You're now on the archive server. Commenting has been disabled.
Market Commentary
Some more September (1930) news:
- Brokers, businessmen, and even the general public more optimistic; over 75% of brokerage houses now advise buying stocks.
- Offering of $334.2M in 2 3/8% one-year Treasury certificates is oversubscribed by almost 4:1.
- B. Anderson, Chase Natl. Bank economist, says Fed policy of easy money will not be sustainable when business revives; suggests moderate tightening now to avoid shock of a sudden severe tightening later.
- Florida Bondholder's Adjustment Committee calls on owners of defaulted local bonds to accept arbitration with principle that local govt. should “pay to the full extent of its ability to pay” when fairly determined, and no more. Says full payment in many cases impossible due to string of problems in past few years including collapse of real estate boom, bank failures, storms, and Med. fly scare; local feeling is that many bonds were voted in due to high-pressure tactics by outsiders.
- Roger W. Babson (economist, made perfectly timed bearish call in fall 1929) optimistic on immediate future, sees possible “stampede of orders” due to underproduction; says it's as evident now that business is bound to improve as it was clear a year ago that it must deteriorate.
- The great debate: Bears argue that past month's rally has already discounted the mild improvement in business, and that decline in steel production in past week indicates weakness. Bulls counter that steel decline was due to Labor Day, that August steel and car loading figures show more than seasonal improvement, and that recent retail figures and company outlooks have been improved. On the technical side, bulls believe the recent rally has “definitely broken” the downtrend since last Sept., indicating future support should come in well above the June bottom of 212.
- “While the recovery in business will undoubtedly be gradual, and characterized by confusing uncertainties, the fact remains that all indices that have pointed to revival in the past are now existent. As the stock market is usually some months ahead of trade, observers ... think there is a good chance that Wall Street will be the outstanding bright spot of the country during the winter months.”
Chariman Ben sure is a good Great Depression historian
h/t Mike
»
- 7003 reads
- Printer-friendly version
- Send to friend
B. Anderson, Chase Natl. Bank economist, says Fed policy of easy money will not be sustainable when business revives; suggests moderate tightening now to avoid shock of a sudden severe tightening later.
The difference.
With BB now calling the recession over (nearly), these calls to buy are safe bets. Not because they are right, but because being wrong carries no personal risk now.
It's a casino. You want the peeps tit-to-elbow at the tables, laying down their chips. Whatever you need to say to get them to the tables, you say it. Nobody will remember later who said it was safe to play.
cougar
BB calling the recession over since at least Feb 2008.
None dare use the correct D word...
With todays display, was it shifty Paulsen telling uncle Ben "you lie and I'll swear to it"?
Yes, Bennie studied well.
We can joke at the accuracy of said news, but man, journalists had more brains back then judging by the grammar and intellectual content.
It's hard for me not to throw up on myself now when I read the canned {insert symbol here} spam that dribbles into my brain these days and calls itself news.
For example, if I read one more report referring to gold as "the yellow metal" I'll jump. Not eloquent, not smart, just another sloppy parrot turd.
Where is John Bougoreal? i'd love to hear his commentary now after yesterday's article he penned "1039-1041 Q3 S&P top"...yah!
Why u guys so emo?? LoL
this is more than a little amusing
As you all know:
1. In his career as an academic, Mr. Bernanke developed the opinion that the Great Depression was prolonged as a result of the failure of the federal government to spend sufficient amounts to stimulate the economy.
2. During WWII, which period may or may not overlap with the Great Depression to which Bernanke refers, government spending reached approximately 80% of GDP.
3. WWII caused an immense spike in manufacturing to support the war effort.
4. After WWII, various factors, including the baby boom, led to the commencement of the greatest period of economic growth in history.
Now, it seems at least plausible that the U.S. was able to recover from the historic levels of government debt only because of the economic boom that resulted from unique factors such as the burst of new population growth. In other circumstances, such as a period of decreasing population or simply modest economic growth, the government debt arising out of that 80% spending would have been an anvil tied to the economy.
Yet Bernanke's position is that the U.S. should have shouldered even more debt during that same general period. And that belief leads him to advance policies that would have us take on analogous amounts of debt during this crisis. But here's the key point: we do not likely have a baby boom or a manufacturing renaissance on the horizon to pull us out of the debt. He's relying on a historical precedent based on similarities that are only halfway there.
Very well stated, but you left out the BIG difference that exists today. It is that there is no Gold Standard, and today's debts can and will be paid off with virtually worthless future dollars.
The money-printing has only just begun.
