January 2009
53 posts
New Sh*t has come to light
GDP
-3.8% : unadjusted
Consumer spending dropped at a 3.5% annual rate, following a 3.8% drop in Q3
-5.1% adjusted for the impact of inventories for pre-ordered goods
Question: what does 4Q09 GDP look like?
Fewer stores and fewer orders
If they plan for flat demand, then…
Inventories will build according to the -5.1% scenario, and
GDP will be negatively impacted on a...
Watch
You have to realize the size of the problem confronting us today is significantly larger than in the ‘30s. The situation will continue to deteriorate.
—George Soros
I’m appealing to your sense of fairness. I did a lot of things that were mostly right.
—Rod Blagojevich
Bill Gross -- Stop the Decline in Asset Prices →
To PIMCO, the remedy for this deflationary delevering and mini-depression is simple and almost axiomatic: stop the decline in asset prices.
David Swenson on the solution for Newspapers →
“Many analysts predict the economy will have contracted at a pace of 5.4 percent in the fourth quarter when the government releases that report on Friday. If they are correct, that would mark the worst performance since a 6.4 percent drop in the first quarter of 1982.”
—casey mulligan
GDP decline peaked in 1Q1982 at -6.4%
The market declined from January through March, staged...
In response to a quote from a Harvard faculty report on the aims of education:
The aim of a liberal education is to unsettle presumptions, to defamiliarize the familiar, to reveal what is going on beneath and behind appearances, to disorient young people and to help them to find ways to reorient themselves.
….
Institutions do all the things that are supposed to be bad. They impede...
WTF →
To be honest, I’m only with my BF because I just don’t have the heart to change my facebook status from “in a relationship” to “I ain’t saying I’m a gold digger, but I ain’t messin’ with no broke banker.”
From - It’s the economy, Girlfriend
1 tag
VRM & CRM - There's no argument there
A friend recently directed me to an argument that flared up between Graham Hill and Doc Searls on the subject of Vendor Relationship Management (VRM) and Doc Searls’ VRM Project. Graham’s critique is essentially existential. He claims that VRM can’t exist, and if it does exist, it’s irrelevant and a giant step back for commerce and the consumer.
Graham
Searls
Graham...
Nowhere to run to...
There is nowhere to hide. We have for the first time in decades a global synchronized recession. Markets have become perfectly correlated and economies are also becoming perfectly correlated. This is not your kind of traditional minor recession.
Nobody’s in favor of long-term ownership of the U.S. banking system by the government, but if you don’t do it this way you end up like Japan where you...
Case Shiller passed 25% declines from the peak in the broader 20 region index.
Median sales price of existing homes accelerated downward 13.6% and 15.3% in November and December, year over year, respectively. National Association of Realtors
Housing starts are down 75% from their peak in January 2006.
New home sales in the US fell to a 17-year low of 407,000 in November, according to the...
Six Errors on the Path to the Financial Crisis
Wild Derivatives — Treasury and Fed refuse former Chairwoman of the CFTC, Brooksley Born’s, request to regulate derivatives.
Sky-High Leverage — SEC allows for the sudden and dramatic increase in leverage in 2004, moving the average from 12:1 to 33:1.
Subprime Surge — Between 2004 and 2007, subprime lending “grew from...
“It’s good to smash”
Mass incidents: in 1994 — 10k; in 2005 — 87k; today, no longer publicized
Between 1997 and 2002, 35 million urban workers were laid off between, but no major unrest resulted.
…but now we have mobile phones
“if a systematic trigger occurs and instability spreads to a sizable city, we will see the large scale mobilisation of both...
The pound sterling is going to be under pressure. The U.K. hasn’t got much to sell to the world anymore.
—Jim Rogers, chairman of Singapore-based Rogers Holdings
Now is the time to diversify our foreign reserves assets. With billions of new issuance in the near future, cashing in would become riskier.
—Yu Yongding in the China Securities Daily
China GDP at 6.8% in 4Q08 →
China is in a recession regardless of what the highly massaged official numbers claim
—Nouriel Roubini
NYC Housing - Q4
Home prices down 10% in 4Q08
Average price fell to $669,000 from a year earlier, with the steepest drop in 1-3 family homes, declining 13% to $548k
Apartment prices citywide fell 4% to an average $796,000.
…but
The average Manhattan apartment sale price rose 6% to $1.37mm, which could be attributed to substantial sales at 101 Warren St. Volume in general was down 35%.
