standard of well cited, credible posts and I just screwed the pooch on that one!
Notice the quote from the article: "“The bond market does not believe we will see rapid robust rates of growth,” said Jeffrey Caughron, an associate partner in Oklahoma City at The Baker Group Ltd."
The debate is no longer about whether there will be a recovery (+GDP growth) or not. Per the above quote, the fact of growth is accepted. There is a Recovery and it is here now.
The debate is about the following:
1. how robust will the Recovery be?
2. how long will the Recovery be?
3. how much of the Recovery will be confined to the plutocrats and how much of it will manage to filter through to the plebes?
every analysis starts from first principles, and in the case of economies, there are basically two ways of understanding economic life that are at the center of the debate now.
The assumption that exists in what you say is that the economy is essentially composed of individuals and firms that are atomized and essentially interchangeable. Labor is deskilled and technical specifications are largely ignored.
What I mean is that a car, for example, is composed of several thousand components. A number of them conform to the expectation that you have, that there is more than a single supplier. For example, many parts like a muffler will have an aftermarket. This means that firms other than the original equipment manufacturer (OEM) will produce replacement parts. However, an aftermarket exists for only a fraction of the components in a vehicle.
Take my 2003 Pontiac Sunfire. Last month, I discovered that something which looked like a stick was hanging to the ground form beneath my car. So I crawl up underneath to pull it out, and I realize that it's the bracket the loops around my muffler and connects it into the frame of the vehicle. Specialized components like this for which there is a high degree of technical specification (where do the holes belong, how big is the muffler, what the bracket orientation, etc.) often aren't going to be a profitable aftermarket. So you basically have something that you have to go to the OEM for. If that OEM goes out of business, and the machine tools that are used to produce the pieces have been sold in a liquidation sale to a company in China, a new producer isn't going to pop up overnight. Now anyone wanting to enter the market for this part has to retool their machines to the specifications required by the auto company. And that can be extremely expensive, particularly when you have to finance a new piece of specialized equipment that may take 10-20 years of full out production to repay. This in an environment where credit has dried up. The idea that firms are basically interchangeable breaks down.
The second way of looking at the economy recognizes that the economy is basically a network, and that removing any particular link may impact a number of other links to collapse. It's a contagion element.
Can you give some insight into how 800 billion could be lost on treasuries?
I must be missing something, I can only think of depreciation of the dollar.
I was under the impression that China held around 2 trillion in US treasuries etc. Surely they must be calculating from some other number.
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