Sunday Morning News and Open Thread

Some things I'm reading this morning:

  • Update: Melissa Rycroft, the bachelor contestant weepy Jason Mesnick proposed to and then crassly broke up with on-air, will be replacing the injured Nancy O'Dell on Dancing With Stars Monday night. A former Dallas Cowboys cheerleader, she's been dancing her whole life. And now ABC gets another shot at those Bachelor viewers who were very angry at the finale. Smart move.
  • The LA Times reports the US Attorney in Los Angeles did a switcheroo on medical pot raids. After AG Holder's speech last week, the prosecutor ordered his local AUSA's to hold off on their medical pot cases. Then he lifted the ban. What's up with that? No one's talking. Update: Teddy at Firedoglake has more.


This is an open thread, all topics welcome.

< Obama Signals Readiness for Change With Cuba | An Argument For Timid Action On the Financial Crisis >
  • The Online Magazine with Liberal coverage of crime-related political and injustice news

  • Contribute To TalkLeft

  • Display: Sort:
    I watched Paul Begala on (5.00 / 1) (#7)
    by Militarytracy on Sun Mar 08, 2009 at 10:02:36 AM EST
    CNN's the State of the Union just slamdunk Rush so hard he should have a concussion after that.  I don't care much for the Limbaugh debate but have noticed some good commentary on it.  Too bad I'm not enjoying good commentary about the economy, well Paul B did give some of that too.  In talking about earmarks his take was that he had a hard time dogging actions at the moment that are putting money into the economy and generating jobs, even if that be a job putting up another Buffalo Bill museum in Wyoming.  I'm out of cat food this morning so I opened a can of Mackrel.  The cat is mad......sometimes you just can't please but what sort of cat gets mad about a bowl full of Mackrel?  Anyhow, Run Rush Run!

    Poll on Rush (5.00 / 1) (#31)
    by BackFromOhio on Sun Mar 08, 2009 at 02:37:20 PM EST
    Evidently Rush L has lower popularity rating than Reverend Wright.  Rush's popularity at 11% of 40 & under crowd, from what I heard on CNN today.

    So, I think we can turn our attention now elsewhere?


    ok (5.00 / 1) (#38)
    by dualdiagnosis on Sun Mar 08, 2009 at 04:17:58 PM EST
    Tell that to Obama.

    Two Articles in Sunday NY Times... (5.00 / 2) (#9)
    by santarita on Sun Mar 08, 2009 at 10:18:29 AM EST
    are well worth reading.  Both are in the Business section.  One is by Gretchen Morgenstern on AIG and the Derivatives mess.  One is by Alan Blinder, professor of econ at Princeton and a former Fed Reserve board member, who discusses the pros and cons of nationalization.

    Two items of special note in the AIG article - she discusses only the derivatives (credit default swaps and interest rate swaps) that were made by AIG to insure counterparties to contracts.  She doesn't discuss the derivatives that were traded.  (I may be getting this wrong.)  The other item is that one of the actions taken by the Fed was to buy a pool of toxic securities that had a credit default swap issued by AIG in order to prevent the CDS from being triggered.  This illustrates a bit of the complex array of tools at the government's.

    Blinder's article speaks for itself and is a good start at a discussion of the pros and cons of nationalization.  My only concern is that he has his own opinion ("good bank/bad bank") of how to resolve the financial system meltdown and so may not be objective.

    Just read those (5.00 / 1) (#10)
    by gyrfalcon on Sun Mar 08, 2009 at 10:32:02 AM EST
    two this morning.

    I still have a lot of trouble following some of this stuff, though.  The AIG article repeatedly talks about debt "losing value," which is a concept my brain refuses to wrap itself around.  How the heck does debt lose value?

    One salient point in the AIG article, I thought, was the quote from Warren Buffett.

    "When Berkshire acquired the insurance company General Re in 1998, he wrote, General Re had 23,218 derivatives contracts that it had struck with 884 counterparties.  Mr. Buffett wanted out from under the contracts and he began unwinding them. "Though we were under no pressure and were operating in benign markets as we exited," he said, "it took us five years and more than $400 million in losses to largely complete the task."



