And rising, according to the morning paper.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
Lou Dobbs had someone from CATO claiming the real cause of the recession was oil prices from last year. Now I normally think almost everything out of CATO is caca. So much I think CATO should be renamed CACA Institute.
But I had to wonder if that had any real merit for it did directly hit the middle class and industry.
That's just amazing on deflation considering the Bernanke money pump.
Anyone else reading this comment, there is a search feature on EP and NDD has written a series of oil analysis posts.
Consumer confidence is still pretty low. Household financial obligations as a % of disposable income may have to come down some more - this is just a guess on my part. I just think that people are still feeling tapped out and are trying to recover - in sense they are trying to improve their balance sheets.
On 12/29/2006, 30 minutes before the CPA firm was closing for the New Years holiday, HR walked in and told my wife her job of 18 years no longer exists. She was 54 years old.
She tried and tried to find a job, no luck. So we spent a few thousand on an HR certification from Villanova, still no job. When she was younger she never had a problem getting a job. She had a lot of experience and could do management, marketing and everything in between.
Finally in September 2007 she found a job but at half the pay. She has worked at the company since then but has never received a raise. To make matters worse, they moved her job to a different location. Now instead of making half the pay, she must also make a 60 mile round trip commute.
So what was different for my wife's job search? She had the same skill set, in fact she had more experience and the only difference was that she was in her mid-fifties. The last time she searched for a job she was in her thirties.
Yep, I believe age discrimination is alive and well. But try and prove it.
Maybe we should move here: "But the global downturn hasn’t hurt the world’s second fastest-growing economy as badly as other countries." Where is here you may ask? It is in India. I feel like I am living in a dumb and dumber movie. We moved so many jobs away and now there is nothing for us? Is that dumb or dumber?
Excellent work. In problem #3 you say, "It was the American consumer, unable to find good jobs at home, or take on more debt from yet another asset bubble, that finally gave up." The next logical question is: since the jobless consumer is depleted of buying power (unable to take on any more debt), will deleveraging make it less necessary for the U.S. Treasury to seek foreign creditors? Basically we're totally insolvent relying on virtual credit (as money). Once again, methinks America is bankrupt.
In the fourth quarter of 2008 GS reported a $2.2 billion loss. Couple that with its first quarter earnings of $1.8 billion you end up with a loss of $0.4 billion over two quarters. During that same time they received $12.9 billion from the taxpayer, laundered through AIG and an additional $10 billion from the taxpayer through the US Treasury TARP program. So a $23.3 billion hole in the GS balance sheet was largely repaired, courtesy of the US taxpayer. GS shareholders are greatly enriched. And what do we get from that? A bill somewhere considerably North of $22.9 billion once we finish paying the interest on the gift. That should elicit screams of rage, but the ostriched citizenry of this country is paying too much attention to the last episode of "Lost" to notice what is happening to their wealth.
ok, so we have $12.9 billion they received recently through AIG, plus $10 billion from the government of which they want to pay it back, which leads $2.9 billion in AIG funneled money and they report a $1.8 billion dollar profit.
So does this really mean a $1.1 billion dollar loss?
"Anyone else have some insight into $5.5. trillion of redundant contracts being removed please leave a comment."
It's just netting. The easiest way to exit a CDS position is to buy an offsetting CDS from a third party -- it's much easier than novating or terminating a CDS. Since the dealer banks generally carry matched books (i.e., net flat CDS books), for every CDS they sell to an end-user, they buy an offsetting CDS from another end-user. In reality, this offsetting CDS position will usually make its way around the dealers before finally ending up with another end-user. For example, JPM sells a CDS to an end-user, then buys an offsetting CDS from Morgan Stanley, who buys another offsetting CDS from Merrill, who buys an offsetting CDS from Goldman, who finally buys an offsetting CDS from MBIA (the ultimate end-user). All the trades between the dealers can be netted out -- that is, offsetting trades can be cancelled -- since they're really just superfluous, but there was a huge back-log of CDS trades at the dealer banks. This led to an enormous build-up in the "gross notional" CDS outstanding, but didn't represent the true risk in the CDS market (i.e., the "net notional" CDS outstanding).
