patrick.net

If the Fed was raw printing we should be experiencing a weaker dollar and more inflation than we currently are.

Maybe we should give Boom-Boom more credit?

"The real problem with deflation is the lack of jobs, so a direct hire approach beats the print to prosperity method."

That didn't work in Japan. You can't spend yourself to prosperity.

EBGuy,

thanks for the clarification.

OK, looking for the next week for them to start raw printing in public. Postpone beer for one week.

Weaker dollar will come, when the Treasury bubble bursts.

Treasury is the biggest bubble around, when that bursts, you will get far more than a weak dollar.

EBGuy :

What's a best book/blog/website/article etc for a layman like me to understand what Fed does, and how it affects the money supply ?

Thanks.

Stuck, I read mostly Fed propaganda (see newyorkfed.org) and have probably been brainwashed by the Rothschilds. For all I know, Ben has a printing press in his basement. If you find any good "independent" sources, please share with the blog. Still trying to get a grip on the rapid expansion of the monetary base these past couple of months...

Floyd Norris gets us caught up with Donald Trump's latest effort to wiggle out of repaying $40 million to Deutsche Bank as part of his new Chicago hotel-condo development deal.

He points to a "force majeure" clause in the lending agreement that allows the borrower to delay completion of the building if construction is delayed by things like riots, floods or strikes. That clause has a catchall section covering "any other event or circumstance not within the reasonable control of the borrower," and Trump figures that lets him out, even though construction is continuing.

"Would you consider the biggest depression we have had in this country since 1929 to be such an event? I would," he asked in an interview, adding, "A depression is not within the control of the borrower."

He wants a state judge in New York to order the bank to delay efforts to collect the loan until "a reasonable time" after the financial crisis ends.

Deutsche Bank thinks the idea that an economic downturn should free people from the obligation to pay their debts is laughable.

Trump, it may be noted, does not want everyone to be treated in the same way. When I asked him if he would let remorseful buyers walk away from contracts to buy condominiums at pre-depression prices, he said he would not. "They don't have a force majeure clause," he explained.

A survey by Inside Mortgage Finance and Campbell Communications of 2,508 real estate brokers nationwide found that two-thirds of those polled are expecting a housing bottom in 2009. Well, actually, here’s how it broke down …

REALTORS
=======
17.1% saying it’s already occurred; or will happen sometime before end of 2008
66.4% saying in 2009
14% saying 2010
1.6% saying 2011
0.9% saying ‘12 or later

HOME OWNERS OR BUYERS
==================
It has, or will by year's end 447% of all votes
'09 12822% of all votes
'10 19934% of all votes
'11 11720% of all votes
'12 or later 10618% of all votes

Total Votes: 594

Why is this data not surprising?

Both surveys simply asked about a "housing bottom".

As a result, both survey results may prove to be correct - realtors forecasting a bottom in sales volume next year and respondents forecasting a bottom in sales price in 2010.

It should become painfully clear that realtors care a lot more about making the sale than they do about the sale price.

For example if a $300,000 home is sold through a realtor, a six percent commission would result in $18,000 to be divvied up between the agents and brokers for the buyer and seller. If the sale is not made, the commission is zero. Whether the sale price is a little higher or lower has no significant impact on the commission amount, relatively speaking. What's important is that the sale is made.

Realtors will naturally think of a "housing bottom" in terms of home sales and the number of commissions they are likely to generate rather than home prices and the size of those commissions.

Correction:

It has, or will by year’s end ==> 44 7% of all votes
‘09 ==> 128 22% of all votes
‘10 ==> 199 34% of all votes
‘11 ==> 117 20% of all votes
‘12 or later ==> 106 18% of all votes
==================================
Total Votes: 594 100%

The ever-growing Obama stimulus package
Thursday, December 04, 2008
While the $50 billion economic stimulus package proposed during his presidential campaign now looks almost laughable after the events of the last few months, the size of the plan now thought to wind up on President Obama's desk come inauguration day is anything but.

As there are no real numbers to report since legislators have yet to sharpen their pencils and get to work, all that is available at the moment are informed guesses as to the total cost, and these estimates seem to grow by the day.

