1 GOD.

ENOUGH WITH THE BORING CO-BLOGGERS.

WHERE THE FUCK IS ACE?

2 GOLD!!!!!!!!!!!!!!!!!!!

3 Thank you Monty , these are much appreciated . Any thoughts on the Dec 3 Fed disclosures ?

4 Jeff B.>>   He's waiting for you to hit the tip jar.

5 Thank the gods of commerce, who have been sorely battered of late. Another Monty post!

Any comments on QE II?

6 Jeff, you aren't required to read anything here.  You don't like what the cob-loggers write, don't read it.  If you're mad Ace isn't posting, go someplace else...friggin' baby.

7 Uh, does JeffB know with whom he messes?

8 Personally, I wish I (and Monty) had the time to just sit and catch up on the last 6 mo. or so.  Far and away the most interesting guy on the site.  And I miss runningrn so if she doesn't show up soon this morning, someone say hi for me?  Please?

9

ENOUGH WITH THE BORING CO-BLOGGERS.

Mind your manners.

10 If you're a European, particularly a union-affiliated European, you sit on your prat and cry like a baby wailing for its bottle.

I watched the morning news in München last week show a report about the unemployed in Spain going on strike against cuts in payments, and I couldn't for the life of me figure out how unemployed people not working for one day was somehow different from any other day.  Eventually  it dawned on me that "going on strike" was code for "loot the Levis store."  But I still don't understand.

11

ENOUGH WITH THE BORING CO-BLOGGERS.

 

Ace doesn't usually haul his ass out of bed till 3 in the afternoon...you should know that if you've been hanging here a while...maybe he's a troll?

12 Well, it is good to know that one can count on some things to be consistent.

Jeff B. being an insufferable prig is one of those things.

13 Yay!!  The DOOM is back!

14 I'll have to think a bit about what QEII means. Certainly something is coming down the pike, but with the (likely) GOP gains in both the House and Senate means that the Keynesian appetite for "stimulus" may go unrequited. I expect a lot of back-room dealing, and a lot of sleight-of-hand -- the "stimulus that dare not speak its name", in other words. Frankly, I'm as at sea as anyone else at this point. It's a very confused and chaotic picture out there right now. The looming trade-war with China seems suicidal, but it's not clear to me that our politicians will buck the protectionist wind blowing their way. That alone might strangle QEII a-borning.

15 Well, it is good to know that one can count on some things to be consistent.

Jeff B. being an insufferable prig is one of those things.

Yeah, I'm in an especially bad mood today, too.  Sorry, Monty -- it's not your fault, and this is a good post.

16 I had missed these posts.  They show how to do truly good gallows humor.

17

I'm reminded of a scene from "First Blood" where Rambo is talking about all his buddies to Trautman:

"Barry's gone too Sir. Got himself killed in Nam, didn't even know it. Cancer ate him down to the bone."

We're fucked with a Garden Weasel™, and most of us don't even know it.

 

18 Thank you, thank you, thank you Monty!  Your financial posts are clear and to the point.  Now that I am responsible for my family's finances I have been feeling very adrift with all the unfamiliar terms and I really appreciate  your  break-down of what's happening. 

19

OK, we know the Fed Rerserve is monetizing the debt, by buying bonds itself...

Are they playing directly, or through surrogates, in the Stock Market?

Looking at the trends, the Market makes no sense right now... as if the big players or some outside force is just playing it like Vegas... as its ups an downs are divorced from either financial news, or how well a company is doing...

20 What is QEII?...I get Queen Elizabeth 2 when I bing it...a ship?

21 Jeff B. is consistently one of the rudest, dumbest commentors here. 

22 What is QEII?...I get Queen Elizabeth 2 when I bing it...a ship?

Posted by: CanaDave at October 04, 2010 11:51 AM

I think its more like an iceberg

23 Ass pirates of the world unite! To punder your wallet.

24 I'm afraid I have to show my ignorance and ask what the heck QEII is.  The proliferation of acronyms and contractions is one of the reasons I need Monty to read Zerohedge and tell me what it says rather than just read it myself.

25
Do you know the way to San Jose?  Obama does and he's driving.  We're not there yet.  But we'll all be there soon.  Yes,  dear,  the doors are locked.  Just quietly take off your seat-belt and pray you're thrown clear on impact.

26

CanaDave: Quantitative Easing, number 2...

27 If you're a European, particularly a union-affiliated European, you sit on your prat..

Speaking of which...

Thousands of protesters take to the streets as French unions battle pension reforms

French ports in Marseilles remained closed today as more than three million people were expected to join striking workers in protests against plans to raise the country's retirement age.

President Sarkozy caused outrage in the France last month after plans to cut the deficit by raising retirement age from 60 to 62 were announced.

Strikes across France on September 23 sparked widespread chaos as work stoppages disrupted schools, international flights and public transport.

The shock, the horror - Euro gits have to wait 2 additional years before they get their generous pension plans?  Eleventy!!!!!!