The dealer banks only started to get serious about netting out all the back-logged CDS trades when Geithner, in his capacity as NY Fed President, told them to net out their CDS back-logs or face the wrath of the of the NY Fed (which, contrary to popular belief, was a very credible threat coming from Geithner). So the dealers eventually hired TriOptima to net out all their CDS books by matching up offsetting trades and cancelling them. That process dramatically reduces the gross notional CDS outstanding. That makes it look to naive journalists like $5.5 trillion "has simply evaporated," but in reality that risk was never there in the first place. The journalists only thought it was there because they don't understand the difference between "gross" and "net." According to the DTCC, the net notional CDS outstanding -- i.e., the true amount insured by the CDS market -- is only about $2.7 trillion.
Also, I don't know why anyone would be surprised that AIG didn't sign the Big Bang protocol. The Big Bang was for single-name CDS on corporate bonds, and AIG never really wrote single-name corporate CDS. AIG wrote CDS on ABS/CDOs, which are a completely different beast, and aren't covered by the Big Bang protocol.
OK, that was probably a longer explanation than you wanted, but the amount of misinformation in the press about the CDS market really irks me.
Great in depth post midtowng! I submitted this to reddit.com
Anybody else reading this, you can spread great posts via those "share" buttons to get it in blog post aggregators so more people read it.
I like reddit personally because they make it all very easy to find good posts and submit them.
Back to the post, this is really the ultimate tsunami coming our way in my view and without a strong U.S. manufacturing policy, to turn the U.S. into a production economy again, we're in deep shit. And that means confronting trade policy, moving investment into new ventures in advanced manufacturing and making sure they hire U.S. citizens (domestic workforce) which seems to be a topic also taboo in D.C.
Then, also services, this would be Research & Development, startups, STEM, advanced medical, needs to have massive incentives, again tied to the domestic labor force.
This hits both sides of the political spectrum. They spend millions to make "seemingly" grassroots campaigns appear and really manipulate people to get behind whatever they are up to.
I've seen ads on TV now trying to stop any sort of health care reform and they are using the TARP, bail out, deficits to get people upset.
So, hopefully EP can work to shed light on these bastards, get the real details out on where the Populist rage should really be directed.
I've seen this on the left too, get people's panties in a bunch over say discrimination when the issue is more enabling further domestic diversity discrimination in reality...
Lots of fun in misinformation, manipulation, public relations, marketing land!
Mr. Oak mentioned those "tea bagging" parties being promoted by various neocon outfits. There is someone named Andrew Langer who is promoting them (I forget which, of the numerous, neocon "stink tanks" he belongs to).
I believe this is the same Andrew Langer who is the son of the tax attorney, Marshall Langer, responsible for setting up those tax havens in the Bahamas.
Avoidance of corporate taxes - how unAmerican can you get????
Don't wish to be flippant about an excellent article, but thought the market manipulation had been rather obvious for some time, with Goldman Sachs, Morgan Stanley, Deutsche Bank, et al., being the original financiers of that InterContinental Exchange (ICE) from whence all those oil and energy futures trading/manipulation was being done (along with foodstuff via "soft" commodities and precious metals, etc., along with zero, I repeat zero, increase in oil markets after BP shut down several oil & gas pipelines feeding the Euro markets after the attack on S. Ossetia and the Russian military response pretty much proving that.
[My personal list of the alpha dog perps: Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citibank, BofA and Deutsche Bank (UBS is in there somewhere as well...)
The topics that never get mentioned in unemployment statistics. After the dot con crash, the tech sector couldn't offshore outsource jobs fast enough. They also brought in foreign workers in H-1B and L-1 Visas and displaced U.S. workers. Literally age discrimination is institutionalized in these fields with many perfect capable, highly skilled people having their careers cut short because they were over the age of 35. Think about it. 35 years of age!
The Financial sector also wiped out massive amounts of U.S. employees by offshore outsourcing pretty much anything that wasn't nailed down, call center jobs, I.T. jobs, even analysis, trading jobs.
Then, in manufacturing, they shipped jobs off to China in record speed, wiping out entire towns.