Some time ago, conventional wisdom had it that something in excess of $300 billion would be needed. Then Senator Charles Schumer (D-New York) got on one of those Sunday morning talk shows and cited $500 to $700 billion as a reasonable size - about five percent of GDP.

But, with the recession now believed to be of a longer duration than first thought, this seems to have morphed into $500 to $700 billion for each of the next two years bringing the total to at least 20-times the size of President-elect Obama's original figure.

And it could go even higher.

This report from Bloomberg fills in some of the details:

Calls for $1 Trillion Stimulus Package Grow as Economy Tumbles
By Rich Miller and Matt Benjamin

Dec. 4 (Bloomberg) -- The one thing that isn’t shrinking in the U.S. economy these days is the size of the stimulus package that financial experts say is needed to turn it around.

With automobile sales dropping, payrolls plunging and manufacturing contracting, economists from across the political spectrum are raising the ante on how much the government should lay out. Some are now calling for at least a $1 trillion boost.

Kenneth Rogoff, a Harvard University professor who was an adviser to Republican presidential candidate John McCain, and Joseph Stiglitz, a Nobel Prize winner who served in President Bill Clinton’s White House, are among those who say President- elect Barack Obama should push for a package of that size.

“They need a stimulus of $500-to-$600 billion a year for at least two years to counter what is going to be a collapse in consumption,” said Rogoff, a former chief economist at the International Monetary Fund.

Central banks all around the world were busy today slashing interest rates with abandon:

Bank of England -------------- cut 100 basis points to 2.0 percent
European Central Bank -- cut 75 basis points to 2.5 percent
Sweden's Riksbank ---------- cut 175 basis points to 2.0 percent
Bank of New Zealand ------- cut 150 basis points to 5.0 percent
Bank of Indonesia ------------ cut 25 basis points to 9.25 percent

Earlier in the week, Australia's central bank cut short-term interest rates by 100 basis points to 4.0 percent and Thailand slashed by a full percentage point.

The Swedish central bank couldn't wait for their regularly scheduled mid-December meeting and hastily made their biggest rate cut in 16 years in an attempt to combat a recession that officially began two months ago. The government also announced a $4 billion stimulus plan.

In New Zealand, rates were slashed by a record 1.5 percentage points and Reserve Bank Governor Alan Bollard indicated there are more, smaller cuts to come. The kiwis entered a recession back in the first quarter of the year and short-term rates have been slashed from 8.25 percent over the summer to just 5.0 percent.

In Indonesia, both interest rates and inflation (~12%) are still quite high and the central bank has received some criticism for making its first rate cut in over a year. They were no doubt influenced by the full-point rate cut in Thailand a few days ago.

Facebook has delayed a plan to allow employees to sell some of the stock options they have in the privately held company because of the bad economy. Many technology insiders have speculated that the shares would no longer get the price they would have last year, when the company's value was pegged at $15 billion when Microsoft bought a 1.6 percent stake.

Santa Cruz school No. 3 in nation
By Sharon Noguchi
Mercury News

Five area schools have been honored among the top 100 high schools in the United States by U.S. News & World Report.

The magazine's annual survey of public high schools ranked Pacific Collegiate Charter in Santa Cruz as No. 3; Mission San Jose in Fremont No. 60, Monta Vista in Cupertino No. 73; Gunn in Palo Alto No. 74 and Saratoga No. 80.

"Silver" winners, roughly the next top 500 high schools, included Evergreen Valley in San Jose, Homestead in Cupertino, Leland in San Jose, Los Gatos High, Lynbrook High in San Jose, Mountain View High, Palo Alto High, Amador Valley and Foothill in Pleasanton.

The ranking is based on three criteria:

How much schools exceed statistical expectations in state reading and math test scores;

Whether a school's disadvantaged students exceed state averages in proficiency;

How many students participate and how well they perform on advanced-placement and international-baccalaureate exams.

The survey honored 1,900 schools with awards ranging from "gold" to honorable mention. Ten percent, or 209, of California's high schools won a bronze award or better. The survey indicated that more schools are offering college-level work and more students are doing better on that work.