28 Jeff B. is consistently one of the rudest, dumbest commentors here. 

Posted by: rdbrewer at October 04, 2010 11:51 AM

I resent this.  I thought I had rude and dumb pretty well locked down.  I shall have to post more frequently.

29 Oh shit, we're going to have to know math for this post.

30 We all welcome the return of Monty Financial Gloom and Doom. Could I have foresaw this with my urban collapse scenario in the news thread? But please tell me that nobody puts mayonnaise on french fries!

Gold IS an inflation hedge, but only in the long run. It is like any other commodity, it goes through ups and downs just like globull warming. But an increase from $500 to $1300, could that actually be our real inflation number anyway? Does anyone believe any numbers released by the government anymore?

Municipal Bonds a safe haven? I would have thought that the bankruptcy an collapse of that CA city a few years ago would have put paid to that account long ago. There is no absolutely "safe" haven, but I would call Southeastern Public Utility stock as about as safe as you can get. You will not get large capital gains, but you will not get large losses either. What you will get is a stable stock that pays a high dividend. [insert common investment disclaimer here]

As for the residents of Pudunk bailing out the finances of liberal cities who owe huge retirements to SEIU thugs I think if that started happening the Tea Party marches would be looked on by the politicians as calm and collected. What I would go for is what I have written in to the local paper when they whined about poor city finances and inability to forcibly incorporate outlying suburbs like me. Their best course of action is to declare bankruptcy, disincorporate as a city and shutdown all city operations. Any services like water/sewer etc can offer their service for a fee like any other private business.

And yes, CA, MI, and IL will be the first to start hitting for this crap. A lot of these urbane areas are already getting massive subsidies in one form or another and they should be cut off soon.

And Monty trashing derivatives???  You know Mr. Flamewar Derivitive guy will be back.



 

31 BoM, he's done it in the past when Ace wasn't on break.  It seems his problem is co-bloggers in general, not Ace being away.

32

CanaDave: Quantitative Easing, number 2...

 

Ahh...okay.  Thanks SnowSun.

33

If you hate the feckn co-bloggers go to Rhams facebook page and read some of the hate he's getting from Chicagoians.

I was shocked that his minions leave that stuff up

34

Posted by: SnowSun at October 04, 2010 11:53 AM (UAUr6)

Ok..., now I know what the letters stand for but what does it mean?  There we have the other reason I need Monty's posts.

35 I've thought for a long time that municipal debt is the next big shoe to drop in this recession/depression/worker's paradise that we're living in. Harrisburg, PA made the news recently when they barely escaped having to declare bankruptcy, but Harrisburg is only one of tens or even hundreds of muncipalities in the nation in dire financial straits.

I remember how NPR was absolutely thrilled when Orange County, CA (a very conservative county) went belly up. They ran story after story about it as if it was an object lesson on conservative fiscal irresponsibility. You can bet none of the Democrat run cities will get the same treatment when they fail. And they're gonna fail by the hundreds.

36 @33 JeffB has a crush on ace, then?  How sweet.

37 #37  And they're gonna fail by the hundreds.

And they are probably going to fail all around the same time.  It will be a ripple effect - one large city declares bankruptcy, followed by more and more cities. 

And then...only chaos.

38 38 @33 JeffB has a crush on ace, then?  How sweet.

Wicket is going to be so mad.

39 What, no cheerleader/hot businesswomen pics?

40 @39 Oh boy, THIS is going to be fun!

41 And they are probably going to fail all around the same time.  It will be a ripple effect - one large city declares bankruptcy, followed by more and more cities. 

And then...only chaos.

Posted by: Kratos (Ghost of Sparta) at October 04, 2010 12:03 PM (9hSKh)

As I said in the previous thread, if you live within 20 miles of a city in excess of 100K you need to move. When those checks stop coming the downtown firesale parties will start and then move towards the 'burbs.

42

And they are probably going to fail all around the same time.

They've already failed...the Fed is just printing money while we borrow money from the ChiComs we can't pay back.

Good thing I planted popcorn in my illegal backyard garden, 'cause it's gonna get interesting out there.

43 I think QE 2 is quarterly earnings from the second period of the year but I could be wrong.

44 And when I say 20 miles from the city, I don't mean 20 miles from the geographical center. I mean 20 miles from the metropolitan statistical area.

45

Are they playing directly, or through surrogates, in the Stock Market?

Looking at the trends, the Market makes no sense right now... as if the big players or some outside force is just playing it like Vegas... as its ups an downs are divorced from either financial news, or how well a company is doing...

Posted by: Romeo13 at October 04, 2010 11:50 AM (AdK6a)

They pumped another $5 Billion into the market last week from what I read.  I can't find the article, but IIRC it was a direct injection.

46

On  Sat., the WSJ reported that Harrisburg's mayor asked state officials to declare the capital city a

"distressed municipality under a 1987 state law that offers state help to financially ailing municipalities....19 cities and other local governments, the largest of which is Pittsburgh are in the program.

