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In Shocking New Taxpayer Funded Study, San Fran Fed Finds That Easy Credit Leads To Increase In Household Borrowing

Tyler Durden's picture





 

Those oberstabsfeldwebels of the unobvious from the San Fran Fed are back at it, issuing another blisteringly original, taxpayer funded, masterpiece which finds that "in the years leading up to the financial crisis of 2008–2009, a
combination of factors including low interest rates, lax lending
standards, the proliferation of exotic mortgage products, and the growth
of a global market for securitized loans promoted increased household
borrowing." In other words, easy credit led to an increase in household leverage... How truly unbelievable. But hark, it continues: "Homebuyers with access to easy credit helped bid up U.S.
house prices to unprecedented levels relative to rents and disposable
income...U.S. household leverage, as measured by the ratio of debt to disposable income, reached an all-time high of 130% in 2007." You don't say- the Fed's easy credit legacy led to the biggest credit bubble in history? Wow, and it was Alan Greenspan saying just a few days ago that the Fed had nothing to do with the credit bubble... But wait, there's more: " Going forward, households may keep trying to reduce excessive debt loads by increasing their saving." In other words, broke Americans who have no access to credit, will be forced to save. Thank god for such insightful, uber-brains as Reuven Glick and Kevin J. Lansing who were able write such a brilliant research paper, with such profoundly powerful conclusions.

And indicatively, the San Fran Fed is the same lair of contagious hypercranial activity that allowed them to pen such masterpieces as "San Fran Fed Asks If Structural Unemployment Is On The Rise, Discovers It Isn't", "San Fran Fed Study Finds That, Gasp, Immigrants Are Good For The Economy", the out on a limb "San Francisco Fed: "A Recessionary Relapse Is A Significant Possibility Sometime In The Next Two Years"", and the legendary: "San Fran Fed Spends More Money To Justify Colossal Failure At Anticipating Consequences Of Its Actions."

Full paper for those who wish to save a few Bernanks on lobotomy costs.

Consumers and the Economy, Part I: Household Credit and Personal Saving

By Reuven Glick and Kevin J. Lansing

Following a 20-year decline, the U.S. personal saving rate bottomed
out at around 1% in the third quarter of 2005. Since then, the rate has
been trending upward, reaching around 6% in the third quarter of 2010.
 The era of declining saving rates coincided with a period of expanding
credit availability for households that contributed to a dramatic
increase in leverage as measured by the ratio of household debt to
personal disposable income. During the boom years of the mid-2000s, the
combination of declining saving rates and rapidly rising household debt
allowed consumer spending to grow much faster than disposable income,
providing a significant boost to the economy. Recently however, the
rebound in the saving rate has coincided with a reduction in household
debt—a deleveraging—that has acted as a drag on consumer spending and
the economy.

In this Economic Letter, we show that movements in the
availability of credit are very important for explaining movements in
the saving rate. Over the past half century, greater credit
availability for households has been associated with lower saving rates
and a resulting higher leverage. Standard economic models seek to
explain movements in the saving rate primarily in terms of movements in
household net worth, as measured by the value of assets minus debt.
Taking credit availability into account significantly improves the
explanatory power of saving rate models.

Models of consumption and saving

The standard life-cycle model of saving behavior holds that, over their
lifetimes, consumers strive to achieve a target ratio of net worth to
income that will allow them to maintain their desired consumption
patterns through retirement (see Skinner 2007). If unexpected events,
such as drops in the prices of stocks or houses, cause net worth to
decline, then the life-cycle model predicts an increase in saving
behavior to help return the net worth–income ratio to target.
Additional saving could be used to purchase assets or pay down debt,
thereby increasing net worth.

