The Economy, stupid

[whitesoxfan101]

On a slightly different topic, here's a Congressman describing something we probably didn't know about before...the entire financial system almost collapsed in a Money market account run last September.

 

 

 

On the other hand, here's the Politico asking if that actually happened. If it did happen, then it's perhaps an incredible missed story by the media; a giant bank run that went unreported. If it didn't happen, then given how he described that, as information coming directly from the people proposing the bailout, then it's worth asking who exactly it was who told him that story.

 

Wow. First off, if that did actually happen, and we were that close to economic and political collapse worldwide, that is terrifying to think about. Then again, maybe this is just the congressman using exaggerated scare tactics to try and help his political point of view (I assume he supports the stimulus), so who knows. Second, I love how the extreme people in the comments of that video say it's proof that the democrats wanted the economic collapse, took part in it, and are overseeing a coup in the country to turn us socialst/communist. Now obviously that is a VERY extreme viewpoint, but where the hell did that money market run account run come from and where did the money go? Regardless of what the truth is, that is a fascinating video, thanks for posting it, and i'm curious people's opinions of my comments/questions.

Edited February 11, 2009 by whitesoxfan101

[southsider2k5]

I'm quite certain I've addressed a number of those points before, most notably the fact that the GSE's simply weren't a major part of the real subprime expansion, but the thing that hurt them was the elimination of $8 trillion or so in total housing wealth in this country.

 

But, I don't think I've posted the analyses that strike at the heart of one of your claims...that the Community Reinvestment Act was a major contributor in causing banks to create bad loans because they were required to do so. It turns out...your claim that those funds are more likely to end up in foreclosure is simply inaccurate. I'll cite my data from a statement by one of the Fed Governors last December.

 

That is a nice twist of statistics... Less than subprime. That means basically nothing. Not all CRA loans were subprime, that is why the statistic was inbetween prime and subprime. Got any other bogus stats you want to throw out?

[StrangeSox]

On a slightly different topic, here's a Congressman describing something we probably didn't know about before...the entire financial system almost collapsed in a Money market account run last September.

 

 

 

On the other hand, here's the Politico asking if that actually happened. If it did happen, then it's perhaps an incredible missed story by the media; a giant bank run that went unreported. If it didn't happen, then given how he described that, as information coming directly from the people proposing the bailout, then it's worth asking who exactly it was who told him that story.

 

 

That's not the Politico. That's a blog called portfolio.

 

I heard about this story today, but I really can't find any information on this aside from circular blog posts/ links. And, of course, this is all clearly the work of George Soros in order to get Obama elected (thanks Rush Limbaugh!). I really hate how fast unsubstantiated bulls*** spreads through the blogs and gets "substantiated" through circular references.

 

Here's some information on runs on the 18th:

http://jessescrossroadscafe.blogspot.com/2...nd-another.html

Edited February 11, 2009 by StrangeSox

[NorthSideSox72]

Seems odd to me, a sudden $550B run on MM accounts like that. Odd, as in, that wasn't likely to be the work of general customers in the populace. As in, a few financial institutions were doing it themselves. Or, this was actually something fully under the covers, that wasn't supposed to happen at all, and wasn't known to the people that should know. Either way, that would be a scary thing.

 

But, I have huge doubts this actually occurred.

 

[StrangeSox]

Money markets were getting hammered that week. IIRC at this time, a few money markets were generating negative returns and it was being reported all over the media. One of the largest banks had just collapsed and no one knew who'd be next. Everyone was in a financial panic. It doesn't take a Machiavellian scheme for a bunch of people to happen to make a run at the same time.

 

Unfortunately, this story stops on the 17th, but you can see tens of billions of dollars being drawn out.

 

http://www.boston.com/business/markets/art..._money_markets/

Edited February 11, 2009 by StrangeSox

[southsider2k5]

So the Dow has traded as low as 7693 today. This is interesting because the next long term low level is 7591, which is the lows from the post 9-11/bubble recession in 2002. If they manage to go lower than that, the Dow will be looking at levels it hasn't seen since 1997-1998.

[Balta1701]

If you've got 20 minutes of broadband time, I recommend this Moyers interview with Simon Johnson of MIT, former chief economist of the IMF, viewing the banks and their bailouts through his eyes. His basic theme is that these guys simply have too much power, they have moved everything to the point that they're immune from the consequences of them making mistakes, and they're just going to keep using the government to bail them out unless we fundamentally reform the system and actually break the lobbying power of these guys in particular.

[Balta1701]

The SEC today filed charges against Texas Banker R. Allen Stanford for committing what they're calling "Massive fraud." Basically, it appears that he may have been running a $10 billion or so ponzi scheme. He's also very, very politically connected. Hanging out with people like Pelosi and Bill Clinton at the DNC last year, giving big time to both parties, etc.

[KipWellsFan]

I think the Frontline episode tonight will be talking about the near collapse you guys were talking about earlier.