The city is wrangling with $288 million in incinerator debt...the city has skipped some payments on its incinerator bond.  Harrisburg faces a lawsuit over the missed payments, and is grappling with a $4.5 million budget deficit."

47

http://tinyurl.com/29xs77s

"The Fed. vs. The Bond Market"
A little info about the follies of QE... via Karl Denniger at Market-Ticker dot org.  Great blog too... KD's not afraid to call out anybody.

48

TEE866 at October 04, 2010 12:07 PM (nO7Mi)

See, that was my best guess but the buzz around it didn't seem right.

49

They've already failed...the Fed is just printing money while we borrow money from the ChiComs we can't pay back.

Posted by: gator at October 04, 2010 12:06 PM (aOKEC)

Its actually worse... the Fed Reserve is now just printing money, and using it to buy its own bonds.... not even borrowing from the Chinese.

They are now truly just printing money, with nothing to back it.

50 If California goes bankrupt while Obama is still in office will the government and unions end up owning the state?

51 No sane person should actually be playing the stock market anymore. It is controlled by idiot buyers for the insurance companies, major funds, and municipal managers.

Insider trading is rampant among the high wheels on the fed and at these funds yet the incompetent regulatory groups go after Martha Stewart.

If you have investment money find a stable blue chip stock with a company that doesn't have any debt and park it there.

52

They pumped another $5 Billion into the market last week from what I read.  I can't find the article, but IIRC it was a direct injection.

Posted by: Johnnyreb at October 04, 2010 12:09 PM (cqZXM)

I saw some intial reports of this as well... funny how NONE of the MSM will touch that story... and it has pretty much gone down the memory hole.

53 Monty and the stock market are conspiring against Obama today. By the way, Harrisburg's not just any old town in PA, it's the capital, and it's completely removed from the four Blighted Keystone Corners of Pittsburgh, Philadelphia, Erie, and Scranton/Allentown. If Harrisburg can't make it...oh, boy.

54

Feel the G's as we take this ship to the moon!

55 By the way, Harrisburg's not just any old town in PA, it's the capital, and it's completely removed from the four Blighted Keystone Corners of Pittsburgh, Philadelphia, Erie, and Scranton/Allentown. If Harrisburg can't make it...oh, boy.

Harrisburg is just like any other big city. Once a city gets larger than 30,000 residents it starts shifting to major socialism, the working people bailout, and the city becomes a haven for the looting class.

In an honest world it would go bankrupt soon after.

56

Oh, also in Sat.'s WSJ:

"Trading was jittery after the Institute for Supply Management said the U.S. manufacturing sector expanded in September, but at a slower pace than August.

The ISM's manufacturing purchasing managers index fell to 54.4 from 56.3 in August.  Economists surveyed by Dow Jones Newswires had expected a reading of 54.0.  Readings above 50 indicate expanding activity, and September was the 14th consecutive month of growth.  But investors said certain details in the report triggered alarm about the economy's health.

'Some of the data points had a lot of weakness in the layers,' said Seth Setrakian, partner and co-head of trading at First New York Securities, a proprietary trading firm.  'Backlogs and new orders were down and inventories were way up, which portends declining economic growth in the next few quarters.'

Investors also continued to stew over the possibility of the Federal Reserve taking further action to stimulate the economy."

57

They are now truly just printing money, with nothing to back it.

This should work!

58 I'm afraid I have to show my ignorance and ask what the heck QEII is. "Quantitative easing." That's a term that the Fed uses when the don't want to admit that they're running the printing presses night and day to increase the money supply. Basically, QE involves the Fed buying Treasuries. How do they "buy" them? With newly-minted money, of course. But the Treasuries go into a Federal vault, and so don't actually count as "debt" on the ledger because - har har har - they'll be redeemed at some later date. It's still printing money, though. Don't be fooled. It's still currency debasement, just going the route of money-laundering rather than outright counterfeiting. Wikipedia's article is here.

59 My name is Monty, and I'm here to say,
Obama's comin' for your 401(k)!
*wikki-wikki-wopp!*
*wik-wikki-wikki-wopp!*

60 You guys need help with your city? We gots experience, and we gots time.

61

Posted by: Vic at October 04, 2010 12:13 PM (/jbAw)

I got out after loosing money on a couple of "interesting" Governmental / Legal / Business situations...

When United Airlines went bankrupt... they had enough assets on the books to make the stockholders and investors whole, but instead of breaking it up, they made all of us loose money, as the company continued... now United is healthy and looking to merge... but I lost 10s of thousands on that one...

And don't even get me started on GM... or Chrysler... bonds...

62 #52 Don't they already?

63 Jeff B.

Quit punching down dammit!

64

My beats flow fresh, no doubt about that!
With the stagflation comin', gold's where it's at!

Awww, yeeeah, you heard that, fiatches!

65

Wikipedia's article is here.

When I click on this, it shows me a bloody and lubeless barbed cock of Satan.

Anybody else getting this?

66 Hey!! the running nurse made it in.  Hope all is well in your world lady.  I gotta go but wanted to give ya a shout out.  Be good to yourself.