Finally illegal immigration rounded it out. Instead of dealing with the influx of illegal labor repressing wages, avoiding taxes, workman's comp., cities used taxpayer dollars to create day labor centers so these illegal workers
were easier to hire. This is also a massive underground economy, cash under the table.
This is labor economics 101 and we even have spin trying to refute some highly validated axioms in this topic area...
Labor follows the law of supply and demand, that's reality.
To date, you cannot even get this properly analyzed. Corporations refuse to release the data on how many jobs were offshore outsourced and the DOL just plain ignores it.
Instead we have estimates from a few brave researchers and economists, doing battle with corporate lobbyists in faux pas debates.
The DOL literally counts foreign temporary guest workers in the U.S. unemployment statistics, skewing the numbers and to hide the displacement of U.S. workers.
Until the United States recognizes labor economics 101 and starts addressing the global labor arbitrage problems, I don't see how any recovery could be anything but jobless.
Seriously, this issue kills me because they won't even pull their heads out of the sand to obtain the raw data for proper analysis, never mind pass legislation.
You might want to create an account on the upper right and login to comment.
Then all of the "type the letters in to prove you are a human" goes away and account features, which allow you to track who replied to your comments, appears. A host of other features appear too when folks are logged in.
Double digit unemployment is assured because there's simply too much debt still in the system. As Economist Steve Keen notes in his blog, "The sheer scale of private debt de-leveraging swamps the government’s pump priming, while there is so much debt relative to government created money that the latter will have to be increased by astronomical amounts–and given to those in debt, rather than to the banks–to counter the collapse in demand caused by private deleveraging."
And rising, according to the morning paper.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
Lou Dobbs had someone from CATO claiming the real cause of the recession was oil prices from last year. Now I normally think almost everything out of CATO is caca. So much I think CATO should be renamed CACA Institute.
But I had to wonder if that had any real merit for it did directly hit the middle class and industry.
That's just amazing on deflation considering the Bernanke money pump.
Anyone else reading this comment, there is a search feature on EP and NDD has written a series of oil analysis posts.
to match the fictional press release and the fictional news conference.
What I find amazing is the stocks are going up on this news, so how is this different from hyping up a dot con stock in the 90's?
Even more interesting is any inside trading deals going on before these "profits" are announced?
I feel like my financial future is on a joy ride on a global roulette wheel.
Welcome to EP!
OK....I did so this morning.
Consumer confidence is still pretty low. Household financial obligations as a % of disposable income may have to come down some more - this is just a guess on my part. I just think that people are still feeling tapped out and are trying to recover - in sense they are trying to improve their balance sheets.
On 12/29/2006, 30 minutes before the CPA firm was closing for the New Years holiday, HR walked in and told my wife her job of 18 years no longer exists. She was 54 years old.
She tried and tried to find a job, no luck. So we spent a few thousand on an HR certification from Villanova, still no job. When she was younger she never had a problem getting a job. She had a lot of experience and could do management, marketing and everything in between.
Finally in September 2007 she found a job but at half the pay. She has worked at the company since then but has never received a raise. To make matters worse, they moved her job to a different location. Now instead of making half the pay, she must also make a 60 mile round trip commute.
So what was different for my wife's job search? She had the same skill set, in fact she had more experience and the only difference was that she was in her mid-fifties. The last time she searched for a job she was in her thirties.
Yep, I believe age discrimination is alive and well. But try and prove it.
Maybe we should move here: "But the global downturn hasn’t hurt the world’s second fastest-growing economy as badly as other countries." Where is here you may ask? It is in India. I feel like I am living in a dumb and dumber movie. We moved so many jobs away and now there is nothing for us? Is that dumb or dumber?
Excellent work. In problem #3 you say, "It was the American consumer, unable to find good jobs at home, or take on more debt from yet another asset bubble, that finally gave up." The next logical question is: since the jobless consumer is depleted of buying power (unable to take on any more debt), will deleveraging make it less necessary for the U.S. Treasury to seek foreign creditors? Basically we're totally insolvent relying on virtual credit (as money). Once again, methinks America is bankrupt.