 

http://www.pbs.org/wgbh/pages/frontline/meltdown/

[mr_genius]

Endless bailouts

 

http://news.yahoo.com/s/ap/20090217/ap_on_...e/autos_bailout

 

honestly, this is never going to end. they will be right back in a couple months after this 5 billion is gone

[Balta1701]

So the Dow has traded as low as 7693 today. This is interesting because the next long term low level is 7591, which is the lows from the post 9-11/bubble recession in 2002. If they manage to go lower than that, the Dow will be looking at levels it hasn't seen since 1997-1998.

Done.

[kapkomet]

Done.

Yay America! Yay Obama, my savior!

[Balta1701]

The SEC today filed charges against Texas Banker R. Allen Stanford for committing what they're calling "Massive fraud." Basically, it appears that he may have been running a $10 billion or so ponzi scheme. He's also very, very politically connected. Hanging out with people like Pelosi and Bill Clinton at the DNC last year, giving big time to both parties, etc.

Gotta love fraudsters with balls. The 2001-2002 political cycle was when the Stanford group gave its largest contributions to Congress (Largest recipient: Sen Nelson, D-FL, chair of the DSCC at the time). In 2001-2002, Congress was debating the "Financial Services Antifraud Network Act" which would have spent some money to create a computerized nationwide system with the goal of detecting securities fraud. The bill passed the House but died in the Senate.

[mr_genius]

http://finance.yahoo.com/news/GM-needs-up-...b-14392493.html

 

GM going for 30 billion in bailouts by end of next month

Edited February 18, 2009 by mr_genius

[southsider2k5]

I am starting a countdown for the refiners bailout.

 

http://news.yahoo.com/s/ap/20090216/ap_on_...prices_unhinged

 

Crude oil is getting cheaper — so why isn't gas?

 

By CHRIS KAHN and JOHN PORRETTO, AP Energy Writers Chris Kahn And John Porretto, Ap Energy Writers – Sun Feb 15, 9:07 pm ET

A customer pumps gas at a gas station in Menlo Park, Calif., Thursday, Feb. 12, AP – A customer pumps gas at a gas station in Menlo Park, Calif., Thursday, Feb. 12, 2009. Murmurs of price …

 

 

NEW YORK – Crude oil prices have fallen to new lows for this year. So you'd think gas prices would sink right along with them.

 

Not so.

 

On Thursday, for example, crude oil closed just under $34 a barrel, its lowest point for 2009. But the national average price of a gallon of gas rose to $1.95 on the same day, its peak for the year. On Friday gas went a penny higher.

 

To drivers once again grimacing as they tank up, it sounds like a conspiracy. But it has more to do with an energy market turned upside-down that has left gas cut off from its usual economic moorings.

 

The price of gas is indeed tied to oil. It's just a matter of which oil.

 

The benchmark for crude oil prices is West Texas Intermediate, drilled exactly where you would imagine. That's the price, set at the New York Mercantile Exchange, that you see quoted on business channels and in the morning paper.

 

Right now, in an unusual market trend, West Texas crude is selling for much less than inferior grades of crude from other places around the world. A severe economic downturn has left U.S. storage facilities brimming with it, sending prices for the premium crude to five-year lows.

 

But it is the overseas crude that goes into most of the gas made in the United States. So prices at the pump will probably keep going up no matter what happens to the benchmark price of crude oil.

 

"We're going definitely over $2, and I bet we'll hit $2.50 before spring," said Tom Kloza, publisher and chief oil analyst at Oil Price Information Service. "This is going to be an unusual year."

 

On the last day of 2008, gas went for $1.62 on average, according to the auto club AAA, the Oil Price Information Service and Wright Express, a company that tracks transportation data.

 

The recession in America has dramatically cut demand for crude oil, and inventories are piling up. So prices for West Texas crude have fallen well below what oil costs from places like the North Sea, Saudi Arabia and South America.

 

That foreign oil sells in some cases for $10 more per barrel — and that doesn't even include shipping.

 

Brent North Sea crude, which feeds some East Coast refineries — and therefore winds up at many gas pumps around America — now costs about $7 more per barrel than the West Texas crude. Deutsche Bank analysts say the trend should continue.

 

Historically, West Texas International crude has cost more. So nobody bothered building the necessary pipelines to carry it beyond the nearby refineries in the Midwest, parts of Texas and a handful of other places.

 

Now that the premium oil is suddenly very inexpensive, refiners elsewhere can't get their hands on it.

 

"It's so cheap," said Lynn Westphall, the senior VP of external affairs at San Antonio-based Tesoro, which owns a half dozen refineries on the West Coast and Hawaii. "But you can't just build a pipeline to everywhere. We know we can't get it."

 

Tesoro's refineries in North Dakota and Utah use locally drilled oil and Canadian oil, which also has been running about $10 more per barrel than West Texas crude.

 

So why not build more pipelines? Because investing billions of dollars over several years makes no sense when the prices could just flip a year from now to where they were before.

 

"How long is WTI going to be cheaper than Venezuelan oil? Than Canadian?" asked Charles T. Drevna, president of the National Petrochemical and Refiners Association. "You just don't build a pipeline like that."