67 As a comp.lit. major ('cause Ethnic Studies had way too much math) I don't understand much about this economical financialation stuff , but I can tell you this, Monty: You are one funny sumbitch!

68 Anyone from Alabama on here? Just saw four State Senators get busted in a casino payola scandal. Most diverse scandal ever. 2 D's, an R and an Ind. Including a black guy and a white woman/Tea Partier. http://tinyurl.com/25q6jsr

69

"Quantitative easing." That's a term that the Fed uses when the don't want to admit that they're running the printing presses night and day to increase the money supply.

Basically, QE involves the Fed buying Treasuries. How do they "buy" them? With newly-minted money, of course. But the Treasuries go into a Federal vault, and so don't actually count as "debt" on the ledger because - har har har - they'll be redeemed at some later date.

 

I think I liked Queen Elizabeth II the ship better

70

Oh, and higher raw material costs have many retailers looking to raise their prices.  Also from Sat.'s WSJ:

The ability of such companies [such as Starbucks, Goodyear Tire and Rubber, and Jones apparel]to sustain such price increases may sway how the Federal Reserve views the health of the economy, and potentially figure in its decision on whether another big round of stimulus is needed.  The country's low rate of inflation was cited by the Fed last month as a main reason the central bank is considering further steps to juice the economy...

'Everyone's talking about raising prices', said Manny Chirico, chief executive of Phillips-Van Heusen Corp., whose clothing labels include Calvin Klein and Tommy Hilfilger.  Mr. Chirico says costs are up 5-7% and he hopes to recoup some of that by increasing prices 3-4% starting late this year.

For now, doubts about the strength of the recovery linger. Reports on Friday showed the economy has largely stalled."

71

Monty - excellent post. 

 

72

Hey!! the running nurse made it in.  Hope all is well in your world lady.  I gotta go but wanted to give ya a shout out.  Be good to yourself.

 

Teej!  Where have you been all these days?  I haven't seen you here in forever!  I hope all is well with you and that your shoulder is all healed up!  Have a great day!

73 "The federal reserve is just printing money . . . blah blah blah . . . "  Is this BS or was I badly misinformed when getting my econ degree . . . the Fed doesn't print money, it manipulates the value of money mostly via open market operations, and more publicly via the interest rates it sets (not very important) . . . the Treasury (Geitner!) prints money . . . set me straight.

74

Now my plowshares a sword, and it's nicely honed.
Lookout, all you libs!  It ain't me who's boned!

Word to ya hobo.

75

They are now truly just printing money, with nothing to back it.

 

Psst, wheelbarrow futures.

76 #58  That decrease is so...unexpected.

77 This isn't my fault.

78 Anyone from Alabama on here? Just saw four State Senators get busted in a casino payola scandal. Most diverse scandal ever.
2 D's, an R and an Ind. Including a black guy and a white woman/Tea Partier.
http://tinyurl.com/25q6jsr" --Lincolntf

The Alabama bingo war has been going on for quite a while. While what that article says is certainly possible, it is, in my opinion, just as likely that this is a political move by the Alabama Governor, who shut every electronic bingo hall down a while back. He right to do this has been in contention for even longer.

79 I need Monty to read Zerohedge and tell me what it says rather than just read it myself.

I feel exactly the same way. I read Zerohedge and this is the message I get:

"Something really really REALLY bad is happening, run for the hills."

/QEII is quantitative easing II, sort of like "Weekend at Ben Bernake's II: Let's Print A LOT More Money Again."

80 Thank you for the California boned status.  I missed it badly.

81 There is a big sale on ammo at Cabela's. Just the thing for a case of the DOOOOOOOMMMMMSSSSS!!!!1!!11!

Always makes me feel better.

82

I just read some chicken bones I purchased from Kentucky Grilled Chicken™. They said I should save them, eat the marrow, and make soup stock.

Surely no hard times are a comin'?

83 Posted by: jwpaine I'm in North Carolina and there's a roughly analogous situation with "Online Sweepstakes" shops and bars with video poker machines. Don't think anyone's been charged lately, but it's an issue that's not going anywhere as long the State is running a zillion different Lottery games. Get enough people gambling regularly and a lot of them aren't gonna stop, whatever the format.

84 Monty's posts make me thankful that I no longer own anything of value, therefore, I literally have nothing to lose when things go tits up.

85 Feingold: But I poop from there.
Ace: Not right now you don't!

Feingold down by Seven to Johnson.

86

I don't really care if someone buys gold as an investment.  It has a really lousy LONG-TERM track record - the past 5 years are not typical of what gold usually does - but whatever, it's your money, do what you will.  My complaint with the gold bugs is that a great deal of them also believe that THE WORLD IS COMING TO AN END!!!11!!!1!!!!!11  And in this context, then all the criticism is valid - if the economy does crash, nobody will be trading in gold, they will be trading in things that have intrinsic value like food and ammo.  And I get really upset by the people who try to profit in gold by stoking fear about "the upcoming crash" or whatever (Glenn Beck I'm looking at you).