With this theory as background, most empirical studies seek to explain
movements in the saving rate using movements in the ratio of household
net worth to personal disposable income. However, some studies have
shown that the behavior of consumption, and by extension saving, is also
strongly associated with changes in credit growth. Bacchetta and
Gerlach (1997) and Ludvigson (1999) find that credit growth has a
significant positive impact on consumption growth in the United States
and other countries. In these studies, changes in credit growth can be
interpreted as capturing changes in lending practices or other factors
that affect consumer access to borrowed money. For example, a period of
rapid credit growth may reflect lending industry changes that reduce
down-payment requirements for homebuyers, or allow applicants with
modest incomes or impaired credit histories to obtain loans. This line
of thought suggests that some measure of credit availability may be
helpful in explaining movements in the saving rate through a channel
separate from that of net worth.

Household net worth, credit, and the saving rate

Figure 1
Household net worth and personal saving rate

Household net worth and personal saving rate

Figure 1 plots the personal saving rate versus the ratio of
household net worth to disposable income. Household net worth is defined
as the value of financial and real estate assets minus mortgage debt
and other liabilities. The two series are negatively correlated.

As described by Lansing (2005), the secular decline in the saving rate
that bottomed out in 2005 can be viewed as a behavioral response to
long-lived bull markets in stocks and housing that increased the value
of household assets and, as a result, net worth. Consistent with the
life-cycle model, consumers seem to view asset appreciation as a
substitute for the practice of saving money each month from their
paychecks. Not surprisingly, the saving rate has trended up in recent
years as stocks and housing have experienced bear markets. Of course,
other factors besides net worth may also affect saving behavior. For
example, the saving rate spiked in the second quarters of 2008 and 2009
as a result of tax rebate programs enacted by Congress. However, one
drawback of using net worth is that it obscures the potentially
separate and complex manner in which assets and debt may affect the
saving rate.

Figure 2
Household debt and personal saving rate

Household debt and personal saving rate

Figure 2 shows that the household debt ratio is negatively
correlated with the saving rate for most of the sample period, with the
saving rate declining and the household debt ratio rising between 1975
and 2005. This pattern is consistent with the studies cited above that
find a positive link between consumption behavior and credit growth.
The rising debt ratio can be interpreted as reflecting changes in both
credit supply and credit demand. Supply-side changes include the
greater availability of credit cards and home equity loans, the growth
of subprime lending, the spread of exotic mortgage products, and other
changes that over time served to relax consumer borrowing constraints
and thereby reduced the need for precautionary saving. Demand-side
changes include the secular decline in interest rates starting in the
mid-1980s that lowered the cost of borrowing for consumers. At the tail
end of the sample period, beginning around 2007, we observe a
declining debt ratio coinciding with a rising saving rate. This pattern
reflects consumer deleveraging in the face of the tighter lending
standards, excessive debt burdens, and uncertainty about future income
that prevailed during and after the financial crisis (see Glick and
Lansing, 2009). The main takeaway from Figure 2 is that the
relationship between saving and debt is complex and likely depends on
factors that govern credit availability.

Figure 3
Household debt and credit availability

Household debt and credit availability

To explore this relationship further, Figure 3 plots a measure of
credit availability constructed from the Federal Reserve Board Senior
Loan Officer Opinion Survey. Following Muellbauer (2007), we examine the
quarterly changes since 1966 in the net percentage of reporting
institutions indicating a greater willingness to make consumer
installment loans. The quarterly changes are cumulated over time and
the resulting series is scaled to have a value of 100 at the peak,
which occurred in the first quarter of 2007. The figure shows a
long-term uptrend in the availability of credit to U.S. households that
tracks reasonably well with the uptrend in household leverage, as
measured by the ratio of household debt to disposable income. The
correlation of the two series suggests that the dramatic run-up in
household debt relative to income was largely driven by an increase in
the supply of credit over time.

Empirical models of the saving rate

To explain movements in the saving rate over time, we construct a
simple empirical model that uses data from the first quarter of 1966
through the third quarter of 2010. We perform a regression, a
statistical exercise in which we look at the relationship between the
personal saving rate and two contemporaneous explanatory variables: the
ratio of household net worth to disposable income, shown in Figure 1,
and our constructed measure of credit availability, shown in Figure 3.
The first variable is based on the standard life-cycle model of net
worth and saving. The second variable is intended to capture shifts in
credit available to U.S. households that affect saving behavior outside
the standard net worth channel.