    Debt Declining in Value in Terms of ... (5.00 / 1) (#14)
    by santarita on Sun Mar 08, 2009 at 11:23:22 AM EST
    that article means essentially that some or all of the pool of securities against which the cds was written was in default or in danger of default.   So if you are AIG and have insured a loan or securities backed by pools of loans, and there are a rising level of potential defaults, it may trigger a requirement to post collateral.  

     I thought that she could have gone into more detail on AIG's trading activities.  And she didn't really address the major problem that the Fed looked at.  If AIG simply failed (as in Chapter 7 bankruptcy or even Chapter 11 bankruptcy) what would that do to all of its insurance and reinsurance subsidiaries?  For example, if you own a house, would you receive a letter from your mortgage holder telling you that you need to find a new insurer and pay for a new policy because AIG failed?  Multiply that by millions and then throw in businesses and you can see what spooked the Fed.


    Two issues y'all need to wrap your heads around (5.00 / 1) (#21)
    by scribe on Sun Mar 08, 2009 at 01:48:01 PM EST
    1.  "Debt declining in value".  You have to think of "Debt" as a commodity, like flour or sugar or gasoline and not as an obligation - something where you owe someone something.  In this context, Bonds or other debt instruments are the commodity which would decline in value.

    2.  Counterparty treatment in bankruptcy.  As has recently been uncovered over at TPM and Orange Satan's, Joe Biden's 2005 Bankruptcy Bill contained a provision which allowed counterparties in swaps and transactions like the ones AIG produced and/or participated in to (a) avoid the automatic stay of actions imposed when one of the parties to a swap declares bankrupcty and (b) those counterparties go to the head of the line when it comes to carving up the carcass of the bankrupt entity.  In effect, there is no line, because they get to take all of the bankrupt entity (until the amounts they are owed is satisfied).

    In short then, AIG and the other issuers/participants in these swaps and transactions made themselves "impossible to fail" (not "too big to fail") by making their status as "impossible to fail" the law of the land.

    As #2... (5.00 / 1) (#27)
    by santarita on Sun Mar 08, 2009 at 01:56:56 PM EST
    Yes this carve out explains, in part,  why Geithner and Bernanke are struggling to keep AIG afloat.  Of course, the inclusion in the 2005 Bankruptcy Act looks nefarious now but back then it made sense.  Credit Default Swaps are intended to provide third part insurance in the event of default.  They wouldn't be worth much if the filing of a bankruptcy petition by the issuer could stop payment.  In this regard, credit default swaps are almost like letters of credit.

    Oh, gawd (none / 0) (#41)
    by gyrfalcon on Sun Mar 08, 2009 at 04:53:22 PM EST
    Thank you once again, Joe.

    I can get the point of "debt" having "value" if I can diagram the phrase with lots of boxes and arrows and study it for a while, but having it make sense in the middle of a sentence as I'm reading is just beyond me.  It's like a triple-double negative or something, or three-dimensional finance.  (I aced everything up to solid geometry in school, which caused me to crash and burn and I nearly flunked it.  My brain just can't automatically follow around that many angles and corners, sigh.)


    Shift your financial statement views . . . (none / 0) (#37)
    by wurman on Sun Mar 08, 2009 at 04:11:15 PM EST
    For a bank, banker, or trust company the money turned over to them creates a liability; i.e., your savings account is a liability to the financial institution, & so is the float cash in your checking account & the tax escrows for your mortgage, etc.  These are potential cash demands on them.

    The debts owed to a financial are assets.  If you owe a lender $200K on a mortgage or $20K on a car, those are positives to them & the cash flow of your payments is an important indicator of the financial's stability as a measure of its ability to meet daily demands.  And the underlying value of your debt (& your perceived or actual ability to pay) effect the solvency of the bank.

    The assets based on such debts may become less valuable (also consider the "mark-to-market" requirement) & the financial institution becomes less solvent--by one of several criteria.