So if you think gold ought to be part of a well-diversified portfolio - meh, whatever, don't care.  But if you think gold ought to be a part of your end-times bunker - then you're a fool.

87 And in this context, then all the criticism is valid - if the economy does crash, nobody will be trading in gold, they will be trading in things that have intrinsic value like food and ammo.

Salt.  It's the new gold.

88 BoM, he's done it in the past when Ace wasn't on break.  It seems his problem is co-bloggers in general, not Ace being away.

Nah, my problem is with the non-Gabriel/DrewM. co-bloggers.  Those two hold up their end of the bargain well.  They've developed their own styles and bailiwicks and write good substantive posts.  The rest, though?   Problematic in the utmost.

89 Lincolntf: One of the websites I manage has been following the Alabama bingo war for a couple of years now. Naturally, I favor laissez-faire. In any case, the acrimony is thick between the two contenders (the Governor on one side, the casinos on the other), so this probe strikes me as political retaliation. Time will tell, of course.

90 . . the Treasury (Geitner!) prints money . . . set me straight.

Posted by: The inexplicable Dr. Julius Strangepork at October 04, 2010 12:30 PM (8cUi6)

Please pull out a dollar bill, and READ it... Very TOP line...

 

91 I actually do want to point out, in case it got lost above, that my vitriol was misplaced in this case, since Monty's written a good post here.

92

In re. zero hedge: If you can get past the verbose entanglement of metaphor and analysis, the economic situation is worse than one could ever possibly imagine where the complex becomes so complex it is rendered simple.  The system is crashing in real time.  Don't be fooled by anyone, we are heading for a complete inflationary climate. There is no past economic template for which this can be compared to.  The fancy speak of velocity of money and conventional inflationary metrics will mislead many to think we are heading into a deflationary cycle.

However, we are in the midst of a worsening economic depression with the wizard exposed and the currency soon to be rendered nearly worthless.

Somber? Yes, but I speaka da truth.     

93 But if you think gold ought to be a part of your end-times bunker - then you're a fool. Then a happy fool I shall be. I've been hearing the same shit for ten years, while all the while my gold has doubled or even tripled in value. Look, I'm not telling people to dump everything and buy gold. But the animus against gold on the part of the so-called "realists" is just silly, given how gold is performing (and continues to perform). I think gold still has room to move, too -- i wouldn't be surprised to see it hit $2000/oz before it starts trending down again. At that price, I'd sell part of my hoard and be well-satisfied. (Assuming that dollars are worth anything at that point; I may be selling my gold for yuan, the way things are going.)

94 But if you think gold ought to be a part of your end-times bunker - then you're a fool.

Posted by: chemjeff at October 04, 2010 12:40 PM (RY/Dc)

Heh!  My end times bunker is made of gold!

95 However, it's important to note that derivatives are neither new nor a priori "bad" instruments.

I knew you'd come around eventually.

96  Karl Denninger seems to believe another round of QE will lead to cataclysmic inflation of basic commodities. It is interesting because up until recently Denninger was a militant deflationist.

97 93 I actually do want to point out, in case it got lost above, that my vitriol was misplaced in this case, since Monty's written a good post here.

Posted by: Jeff B. at October 04, 2010 12:46 PM (NjYDy)

< This 3rd party vitrol you speak of? Is it related to that other elusive 3rd party character, cognitive idiotica?  

98 Don't know if we've been heard yet. Welcome back Montyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyyy!

99 95 But if you think gold ought to be a part of your end-times bunker - then you're a fool.

Then a happy fool I shall be. I've been hearing the same shit for ten years, while all the while my gold has doubled or even tripled in value.

Look, I'm not telling people to dump everything and buy gold. But the animus against gold on the part of the so-called "realists" is just silly, given how gold is performing (and continues to perform). I think gold still has room to move, too -- i wouldn't be surprised to see it hit $2000/oz before it starts trending down again. At that price, I'd sell part of my hoard and be well-satisfied. (Assuming that dollars are worth anything at that point; I may be selling my gold for yuan, the way things are going.)

Posted by: Monty at October 04, 2010 12:49 PM (/0a60)

Gold is at 98% bullish, short-term oversold

100

So if you think gold ought to be part of a well-diversified portfolio - meh, whatever, don't care.  But if you think gold ought to be a part of your end-times bunker - then you're a fool.

 

Easy for you to say, Chemmy--not all of us can go and make a gold bar in our chem lab!

101 102

So if you think gold ought to be part of a well-diversified portfolio - meh, whatever, don't care.  But if you think gold ought to be a part of your end-times bunker - then you're a fool.

 

Easy for you to say, Chemmy--not all of us can go and make a gold bar in our chem lab!

Posted by: Hot Stock Tipper at October 04, 2010 12:54 PM (8GYOu)

Go out and buy pre-1964 US coins, 98% silver, lot cheaper that gold.