Figure 4
Actual and fitted saving rates

Actual and fitted saving rates

Figure 4 plots the actual saving rate versus the corresponding value
fitted to the data from our empirical model incorporating credit
availability. The model explains 90% of the variance of the saving rate
since 1966. Both explanatory variables are statistically significant in
helping explain movements in the saving

rate. Rising net worth and easier credit availability both correlate
with lower saving rates, which is consistent with the broad patterns
shown in Figures 1 and 3. Similar results are obtained when we omit the
credit availability variable but account for the separate influence of
the household asset and debt ratios on the saving rate, rather than
subtracting the two ratios to form a single net worth variable. This
result reinforces the notion that changes in the household debt ratio
tend to reflect changes in credit availability.

For comparison, Figure 4 also plots the fitted value from a standard
empirical model that employs the net worth ratio as the only
explanatory variable. The standard model explains only 73% of the
variance of the saving rate, considerably less than our empirical model
that includes the credit availability variable. Moreover, the model
incorporating credit availability does a much better job of reproducing
movements in the saving rate that have occurred over the past 10
years, when lending industry changes have been particularly dramatic.

Conclusion

In the years leading up to the financial crisis of 2008–2009, a
combination of factors including low interest rates, lax lending
standards, the proliferation of exotic mortgage products, and the growth
of a global market for securitized loans promoted increased household
borrowing. Homebuyers with access to easy credit helped bid up U.S.
house prices to unprecedented levels relative to rents and disposable
income. The rapid rise in household net worth encouraged lenders to
ease credit even further based on the assumption that house price
appreciation would continue indefinitely. U.S. household leverage, as
measured by the ratio of debt to disposable income, reached an all-time
high of 130% in 2007.

The U.S. experience was by no means unique. Household leverage in many
industrialized countries increased dramatically in the years prior to
2007. Countries exhibiting the largest increases in household leverage
tended to experience the fastest rises in house prices over the same
period (see Glick and Lansing 2010). House prices in the United States
have dropped on average by about 30% from their peak in 2006. In the
years since the bursting of the bubble, the personal saving rate
trended up from around 1% to about 6% in the third quarter of 2010,
while the ratio of household debt to disposable income dropped from
130% to 118%.

A simple empirical model of the saving rate that accounts for changes
in the availability of credit to households over time can explain 90%
of the variance of the saving rate and tracks the recent uptrend well.
Going forward, households may keep trying to reduce excessive debt
loads by increasing their saving. On the one hand, higher saving rates
imply correspondingly lower rates of domestic household consumption
growth so that a larger share of GDP growth would need to come from
business investment, net exports, or government spending. On the other
hand, an increase in domestic saving would help rebuild household nest
eggs in preparation for retirement and also help correct the large
imbalance that now exists in the U.S. current account.

 


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Mon, 01/10/2011 - 16:09 | Link to Comment DocLogo
DocLogo's picture

shocking!

Mon, 01/10/2011 - 16:26 | Link to Comment Double down
Double down's picture

PhD! PhD! PhD!

Mon, 01/10/2011 - 16:39 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture


Once again, I must point this out to all those anti-Fed, anarcho capitalists out there.   

The existence of the Fed is not the issue, any more than the existence of the Presidential Office or the existence of the Congress. 

The problem is how the Fed has been managed, and how it has chosen to recklessly and thoughtlessly blow serial bubbles into the economy for the short-term benefit of elected officials and Wall Street profits. I implore you to read Greenspan's Bubbles, by William Fleckenstein. 

If a father beats his child, you don't blame fatherhood.  You blame the father. 

Mon, 01/10/2011 - 16:50 | Link to Comment DaveyJones
DaveyJones's picture

And if a prostitute gives you VD...