    AIG insured a huge volume of the derivatives & the other bundled "instruments" that commercial banks, mortgage bankers, & investment banks held as assets.  As the debt instruments dropped in value to worthless, if in foreclosure, the monster insurer took the hits.  And the Treasury Dept. chose to cover AIG's insured losses to keep all of the lenders in business who bought the insurance.

    This is part of the justification for putting more $billions into AIG.  Also, that AIG bailout is substantially supporting FannieMae & FreddieMac because so many of the various derivatives & bundles contain mortgages from those 2 moribund operations.

    And, yeah, it's way worse than it looks.


    Links for Blinder and Morgensten (none / 0) (#35)
    by jawbone on Sun Mar 08, 2009 at 03:26:44 PM EST
    Diary up at DKos (5.00 / 1) (#13)
    by Militarytracy on Sun Mar 08, 2009 at 11:12:58 AM EST
    Written by someone who has a similar take on the shadow banking problems that I do. Diary.  Looks like the Obama administration is going to try to pay off the sins of the shadow bankers.  Problem is that this is only the loss that the shadow bankers want to admit or must admit to at this time, credit default swaps are not transparent and we have no idea what is really out there.  Any figures we have on it have been what has been volunteered.

    Please read this comment (5.00 / 1) (#15)
    by Militarytracy on Sun Mar 08, 2009 at 11:38:06 AM EST
    by TarheelDem too and read the links.  Comment  What I don't understand is how anyone expects to sell any of the homes that our market is flooded with with any sort of foreseeable certainty that anyone can make the payments.  We can all be out of a job any second in this current situation our whole country and the globe is in.  This is what we get with no HOLC.....a swirling sinking spiraling into an abyss.

    Read the Diary... (5.00 / 1) (#16)
    by santarita on Sun Mar 08, 2009 at 11:46:06 AM EST
    The author is really confused.  And quoting something from a blog called "Alphaville" to support his "We are all about to be ripped off" theory is not helpful.

    AIG wrote a credit default swap on a pool of securities.  The counterparties that owned the pool of mortgage backed securities were calling on AIG to pay up or post collateral.  The Fed bought the pool of securities so that AIG (now owned in large part by the Fed i.e. us) didn't have to go into default.  Actually this was quite innovative because now the Fed owns a chunk of those mortgages and can dictate modifications.  Now the pricing may have been excessive - 1.00 cents on the dollar.  Maybe that pool was only worth .50 on the dollar.  But at the end of the day the counterparties (i.e. some of the banks that are currently receiving taxpayer funds) were made whole and AIG was kept in business and the millions of insurance policies that it has written are good for a while longer.


    AIG was kept in business today (none / 0) (#17)
    by Militarytracy on Sun Mar 08, 2009 at 12:13:05 PM EST
    But without disclosure and transparency where credit default swaps are concerned, this is just putting a finger in the leaking/going to burst dam.  I agree that the author is confused about some jargon, but in essence many of the points made are dead on and you are conveniently leaving out his link to the NY Times article here and I have never known blog Seeking Alpha to be utterly wrong about everything.  They average about as good as most of those who specialize in "trading" do when it comes to accuracy and the future.  In truth, lately they have had a better batting average than most.  If there is truth to their AIG claims it will now hopefully be questioned and looked into as it should.  As I said before, time will tell all the tales as the buried bodies surface.

    It's "seekingalpha.com" (none / 0) (#20)
    by gyrfalcon on Sun Mar 08, 2009 at 12:48:42 PM EST
    Go take a look.  It's a pretty serious group blog that appears to be mostly oriented to traders.

    Part of the Problem... (5.00 / 1) (#29)
    by santarita on Sun Mar 08, 2009 at 01:58:00 PM EST
    for me at least - is it seems like everyone has a piece of the puzzle but no one has all the pieces.

    Like the Blind Men and the (none / 0) (#33)
    by BernieO on Sun Mar 08, 2009 at 03:01:50 PM EST

    I am surprised that so few people know that Hindu folk tale.