Ah, but how is money printed? VIA DEBT. The taxpayer is forced to take on the debt for the spender of last resort, the US Government. Assuming that the US Government will eventually hit a debt ceiling, deflation will consume the system. Of course it is a little more complicated, and we can have mini-bubbles along the way, but to say that the US Government or the FED can print as much as it wants without ramification to fend off deflation is nonsense.
Possibly, but I can't agree with the "worthless dollar" theory. Think about it: What if Ben makes mine, your's, your neigbor's, your boss's etc. dollars "worthless"? What happens then?
Well, the country goes to war with its government, that's what. Easy to crush the poor, beaten down Zimbabweans. But much harder to crush 300m pissed off, armed people. They can only push our currency so far before the backlash is felt.
I don't believe they will do it. Deflation is more palatable.
Ultimately, deflation isn't palatable either. It's a bloody mess of people not being able to find credit for basic production (food or necessities) or even service industries (hard to serve coffee if you can't roll a cup purchase). If you have a cash positive, organically funded operation where you can deal without credit - my hats off to you. You might weather the storm. The other 99.9997343% of US citizens won't.
We've already seen more money printed since Obimbo's innauguration than in the previous 200-plus years of our history. Sooner or later those we trade with will realise that it's not worth the paper it's printed on and we'll be in a world of sh#*, as we used to say in the Navy!
Right on!
Then the US was a surplus creditor nation with half the outstanding debt as present.
Now the US is a deficit, debtor. Instead of drawing interest payments from the world, USA is now sending them abroad AND adding to them, coming very near to assured default threshold.
The war produced another, often overlooked, effect: a strong accumulation of private savings in the U.S
You make excellent points while you admit the tangible solution is not the answer. It's quite likely that no amount of debt will buy enough time to heal what is broken. He is probably with you, but will inject it piecemeal as required until faith is gone.
To me, the solution is in your intangible answer, which I suspect is the point you were driving at anyway. A "baby boom or a manufacturing renaissance" need not depend on creation but relocation.
I continue to stand by the contention that this economic collapse was the result of the stance taken against illegal aliens who filled in the potholes in the road to prosperity.
I also believe in trickle down. $1 million to a single person goes a lot farther in creating overall economic demand than giving $1 to a million different people, regardless of how unfair it is in principal and especially in corrupt practice.
Combining my two beliefs, I find that America is by far the richest, most prosperous nation on earth. Please do not think in terms of just money as this is part and parcel of the whole problem.
A planned vast influx of immigrants to the US would
create a generation of demand that would then parlay into a baby boom allowing two generations to pass while humanity struggles to continually develop the technologies to advance the human condition.
There is nothing wrong with having or being a maid and a butler or a chauffeur. The way (both in attitude and in practice) they are treated can be wrong, and the means by which "selection" (which is far from "fittest") decides the initial roles to be played is both elitist and inane, but you have a choice, would you rather that we all suffer the indignities of decline or is better to suffer the curse of outrageous fortune?
"To be, or not to be? That is (still) the question" -William Shakespeare
Unfortunately, our collective values, morals and gigantic insecurities make anything beyond endless stimulus in hope of technological rescue unlikely.
I think you make a valid point. The circumstances external to the US are very different now from then. For example the US trade deficit, the difference in educational levels of the US as compared to other nations, Europe because of the war and other nations for different reasons could not produce sophisticated goods right away, and other important structural circumstances.
C
The more things change....
I know I don't WW III to 'solve' this problem.
And what innovation will jump start this engine?
Space Elevator!!!! :)
Space Elevator, working Tokomaks, Fusion, Nano-Technology, MPD super conducting superfluids, etc. However this implies the good side is in control and they have the will to unleash such technologies to shatter the fossil fuel oligarchy. Unforuntately, as much as I feel a bevy of supressed technologies line the halls of our nations super secret advanced research institutions, I question who has the will to bring them into the light.
the fossil fuels arent expensive enough yet. in due time
Meh. I'll wait for teleportation.
The Slap Chop..."you're gonna love my nuts."
"Offering of $334.2M in 2 3/8% one-year Treasury certificates"
GS makes that much in one trading session today.
i would just like to point out that the reason goldman upgraded that private airline company is because more people are chartering private planes as a result of swine flu. this was on bloomberg.com today.
Black Swan Bernanke said recession is over. Time to buy puts.
Babson then = Roubini now
I'm still having a little trouble getting my arms around where the customers for all this output are going to come from. Cash for Clunkers simply pulled demand forward and they are going to pull muscles patting themselves on the back for that one. Baltic dry is still in the proverbial toilet. Same store sales declines of 3% now pass as good news. Sooner or later, TSWHTF, regardless of what all the geniuses think.
I can wait.
