The AntiCramer

Economist Robert Frank discovers a Ph.D-powered economic perpetual motion machine. Mark Steyn explains: "The stimulus will work because enough economists are saying it will work that their prestigious postnominal credentials will impress enough of the masses into thinking it will work, which in turn will make it work." (via)

Why does everyone discount the intelligence of "the unwashed masses" so deeply? A working couple trying to support a family in increasing times doesn't give a damn what some bowtie wearing economist dictates from his ivy tower. They have to deal with making REAL decisions on a daily basis. They know better than any distant observer the pressures they face.

The mere fact that anyone thinks these economists have this much influence over the masses is a testament to how blind the "enlightened" actually are.

Following a speech at Peking University, Tim Geithner was asked to share his thoughts about the safety of Chinese investments in the United States. They are "VERY safe," he said. At which point the audience burst out laughing.

This is old news. Happened weeks ago.

CNBC's Dennis Kneale calls out 'cowardly' 'mean spirited' bloggers for trashing his end of recession proclamation. Zero Hedge responds. Eddy Elfenbein weighs in. And here's 'Mike's' comeback.

How does someone who clearly spends massive amounts of time researching facts and trends in the economy and financial world find the time to read all these blogs? You'd think that such cutting edge analysis would be far too time consuming.

But, if you weigh in the quality of Kneale's analysis you'd reach the conclusion that no, he doesn't spend time educating himself and yes, he does have time spare.

Any talk of a V-shaped recovery is poppycock, Bob Rodriguez of First Pacific Advisors says, warning the bulk of U.S. credit problems are still to come. By the close of 2011, Treasury debt outstanding will be $14.6-16.6T, and debt-to-GDP ratio will rise to between 97-110%, which leads him to wonder: "How do we finance all this debt?"

How does something decline in value by more than 100%?


On Jun 03 06:30 PM youngman442002 wrote:

> Lets take it the next step...say everyone but the treasury quits
> buying our debt...what happens...
>
> The dollar devalues...but how much 50%...100% 1000% that is what
> no one knows...
>
> I don't think interest rates will go up because the Fed will be the
> buyer of all debt....
>
> How about personal property? Homes. Food? Autos? Gas? Insurance?
> things you need to live?
>
> Gold?
>
> My personal opinion is to get into offshore gold..hard gold..not
> an etf..
>
> What about Volence from gangs and others like the new mafia that
> will control the new black markets in the USA?
>
> Lots of changes coming...and I don't think they are going to be good

The Fed began notifying stress-tested banks they won't be allowed to rely too heavily on expected future revenues to plug capital holes. BoA (BAC) had been counting on billions of dollars of future revenue as part of its plan to shore up its capital.

If I remember correctly the banks did a substantial amount of lobbying to reduce the amount of their capital shortfall. The Treasury caved and cut the numbers dramatically. The result of the reduced numbers sparked a rally in bank stocks (into which many are issuing shares).

Now, with those events in the "distant" past the Treasury may be attempting to atone for its spinelessness by forcing the banks to raise more capital than publicly announced a month ago.

Goodbye GAAP, Hello IFRS; Will You Be Ready?

M2M was reinstated at the insistence of bankers. If they desired the ability to mark to bubble they shouldn't be allowed to mark to fantasy when the bubble bursts.

You also make the assumption that all markets must correct all of the time at some point in the future. This is a dangerous assumption.

I'll leave the pros and cons of M2M up for debate but you must concede that consistency is key. Otherwise how is an investor to discern fantasy from reality?


On May 26 08:07 PM Lummox wrote:

> I am adamantly opposed to Mark to market, because it can have no
> relationship to reality. In the long run the Market will eventually
> correct, but in the short term, it can be drastically wrong. Just
> because no one wants to buy at a particular time doesn't mean that
> the asset has no value. Or while because one asset sold below market
> all assets should valused below market.
>
> Aas an example, I know of houses and condo's selling 70% belowmarket,
> They were abandoned, stripped of all fixtures, plumbing, furnishings,
> and moved into by squatters. The only people willing to buy a house
> like this, are those that are willing to gut the house to the frame,
> and rebuild. For this will they bid low to cover their investment,
> risk, and guarantee a profit. Also a mansion is appraised at twice
> everyone else's house in the area. Now why should your house be
> appraised at the same value as either the abandoned house or the
> mansion. The answer is they aren't, so why should we apply the same
> rule to financial investments.
>
> In financial markets the same can be true. A bank has a portfolio
> of building loan packages. Someone or several someones bid up a
> package. Suddenly all the packages in the portfolio are worth more,
> the bank has more money to loan as its assets have no gone up. They
> in turn start bidding on more loan packages, because the price on
> them is going up. Soon everyone starts doing this. This is a bubble
> because the actual worth of the package is not what someone wants
> to pay. But how much money are the loans for, what is the interest
> rate being paid on the loans. Also if there is a chance of the loan
> being defaulted will you lose money. In a downturn, when no one
> wants to buy, the price drops, but the value of the loan is still
> dependent on amount of money loande, rate of return, and risk.
>
>
> The mark to market rule, was made illegal after the Great Depression,
> because it contributed to the stock market crash. We re-instated
> it, and it caused problems. All assets should be valued based upon
> their cash value. This confusion come because the finacial market
> packaged loans together, and labeled the as securities. If you have
> a million dolar COD in the bank, that is an asset and is worth one
> million dollars. I f you have a million dollars in stock, that is
> a security and is worth what some is willing to pay you.

Playboy (PLA) is quietly being shopped around for $300M, though its market cap is closer to $100M. So far, there are no takers.

Same problem as all the newspapers. Why would anyone pay for what is readily available for free?

Last week we saw how S&P 500 inflation-adjusted earnings plunged in Q1. This week, we get to see the flipside - an astonishing spike in the index's P/E ratio. For non-believers, here's the data.

With a chart like that how on earth can anyone call this rally sustainable?

Stocks and crude are trading in tandem at heretofore unseen levels.

Were you asleep during the entire summer of 2008?


On May 13 03:51 PM Cetin Hakimoglu wrote:

> it's been that way since 2002

The Federal Reserve Can Not Account for $9 Trillion in Off-Balance Sheet Transactions?

Absolutely no official (public or private) should:

1) Say the word "um" more than once per day
2) Answer a question with "we're in the process of doing ____"
3) Appear so absolutely clueless when responding to a simple question
4) Evade a question for 30 seconds then ask for the question to be repeated (all the while searching for an answer (s)he never finds)
5) Have no clue what has happened to millions of dollars
6) Have no clue what has happened to billions of dollars
7) Have no clue what has happened to trillions of dollars
8) Be completely and totally raked over the coals with so little effort

But hey. Seems like she is trying. I'm sure she'd be secure in a private sector job where incompetence does not merit penalty.

The Federal Reserve Can Not Account for $9 Trillion in Off-Balance Sheet Transactions?

A government large enough to give you everything you want is large enough to take everything you have.


On May 11 10:26 PM Cetin Hakimoglu wrote:

> There is no conspiracy. I don't fear my government and I have trust
> in the federal reserve. The stock market does too, which is why it
> keeps going up. Lets stop pointing fingers.

Job Numbers from the Bureau of Spurious Statistics

Tyler bothers to look for facts. He doens't take everything at face value. Turns out doing so is a lot of work. It is easier to plaster your factless comments all over articles by critical thinkers.


On May 08 01:02 PM Cetin Hakimoglu wrote:

> Why is everything a hoax or a conspiracy? Why can't we accept that
> maybe things are improving?

Well, at least now we have a partial answer to the nagging question: Where did all the Madoff money go?

The same place the majority of SA readers file your comments.


On May 07 03:58 PM Cetin Hakimoglu wrote:

> I'll file this story under 'minutia'

While it's true the recent moderation in weekly jobless claims is happening from a breathtaking peak, the extent of the drop is impressive. Going back to 1987, such declines have usually happened at the tail end of a recession.

Also look out for downward revisions.

The powers that be have a vested interest in massaging the data.


On May 07 11:21 AM old boat guy wrote:

> Yea, sure. These figures are all manipulated to suit the gov't's
> purpose. How about U6? We are getting to a point that all these
> statistical releases are doctored shams; thank god for Durden and
> Lee.