    Great Analogy. n/t (none / 0) (#34)
    by santarita on Sun Mar 08, 2009 at 03:07:10 PM EST
    Yes (none / 0) (#43)
    by gyrfalcon on Sun Mar 08, 2009 at 04:59:19 PM EST
    Not part of the problem, it is The Problem.  All those pieces interlock with each other and with other stuff that isn't so clearly related.

    We have never been here before.


    And some people are determined (none / 0) (#47)
    by Militarytracy on Sun Mar 08, 2009 at 06:04:44 PM EST
    to stay in denial of all the pieces that are to be known.

    Traders Like Santelli? n/t (none / 0) (#23)
    by santarita on Sun Mar 08, 2009 at 01:53:02 PM EST
    Don't think so (none / 0) (#42)
    by gyrfalcon on Sun Mar 08, 2009 at 04:57:56 PM EST
    I'm not saying it's something to take as gospel.  Don't think there is a gospel there, actually.  Seem to be lots of different perspectives.  Just pointing out it's a serious blog.

    Traders pretty much by definition have a point of view I don't share, but they're certainly not all Rick Santellis.  Oh, and there are plenty of posts from economists and journalists and the like, so it's not all by traders, just aimed at their interests.

    Go look at it just so you know what you're talking about.  I'd be curious to know what you think.


    Will Check It Out... (5.00 / 1) (#49)
    by santarita on Sun Mar 08, 2009 at 09:31:18 PM EST
    I'm afraid I was reacting more to the diarist at the Big Orange.

    Melissa eh? (5.00 / 1) (#19)
    by nycstray on Sun Mar 08, 2009 at 12:40:41 PM EST
    Good choice, wasn't expecting that one. Hopefully she'll do well tomorrow night. Not a lot of prep time there! She'll at least have a lot of support :)

    Zakaria - very interesting program today (5.00 / 1) (#32)
    by BackFromOhio on Sun Mar 08, 2009 at 02:58:46 PM EST
    Guests were:
    Gamal Mubarak

    Economics panel featured authors Ian Bremmer,  Niall Ferguson (also Harvard Prof), David Frum, and Barbara Ehrenreich.

    The chat with Mubarak can be seen at CNN's website - truly worth the time.  Mubarak has international view, is extremely tactful without hiding his views. Among other things, welcomed Obama administration's unprecedented overtures to the Mideast and travel by SOS Clinton; last 8 years derailed Mideast peace, by definition difficult, & made peace now even more difficult, but he is hopeful.

    Economics panel discussed greater world economic woes in the making as emerging countries, which economically were dependent on export trade, will crater and can bring down European banking system (not my words); lots of discussion of political and social unrest as fallut from financial/economic woes.  Ehrenreich: Obama does not get anger of non-elite in U.S. at those at top in banking, etc., because they not only make so much more $, but they screwed up bigtime.

    Dowd has flipped her lid. (none / 0) (#1)
    by lentinel on Sun Mar 08, 2009 at 08:32:56 AM EST
    Today, Dowd's column begins with a rambling discussion of Obama's allegedly snubbing Gordon Brown. It then veers off into a discussion of Michelle Obama's arms.

    I think she has lost her marbles.


    She has be a nutjob (5.00 / 2) (#2)
    by BernieO on Sun Mar 08, 2009 at 08:40:07 AM EST
    for years - if not forever. Just check out the archives at Bob Somerby's Daily Howler site for the bizarre things she wrote about Gore.

    When will liberals stop wasting their time on her adolescent drivel? Dowd is always in the most read/emailed list for the Times. If we had any sense that would stop.


    Ugh, Dowd. On the other hand (1.00 / 0) (#11)
    by Cream City on Sun Mar 08, 2009 at 10:38:19 AM EST
    my future relatives in the UK have been forwarding  lots of coverage outraged about the Obama treatment of their prime minister.  I mean, 25 DVD's?  For a man, Brown, who has poor vision?  Plus, it turns out that the DVD's are for U.S. tv, not very playable on UK t.v.

    It does seem that the White House did not handle this state visit well -- and with one of our best allies.


    Maybe it wasn't an accident (none / 0) (#22)
    by scribe on Sun Mar 08, 2009 at 01:52:33 PM EST
    that Brown was treated that way.