Remember that after the war the only manufacuring capacity left un-bombed was in the US. We were the only game in town and with that capacity we helped rebuild Europe and Japan. Also the consumer had huge savings built up from the war years. Neither of these situations are comparable to today's.
LOL
ETrade reports spike in NEW trading accounts. obviously Main Street is clearly in AWE of Wall Street. Such a fantastic job has been pulled off by the power brokers. BIG Ben and tiny Tim deserve a big pat on the backs as their banker friends rope in more unemployed folks off the street corners onto hyper-terminals !! Who needs jobs now as the recovery is in full-swing !!
On the 19th November 1937 Nicholas Murray Butler addressed a banquet in London with the words, “Communism is the instrument with which the financial world can topple National governments and then erect a world government with a world police and world money”.
Steve Keen - http://www.debtdeflation.com/blogs/
Steve Keen - http://www.debtdeflation.com/blogs/
He has a good take, unfortunately, like all economists, he focuses on the financial aspect of the crisis, and misses the point that this crisis emerges from the real economy, not the other way around. But, his methods are the least offensive given the inherent limitations of the field.
consumers have no money, or credit, or if they do they're not spending (like me) so i see no perky car sales figures after cfc. What i do hear is crickets at the dealers.
On the 19th November 1937 Nicholas Murray Butler addressed a banquet in London with the words, “Communism is the instrument with which the financial world can topple National governments and then erect a world government with a world police and world money”.
Have recently seen this quote pop up on a number of blogs and comment sections, was just looking for source to verify. Do you have any available for citation?
thx
from here:
http://eurorealistnewsletter.blogspot.com/2008/10/elizabeth-becketts-sub...
Derek Bennett, the Editor of the Euro Realist newsletter can be contacted by sending an e-mail to: eurorealistnl@aol.co.uk
Any decent Conspiracy Factual-ist is well aware of the Fabians. Follow the link and read on if you are in the dark. Sounds spot on to me given the behavior of the last few U.S. adminstrations.
"...it is neither default, which was unthinkable, nor payment in full." (1933)
Silver accepted as payment credited at $0.50 while it cost Finland but $0.36.
Not default, but also not payment in full.
http://www.time.com/time/magazine/article/0,9171,882135,00.html
Hey Marla,
Apologize for being off-topic, but just need to get this out there. For posting/editing comments can you guys change the functionality a lil' bit so that we can post/edit comment on the same page without having to load a separate page (ala Disqus - I know it's a turd, but that's one very nice functionality it has). It can be done using ajax/javascript which can be accomplished VERY easily using jQuery. That would enhance the user experience IMMENSELY and make it a heck of a lot easier to post/edit comments.
I still can't open up the box when I leave comments to even see one full sentence of comments. Insanely annoying.
Not going back all the way to 1930, but this was released today... I checked the date to make sure it wasn't 2006. Nice headline (for a PR), right? The story is complete deja vu. Thanks for the lesson, gov't!
Feds give Keybank high marks
http://buffalo.bizjournals.com/buffalo/stories/2009/09/14/daily17.html?ana=yfcpc
KeyBank has been recognized by a federal agency for meeting the credit needs of individuals with low to moderate incomes, the Cleveland-based bank said Tuesday.
The Office of the Comptroller of the Currency gave the bank, which operates 42 branches in Western New York, an “outstanding” rating for its commitment to the Community Reinvestment Act, a federal law enacted in 1977 that discourages discriminatory credit practices by commercial banks and savings institutions.
Government can easily spend it's way out of a recession. Nothing new. Game the numbers, build up the confidence game. Only problem is nobody has money to invest anymore.
Besides, what the fuck dude, we are here because WE WANT TO MAKE MONEY. Period. It's called capitalism. The game is to figure out the game, and hopefully bring home some scratch.At least that's the game today.
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
Can anyone source these?
Big ramp today! Here we go! WAAAAA-HOOOOOOO!
would it be possible for the DJIA to go to 0 if the bots pulled the plugs and everybody ran for the exit?
A gift from Tim to CRE
Treasury Eases Tax Rules for Commercial Real Estate
http://www.bloomberg.com/apps/news?pid=20601087&sid=aV2kxXLJIbeo
looks like nothing will ever fail again.
Dropping taxes was a good idea but I am uncomfortable with this caveat:
The guidance would ease requirements for collateral and other guarantees in many cases.
Happy birthday Citigroup. Traded over a billion shares today !
(down like a rock! Apparently realizing the paper profit on that 34% stake will be a bit more tricky than previously forecasted)
Does anyone know the implications of the Geitner tax change? So when loans are modified, the beneficiary of the modification (leveraged Commercial RE developer) can...I'm not sure I understand it at all but I'm sure it's an egregious giveaway to the most connected and politically generouos financial players in all of The US of A. Someone please explain. Thx.
