Friday, October 24, 2008

SAR 8298

This is quickly moving from 'recession' to 'generational memory.'

Refresher: As a public service, you are reminded: If the Dow drops more than 1,100 points before 2pm EST, trading will halt for an hour; 2,200 points leads to a two hour halt. A drop of more than 3,350 will lead to a halt for the rest of the day, week, year...

Simon Says: "The market is in a panic. Hundreds of hedge funds will fail. Financial markets will be closed for a week or more. Investors will dump assets and flee." Wasn't Simon, 'twas Professor Roubini

Some Doctor, Some Cure: The credit bubble was based on the cheap supply of money and credit created by the central banks. The proposed cure is a massive increase in the supply of money and credit. My alcoholic uncle had the same approach to hangovers.

Fine Print: The US Constitution provides certain rights and protections to US Citizens. Unless - like over 60% of them - they live within 100 mile of the US Border. Within that area citizens cede their rights to Homemade Security's Border Patrol.

Betting Slips Show: Corporate debt is following subprime derivatives down the garden path, as losses on $1.2 trillion in corporate CDOs approach the 90% level. If $600 billion in subprime write-offs prompted a couple of trillion dollars in federal bailouts, how much more will a trillion in CDO write-offs cost China the taxpayer?

All Smoke, No Fire: In the 44 years since the GOP began alleging massive Democratic inspired voter fraud there has never, ever, not even once, been an actual case. No evidence. No arrests. No prosecution. Not once. And no, they have no shame. Ultimately, they simply don't want you to vote.

The Unreal Economy: Statistics show the absurdity of the financial system. Of the $4 trillion that circulates through the world's markets every day, less than 2 % is engaged in the buying and selling of goods and services - the 'real economy'. The rest is just gambling.

Third World : America's infrastructure is collapsing. There will not be any money to repair or replace the crumbling highways, neglected waterways, and long ignored electrical grid. A quarter of all US bridges should cause drivers to wonder, "Today?"

Bad Idea #47: FDIC chair Sheila Blair wants the government to guarantee mortgages that are headed for default, with the goal of getting mortgage holders to accept a loss and renegotiate the loans. You first.

Close Cropped : Synthetic fertilizer production isn't keeping up with demand. Prices are up 300% in the last year. Shortages abound. In Iowa, those who order 10,000 tons will be lucky to get 3,000... Wait a minute. Ten thousand tons? What are they doing to the land out there in Iowa?

Imagination: Global warming is a myth, at worst it will be a 100 years before we need to worry. Etc. But NOAA says hurricane activity is up 75% since 1995. Chance.

Christmas Dinner: The world's economies are based on debt. Payments must be made on this debt. If cash on hand runs out, the debtor must sell assets. Eventually the next ratchet on the credit rack leads to a rush to sell Treasuries for cash or hard assets (gold, silver, whiskey). When the Chinese and Japanese and Saudis get around to liquidating Treasuries, the goose will be done.

Banging the Drum: Reminder: one day we'll want to buy another tank of gasoline, but we can't buy what they can't (or don't) export: Mexico's exports are down 16%, Venezuela down 10%, Norway down 9%, Russia down 6%.

Porn O'Graph: Stand and deliver. Or not.


TulsaTime said...

So when everybody has too much debt, and nobody has any cash, what then? Do we have a bonfire of IOU slips and start over?

we seem to be there.....

TulsaTime said...

So when everybody has too much debt, and nobody has any cash, what then? Do we have a bonfire of IOU slips and start over?

we seem to be there.....

Jes said...

Dow this week averaged about 8800. The week before was about 9000 and before that 9200 and before that 10200. (Just eyeballing these numbers.) Given recent news and the various expected dismal earnings reports and other inputs, my guess for next week's average is 8400.
If the Dow dropped a "modest" Level 1 of 1,100 points, that'd be a 15% drop in one day.
I wanna say Inconceivable. Except these Dow folks said that was just Level 1. Level 3 would be a 42% drop.
They've defined a Level 3 drop?!
The implications of them just making this definition make me queasy. Yeah, I know they have to set limits. But is there actually a market left to protect after a Level 3 nuclear bomb hits it? After that I think the only things left alive are cockroaches.