naked capitalism

Anonymous says:

We need more pandas! Pandas ftw!

Matt Dubuque says:

In terms of the FT Alphaville charts, the chart showing soaring bank capital requirements demonstrates my continuing assertion that “recapitalizing” banks involves trying to hit a RAPIDLY moving target.

Their books are deteriorating in terms of CMBS, commercial loans and credit cards valuations and they also are bringing large standby letters of credit on to them as well, as that funding vehicle is becoming much more popular as a last resort for cash strapped corporations.

As for the discussion of the Fed’s book, please keep in mind that much of the expansion in their balance sheet has to do with swaps with other reputable central banks; these have an extremely low credit risk in the near term.

Matt

Matt Dubuque says:

Auerbach’s cogent comment reminds me of Bush’s comment, upon signing TARP, that “a crisis had been averted”.

This struck me at the time as one of the most profoundly stupid comments I had ever heard.

His crisis management skills are simply off the charts in terms of sheer incompetence.

It not his politics so much that gripes me. He just has no clue how to manage ANY crisis, be it Katrina, Iraq, or this latest fiasco.

Matt

doc holiday says:

{Sometimes} when I think of panda bears and The Large Hadron Collider, I also think of Drosophila BMP family members, because after all, this is a small world and sometimes the only thing between realities and fantasies are people. Family is family and we all need to get along and deal with things like backyard panda bear attacks and things that seem utterly stupid and random, like the stuff of chaos. I could swear here, but I do have some restraint and for the most part, I want to have the appearance of being in control, but perception is very open to interpretation, just like these visual metaphors. I guess I don’t care if the panda takes some kid into the jungle, but I need to occasionally act like I do care and then try to be involved with stuff and pretend that I’m part of society.

Although I haven’t made contact with any of the elected people in my village, I remain on high alert — but, enough said on that matter! I’m still licking my wounds from recent calls to Congress and The Senate related to TARP and the fact that I thought the whole idea of giving taxpayer revenues to corrupt bankers was essentially a fraudulent activity somewhat like collusion, conspiracy and treason — thus why would these same pirates be concerned about my feelings related to The LHC or the proposal to cut funds for Drosophila BMP family members?

1. CERN eggheads find there’s no mystery to the universal appeal of a good feast

http://www.timesonline.co.uk/tol/news/uk/science/article4988836.ece

The only damper on an otherwise upbeat ceremony was the rather troubling fact that complications have arisen in one of the sections of the accelerator. The first circuit of protons was completed without a hitch on September 10, but nine days later a faulty electrical connection caused a leak of helium and it will take until the spring to sort it out. The delay was greeted with relief by those who fear that a high-speed collision might lead to a black hole and reduce the planet to goo, but has caused consternation in scientists yearning to perform the crucial experiments in the various detectors.

For some of the more rotund dignitaries, the most eagerly awaited event of the unveiling was the “molecular buffet”, a banquet masterminded by the award-winning chefs Ferran Adrià and Ettore Bocchia that sought to break new ground in terms of “textures, temperatures and combinations”.

2a. These results also demonstrate that combining Drosophila and Salmonella genetics can provide novel opportunities for advancing our knowledge of hematopoiesis and innate immunity.

http://www.pnas.org/content/105/39/14952.abstract

2b. Sarah Palin: Ignorant and anti-science

http://scienceblogs.com/pharyngula/2008/10/sarah_palin_ignorant_and_antis.php

sometimes these dollars go to projects that have little or nothing to do with the public good. Things like fruit fly research in Paris, France. I kid you not.

Anonymous says:

Yves, I am puzzled why you quote reader Steve’s remark re: “Democrats Plea for Help in Stemming Battle Between Banks, Transit Agencies “. Steve remarks: “Seems to me that under our political system, partial nationalization will lead to far more perverse results than full nationalization ever did in Europe. More pork barrel than Marx.” Public transit is not pork. It has been identified as a fundamental national good not unlike AIG and the big commercial banks. If this interferes with the desire of some banks to get out leasing argreements with transit agencies, well tough.

Anonymous says:

Missed an even more important link:
http://www.nytimes.com/2008/10/25/business/25nocera.html?8dpc
It’s the number 1 emailed story from the NY Times right now. joe Nocera got an access code to a JP Morgan employee meeting conference call in which it is made plain that the bank has no intention of using the bailout cash to lend. Quite the opposite. Treasury ad the banks are intent on consolodation, not stopping the next Depression.

