The ivory tower crowd fails again. Mr. Potter style bankers want to grind the common man down further. Timidity and caution rule in the cosseted halls of the Federal Reserve. What! Me Worry? They all have government paychecks, health care and pensions.
I'd like to bitch slap some sense into them.
Look, you dopes [referring to the Fed officials], to make a CHANGE in human behavior, you must act decisively with a substantial impulse. Baby steps and slow applications of policy changes just don't cause a transition in patterns of human activity.
Physics is riddled with proofs of this concept. Adiabatic invariants stay constant under slow, small changes no matter the cumulative size. Particles or systems in quantum states do not change until acted on by enough energy - at once - to shift their energy level. Einstein won a Nobel Prize for this insight.
Gasoline demand provides a clear human behavioral example. Demand drops dramatically when a Katrina event causes a sudden spike in prices. But a slow rise in prices such are this spring have no effect on demand.
This pittance of a discount rate cut is a failure. No bank is using it except for symbolic shows of support. Why? That's obvious! The rate is TOO HIGH!!! Why the heck is a bank going to borrow at 5.75% when it could borrow at 5.25% in the overnight market? Is the Fed stupid? Timid? Cautious? All of the foregoing?
The Fed should make a decisive move: lower the overnight rate to 4.5%, and lower the discount rate to 4.5%. All at once!!!
PS: Another example of Fed timidity causing failure for a policy was the long string of silly 0.25% rate increases a few years ago. Those slow, small increases did NOT slow housing speculation fast enough. So they permitted the housing bubble to grow too large. A quick bump up by 1% once they decided to start raising rates and then a string of 0.5% bumps to get to 4.5% to 5% faster would have stopped all those ARM subprime loans in 2006. Grrr.
PPS: The European interbank market is still gasping for air. I wonder if drains from big players like the Russian or MidEast is affecting interbank lending?
About Me
- Bunkerman
- I have a pioneer mentality. My wife & I live in the woods - neighbors aren't visible except slightly in winter. Our "bunker" - hehe, really a fine home & barn - has plenty of security. We have four dogs: Krypto (age 9, Kelpie), Ava (age 13, Rat Terrier), Sky (Kelpie, age 5) and Lucky Star (age 1, kelpie). I don't take crap from anyone anymore, having enough resources & gear stocked up to survive in any circumstance. I have three degrees from Harvard including a Ph. D. in a physical science, and an MS in Management from MIT. I worked as an investment banker for about 25 years, mainly in secured finance, at three major Wall Street firms and for the last 17 years with my partners at our own firm. I'm semi-retired now, managing some private corporations and business interests and doing my own trading & investing. This is not to boast, but to give you an idea I know a little about some subjects from experience. The photo is my 1943 M16 half-track which I am restoring. These armored vehicles were ubiquitous in the US Army in World War II and Korea. It's driveable.
75 comments:
So lemme get this right. A government paycheck, pension and health care is the reason Fed won't cut rates?
Bman wasn't it low rates that got this so-called 'common man' in trouble in the first place ? The common man that put down 20% and didn't lie about his income.....is he also havin trouble payin his mortgage? I don't think so.
PS.....the common man that is hurting right now is the one who lied about his income and put down $0 for his down payment. Or he is the hedge fund manager and leveraged his fund to the sky cuz he cud borrow $$$ cheaply. I have a different name for this common man......i call him the 'gambling man' or perhaps the 'greedy man'.
I dealt with the last part of the low rate environment by saying they needed to raise faster.
I think a lot or most of teaser ARM buyers with $0 down payment were people who wanted to be homeowners and fell under the greater fool theory: they thought home prices would rise so they could refinance in two years with enough equity to qualify for a better loan.
I don't think "greed" fits them - just dumb maybe. Or just took a bad risk at the wrong time.
The Alt-A liar loans are different - most were probably speculators or investors.
I think a governemnt paycheck, pension and health care insulates them from reality - that reality is what they need to understand to do their jobs.
Here you go Bman.