 

At the same time, refiners have seen the same headlines as everyone else about job losses and consumer spending. They've slashed production just to avoid taking losses on gasoline no one will buy. Result: Higher gas prices.

 

"Why should a refiner produce more gasoline when the stuff we produce is not being used?" Drevna said.

 

Of course, complex explanations of the diverging price paths of West Texas crude and gas are unlikely to placate frustrated drivers. Memories of last summer's $4-plus gas have not receded.

 

"Drivers are being ripped off even more now than before," said Stuart Pollok, who was filling up recently at a Chevron station in downtown Los Angeles. He pointed out Exxon Mobil Corp. reeled in billions in profits last year when oil prices neared $150.

 

Others see the conspiracy reaching higher.

 

"It got really low during the elections and now it's going back up," said Christel Sayegh, a 23-year-old graphic designer in Los Angeles. "They do that every election, though, right?"

 

___

 

AP Energy Writer John Porretto reported this story from Houston. Associated Press Writers Jennifer Malloy and Ryan Nakashima in Los Angeles contributed to this story.

[Balta1701]

I think the Frontline episode tonight will be talking about the near collapse you guys were talking about earlier.

 

http://www.pbs.org/wgbh/pages/frontline/meltdown/

Episode is now available online, will be watching later today.

[Balta1701]

Yay America! Yay Obama, my savior!

Roubini and Richardson argue in a WSJ op-ed today that the reason the market is plummeting since Geithner's speech is that Geithner strongly suggested that he was going to put an end to the free money train coming out of Washington.

With the economic dangers we now face, do we really want to go down this road again?

 

We don't, and that's why, for all the criticism, Treasury Secretary Tim Geithner's plan -- call it Bailout 2.0 -- does have a silver lining. It stops the madness.

 

Yes, Bailout 2.0 lacks details, but it is clear it won't propose more bank freebies -- no new loan guarantee programs or backstops of losses on their bad assets, or government capital infusions in the form of underpriced preferred shares. Now the banks will have to prove themselves via a "stress test" on their solvency to access new capital. It won't be a pretty picture.

 

And by the way, if banks want Uncle Sam to buy all those "toxic" assets, the government is now going to do it alongside private capital. These investors aren't going to overpay, so that game is up as well.

 

Since Mr. Geithner's plan has been unveiled, the stock prices of the financial sector are off about 19%. This is not necessarily a bad thing. The banks were expecting another handout.

 

While it was not his intention, the reality is that Mr. Geithner is going to confirm the insolvency of the financial system. Once we face this truth, there really isn't much left to do but nationalize.

 

We are not talking about the government operating the banks for the long-term. But, as was done in Scandinavia in the early 1990s, we are talking about orderly clean up, then reselling the banks to private investors.

 

The good news is that much of the risk will be borne by the banks' common and preferred shareholders and their long-term unsecured creditors -- as opposed to by taxpayers. This makes sense since shareholders and creditors were the ones who bet on banks in the first place. We'll also stop repeating the mistakes we made with Fannie and Freddie.

[kapkomet]

Roubini and Richardson argue in a WSJ op-ed today that the reason the market is plummeting since Geithner's speech is that Geithner strongly suggested that he was going to put an end to the free money train coming out of Washington.

The problem is, the way I see it, this simply is not true.

 

[Cknolls]

Well once again the mkt loves to hear Messiah speak. Double d up the losses since he opened his pie hole. Keep up the good work boys.

[Cknolls]

LOL, At how he blows Daley. Change. Change. Change. Chicago, Cook county Illinois. Nothing wrong here. Any person who voted for change in voting for Obama and who votes to retain Daley, Stroger or Quinn is A-1 HYPOCRITE.

[Balta1701]

The good news is, the SEC is actually doing stuff.

 

The bad news is...that's a remarkably big change from a few weeks ago.

The Securities and Exchange Commission obtained a court order halting an alleged Ponzi scheme by Hawaii-based Billions Coupons and its CEO Marvin R. Cooper that was targeting members of the Deaf community in the U.S. and Japan.

 

The SEC alleges Billions Coupons and Cooper raised more than $4.4 million from 125 investors since at least September 2007 by holding investment seminars at community centers for investors who were deaf.

[Cknolls]

The good news is, the SEC is actually doing stuff.

 

The bad news is...that's a remarkably big change from a few weeks ago.

 

She did a lot when she headed FINRA. Funny though, I don't remember hearing her answer any questions in front of the blow hards in Congress as to why she did nothing to investigate Madoff and the like. Mary Shapiro in case anyone is wondering.

[Cknolls]

Has anyone read anything about what our Great State is doing to combat the huge deficit it ran up? How many layoffs, silly me, the state doesn't lay off workers, how much do they want to raise our taxes?

 

 

[Cknolls]

I would love to ask the PRINCE how he feels about his CITI investment? LOL. Couldn't happen to a nicer guy.

[southsider2k5]

So I guess 7286 is the big closing low number on the Dow Jones. After that, the next leg down is in the low 6000's back from 1997/1998. Wow.