102 I knew you'd come around eventually. I was never away, really. Futures contracts, for example, are a good and necessary derivative -- how else would farmers be able to sell their crops in a reasonable way (for example)? But I still think a lot of derivative instruments are not only not productive, but are actively harmful and produce risks far out of proportion to any good they do. (Particularly when you get far out in the second- and third-order derivatives where the big hedge funds and corporate investors play.) Many derivatives work fine in theory, but too many fail to take into account the huge impact that human nature has on the equation. Economics is a behavioral science, not a mathematical one.

103  I actually do want to point out, in case it got lost above, that my vitriol was misplaced in this case, since Monty's written a good post here.

Posted by: Jeff B. at October 04, 2010 12:46 PM (NjYDy)

 

Jeff my child, say three Hail Montys and four Our Aces.  Then all will be absolved.

104

I just wouldn't be me if I didn't point out that gold is now $1314/oz as I write this. I bought some gold five years back at about $500/oz; that's a pretty damned good rate of return for something that's just supposed to be an inflation hedge.

 

At least we know Sir Monts-a-lot's bling is real--not that cheap, Chinese, gold plated, hollow crap. 

105

Yum!  Errol Flynn (what was the rest of the post about?)

106 Utilities and Airlines need derivatives to hedge fuel costs. If we were paying spot market prices or spot averaged over their actual storage capacities - it would be a mess.

107 I just heard (on the radio) about some Alabama politicians being indicted over some gambling stuff.  This was on ABC, no party affiliation was given...so, I'm assuming these are Democrats?

108 98  Karl Denninger seems to believe another round of QE will lead to cataclysmic inflation of basic commodities.

Denninger has been on Defcon 4 lately. Lots of bold and ALL CAPS. I'm pretty sure soon he's going to be including !!!ELEVENTY!!! in his posts.

/this, of course, does not mean I disagree with him.

109 Hey!  That's not Errol Flynn!  That's those fuckers from the SEIU, and all the other gov't 'employee' unions! 

110 Posted by: BeckoningChasm Check post #80.

111 OT: Weasel Zippers reports that the One Nation rally website is using a pic of the MLK "I Have A Dream" rally to imply a much bigger crowd for their October 1, 2010 rally.

112 "The Alabama bingo war "...

That's funny, and it reminds me of the old joke:

What has 72 balls but only F***s old ladies?

113 Okay, I checked the html on that last post, and it was proper, so why is the text of the hyperlink missing? In any case, the One Nation rally website is using a pic from the MLK I Have A Dream" rally to imply a MUCH larger gathering at their own 10-1-10 rally.

http://tinyurl.com/254ng8n

114 Good to see the Doom & Gloom Express steaming down the Interwebz track again, Monty!

Are you telling us we should listen to G Gordon Liddy? Oy! I've been wondering if Tricky Dick paid him in gold for his little escapade back in the Watergate days....

I am gonna disagree with you a little on "protectionism," though. While I agree that trade barriers are bad in theory (and conservative biz-people on Wall Street are always harrumphing about them, because they make big bucks no matter what), it's clear that the Chinese and others are playing with a marked deck and, out of simple self-preservation, we have to respond.

Being honest when everyone else is bending/breaking the rules is laudable, I suppose, but it's also dead stupid.

If we had genuine free-market conditions (without the Chinese, Japanese, Euros and damn near everyone else grabbing the advantage by currency manipulation, subsidies, preferences, local regulations, etc.) I'd say any moves from our gubmint would be bad.

But fuck the foreigners. If they can't play by the rules, we shouldn't either.

Fuck Larry Kudlow and the rest of the "free-market" crowd, too.

115

 And in this context, then all the criticism is valid - if the economy does crash, nobody will be trading in gold, they will be trading in things that have intrinsic value like food and ammo.

Salt.  It's the new gold.

 

I'm keeping my ammo.  If it all goes tits-up, I'll buy a cheap Robin Hood costume and start robbing people at gunpoint of all their gold and, you know, food and stuff, and give it to the poor, like me.  Oh fuck it.  It will all be for me.

116 Denninger has been following the home-forclosure cock-up lately, too. The problem is that a lot of banks started foreclosure of homes without having sufficient documentation (in some cases, the wrong documentation), so there's a de facto moratorium now on nearly *all* foreclosures. That means that all that shitty, nonperforming real-estate debt is going to continue to clog up the arteries of the financial system for a good while longer. In fact, if foreclosure is prevented, it might prompt people who would otherwise strive to pay their debts to simply default. If there's no downside to not paying the mortgage, why not? If you're going to get booted out of the place eventually anyway, why not just squat there rent-free while the feds and the banks squabble?

117 Soona - in that situation, poor = friends with guns

118 Many derivatives work fine in theory, but too many fail to take into account the huge impact that human nature has on the equation. Economics is a behavioral science, not a mathematical one.
Posted by: Monty

The question is then, should the Fed be the one to regulate derivatives? If derivatives are not inherently destructive further regulation, outside of better reporting and less fraudulent activity by the oligopoly of US rating agencies, may only exacerbate the destructive potential of derivatives.