Washington’s failure to face these unpleasant realities opens the door to strange and dangerous fantasies, like Mr. Bush’s surreal take on the Vietnam war.
The real lesson of Vietnam for Iraq is clear enough. America lost that war because a succession of changes in South Vietnamese leadership, many of them inspired by Washington, never produced an effective government in Saigon. None of those changes, beginning with the American-sponsored coup that led to the murder of South Vietnamese President Ngo Dinh Diem in 1963, changed the underlying reality of a South Vietnamese government and army that never won the loyalty and support of large sections of the Vietnamese population.
The short-term sequels of American withdrawal from Indochina were brutal, as the immediate sequels of America’s withdrawal from Iraq will surely be. But the American people rightly concluded that with no way to win a military victory, there could be no justification for allowing thousands more United States troops to die in Vietnam. Those deaths would not have changed the sequels to the war, just as more American deaths will not change the sequel to the war in Iraq. Once the war in Southeast Asia was over, America’s domestic divisions healed, its battered armed forces were rebuilt and the nation was much better positioned to deal with the relentless challenges of global leadership.
If Mr. Bush, whose decision to inject Vietnam into the debate over Iraq was bizarre, took the time to study the real lessons of Vietnam, he would not be so eager to lead America still deeper into the 21st century quagmire he has created in Iraq. Following his path will not rectify the mistakes of Vietnam, it will simply repeat them.
I agree with that 100%. From today's lead editorial in the nytimes.
Lemme say this again, I think the Fed will cut the fed funds rate 50bps before sept meeting. I just don't think they should.
That NYTimes editorial is just plain wrong about Vietnam. No surprise.
Unless we get a rate cut today, looks like today will be very quiet. Come on beefers.....how about some ping pong?
So their conclusion about Iraq is "suspect". Conclusions based on false premises are always suspect.
Bman i know you don't believe in 'hearts and minds'. But in the cases of both vietnam and iraq....these were not countries that attacked us ( or were going to attack us). These were 'wars of choice'. We CHOSE to go there to help these countries. In that case winning the support ( hearts and minds) of the population is a must for victory.
The right wing in america specializes in creating fear and panic. The 'dominoe theory'. Baloney...that turned out to be garbage. For the past five years the GOP been sayin ....'if we don't fight them in iraq we'll be fighting them in cleveland.' More nonsense. And the majority of american people seeing thru the republican lies.
die GOP die !!!!!
PS.....'creating fear and panic'....Bman says that's what beefers do
lmaooooooooooooooo
Oh Bud.
The domino theory was correct and the War in Vietnam broke the chain.
The War in Vietnam was not an insurgency. It was a simple North Vietnamese conquest after 1968. That would have been easily defeated excpet for the delusions of LBJ, Nixon and their advisors and Congress.
I don't give a crap for Iraqi hearts & minds. As far as I can tell, they are all enemies except the Kurds. I actually could care less if they all kill each other like idiots - that's their lives - let them take the responsibility. But becoming another Al Quadea base to attack us - that's a problem.
So we attacked Iraq cuz it was an alqaeda base to attack us. Lmaooooooooooooooooooo
Man the GOP just won't admit what a disaster and fiasco and lie this war is based on. It cost them the midterms. Good. I hope they stay stubborn and defend this war. It should result in a resounding defeat next year. That will be sweet.
PS.....Saddam and alqaeda were bitter enemies. He was only interested in protecting his rule.
Saddam would have been a good republican if american. He was only interested in looting the nation to line his pockets and promote his rule.
It's raining here. When it stops i'll go play golf. Unless fed cuts rates today.
No Bud. We attacke dIraq to get rid of Saddma - unfinished business from the 1990 war.
We stayed to prevent it from becoming an Al Quead base.
golf lololol the rich man's game! What is the greens fee - $100 or more?
Sheesh, an hour on the basketball court cost $0.
An hour at the rifle range - maybe $10.
I wish $100. Course i'm playin today the fees are $175. I like to play nice courses......and almost all of them 100 bux is the minimum. Sometimes you can play a nice course for 50-60 but those are rare.