In the fourth quarter of 2008 GS reported a $2.2 billion loss. Couple that with its first quarter earnings of $1.8 billion you end up with a loss of $0.4 billion over two quarters. During that same time they received $12.9 billion from the taxpayer, laundered through AIG and an additional $10 billion from the taxpayer through the US Treasury TARP program. So a $23.3 billion hole in the GS balance sheet was largely repaired, courtesy of the US taxpayer. GS shareholders are greatly enriched. And what do we get from that? A bill somewhere considerably North of $22.9 billion once we finish paying the interest on the gift. That should elicit screams of rage, but the ostriched citizenry of this country is paying too much attention to the last episode of "Lost" to notice what is happening to their wealth.
Goldman Sachs Profit.
ok, so we have $12.9 billion they received recently through AIG, plus $10 billion from the government of which they want to pay it back, which leads $2.9 billion in AIG funneled money and they report a $1.8 billion dollar profit.
So does this really mean a $1.1 billion dollar loss?
I was thinking this story was a "non-story" in terms of what AIGFP actually issued.
I hope you consider creating an account and posting more, we all need some more insight into what is really going on with these derivatives.
I dig as best I can but sometimes just cannot answer my own questions.
"Anyone else have some insight into $5.5. trillion of redundant contracts being removed please leave a comment."
It's just netting. The easiest way to exit a CDS position is to buy an offsetting CDS from a third party -- it's much easier than novating or terminating a CDS. Since the dealer banks generally carry matched books (i.e., net flat CDS books), for every CDS they sell to an end-user, they buy an offsetting CDS from another end-user. In reality, this offsetting CDS position will usually make its way around the dealers before finally ending up with another end-user. For example, JPM sells a CDS to an end-user, then buys an offsetting CDS from Morgan Stanley, who buys another offsetting CDS from Merrill, who buys an offsetting CDS from Goldman, who finally buys an offsetting CDS from MBIA (the ultimate end-user). All the trades between the dealers can be netted out -- that is, offsetting trades can be cancelled -- since they're really just superfluous, but there was a huge back-log of CDS trades at the dealer banks. This led to an enormous build-up in the "gross notional" CDS outstanding, but didn't represent the true risk in the CDS market (i.e., the "net notional" CDS outstanding).
The dealer banks only started to get serious about netting out all the back-logged CDS trades when Geithner, in his capacity as NY Fed President, told them to net out their CDS back-logs or face the wrath of the of the NY Fed (which, contrary to popular belief, was a very credible threat coming from Geithner). So the dealers eventually hired TriOptima to net out all their CDS books by matching up offsetting trades and cancelling them. That process dramatically reduces the gross notional CDS outstanding. That makes it look to naive journalists like $5.5 trillion "has simply evaporated," but in reality that risk was never there in the first place. The journalists only thought it was there because they don't understand the difference between "gross" and "net." According to the DTCC, the net notional CDS outstanding -- i.e., the true amount insured by the CDS market -- is only about $2.7 trillion.
Also, I don't know why anyone would be surprised that AIG didn't sign the Big Bang protocol. The Big Bang was for single-name CDS on corporate bonds, and AIG never really wrote single-name corporate CDS. AIG wrote CDS on ABS/CDOs, which are a completely different beast, and aren't covered by the Big Bang protocol.
OK, that was probably a longer explanation than you wanted, but the amount of misinformation in the press about the CDS market really irks me.
Great in depth post midtowng! I submitted this to reddit.com
Anybody else reading this, you can spread great posts via those "share" buttons to get it in blog post aggregators so more people read it.
I like reddit personally because they make it all very easy to find good posts and submit them.
Back to the post, this is really the ultimate tsunami coming our way in my view and without a strong U.S. manufacturing policy, to turn the U.S. into a production economy again, we're in deep shit. And that means confronting trade policy, moving investment into new ventures in advanced manufacturing and making sure they hire U.S. citizens (domestic workforce) which seems to be a topic also taboo in D.C.
Then, also services, this would be Research & Development, startups, STEM, advanced medical, needs to have massive incentives, again tied to the domestic labor force.
This hits both sides of the political spectrum. They spend millions to make "seemingly" grassroots campaigns appear and really manipulate people to get behind whatever they are up to.