Of course the easier route would be to not bailout firms that make bad bets but that would be just crazy or something.

119 122 Many derivatives work fine in theory, but too many fail to take into account the huge impact that human nature has on the equation. Economics is a behavioral science, not a mathematical one.
Posted by: Monty

The question is then, should the Fed be the one to regulate derivatives? If derivatives are not inherently destructive further regulation, outside of better reporting and less fraudulent activity by the oligopoly of US rating agencies, may only exacerbate the destructive potential of derivatives.

Of course the easier route would be to not bailout firms that make bad bets but that would be just crazy or something.

Posted by: Garbonzo the Garrulous at October 04, 2010 01:14 PM (23kaI)

All those firms were TOO BIG TO FAIL!!!!

What hooey.

120 If it all goes tits-up, I'll buy a cheap Robin Hood costume and start robbing people at gunpoint of all their gold and, you know, food and stuff, and give it to the poor, like me. A gold-bug friend of mine always says: "I have gold, and enough lead to protect it." I've reduced my gun collection in recent years: I'm down to a Springfield XDM .40 cal pistol and a S&W AR15. I went nuts a couple of years ago when Bammer got elected and bought a shitload of 5.56 NATO ammo cheap, so I'm good there. (.40 Smith ammo is weird -- sometimes it's dirt cheap, other times you can't find it for love or money. I bought a bunch of cheap Wolf steelcase for the range, but I don't like using it too much -- it runs awful dirty, and I sometimes get ejection problems with steelcase that I don't get with brass.)

121

Gold, will of course have some movement across its norther flight however, ya'll have to understand, this is not a cycle and the dollar's play has been played. Meaning, gold is running north due to a systemic breakdown of the national and international economic system. 

Gold and silver are both good to have on hand.  Also, coins minted before 1964 such as nickels, dimes, quarters, half dollars and dollars are 90% silver.  These coins are referred internationally as "junk silver" but don't let the name fool ya.  Any combination of silver coinage minted prior to 1964 with a face value of $1.40 actually yields the value of 1 troy ounce of silver.

The spot price of silver right now is $22.00.

A year ago, silver was trading around $13.00 per ounce.  January 2009, silver was trading at around $11.00 per ounce.

A year ago, gold was trading at around $1,000 per ounce. Jauary 2009, gold was trading around $880 per ounce.

Pay attention folks, for we are in a bona fide depression. With a new rub, this time, the government has a $13T Natl. Debt and over $75T of unfunded liabilities, with a crashing currency.

 

122

You know, considering how many people in Japan smoke, the 40% tax hike might be considered cruel and unusual punishment. 

 

123 The question is then, should the Fed be the one to regulate derivatives? You said it yourself: the only real solution is to make firms pay for their bad decisions. Regulation actually makes the problem worse by systematizing and socializing it. ("That which is not specifically forbidden is specifically authorized," or that's how many people will read it.) There is no such thing as "too big to fail", as we are finding. You can only hide the damage for so long.

124

I've reduced my gun collection in recent years: I'm down to a Springfield XDM .40 cal pistol and a S&W AR15. I went nuts a couple of years ago when Bammer got elected and bought a shitload of 5.56 NATO ammo cheap, so I'm good there. (.40 Smith ammo is weird -- sometimes it's dirt cheap, other times you can't find it for love or money. I bought a bunch of cheap Wolf steelcase for the range, but I don't like using it too much -- it runs awful dirty, and I sometimes get ejection problems with steelcase that I don't get with brass.)

 

I, too, have a lot of Wolf steel case.  But I also have a robust cleaning kit.  Brass is way to fucking expensive.  Maybe the first thing I should be robbing people of is brass ammo.  Yeah, that's it. 

125 I read a lot of financial blogs, every day. The last couple of months, every one of them has gone Bear. Some of them are accusing the Market of naked manipulation (High Frequency Trades) due to lack of the little guy players. So the Market goes up, but volume is down, meaning more people are leaving it up to the big institutions to prop it up. This also happened in Oct of 1929 when the market was crashing and big investor, all by himself, strode on to the floor and starting buying shares of all the main big selling stocks like Ford and US Steel and General Electric. That actually worked. For about a week.

126 ...so Alabama has no dildo sales, no strong beer sales, and now no bingo? Why does anyone live there?

127

Derivatives served a very narrow sector until some geniuses in the UK attached to a prominent investment bank came up with a clever idea to package them as investments after convincing AIG and others to offer protection against them in the form of default swaps.

Alan Greenspan gave some very eloquent congressional testimony on derivatives in their hey day and advised they were stable due to their ability to spread risk.

This is complete bull shit. 

The derivative market spread mal-investment risk and while there were a lot of players at fault, the key point is the fact exotic investments such as derivatives in the form of collateralized debt obligations with the countervailing insurace hedge products of credit default swaps, brought down AIG and was at the heart of TARP with U.S. Tax Dollars being paid to foreign banks and foreign sovereign funds.