    After all, he basically killed the Icelandic economy and nation last fall, grossly exacerbating the economic situation, as a response to the Icelanders not being his nice little tools and knuckling under to him and his whims.

    Why is Iceland so important?  Go read the article on them and their finance-based economy in the current Vanity Fair (it's a wonderful read) - they were involved in all the messes which are taking our economy apart.  In reality, their situation is the US' situation, in miniature.  Their whole economy went from relatively broadly based to ... all based on speculative finance.  With results which, in retrospect, were completely predictable.


    When I say (none / 0) (#24)
    by scribe on Sun Mar 08, 2009 at 01:53:59 PM EST
    "maybe it wasn't an accident", I mean it was a b*tch-slap message to and for Brown (former Chancellor of the Exchequer) having been so short-sighted.

    Link, please. T/U n/t (none / 0) (#36)
    by jawbone on Sun Mar 08, 2009 at 03:28:14 PM EST
    Too many to link (none / 0) (#45)
    by Cream City on Sun Mar 08, 2009 at 05:16:39 PM EST
    Look in Australian media, from which most were sent to me, but also see the London Guardian, the International Herald, etc.  And it was reported in many American media, of course.  You don't think Dowd actually works hard to find her stuff, do you?

    Oh, unless you wanted a link (none / 0) (#46)
    by Cream City on Sun Mar 08, 2009 at 05:18:31 PM EST
    to my future relatives emails, as the point was that some Brits certainly are upset?  Sorry, not gonna share eaddresses here.

    Here's one perspective (none / 0) (#52)
    by jbindc on Mon Mar 09, 2009 at 07:13:49 AM EST
    Thnx--I had missed the reports on Obama being too (none / 0) (#56)
    by jawbone on Tue Mar 10, 2009 at 10:42:29 PM EST
    tired to manage the visit from the PM well. I had heard about the sad and tacky presents--yikes! I could have done better than that. I mean, DVD's that don't work in British standard players??

    And the plastic models?

    Oh my.

    But the fatigue excuse? Not good. Inexperience of the staff. Say wha??!!

    What I have noticed is that our president does not look like he's enjoying his new job, not at all. The only time he's looked relaxed that I've seen him has been during the Q&A sessions at his "summits."

    I remember Bill Clinton's obvious enjoyment of the job, as well as Hillary's for the political, now diplomatic, jobs she's held. What a difference.

    Oh, if only....



    I agree with your point (none / 0) (#30)
    by lentinel on Sun Mar 08, 2009 at 02:01:00 PM EST
    but it seemed to me that this reality was swamped in Dowd's column by some other agenda that was, at best, unclear to me.
    (I did hear also, by the way, on the BBC that the Congress gave Mr. Brown's rather pedestrian speech 17 standing ovations. That should count for something.)

    The issue of British-American relations is a serious one, no doubt.
    I am not especially fond of the way that American intelligencia is enamoured with all things British - or spoken with a British accent.
    I feel that America has a more deep affinity with the French, who overthrew a monarchy and helped us to free ourselves from one. For me, the British under Blair are inextricably tied up with Bush. And that goes for Brown too.

    But - anyway - Dowd did not seem to be out to discuss this issue. And her segue into Michelle's bare arms just felt bizarre to me.


    Not. (none / 0) (#50)
    by Upstart Crow on Sun Mar 08, 2009 at 11:05:56 PM EST
    The American intelligentsia isn't. It's the middlebrows.

    She's stuck (none / 0) (#6)
    by SOS on Sun Mar 08, 2009 at 10:00:56 AM EST
    in the same niche she's always been in.

    Problem with that is it gets old after a while.