…And
The...
Presidential Inaugurals →
RGE Housing Round-up →
New Hedge Fund Numbers - Down 48%
Hedge-fund assets declined 48% in 2008 on losses and redemptions
Assets - December 2007: $1.92 trillion
Assets - December 2008: $998.4 billion at the end of December
at the lowest level since July 2004, $976.7 billion
December Redemptions: $148.8 billion, a record
—TrimTabs Investment Research and BarclayHedge.
The worst of the economic situation is not yet behind us. It looks as if it will continue to deteriorate for most of 2009. In terms of our sector, we expect consumer loans and credit cards to continue to get worse.
When we look back at industry excesses in areas such as highly leveraged lending and securitisation, it is clear that some of these markets will never come back. In the next few years,...
Frontline Ltd., the world’s biggest owner of supertankers, yesterday said about 80 million barrels of crude oil are being stored in tankers, the most in 20 years.
-Bloomberg
Seven Cups of Coffee a Day May Lead to Hallucinations
Those who consume this volume in a day are three times more likely to have hallucinations than those who consumed 10 mg a day.
Seven cups contains 330 mg of caffeine. This is also known as one 16 ounce cup of Starbucks drip coffee.
Driving us crazy, one grande at a time.
Ireland: Warning that house prices may fall by 80% →
Hedge Funds
Lost $350b in 2008, 90% of which was lost in Q4
Shrank by 20% to $1.5t, from a peak of $1.9t
Lost 12.3%, according to Eurekahedge, compared to a 13% gain in 2007
Rose 1% in December
Fiscal actions are unlikely to promote a lasting recovery unless they are accompanied by strong measures to further stabilize and strengthen the financial system. More capital injections and guarantees...
Ayn Rand lives on in an ideology that, given the circumstances, refuses to meet with the facts.
Political Expertise - Krosnick
The Nature of Expertise - Robert Glaser
AI + Expertise and Expert Systems - Luc Steels
Inference Structures - Heuristics, screening for necessary information
deep vs surface knowledge - surface knowledge and the advantage of screening but the disadvantage of brittleness and weak explanation and unclear boundaries
problem solving methods - knowledge-use-level...
Past Performance Does not indicate Future Returns
Hedge fund performance: down 18.3% percent in 2008, their worst year on record.
Fund closures
693 funds closed in the first nine months of 2008, 6.9% of the industry
920 funds may have been shut, through all of 2008, exceeding the all-time high of 848 in 2005
—Hedge Fund Research
shake hands with the government
shake hands with the government; make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond. Anticipate, then buy what they buy, only do it first: agency-backed mortgages, bank preferred stocks, and senior bank debt; Aaa asset-backed securities such as credit card, student loan, and auto receivables.
—Bill...
You don’t have it in strong hands, you have flippers. These speculators are preventing the market from crashing now, and when they get out it could fall again.
—Robert Shiller
We’re creating a shadow inventory of homes that will be right back on the market as soon as the economy and the housing market begin to improve. We could see a double-dip in the housing recession if that happens....
PennyMac buys $558mm in home loans at 30-50 cents on the dollar from the FDIC that were acquired when First National Bank of Nevada collapsed.
Recovery rate of Tribue Co. is 1.5 cents on the dollar.
Reinhart + Rogoff Reprised
Reinhart + Rogoff - Aftermath
Wow…emerging and developed economies share common features following a banking crisis:
Asset market collapses: real housing pricing decline 35% over six years; equity price collapses average 55% over three and a half years
Profound declines in output and employment: unemployment goes up 7% on average over four years; and output falls (from peak to trough) an...
The end as we know it
and how to save it
Yum →
It was like riding a tiger, not knowing how to get off without being eaten.
—Ramalinga Raju, former Chairman of Satyam, on his perpetration of a +$1b accounting fraud
Rates are going to be low for a long time. They see the economy as extremely weak. It is a dark document.
—Vincent Reinhart, former director of the Fed’s Division of Monetary Affairs, who is now a visiting scholar at the American Enterprise Institute in Washington
The current downturn is likely to be far longer and deeper than the ‘garden-variety’ recession. It’s worth pulling out all the...
Has Financial Development Made the World Riskier? - 2005 Paper by Raghuram Rajan
Comments on “The Revival of Fiscal Policy”
—Janet Yellen, President, SF FED