I don't get the details either, but whatever it is, it won't make up for the fact that CRE is worth half of what it was two years ago.
It's another one of these "Why isn't this working?" headscratchers for the administration. The problem is CRE has lost a leg, and you're proposing a band-aid to stop up the femural artery.
It's different this time!
famous last words
Did they have the equiv of $800 B to support the market then.... ah no?
Velocity of 800 B today is about 200 B per week to hold this baby up.
When will Congress ask for it back is the key...or will they?
Joliet Remembers The 1930s
http://newsfrom1930.blogspot.com/2009/09/monday-september-15-1930-dow-24...
I've said this once and I'll say it again, people need to read "The Forgotten Man". Fantastic business reading and everyone that says the Obama is more like Herbert Hoover than FDR is hugely mistaken and the fact that Obama is very similar to FDR is not a good thing at all. Do some research on the TVA and you'll see that socialism in this country is very deep rooted.
FDR was a vicious guy who just crushed people but somehow the history books written by his 'subjects' sing his praises. The guy went door to door stealing people's gold at gunpoint and that was on a good day.
That was the RW polemic back in the day. Also, they claimed that FDR and George Marshall were incompetent and weak on communists. communists themselves, in fact, one line of slander went.
Last I checked, we won WWII so maybe they were competent and the RW slanderers were the idiots. Since last I checked, the US is not communist maybe neither FDR nor Marshall were actually communists.
Maybe FDR and Marshall were right about a thing or two. And maybe the anti-government nut jobs like the Chumbawamba posting on this site--proud about stealing from his credit card company and lying about it: sorry buddy, being a lying theiving failure does not qualify as smart or something to be proud of--are the idiots who the rest of us should not listen to.
They say that the victors get to write the history books. But the reality is that whether they are victors or not, the academics do the writing. And we know what side of the aisle they all sit on....
History is written by those who have hanged heroes
- Braveheart opening sequence
the average consumer has never been worse off, they are poorer, less able to pay their debts, their housing values continue to deflate, your public education system is (or should be) an embarrassment, and they are about to get bent over with a worthless health-care bill (which will be spun as a great win for the middle class). but, they can still drive through their nearest obesity factory and supersize
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
This so called recovery is an enigma. The people who I talk to say things are still bad or at least stable.
So all we need is a Mediterranean fly scare... and it is 1930 all over again...
H1N1?
OMG... you're right... it is now officially 1930 :-)
I expect that one day in a post-apocalyptic future full of scarcity, they will use market commentary and analyst reports for toilet paper. And, perhaps, stock certificates--except the electronic age is making future toilet paper even scarcer. I suppose that leaves the U.S. dollar.
A totally rhetorical comment, but let's have a moment of contemplation on the long-run meaning of prognosticators' words and electronic bits representing transactions. Including this one.
Great post Tyler, great post.
Seeing as we are on par with 1930, that means we whould be entering World War III in about 10 years. Maybe over water this time?
Future looks bright. About as bright as Chernobyl did as it was melting down.
I feel they are manipulated more so than the past (at least what I recall). Nevertheless, it's a shade of gray. For instance, were the markets less manipulated in the great Bull Run of the late 90s? Were the markets less manipulated in the 1987?
good articles; good articles 4 slow news day ..http://www..
hat tip: finance news & finance opinions
VIX Index daily chart looking bullish, and looks like it's forming a base.
Something is brewing.
more:
http://www.zerohedge.com/forum/market-outlook
Of all places, Yahoo posted a news story from AP today commenting that the "urgency" for financial reform is slipping away due to "lobbying, government turf battles, and a stabilized financial system".
It truly warms my heart to finally hear, after two years of economic devastation, that nothing was really broken after all, so nothing needs fixing. I can sleep well knowing that the same folks who presided over the nearly failed system are still at the helm to guide us back on the path toward eternal Potemkin prosperity, where everyone's assets rise more than average, and the smartest minds this nation can produce are back in control of determining what risk really means and how too much is never enough. As Ben himself might say, "Trust us; it's technical". Benny, academia's loss is truly our gain. It really was confined to subprime after all! Oh we of little faith!
And a special tip of the hat must go to the long suffering taxpayer, some of whom actually still exist, whose relentless and undying willingness to help those far more fortunate than themselves insures that next season in the Hamptons will be something to behold, if only we still have a chronicler. F Scott Fitzgerald to Tom Wolfe to Dominic Dunne to whom? I just hope it's not that nasty Niall Ferguson, or worse, Tyler Durden.