    Is it me or... (none / 0) (#3)
    by Oceandweller on Sun Mar 08, 2009 at 08:49:20 AM EST
    To try to keep my mind open I browse on unfriendly blogs and websites.
    Yet getting information from 360° has his downfall...and its perks.
    Coulter is nasty but she has a real sense of humor.
    But Larry Johnson no quarter, there seems to be no balance at all. OK Rush Limbaugh has no balance but never pretended to be fair and balanced. LJ pretends to be open-minded yet hosts venimous contributors unable to get over past seen as slights.
    Question: is the man and his blog still relevant or am I being way over the top open minded.
    In short could you tell me if I need to carry on reading him or should I politely close the door as enough is enough.
    As said famously X(thanks for giving his name) : Tolerance, there are special houses for that. i.e. in OLd Europe it was the elegant name for brothels....

    Haven't been there in a long time (5.00 / 1) (#5)
    by Militarytracy on Sun Mar 08, 2009 at 09:36:33 AM EST
    stopped reading when the blog started shifting into gear on Obama being an illigimate presidential candidate during the primary.  I crave open discussion of the issues too but draw the line at vendetta via whatever issues we can pull out of our behind.

    Well (5.00 / 2) (#8)
    by jbindc on Sun Mar 08, 2009 at 10:04:05 AM EST
    No Quarter is not really right-wing - they LOVE Hillary and other progressives - but hate Obama and his conduct through the primaries and election.  

    If you want to read a pretty good conservative site - I suggest The Corner.  It's the blog of The National Review.  

    I usually don't agree with most of the stuff they write, but you do get a different view of the world.


    thanks (none / 0) (#25)
    by Oceandweller on Sun Mar 08, 2009 at 01:54:59 PM EST
    for the website

    all what is exaggerated is irrelevant.


    Can I use this? (none / 0) (#39)
    by dualdiagnosis on Sun Mar 08, 2009 at 04:22:20 PM EST
    "all what is exaggerated is irrelevant"

    kind of like- "all your base are belong to us"


    I'm reading this (onliine) (none / 0) (#4)
    by DFLer on Sun Mar 08, 2009 at 09:29:15 AM EST
    Commentary: A shining city on a hill can't have dungeons in its basements

    By Joseph L. Galloway | McClatchy Newspapers
    (1st parts:)
    It turns out that even the most paranoid among us were right to be afraid of what George W. Bush's White House and Justice Department were up to in the days and months after the terrorist attacks of 9/11.

    This week the Justice Department declassified and released two memos and seven so-called legal opinions that, taken together, informed President Bush that, as a wartime chief executive, he had unfettered dictatorial powers.

    We already knew that Bush dispensed with the Fourth Amendment, suspended the right of the people to be secure against unreasonable searches and seizures and ordered warrantless wiretapping and surveillance of untold billions of e-mails and telephone calls to and from American citizens.

    But who knew that his political appointees in the White House counsel's office and the Justice Department's Office of Legal Counsel were telling him that he could also suspend the First Amendment in a nation that was founded on guarantees of freedom of freedom of speech and of the press?

    The Republican legal vultures -- John Yoo, Jay Bybee and Steven Bradbury -- told the panicked cowboy president that he could do anything he chose, anyway he saw fit, and not only was it legal, it also wasn't subject to any congressional or judicial oversight.


    TARP bill without jobs (none / 0) (#12)
    by Jlvngstn on Sun Mar 08, 2009 at 11:02:00 AM EST
    Just curious.  How many of you who supported TARP without a jobs package in it, are happy with that decision now?  We would be starting to see some job creation at this point had there  been funds for it.  

    Jobs would not heal credit, foreclosure or liquidity trap but is a far better stabilizer than TARP which essentially has not stabilized banks to any degree relative to loosening of credit.  

    Any predictions on the next 6 months?

    CRE crash
    Auto market crash
    Hospitality crash

    Bottom prediction for market October 09.  

    Stimulus net efffect, negligible at best.  You cannot recover from this recession until you stop the hemorraghing of job loss.  

    I said it last September and November and unfortunately it is now too late.  

    As evidenced by the stress test the gov't is applying to banks which they use 10.3 for "next year" which is also complete BS as they knew we would be close to 10% this year, and if they didn't their economic forecasting is PITIFUL.  

    Larry Summers and Geithner have engendered zero confidence from anyone.  I applaud the HC efforts but give this admin an F on economic policy.  