Q: How do you have a depression without bank runs?

A: Watch, we’re having one now. It’s called a bank managers’ strike. Either we break the strike, or it’s down the tubes.

doc holiday says:

This here space is where my head is at tonight, as I ponder future values and a glass of Redhook ESB:

Economics

In economics, the value of a capital asset is equal to the present value of the flow of services the asset will generate in future, appropriately adjusted for uncertainty. Economic depreciation over a given period is the reduction in the remaining value of future services.
Under certain circumstances, such as an unanticipated increase in the price of the services generated by an asset, its value may increase rather than decline. Depreciation is then negative.
[edit]National accounts
In national accounts, depreciation represents the decline in the aggregate capital stock arising from the use of capital in production, also referred to as consumption of fixed capital. Hence, depreciation is equal to the difference between aggregate (gross) investment and net investment or between Gross National Product and Net National Product. Unlike depreciation in business accounting, depreciation in national accounts is, in principle, not a method of allocating the costs of past expenditures on fixed assets over subsequent accounting periods. Rather, fixed assets at a given moment in time are valued according to the remaining benefits derived from their use.

>> I reckon this is also another space to get inside and crawl around:

Consumption of fixed capital

http://en.wikipedia.org/wiki/Consumption_of_fixed_capital

It refers to a depreciation charge (or "write-off") against the gross income of a producing enterprise, which reflects the decline in value of fixed capital being operated with. Fixed assets will decline in value after they are purchased for use in production, due to wear and tear, changed market valuation and possibly market obsolescence. Thus, CFC represents a compensation for the loss of value of fixed assets to an enterprise.

The UNSNA manual notes that "The consumption of fixed capital is one of the most important elements in the System… It may account for 10 per cent or more of total GDP."

Consequently, if businesses decide for economic reasons to rent more physical assets, or alternatively buy more physical assets, this can independently affect the size of GDP components and the size of intermediate consumption. If they buy, this boosts GDP; if they rent or lease, this lowers GDP.

> This is all based on a rouge data stream from The Large Hadron Collider, so just relax and embrace the noise as if taking a shower; I have no idea where this is going, other than down the drain…

Glen says:

Anon of 6:57 PM, there are some good discussions on this site with regard to the why and hows on the use or hoarding of bailout money for banks – liquidity vs. solvency. I’d say it’s a solvency issue. Most of these banks were built on dodgy Fiat money and now that it’s worth zip, they need to hoard as much cash as possible to avoid credit rating downs grades due to solvency issues.

doc holiday says:

anon @ 8:57,

I think the time has come to discuss The Roubini Plaster Vulvas, as it seems to be within the context of free association and by the time Yves gets around to reading comments, this will obviously be an old footnote…

I bring to your attention, exhibit A:

Sigmund Freud
http://en.wikipedia.org/wiki/Sigmund_Freud

In 1876, he published his first paper about “the testicles of eels” in the “Mitteilungen der österreichischen Akademie der Wissenschaften”, conceding that he could not solve the matter either. Frustrated by the lack of success that would have gained him fame, Freud chose to change his course of study. Biographers like Siegfried Bernfeld wonder if and how this early episode was significant for his later work regarding hidden sexuality and frustrations.

See Also: The Secret Pleasures of Dr. Doom

http://gawker.com/5063337/the-secret-pleasures-of-dr-doom

To be continued…

Dave Raithel says:

Re the FT “Losing Control” charts and Ms. Schwartz nearly a week ago: The banks don’t need liquidity (infusions of capital), they need mutual trust; but the banks don’t trust each other because they are all going bust; so they need the capital … to be liquid… Seth Myers on Sat Night Live explaining to Greenspan how what has happened, happened, was precious. Hope it shows up on You-tube ….

RBG says:

Also, why is does Fed balance sheet size as % of GDP important?

Thanks

MattJ says:

So, what exactly is the solution proposed here for the transit agencies funding problems? It seems to me that they are yet another example of an institution that should have known better making a short term decision with seriously negative long term effects, looking to be bailed out. I’m sure they are not proposing to pay back the initial payment they took, after all. They just want someone to bail them out from their short sighted, greedy decisions.

This does not seem to me to be a federal problem. Let the cities in which they reside, or at worst their states, bail them out.