Mon, 01/10/2011 - 17:03 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

well, if it's bacterial, take Cipro. 

What's your point?

Mon, 01/10/2011 - 17:17 | Link to Comment DaveyJones
DaveyJones's picture

Experience brings wisdom I guess

Mon, 01/10/2011 - 23:07 | Link to Comment Drag Racer
Drag Racer's picture

no, a drug will just do other damage to your system. The answer for any bacterial infection is to raise your body ph to 8 or better 9 with a proper diet. Also increase the oxygen level of your system properly with H2O2.

Mon, 01/10/2011 - 17:02 | Link to Comment Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

WRONG. hmm, which one wasn't originally created by the US Constitution.  Yep, the Fed Reserve.

 

So yeah it IS an issue, and it was its creation and the way it was set up that precisely caused the problems you admit it has.

Mon, 01/10/2011 - 17:08 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

....which one wasn't originally created by the US Constitution.  Yep, the Fed Reserve.

Neither was the Bill of Rights

Mon, 01/10/2011 - 18:36 | Link to Comment snowball777
snowball777's picture

...or standing armies for more than 2 years (much less deployed in other nations for nearly a decade).

Mon, 01/10/2011 - 17:07 | Link to Comment Dismal Scientist
Dismal Scientist's picture

There is no 'must'. Believe what you want re what the issue is. If you don't get that the creation of the Fed was a mistake, then I doubt whether anyone here can be bothered to enlighten you. Hell, I'm not even American, and even I know its one of the biggest con tricks ever perpetrated on an unsuspecting public...

Mon, 01/10/2011 - 17:13 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

The only reason that you think the Federal Reserve is a mistake is because of the way you've seen and experienced its management. Either that, or you haven't thought clearly about how a massive $14T economy would function without it. 

Mon, 01/10/2011 - 17:31 | Link to Comment Dismal Scientist
Dismal Scientist's picture

A big presumption on your part, son. The concept of a central bank which is privately owned and controls US (or any other country's) money supply was always doomed to failure, if you're on the receiving end of it. The management is not the issue, but the concept, so I must correct you there.

Certainly, a $14trn economy needs some guiding hand mechanism, but it ain't the Fed now, in the future, or whenever. See, I have thought about it ? Now come on, hit me with your vision of the US central banking future...

Mon, 01/10/2011 - 17:34 | Link to Comment Dismal Scientist
Dismal Scientist's picture

dup.

Mon, 01/10/2011 - 17:35 | Link to Comment damnitalready
damnitalready's picture

 

If the FED was created for central planning of the financial economy, then the only way the FED can manage itself "properly" is to act like itself doesn't exist, i.e., quit trying to centrally manage the economy, in which case it's pointless.

 

Mon, 01/10/2011 - 17:53 | Link to Comment Dollar Damocles
Dollar Damocles's picture

Interest rates control the quality and quantity of the production of goods accross time.  The price of renting capital is the interest rate and should be market discovered through the process of supply vs demand like all other prices.  If you can expand capital from thin air through FRB, and artificially add supply, thereby lowering interest rates below what a market unhindered by gov/banking cartel intervention would have set them at; you cannot help but have misallocation of capital since you are fundamentally destroying the communication between savers/consumers and producers.  Price coordinates all economic activity, and price controls or interventions always distort economic activity.  The same is true with the price of money.  You say that the problem is not the FED, but how it is managed...  What should the price of corn be?  Or wheat, or oil?  The argument for the FED is fundamentally an argument that some intellectual bureacrat like Bernanke should use his wisdom to set interest rates as opposed to the market.

You mention Anarcho Capitalism, but you obviously do not understand the very basics of interest rates and how manipulating them through FRB and artificial money supply causes distortions and malinvestments.  FRB is the enemy, and the FED has no purpose other than to enable FRB of a much higher leverage than a free market would ever allow.  The dicipline of the free market is the bank-run, which does allow some very small leverage, but only on a prudent level.  The FED is there only to destroy prudence and socialize the costs of foolish risk taking on the part of banks.