    If it is going to take 3 trillion to bail out the banks, which is where i guess it is now and will be at 6-7 trillion in October because CRE defaults and airlines and hospitality defaults will be soaring, I think I may have to finally agree with BTD to cut losses TODAY.  Problem is even with nationalization the shortage in stimulus and the lack of DO NOTHING last September through November put us in this position.  

    For those of you who have argued that Bush would have vetoed it, the democrats would have had more political capital today for TRYING.  

    This is unquestionably the greatest economic turbulence since the great depression and the big idea president has given us one big idea that was a big idea in the 90's.  

    Your government is ok with 10% unemployment and an economy that is stuck in the 1970's.  

    The government is the problem and their is a lot of waste and fraud, but the bulk of it seems to be in the salaries of those who allegedly represent us.

    don't be fooled by a market rally (5.00 / 1) (#18)
    by Jlvngstn on Sun Mar 08, 2009 at 12:23:44 PM EST
    this week, it will occur mostly because of suspension of mark to market.  if you are a speculator and have money to gamble, buy bank stocks, i bet they will have a 25% jump post suspension.  buy low sell after the bump. it is not sustainable

    You sound like you might be right (none / 0) (#26)
    by scribe on Sun Mar 08, 2009 at 01:56:52 PM EST
    Not that I have any money for buying stocks (Eventhough I could get 2 shares fo Citi for the price of a cup of coffee).

    The stock market has looked like nothing short of an avalanche, and this one has not yet ground to a halt.


    You sound like you might be right (none / 0) (#28)
    by scribe on Sun Mar 08, 2009 at 01:57:02 PM EST
    Not that I have any money for buying stocks (Eventhough I could get 2 shares fo Citi for the price of a cup of coffee).

    The stock market has looked like nothing short of an avalanche, and this one has not yet ground to a halt.


    God knows this isn't the time (none / 0) (#48)
    by Militarytracy on Sun Mar 08, 2009 at 06:08:54 PM EST
    for day traders to get a day job.  Is it me or is there a rush back and forth from the market to commodities to the market and back to commodities as well as the vultures attempt to pick available carcasses clean?  The suckers are the people staying in for the long term wealth.

    A group-think of financial advisors (none / 0) (#40)
    by wurman on Sun Mar 08, 2009 at 04:34:00 PM EST
    referenced in the WSJ this a.m. has the US economy beginning to crawl out of the hole in 3rd quarter 09; the stock market creeping toward some recovery in 4th of 09 (Charles Schwab's Independent Advisor Oulook Study).

    The more dim prognostications push the recovery areas out another quarter in each category.

    This is from Nikki Waller, "The Wallet," in my deadtree version.  ". . . predicting the market is impossible, but the advisers' overall optimism is worth nothing, especially as grim economic forecasts keep rolling in."

    That's interesting (none / 0) (#44)
    by gyrfalcon on Sun Mar 08, 2009 at 05:01:37 PM EST
    The conventional wisdom (and I guess past history) is that the stock market starts to come back before there are actual visible signs of economic recovery.  They say not this time?

    The CW that you reference is made up. (none / 0) (#51)
    by wurman on Mon Mar 09, 2009 at 12:11:46 AM EST
    I was watching something on CNN the other night & Pat Buchanan stated about 4 or 5 times that the "stock market" was a bellwether & gave us a view of the economy 6 months down the road.

    Ed Schulz blew him up & blasted the fabricated notion that the "market" (what does that mean? the DJIA? S&P? Nasdaq?) indicates anything, either currently or down the road.

    The argument was papered over by the host.

    Just for classics: the "market" trailed the New Deal recovery by years & lost half its value in 1937-38 as the economy finally gained some power & began putting people back to work in the private sector.  Because rightwingnutz deny that the Roosevelt alphabet soup approach worked, they sort of assert that the "market" was just waiting around to really lead the USA out of the Depression.

    During the Reagan Great Repression of 1981-84, the "market" stayed high for the first year, then dropped & appeared to lead the way in 1983-84, but amazingly dropped again in late 1984 even as the economy grew substantially and the DJIA seemed to follow the Main Street recovery.

