The Economy, stupid

[southsider2k5]

Options close first, baskets out, vol out and takers in.

 

It starts at about 2:30 usually. The push is just amazing. Its been so predictable, that is what is strange.

[NorthSideSox72]

CNN reporting (no link yet) that DHL will DISCONTINUE US OPERATIONS, laying off some 9,500 people, including their hub in Ohio.

 

Yikes.

 

Good for FedEx and UPS, really bad for those 9,500 people.

 

[NorthSideSox72]

Also today, not as much a surprise, Circuit City files for Chapter 11 Bankruptcy protection. They say they plan to continue operating through the holiday season, though.

 

Markets open up big today anyway, apparently due to China's own bailout efforts.

 

[Rex Kickass]

CNN reporting (no link yet) that DHL will DISCONTINUE US OPERATIONS, laying off some 9,500 people, including their hub in Ohio.

 

Yikes.

 

Good for FedEx and UPS, really bad for those 9,500 people.

 

Given that most of DHL's operations were already outsourced to UPS, it sorta makes sense. They aren't discontinuing US Operations to my understanding, they were discontinuing point to point domestic delivery (US to US service).

[NorthSideSox72]

Given that most of DHL's operations were already outsourced to UPS, it sorta makes sense. They aren't discontinuing US Operations to my understanding, they were discontinuing point to point domestic delivery (US to US service).

Yes, US Domestic services to be discontinued. And since their internal workload will be given to UPS for international business, they are essentially getting out of the US business.

 

[mr_genius]

Anybody see Nobel Prize Winner Krugman say we need another stimulus package. $600 BILLION DOLLARS. WTF!!!

 

it's more financial madness.

[Rex Kickass]

I just lost my job, can I have some stimulus pls? Kthxbye.

[Balta1701]

Anybody see Nobel Prize Winner Krugman say we need another stimulus package. $600 BILLION DOLLARS. WTF!!!

FWIW, here's the Nobel Laureate on where he came up with that number.

[NorthSideSox72]

Outgoing head of CFTC is saying that the new administration would be best served by scrapping the existing CFTC, SEC and bank regluation agencies. He prefers a functional model (as opposed to the current instrument-segregated model) for regulation, creating three new agencies to replace all the current ones. Interesting read. I think I agree with him.

 

[southsider2k5]

Outgoing head of CFTC is saying that the new administration would be best served by scrapping the existing CFTC, SEC and bank regluation agencies. He prefers a functional model (as opposed to the current instrument-segregated model) for regulation, creating three new agencies to replace all the current ones. Interesting read. I think I agree with him.

 

I tell you people read Soxtalk, because I have been saying this for a long time. This is the only common sense way to regulate the financial sector.

[mr_genius]

Market is tanking again. I think my 401k needs a billion dollar bailout.

[Balta1701]

Market is tanking again. I think my 401k needs a billion dollar bailout.

You're not too big to fail.

 

You need to leverage that 401k to the point that you're controlling a hundred billion or so. Once that happens, when your 401k starts declining, then the feds will have to bail you out. Especially if you own a lobbyist or two.

[mr_genius]

You're not too big to fail.

 

You need to leverage that 401k to the point that you're controlling a hundred billion or so. Once that happens, when your 401k starts declining, then the feds will have to bail you out. Especially if you own a lobbyist or two.

 

Agreed.

[southsider2k5]

How much do you think the Dow would go to at this point?

 

http://www.cnbc.com/id/27641538

 

The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

 

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

 

"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.

 

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

 

As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.

[mr_genius]

How much do you think the Dow would go to at this point?

 

http://www.cnbc.com/id/27641538

 

Unfortunately, there is a very real chance we will find out. Excessive amounts of government debt are the proverbial 400 pound gorilla in the room no one wants to talk about. We could face a big time disaster with continued big deficits. I mean way worse than now. In 2009 alone we could see a 2 trillion dollar deficit. Could see a massive collapse in government funding, there just won't be any place for the US to get these resources. Total disaster. A bankrupt federal government.