Bman i'm sorry to get you agitated on a summer friday morning. But it's not my fault. The nytimes editorial got me all riled up. I'm calmer now.
lmaoooooooooooooooo
Lolol Bud ... I can take it as well as dish it out.
NYTimes has been banned for my reading for about 25 years. It's a com-symp pos suitable only for cat boxes. :-)))
Besides, I needed something to wake me up - have been reading trust papers for about an hour. Arghhhhhhhhhhh
good morning Bunkites
tonight.. at golf league...I'll be paying $28...lmaooo......I think that says it all(insert cryin face icon here)
That is a gift spin...they charge Bud by the hour!!!
lmaoooooooo $28. I don't think 28bux even gets you on the crappiest courses down here. I believe the municipal course is 30.
..lol mav....$17 if I feed the cows.lmao
it doesnt matter where I play...cow patch or Indian Wells...the card will add up to 90....pffftttt
Bman what papers you read ? WSJ and IBD only?
WSJ, Barron's, IBD. Most current news comes from online.
That durable good number doesn't fit the bear theory.
How much does a good golf ball cost today?
housing number - new home sale sup 3%. Uh ... that doesn't fit the bear theory, either.
Are bears being delusional? Or just hubris - wishful thinking?
Where is the contagion?
Ignoring data is risky.
You're welcome to remind me of that when the data is the other way. :-)))
A dozen good golf balls usually sell for about 20-25 bux.
good thing they don't charge by the stroke Bud...you would be back putting the ball through the clowns nose.
15 Top Flite Optic Yellows...10 beans..lol
lmaooooooooooo top flite
lmaoooooooooooo
Bunkerman...you talk of time and price but what about volume....since the near market crash no one seems to give a crap one way or the other...what do make of that...obviously it is hard for me to be bullish here.
Bud, not bad...you are alright for a liberal.
One of my beefer friends tellin me BSC got some real bad news comin. Real bad. I took a token darkside here. Makes sense for them to try to 'hide' it by releasing the news during a holiday week.
Bman....are you sayin the data was good? Ok. It appears so. Maybe i'm wrong then. The fed won't cut.
UNG rebuilding again...did I say july low...meant august....took a good chunk off ahead of DEAN, not enough...avg 36.79...real buyer at work.
I think big volume mostly signals a top of a bottom.
So the big volume days in late July and early August signal a bottom, if anything.
Stocks can rise to new highs for a long time on moderate volume.
I also think with all the ETFs and trading funds, that volume indicators mean little except at really big surges mentioned above.
ETFs sort of make for fake volume - one set in the ETF itself and the second in the arbitrage between it and the stocks.
Fed cuts depend on credit markets. I don't know how the US markets are, but Euro credit markets suck. Unfortunately, Bud, I think they won't until the September meeting. That's a mistake as my post today points out.
I wouldn't be surpirsed re BSC. That pig, Cayne, going to China to beg can't be a good sign.
Lmaooooooooo...pig cayne
Bud...another peice of real bad news from BSC is what we need for Bunkerman's retest....moving to the darkside 2-1...you guys have me convinced, no early rate cut...ben won't be shocking the tape again to save the common man. down we go.
BAC 16% CFC....give me the yo and all the hard ways...lol
'save the common man'.......that cracks me up everytime
lmaooooooooooooooooo
you could be right, Frosty. That risk is why I'm waiting patiently. I have no illusions about the Fed's omniscience - I think they are no doing a very poor job. Maybe they went back to Nantucket or "the Vineyard".
Obviously the discount rate cut failed. I can't figure out why they don't at least cut the discount rate to 5.25%. Too timid by far.
Pisani is such a fool, thinking the Fed even knew that last Friday was an option expiration day.
That guy talking about the asset-backed CP market is right. That's why the Fed has to cut.
I think all these derivatives have made things worse. In the past one didn't have a crisis until there was a big bankruptcy. Now the markets freeze when ... nothing happens. All from fear of the future. I think excessive speculation in derivatives and excessive money in beefers caused this Rich Man's Panic of 2007.