Explain to me why a cartel is a good thing in any industry, and then explain to me why a banking cartel is a good thing.  Fascist.

Mon, 01/10/2011 - 17:55 | Link to Comment NumberNone
NumberNone's picture

When a gun is used in a crime we blame the shooter and there are cries for banning guns....

Mon, 01/10/2011 - 16:41 | Link to Comment Sudden Debt
Sudden Debt's picture

Just Imagine! You give somebody who is broke acredit card with a 20.000$ credit line and they would actually spend money?

I... we....

I should have paid more attention during economics...

Mon, 01/10/2011 - 17:14 | Link to Comment Convolved Man
Convolved Man's picture

 

It has also been discovered that credit is expended at rates proportional to the perceived value and need of the purchased products or services.  In order to induce savings, the newer credit cards will provide electric shocks that increase in intensity as expended credit approaches the card limit.

Mon, 01/10/2011 - 18:48 | Link to Comment snowball777
snowball777's picture

Great approach, if your goal is to spread their debt over more cards.

Mon, 01/10/2011 - 17:07 | Link to Comment Clayton Bigsby
Clayton Bigsby's picture

In other breaking news, Elvis is dead!

Mon, 01/10/2011 - 17:24 | Link to Comment knukles
knukles's picture

NFW
Last night I was riding right next to him when he was flying the UFO.

It's Paul who's dead.

Learnt all thet in ecoonomics clss.
Shake n' Bake, n' I hepped.

Mon, 01/10/2011 - 17:11 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

Pfft, everyone knows Waddell and Reed caused the housing bubble.  What a bunch of malarky.

Mon, 01/10/2011 - 19:51 | Link to Comment knukles
knukles's picture

Yeah?

Well Greenspan created Waddell and Reed.
Nay na na na na yna

Mon, 01/10/2011 - 16:09 | Link to Comment Hephasteus
Hephasteus's picture

Look were not going to have this saving crap. Now goddamnit I got intel and HP churning out piles of crap technology on 6 month release cycles. I don't need this wait and see crap. I need you out there buying and hyping and being part of the "excreitement".

Mon, 01/10/2011 - 16:09 | Link to Comment Commander Cody
Commander Cody's picture

Yawn.

Mon, 01/10/2011 - 16:11 | Link to Comment BlackSea
BlackSea's picture

Shhhhh ZH!

I'm in the final stages of my application on "Determining the cardinal point from which the sun rises every day"

 

Mon, 01/10/2011 - 16:16 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Pass it on dude. I'm taking the test tomorrow.

Mon, 01/10/2011 - 16:21 | Link to Comment BlackSea
BlackSea's picture

I will pass on my other paper "Unequivocally determining the cardinal point where the sun sets every day". Thanks for your interest in government-sponsored research!

Mon, 01/10/2011 - 16:25 | Link to Comment Hephasteus
Hephasteus's picture

Ok you smartasses. You don't know where the sun goes at night. And you don't have any idea if it's coming back. So just be glad your government does.

Mon, 01/10/2011 - 16:30 | Link to Comment BlackSea
BlackSea's picture

Sir, that's the exact point of the study! We're not sure that even everyone in the government is aware of this crucial data.

Mon, 01/10/2011 - 23:08 | Link to Comment tekhneek
tekhneek's picture

So......

Ben doesn't just clap his hands.... (lights out)...?

Damn it.

Mon, 01/10/2011 - 16:32 | Link to Comment Misean
Misean's picture

I tried doing that, but it's like it moves a little bit one way every day for like 6 whole months!!11!1! and then move back the other way for like another 6 flipping months.  Stupid sun...

Mon, 01/10/2011 - 16:36 | Link to Comment BlackSea
BlackSea's picture

Clearly, you need more government grants.

Mon, 01/10/2011 - 16:38 | Link to Comment Misean
Misean's picture

NASA sized...maybe even D.O.D. sized...could be a threat to national security!