[Balta1701]

Unfortunately, there is a very real chance we will find out. Excessive amounts of government debt are the proverbial 400 pound gorilla in the room no one wants to talk about. We could face a big time disaster with continued big deficits. I mean way worse than now. In 2009 alone we could see a 2 trillion dollar deficit. Could see a massive collapse in government funding, there just won't be any place for the US to get these resources. Total disaster. A bankrupt federal government.

I believe that if we were in a position where we were a developing country and there was a larger, um, let's call them "US" type economy compared to us, the larger country would have already forced us in to default on a lot of that debt and caused a genuine currency crisis. It's what we've been doing to developing countries for decades.

[NorthSideSox72]

Unfortunately, there is a very real chance we will find out. Excessive amounts of government debt are the proverbial 400 pound gorilla in the room no one wants to talk about. We could face a big time disaster with continued big deficits. I mean way worse than now. In 2009 alone we could see a 2 trillion dollar deficit. Could see a massive collapse in government funding, there just won't be any place for the US to get these resources. Total disaster. A bankrupt federal government.

I am very concerned as well, but the US government won't go bankrupt.

 

[mr_genius]

I believe that if we were in a position where we were a developing country and there was a larger, um, let's call them "US" type economy compared to us, the larger country would have already forced us in to default on a lot of that debt and caused a genuine currency crisis. It's what we've been doing to developing countries for decades.

 

I guess if you mean by 'we', the developed world countries, than yes that is true. But if 'we' is just the United States, you are not accurate.

 

 

But your right, the only reason the United States gets away with it is because if the United States economy completely collapses there would be a epic world economic depression.

 

[Balta1701]

I guess if you mean by 'we', the developed world countries, than yes that is true. But if 'we' is just the United States, you are not accurate.

 

 

But your right, the only reason the United States gets away with it is because if the United States economy completely collapses there would be a epic world economic depression.

Yes, By "We" I mean the developed countries, including the U.S., the ones who control things like the IMF and the World Bank and so forth. You are correct there.

[mr_genius]

I am very concerned as well, but the US government won't go bankrupt.

 

go to $-30 trillion and find out. want to take the gamble?

 

Edited November 12, 2008 by mr_genius

[Balta1701]

If you have a few minutes (Californians can read it while ducking and covering!) I highly recommend this moderate length tale of how badly the banking industry f***ed this entire country over.

As an investor, Eisman was allowed on the quarterly conference calls held by Moody’s but not allowed to ask questions. The people at Moody’s were polite about their brush-off, however. The C.E.O. even invited Eisman and his team to his office for a visit in June 2007. By then, Eisman was so certain that the world had been turned upside down that he just assumed this guy must know it too. “But we’re sitting there,” Daniel recalls, “and he says to us, like he actually means it, ‘I truly believe that our rating will prove accurate.’ And Steve shoots up in his chair and asks, ‘What did you just say?’ as if the guy had just uttered the most preposterous statement in the history of finance. He repeated it. And Eisman just laughed at him.”

 

“With all due respect, sir,” Daniel told the C.E.O. deferentially as they left the meeting, “you’re delusional.”

This wasn’t Fitch or even S&P. This was Moody’s, the aristocrats of the rating business, 20 percent owned by Warren Buffett. And the company’s C.E.O. was being told he was either a fool or a crook by one Vincent Daniel, from Queens.

[StrangeSox]

Another great segment on how bad we're all screwed:

 

That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with s***ty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

 

 

[NorthSideSox72]

Another great segment on how bad we're all screwed:

Except that is a fully incorrect understanding of what a CDS is.

 

[Cknolls]

I think we could trade above 900 on futes today, 905 to be exact. If not today, definitely tomorrow.

[Cknolls]

I think we could trade above 900 on futes today, 905 to be exact. If not today, definitely tomorrow.