Derivatives, just like naked short-selling, should be banned.

 

128 I was never away, really. Futures contracts, for example, are a good and necessary derivative -- how else would farmers be able to sell their crops in a reasonable way (for example)? But I still think a lot of derivative instruments are not only not productive, but are actively harmful and produce risks far out of proportion to any good they do. (Particularly when you get far out in the second- and third-order derivatives where the big hedge funds and corporate investors play.)


Please describe a derivative instrument that is "actively harmful."  You are ascribing intentions to a tool.  By this logic the 2nd amendment should be repealed because, you know, guns have the capacity to cause great damage and produce risks.

While we're on the subject, please also provide evidence that supports your idea that derivative instruments produce risks "far out of proportion to any good they do."  How do you know this?  A portfolio that didn't get blown up due to effective hedging generally isn't a headline grabber.  An airline that didn't go broke because fuel costs were hedged with derivatives isn't a subject for the CNBC decabox.  A bank that didn't get bailed out because it's mortgage portfolio was securitized and sold off is boring.  I know your theory feels right to you, but do you have any actual data?

129 So the Market goes up, but volume is down, meaning more people are leaving it up to the big institutions to prop it up. The Dow had a monster September (up about 7%, the best performance in like 70 years), but on what good news? None that I could see. And the value of the dollar itself has dropped precipitously since the beginning of the year, so any "profit" gained by the gain in stock prices is offset by the lower value of the dollar. It's a wash, really, and the lack of volume just confirms my suspicions that the market now is mostly composed of large investors winning and losing money from each other. I'd love it if the stock market could hold onto its gains -- my 401(k) would certainly benefit -- but I don't think it's going to last. Reality will intrude as it always does. (A trade-war with China will *murder* the stock market, especially the electronics and manufacturing sectors.)

130

You know, considering how many people in Japan smoke, the 40% tax hike might be considered cruel and unusual punishment. Posted by: MWR

Time for a Tobacco Party, perhaps?

タバコ会事件 ?

131 Tobacco and alcohol should not be taxed. People who consume those tend to die off early, way before social security kicks in. This is the attitude that China has taken, where it is even considered patriotic to smoke. That way you don't have to pay someone to change your diapers for 20 years.

132 ...so Alabama has no dildo sales, no strong beer sales, and now no bingo? Why does anyone live there?--HeatherRadish

Well, they didn't outlaw dildo sales, they just have an extreme shortage since they elected them all to public office.

133

Good. I'm glad the financial briefing is back. Remember when Monty did this everyday? I always read it. How bout once or twice a week Monty?

134 so Alabama has no dildo sales, no strong beer sales, and now no bingo? Why does anyone live there?

Its gold-lined sewer systems.

135 Please describe a derivative instrument that is "actively harmful." Would His Majesty prefer his toast served with the crusts cut off as well?

136 Please describe a derivative instrument that is "actively harmful."

What about the banjo?

137 Please describe a derivative instrument that is "actively harmful."

Would His Majesty prefer his toast served with the crusts cut off as well?

My apologies.  I should have known that asking you to explain one of your actively dumb statements was magisterial.  Crusts will be fine.

138 113 OT: Weasel Zippers reports that the One Nation rally website is using a pic of the MLK "I Have A Dream" rally to imply a much bigger crowd for their October 1, 2010 rally.
Posted by: jwpaine at October 04, 2010 01:08 PM (g4J4S)

They've now switched their photo to show their "crowd" from the perspective of their stage. Since you cannot see what's behind the trees on either side of the Reflecting Pool, it remains deceptive since there was practically no one beyond the trees.

139 But fuck the foreigners. If they can't play by the rules, we shouldn't either.

Fuck Larry Kudlow and the rest of the "free-market" crowd, too.

Posted by: MrScribbler at October 04, 2010 01:11 PM (Ulu3i)

Yep.  The Chinese (and for that matter, Japanese) mercantilist system is going to come crashing down eventually anyway.  Having a massive trade surplus AND a weak currency is like having your cake and eating it, too.  Can't be done in real life.  The longer the correction is put off the more extreme it will be.  If I have to pay more for a big TV I don't need, or a piece of junk which I'll have to throw away after a few weeks, then so be it. 

140 And in this context, then all the criticism is valid - if the economy does crash, nobody will be trading in gold, they will be trading in things that have intrinsic value like food and ammo.

Bic lighters.  I've learned one thing watching all those survival shows on Discovery.  Making fire by rubbing two sticks is a bitch. 

141 They's four O's in boogaloo.

142 145 They's four O's in boogaloo.
  I was told there'd be no spelling...

143 What I want to know is, at what point will be interest on the debt exceed all taxes collected, thereby making the principal impossible to pay?

144 Finally!  Monty, I missed these things.  Keep it up, will ya?  I gotta have some way to laugh through the tears.

145 Interest on the Federal Debt in 2010 is projected to be $396 Billion or so.

146 Oooh, theramin!

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