I've seen ads on TV now trying to stop any sort of health care reform and they are using the TARP, bail out, deficits to get people upset.
So, hopefully EP can work to shed light on these bastards, get the real details out on where the Populist rage should really be directed.
I've seen this on the left too, get people's panties in a bunch over say discrimination when the issue is more enabling further domestic diversity discrimination in reality...
Lots of fun in misinformation, manipulation, public relations, marketing land!
One thing I have discovered in watching corporate lobbyists at play is they have amazing technique to make the obvious up for debate and obscured...
so you end up "debating" absolute truths as if they are now not...
even when you have amazing statistics and data to back up the obvious truth.
Mr. Oak mentioned those "tea bagging" parties being promoted by various neocon outfits. There is someone named Andrew Langer who is promoting them (I forget which, of the numerous, neocon "stink tanks" he belongs to).
I believe this is the same Andrew Langer who is the son of the tax attorney, Marshall Langer, responsible for setting up those tax havens in the Bahamas.
Avoidance of corporate taxes - how unAmerican can you get????
Don't wish to be flippant about an excellent article, but thought the market manipulation had been rather obvious for some time, with Goldman Sachs, Morgan Stanley, Deutsche Bank, et al., being the original financiers of that InterContinental Exchange (ICE) from whence all those oil and energy futures trading/manipulation was being done (along with foodstuff via "soft" commodities and precious metals, etc., along with zero, I repeat zero, increase in oil markets after BP shut down several oil & gas pipelines feeding the Euro markets after the attack on S. Ossetia and the Russian military response pretty much proving that.
[My personal list of the alpha dog perps: Goldman Sachs, Morgan Stanley, JP Morgan Chase, Citibank, BofA and Deutsche Bank (UBS is in there somewhere as well...)
The topics that never get mentioned in unemployment statistics. After the dot con crash, the tech sector couldn't offshore outsource jobs fast enough. They also brought in foreign workers in H-1B and L-1 Visas and displaced U.S. workers. Literally age discrimination is institutionalized in these fields with many perfect capable, highly skilled people having their careers cut short because they were over the age of 35. Think about it. 35 years of age!
The Financial sector also wiped out massive amounts of U.S. employees by offshore outsourcing pretty much anything that wasn't nailed down, call center jobs, I.T. jobs, even analysis, trading jobs.
Then, in manufacturing, they shipped jobs off to China in record speed, wiping out entire towns.
Finally illegal immigration rounded it out. Instead of dealing with the influx of illegal labor repressing wages, avoiding taxes, workman's comp., cities used taxpayer dollars to create day labor centers so these illegal workers
were easier to hire. This is also a massive underground economy, cash under the table.
This is labor economics 101 and we even have spin trying to refute some highly validated axioms in this topic area...
Labor follows the law of supply and demand, that's reality.
To date, you cannot even get this properly analyzed. Corporations refuse to release the data on how many jobs were offshore outsourced and the DOL just plain ignores it.
Instead we have estimates from a few brave researchers and economists, doing battle with corporate lobbyists in faux pas debates.
The DOL literally counts foreign temporary guest workers in the U.S. unemployment statistics, skewing the numbers and to hide the displacement of U.S. workers.
Until the United States recognizes labor economics 101 and starts addressing the global labor arbitrage problems, I don't see how any recovery could be anything but jobless.
Seriously, this issue kills me because they won't even pull their heads out of the sand to obtain the raw data for proper analysis, never mind pass legislation.
I see you posting comments almost daily.
You might want to create an account on the upper right and login to comment.
Then all of the "type the letters in to prove you are a human" goes away and account features, which allow you to track who replied to your comments, appears. A host of other features appear too when folks are logged in.
Welcome to EP.
Double digit unemployment is assured because there's simply too much debt still in the system. As Economist Steve Keen notes in his blog, "The sheer scale of private debt de-leveraging swamps the government’s pump priming, while there is so much debt relative to government created money that the latter will have to be increased by astronomical amounts–and given to those in debt, rather than to the banks–to counter the collapse in demand caused by private deleveraging."
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