They need regulated ;-)))) ... to protect the common man.
Bunkerman, this is ben's first real life crisis at the helm...of course he is reluctant to move the bubble elsewhere elmer style, besides he needs to earn his chops, you know that...polls are leaning toward no bail out for the liars and cheaters.
if Ben's done his homework, he should know better. No excuses.
"no excuses"...LMAOOO...first timers always suck...fed heads included...I bet you were no john holmes your first time in the saddle.
lmaooooooo john holmes
lolol Frosty.
QQQQ...46-48 range bound until further notice? beefer ping pong for a couple of weeks while we debate shoulda' coulda' woulda'
Most of BSC profits came from its mortgage area - "slicing & dicing" and prepayment models. They must be completely screwing their clients in making markets and trades now. So major layoffs seem likely to me. I'd say they're gutshot and a goner.
How can you recover when you screw all your clients and your main business line collapses?
And all the other departments and people seeing their stock get crushed and their bonueses at risk will have knives out, too.
The firm is full of pirahnas. They'll eat eat other.
The equity side is worth something to somebody. The investment banking is worth nothing.
What's book value? That might be all it's worth now.
I wonder if the S&P can go to 1500 around the 50 DMA , then correct and set up a H&S bottom pattern?
It's cleanly broken the downtrend line. So 50 DMA and round number 1500 is next, barring news.
Bman what are you talking about? Screw the clients? What for? Their only hope for survival is if they can make their clients money. BSC is in business to make their clients money......if they do that they will make alot of money for themselves.
Lmaooo pirhanas
you don't know what you're talking about, Bud. Didn't you every read Liar's poker?
Debt trading operations are in business at the clients' expense.
Do you think they're giving any bids for all that mortgage paper they sold to insitutions. Nope.
SLF new darksider....50 double top...filled the downside gap yesterday making a lower high at 49...printing an N7...looks ripe for lower prices.
sorry for interupting...thought I might toss out a money making idea.
W makes me sick.
Cheney makes me puke.
Hillary makes me come.
Bye.
die yankees die !!!
this action isn't making me any more bullish....avg spy labor day week +56 bips....well short of you 1500 Bunkerman...would have to be historically well above avg bullish action to do the job.
Bunkerman...can GS still make 21.50...that is alot of beefer gutting...in fact that would be working at buffalo bill type pace. they need to spank the VIX to have a chance?
I don't like GS - unless the prop. traders are hitting the ball;
Or they're gutting their own beefer.
The IB shop is good, but maybe deal flow next few Q's light? THey get a lot of strategic buyers as clients, though.
Hard to see them crush the ball, though. Last Q was 3% ups - market was good tehn.
New money might come in after Labor Day to get 1500. Then a pullback to 1430, then Fed cuts and we blow through 1500 to break the inverted H&S neckline there.
Just thinking ...
Won't take much to break the neckline down on TWM ... ;-)
Lmaoooooooo......gutting their own beefer? Huh? Bman isn't that like opening a restaurant and then intentionally poisoning the customers? Why would they do that?
lol Bunerkman....keep on taunting me....going home 2-1 short less than 35% of chips in play...I have my eye on you Bunkerman.
Thanks guys..off to the cow patch...FORE...FORE...FORE!!!!!
Bud, at a big broker, every shop gets its own bonus pool. It's like a shopping mall with some anchors & some small shops. they cn sometimes compete. The traders gut the IB clients, etc.
I know - I've seen it done.
They are like a school of pirahnas - no problem with cannibalism.
Read Liar's Poker - it tell how it was done at Salomon Bros.
You need to more paranoid & less naive. The Street is a gang of cuttthroats ... pirahnas ... barrcuda ... sharks.
The traders couldn't care less if the in house beefer got gutted.
lolol keep me in line frosty - I just read the charts ;-)
1/3 of new money in here ... waiting
lmaooooooooooo....more paranoid less naive.
Have a gud wekend.
thanks Bunkerman....first round on me....set up the bunker barkeep.
Blog is very slow updating today. I posted two new posts this AM early and neither are up yet.
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