    It's probably not much of an indicator either way.  Especially the DJIA, which they simply change & use different corporations to suit their overall marketing purposes.
    From Wiki:

    The individual components of the DJIA are occasionally changed as market conditions warrant. When companies are replaced, the scale factor used to calculate the index is also adjusted so that the value of the average is not directly affected by the change.

    On November 1, 1999, Chevron, Goodyear Tire and Rubber Company, Sears Roebuck, and Union Carbide were removed from the DJIA and replaced by Intel, Microsoft, Home Depot, and SBC Communications. Intel and Microsoft became the first two companies traded on the NASDAQ exchange to be listed in the DJIA. This move was widely (in retrospect) criticized since it involved moving into "tech" names just before the top of the tech bubble. On April 8, 2004, another change occurred as International Paper, AT&T, and Eastman Kodak were replaced with Pfizer, Verizon, and AIG. On December 1, 2005, AT&T returned to the DJIA as a result of the SBC Communications and AT&T merger. Altria Group and Honeywell were replaced by Chevron and Bank of America on February 19, 2008. On September 22, 2008, Kraft Foods replaced American International Group in the index.[9] GM and C are also mentioned as being "on the way out".

    Just for the record (none / 0) (#53)
    by gyrfalcon on Mon Mar 09, 2009 at 11:08:15 AM EST
    I did not say the DJIA was a "bellwether" or some infallible predictor of the future, and I was not repeating something out of the mouths of the likes of that financial genius Pat Buchanan.

    The business shows, in discussing endlessly where the bottom might be and when the market will recover and when the recession will end, have said as an article of faith that the market has traditionally recovered before the economy after a recession.

    Perhaps there's a difference between a recession and a depression, I don't know.


    I am saying that the talkers on those shows (none / 0) (#54)
    by wurman on Mon Mar 09, 2009 at 03:28:52 PM EST
    are wrong & that a cursory analysis of the "market" indicates otherwise.

    My references are to indicate that what the talkers consider as the "market" is a central question.  Usually, when asked, they mean the Dow Jones Industrial Average--which is pure bull as my 2 examples indicate, one on each side of their wrong.

    If they in fact mean some broader index, such as the S&P or the Russell, etc., then it gets even more problematic.

    If I wanted to spend the time on the "market" it would probably not be difficult to demonstrate (beyond my 2 simple examples) that there is no construct of the "market" that shows "it" can consistently or regularly recover before the overall economy after a recession.  I was working from memory.

    Kudlow has some steady indicators here:

    Noteworthy is the factoid that nearly every post-WWII recession has been preceded by an inverted Treasury curve and an oil shock. Sound familiar? Then the economy heals as oil prices come down and the Treasury curve normalizes. Also sound familiar?

    A valuable analysis of recovery indicators is here at Forex:

    In particular, residential permit issuances, new home sales and initial jobless claims data all displayed turning points in advance of the official end to a recession. However, these indicators were like Dorothy's friends from the Wizard of Oz: each was missing one key element that would complete them as a truly reliable predictor of a recovery. As such, none of the indicators should be looked at in exclusion of the others.

    I recommend you read the Forex article.  It shows that the S&P 500 indicated an oncoming recovery in 8 of the 10 past recessions.  From my point of view, 80% is OK, but not enough to bet the farm on.  And it comes up later than the 3 primary indicators, which may be worthy of betting the farm when all their elements occur together--as the article makes clear.

    Hope this helps some.


    Thanks (none / 0) (#55)
    by gyrfalcon on Mon Mar 09, 2009 at 03:38:07 PM EST
    Perhaps, if pressed, they'd say they're talking about S&P.  Probably would, actually.  The business analyst types are far less fixated on the DJIA than the nincompoop non-business, and especially political, reporters are.

    80 percent seems like a high enough percentage to justify using the term "usually," no?  In any case, the context of these remarks often includes the fact that just because "the market" starts to recover does not mean the recession in question is over.

    Thanks for the Forex link.  Looks interesting.