Mon, 01/10/2011 - 16:47 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

What a great thread. :>)

The funny thing here guys is that more and more we need "proof" in order to accept "reality". We have become so divorced from reality and nature that unless someone with a white lab coat doesn't stamp the results with their "author-ity" or some politician doesn't grab the microphone to "in-form" us of the "truth" we can't think.

As we have become more and more dependent upon the TV and government to think for us, we have abandoned all critical thinking skills in favor of Ponzi witch doctors and confidence men.

Mon, 01/10/2011 - 16:51 | Link to Comment BlackSea
BlackSea's picture

There you go, with big meaningless concepts like "reality", "critical thinking", "common sense" and other nonsense.

We don't think, we do our jobs, ok? Now stop trying to distract us please.

Mon, 01/10/2011 - 17:01 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Watch the pretty moving pictures and leave the worrying to us.

Thank God Fringe (I'm an fan) is back on Jan 21. :>)

http://www.fox.com/fringe/

Mon, 01/10/2011 - 17:06 | Link to Comment BlackSea
BlackSea's picture

Aaaaah, TV series. Now this I understand.

Don't EVER try the other "thinking" stuff on me.

Mon, 01/10/2011 - 16:52 | Link to Comment Misean
Misean's picture

Yeah, sure...but these guys say the obvious with linear differential equations!  Linear differential equations, I tells ya!

Gotta have a properly credentialed, pingeon holed, "specialized" society in a completely cartelized fascist ebubblemy, man! 

Mon, 01/10/2011 - 16:55 | Link to Comment Misean
Misean's picture

Yeah, sure...but these guys say the obvious with linear differential equations!  Linear differential equations, I tells ya!

Gotta have a properly credentialed, pingeon holed, "specialized" society in a completely cartelized fascist ebubblemy, man! 

Mon, 01/10/2011 - 17:00 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

As we have become more and more dependent upon the TV and government to think for us...

Very true.  For many, the myth has become the reality, which is why so many viewers of Faux News/Glenn Beck/Hannity are so willing to believe that Obama is Hitler and Obama is trying to bring eugenics to America or QE is caused by unions, etc. To paraphrase JF Kennedy, "too often we enjoy the comfort of the myth rather than the discomfort of thought."  Reliance on the myth reminds me of right-wing, religious fanatics who still think the Earth is 6000 years old. I wish there was a reliable study that could determine the correlation between people who believe silly Faux News propaganda like "Obama wants to kill your grandmother" and those who think the Earth is 6000 years old. 


Mon, 01/10/2011 - 17:02 | Link to Comment BlackSea
BlackSea's picture

We absolutely need a government-sponsored study for that too.

Mon, 01/10/2011 - 17:59 | Link to Comment Hephasteus
Hephasteus's picture

I like the cut of this man's jib.

Can I pay you to take care of my enlightened self interest for me. I'll pay you well if you do a bad job!!!

Never mind. I already have that.

Mon, 01/10/2011 - 18:17 | Link to Comment BlackSea
BlackSea's picture

Can never have enough! I'm available.

Mon, 01/10/2011 - 17:59 | Link to Comment NumberNone
NumberNone's picture

Dude...I'm still worried that Guam could tip over at any moment...

http://www.youtube.com/watch?v=zNZczIgVXjg 

Mon, 01/10/2011 - 18:01 | Link to Comment Hephasteus
Hephasteus's picture

Damnit don't mention that again. It just scares the shit out of me.

Those poor guams. It's like living in a nitroglycerin factory.

Mon, 01/10/2011 - 17:11 | Link to Comment DaveyJones
DaveyJones's picture

It's not so much the "divorce" from reality that hurts, its the support payments

Mon, 01/10/2011 - 17:42 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

As long as the support payments are in fiat and not Gold it's tolerable. :>)

Mon, 01/10/2011 - 16:13 | Link to Comment USD Long
USD Long's picture

and I was concerned that I may not be getting all of the Government I am paying for!

