naked capitalism

satan says:

I thought our system was insolvent.. oops now back to the scheduled programing.

ndk says:

And these numbers are roughly as accurate as an Internet survey of measured lengths conducted at home in the privacy of your bedroom.

One of the inherent problems in the regulatory forbearance and benign neglect is that it totally screws up information gathering mechanisms. We need good numbers to be propagated throughout the economy so people can best allocate themselves to productive purposes. Confidence creation and prayer that things will improve because addressing the problem will make it worse have become such big, swinging priorities that they have impeded our ability to do what’s most prudent.

S says:

even if the TARP’s newest initiative succeeds in getting rates down, one has to believe they will remain there for term (at least 5 years) to make it reasonable to buy. Isn;t this the price vs. rate falacy that so many were sold for so long. It makes 0 economic sense for anyone to enter the market even with lower rates, unless you think it is a new paradigm. And when you consider how they are spending trillions to drive down the rates to artificlally inflate the rates, it makes doubly no sense.

naturally, ratesn WILL eventually blow out and with them mortgage rates. if in 5 years the rate blows to just 6-7% (vs. a 5% buy), that would imply a 5-25% capital loss in order for the next buyer to be able to purchase the home with a like payment. Since incomes are not growing and not likley to in the context of wage labor arbitrage, the governement is merely snowjobbing the current buyers into a capital loss later. This entire fantasy rests again on the Greenspan mantra that interest rates will remain perm low. The recent Fed action attest to the fact that this simply can not be true.

doc holiday says:

Re: "Fed and Treasury throwing money at banks. Oh, just large banks."

> I thought the TARP-like bailouts were just for Friends of Hank & Ben, so no shock that the money hasn't trickled down to the lower level minions — because it seems to have got stuck in XMAS bonuses and vacations and various perks for those that are well connected. Is it thus any wonder that lending remains contentious and that confidence will not be restored until there is a pursuit of justice.

Without universal justice and accountability, FDIC failure rates will rocket and if The Obama crowd doesn't face that reality, The Great Depression will look like a picnic!

Anonymous says:

Interesting OT:

“Neal, we’re out of propane!” I figured he was experiencing personal financial stress and I offered some consolation. “No, we’re out! Everybody’s out … all three elevators in the area can’t get fuel to dry the corn crop.” Their crop is coming in wet this year, 22% moisture as opposed to the more normal 18%, and it must be dried to 13% or 14% for storage no propane at this time of year means crops left standing in the field overwinter with the hopes of harvesting in spring. Today I happened to talk to one of the staffers who works for Steve King, IA-05′s Congressman, and he confirmed that this is a systemic problem – a friend in the region with a propane business is running trucks all over to get enough fuel for the elevators they service.

http://theautomaticearth.blogspot.com/

doc holiday freaks out says:

10-yr Treasury Freaks Out Doc

http://finance.yahoo.com/q/bc?s=%5ETNX

Days range = 3.058 – 3.264

As for as 10-year treasury Constant Maturity, the range we are in now, goes back yield wise to about June 1958 and a period of low yields that go back beyond 1953:

http://www.economagic.com/em-cgi/data.exe/fedbog/tcm10y

What does it imply?

http://research.stlouisfed.org/fred2/series/DGS10

> Paul Krugman says:
Don't panic about the stock market…Panic about the credit markets instead. Interest rate on 3-month Treasuries at 0.02%; interest rate on high-yield (junk) bonds over 20%.

http://krugman.blogs.nytimes.com/2008/11/20/dont-panic-about-the-stock-market/

The 30-year yield tumbled 46 basis points to 3.46 percent, the biggest drop on record. The yield is the lowest since regular sales started in 1977. Yields on five-year notes declined to 1.88 percent, not seen since 1954, according to data compiled by Bloomberg and the Fed.

Direct Correlation
http://www.bloomberg.com/apps/news?pid=20601087&sid=aSQiBCOuoGGM&refer=home

The Standard & Poor’s 500 extended its 2008 tumble to 49 percent, poised for the worst annual decline in its 80-year history. The S&P declined 6.7 percent to 752.44.

“Bond yields, we feel, are somewhat distorted by what’s happening in the derivatives market,” said Chris Ahrens, an interest-rate strategist at UBS Securities LLC in Greenwich, Connecticut, one of 17 primary dealers that trade with the Fed.

“Changing the terms of the TARP as suddenly as he did undermined investor confidence,” said Richard Schlanger, a bond fund manager in Boston at Pioneer Investments, which oversees $44 billion. “It’s a frightening situation.”

“You have the cloak of a declining inflationary environment,” said Tom Tucci, head of U.S. government bond trading in New York at RBC Capital Markets, the investment- banking arm of Canada’s biggest lender. “People are denying it, but we are mirroring the whole Japanese situation and if that’s the case interest rates are going to go a lot lower.”

>> On topic, will this add to FDIC failures — yah think???

Jojo says:

Yves again. Translation: Things are sure to get worse in 2009.

But, but, but I was watching CNBC Closing Bell and I heard a guest saying that we were in the 7th inning of a 9 inning ballgame! Sounds like things are going to get better from here on out.

[rolol]

ndk says:

Yves, and I’m not sure if you’ll believe this number, but using most recent numbers, total credit outstanding in 2008Q2, which neglects much of the recent debt guarantee activity, divided by 2008Q3 preliminary GDP yields a debt-to-GDP ratio of 353.8%.

ndk says:

I’m sorry to dump this stream of consciousness here, but remember, guys, that’s a record high, 50% higher than 2003! As our GDP drops from recession, this will go up, unless the credit market contracts even faster. We’ll find out for sure with the next release, but consumer credit isn’t contracting at all yet. M2 is still growing.

Guys, we haven’t even started to deleverage yet in the official metrics. This is just the pain of deceleration.