Mon, 01/10/2011 - 16:15 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Sometimes the truth is spoken by the Ponzi just so they can say (after the fact) that they did speak the truth.

Carry on with the thieving.

Mon, 01/10/2011 - 16:15 | Link to Comment Weimar Ben Bernanke
Weimar Ben Bernanke's picture

Fo' Real Tyler!? Fo' Real?! I never  knew that easy credit leads to increased household borrowing!

 

Mon, 01/10/2011 - 16:15 | Link to Comment Village Idiot
Village Idiot's picture

what about the bat devil omen?  let them explain the bat devil omen.

Mon, 01/10/2011 - 16:20 | Link to Comment RobotTrader
RobotTrader's picture

So far, ultra high personal debt, record foreclosures, bankruptcies, and 9.5% unemployment doesn't really matter.

I guess Mohammed "Sugar High" El-Erian will have to say its the "New Normal" again...

LOL....

Dow Transports now printing another 52-week high.

Mon, 01/10/2011 - 16:20 | Link to Comment gwar5
gwar5's picture

Gooood Lord! And just in time!

 

Mon, 01/10/2011 - 17:19 | Link to Comment plocequ1
plocequ1's picture

The Apple indicator indicates who gives a fuck? Its all good. Apple up 5. My Macbook pro is holding up real well. May Appl go to $900/ share. All hail the The Don Steve Jobs. A mans man. A man of his word. A modest man who will always listen to reason.

Mon, 01/10/2011 - 16:24 | Link to Comment buzzsaw99
buzzsaw99's picture

Glick, Lansing and buzzsaw99. those bastards plagiarized my work and didn't give me any credit. sons of bitchez!

Mon, 01/10/2011 - 16:25 | Link to Comment dark pools of soros
dark pools of soros's picture

did their kids do this report for a school project?

Mon, 01/10/2011 - 16:27 | Link to Comment Misean
Misean's picture

Holy supply and demand Batman!

Mon, 01/10/2011 - 16:29 | Link to Comment bullwinkle
bullwinkle's picture

They say that sarcasm is the lowest form of humour, but you Mr. Durdin elevate it two notches above a congressional hearing.

Mon, 01/10/2011 - 16:32 | Link to Comment Savonarola
Savonarola's picture

Masters of the obvious.

Mon, 01/10/2011 - 16:32 | Link to Comment SDRII
SDRII's picture

If the flow of funds is to be believed the 600B of so in "savings" is anything but

Mon, 01/10/2011 - 16:32 | Link to Comment Bob
Bob's picture

That's a wonderfully sanitized revision of history for mass consumption: It was all about abstract macro forces. 

Note the absence of mention of fraud. 

Somebody most definitely got their money's worth.

Mon, 01/10/2011 - 16:33 | Link to Comment NotApplicable
NotApplicable's picture

Now, if only we knew what color the sky was supposed to be...

Mon, 01/10/2011 - 16:39 | Link to Comment Red Neck Repugnicant
Red Neck Repugnicant's picture

.

Mon, 01/10/2011 - 16:40 | Link to Comment Misean
Misean's picture

If fatherhood is defined as beating the child, you do.  Try to think a bit before typing.

Mon, 01/10/2011 - 17:29 | Link to Comment IQ 145
IQ 145's picture

 He did try; but it didn't do any good.

Mon, 01/10/2011 - 17:31 | Link to Comment IQ 145
IQ 145's picture

 He did try; but it didn't do any good.

Mon, 01/10/2011 - 16:40 | Link to Comment ThreeTrees
ThreeTrees's picture

To anyone that is surprised by this I have a book for you to read, published in the late 1940's, called Human Action by Ludwig von Mises.  It outlines in great detail the incentive structures created by this kind market intervention and correctly predicts the outcome.

Empricism: behind the curve.

Mon, 01/10/2011 - 16:41 | Link to Comment Ancona
Ancona's picture

I wonder how much these fucking geniuses got paid to write a white paper stating the blatently fucking obvious?

Mon, 01/10/2011 - 16:54 | Link to Comment Convolved Man
Convolved Man's picture

 

Here at the Fed, our experiments in behavioral economics are conducted using mice as surrogates for consumers, a maze as the model of financial opportunities and cheese as a monetary reward.  After numerous repeatable trials, we have concluded that mice will navigate mazes to find cheese.

Mon, 01/10/2011 - 17:06 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Yeah....but do they shit in the walls or the woods?

Mon, 01/10/2011 - 17:11 | Link to Comment BlackSea
BlackSea's picture

Don't ask questions that are not in the study's parameters. They need a separate study for that.

Mon, 01/10/2011 - 17:26 | Link to Comment Convolved Man
Convolved Man's picture

 

Unfortunately, the Fed's field experiments conducted with bears as surrogates for consumers, forests the model for financial opportunities and honey as a monetary reward has only resulted in our economists shitting their pants when confronted by bears in forests looking for honey.

Mon, 01/10/2011 - 17:48 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Too funny.

Please refer to "reality" discussion above for more research ideas and the product below for your economists. :>)

Mon, 01/10/2011 - 18:18 | Link to Comment BlackSea
BlackSea's picture

LOL, you had me at Depends ;)

Mon, 01/10/2011 - 20:08 | Link to Comment Convolved Man
Convolved Man's picture

 

+10.  Oh great.  Now I have new mental image of why Bernanke is uncomfortable during his interviews.

Mon, 01/10/2011 - 20:38 | Link to Comment Convolved Man
Convolved Man's picture

 

Speaking of bears in the forest, did you hear the one about the two campers sitting at their camp fire when a snarling grizzly came out of the woods and charged toward them?  The first camper jumps up and yells, "We gotta run", while the second camper calmly starts lacing up his sneakers.   The first camper sees this and exclaims, "What the hell are you doing?  We got to run."  To which the second camper replies, "I don't have to run faster than the bear, just faster than you."

Mon, 01/10/2011 - 17:02 | Link to Comment Glen
Glen's picture

Well fuck me; that was a revelation.  

Mon, 01/10/2011 - 22:18 | Link to Comment StychoKiller
Mon, 01/10/2011 - 17:03 | Link to Comment Dismal Scientist
Dismal Scientist's picture

'Oberstabsfeldwebels', hilarious. You have outdone yourself Tyler. Stating the bleeding obvious post event can only sound credible, if you shout in a Sergeant Major style. Its enough to make one puke, if one actually gave a sh*t...

Mon, 01/10/2011 - 17:11 | Link to Comment BlackSea
BlackSea's picture

I wish to point out that my 95 year old senile grandfather did not in any way assess the findings of this study as being obvious.

Mon, 01/10/2011 - 17:26 | Link to Comment bronzie
bronzie's picture

NINJA loans - no income, no job or assets but you can still borrow half-a-mil or more to buy a house

NINJA wasn't easy enough so we also allowed no downpayment

who'd-a-thunk that mortgage loans like that would encourage people to spend more than they could pay back ...

<sarcasm off>

Mon, 01/10/2011 - 18:24 | Link to Comment NumberNone
NumberNone's picture

Jeez...just give everyone more credit again.  All problems solved...

Tue, 01/11/2011 - 00:43 | Link to Comment BobbyTinGA
BobbyTinGA's picture

I am interested to see how long the savings rate will stay anywhere near 6%.  All of the talking heads covering Wall Street are so sure of the recovery gaining steam this year, so is the "consumer" expected to do his share by saving less?  It looks like the retail investors have sat out of the equity market for quite a long time and will be jumping in with both feet again this year, inflating stock prices and perhaps setting us up for another bubble.  My bet is that the savings rate is south of 4% the next time Santa comes to town.

 

Who here is long on US equity in 2011?  I know that silver, shotgun shells and victory gardens are all the rage at Zero Hedge, but where else should a savvy American lay his bets?

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