OO said:
Unless you are able to buy 200, 300 ounces per transaction

Where do you do this? Tulving? Is there a local dealer who can handle such a transaction?

Can't you just request delivery? One contract of COMEX GC is 100oz.

I still think it is hard for gold prices to really take off until most small-time gold bugs become deeply disappointed.

Not investment advice.

Treasury is the biggest bubble around, when that bursts, you will get far more than a weak dollar.

And how many years have we waited for the housing bubble to correct?

A treasury bubble makes about as much sense as a cash bubble.

Cash bubble is the same as hyperinflation?

As Tech Job Cuts Mount, Layoff Rumors Pervade The Valley
Posted by Eric Savitz

When the Internet and telecom bubble burst, Silicon Valley jobs evaporated: by 2005, California’s Santa Clara County - which includes San Jose, Palo Alto, Cupertino, Mountain View and other tech-focused towns - had given up more than 20% of its total job base, a loss of over 200,000 jobs. So how bad will it get this time around?

http://news.cnet.com/In-Silicon-Valley,-help-not-wanted/2008-1022_3-5571238.html

Chordiant Software, the Cupertino company that last month slashed the forecast for its fiscal fourth quarter by a third and said it would lay off 33 employees, or about 13 percent of its workforce, said Tuesday that its board approved payment of "special cash bonuses for outstanding performance during the 2008 fiscal year" as a "retentive tool."

Chordiant's chief executive, Steven Springsteel, is set to get an extra $100,000 distributed over the next four quarters. He won't be getting a raise next year but will have to make do with the same $550,000 salary he was paid in 2008.

The day before that, Maxygen, the Redwood City biopharmaceutical company that said last month it would cut 30 percent of its staff during the first quarter of 2009 "in order to preserve cash," filed details about bonuses being paid to its top officers, including $200,000 for its CEO, Russell Howard.

Eighty percent of their bonuses were to be based on company performance while the remaining 20 percent would be distributed at the board's discretion. Evidently, the performance goals weren't entirely met. Based on the performance targets set up, only "a portion of the achievement of certain corporate objectives" was paid, while the "full amount of the discretionary component" was approved.

The board also used its "discretionary authority" to give even more extra bonus money to its CEO and chief business officer, "to recognize their contributions to the achievement of corporate objectives that were not included in the previously established goals."

“retentive tool.”, indeed

Friedman, Billings, Ramsey & Co. analyst Craig Berger wrote in a note to clients that "recent industry checks" suggest that Santa Clara, Calif.-based Intel is preparing a large work force reduction that could be as high as 8,300 employees, or 10 percent of its global staff.

Intel's last major round of cutbacks came in 2006, when about 10,500 jobs were eliminated as smaller rival Advanced Micro Devices Inc. was stealing market share and cutting deeply into Intel's profits in a bruising price war.

Berger said Intel could save $1 billion a year from a new restructuring and by reducing or eliminating some raises and bonuses because of the company's performance.

An Intel spokesman declined to comment.

Liz Perkins, 24 and the mother of four young children in Colorado Springs, began looking for work in October after she learned that her husband, James, was about to lose his job at a bed-making factory.

But the jobs she found either did not pay enough to cover child care or required her to work overnight. “I can’t do overnight work with four children,” she said. She has since stopped looking for work.

The family has paid its bills by dipping into its savings and borrowing money from relatives. But Ms. Perkins said that unless her husband found a job in the next three months, she feared the family would become homeless.

Cash bubble is the same as hyperinflation?

Hah, actually deflation could be considered a cash bubble.

Hyperinflation is hyperinflation. No bubble to see there.

“The real problem with deflation is the lack of jobs, so a direct hire approach beats the print to prosperity method.”

That didn’t work in Japan. You can’t spend yourself to prosperity.

What I meant by that is if the gov wants to throw money at the problem, a "jobs program" would be better than a "stimulus" handout.

You do not believe that the Great Depression was ended by WWII and the GI Bill? That may be an example of how spending on jobs and production ended a severe economic downturn. Of course, I'd rather see a space program and infrastructure bulidup, and not a major war, powering an economic recovery.

O.T., but interesting non the less.

Check your seldom used credit cards. My wife received a letter from one of her card issuers stating that her card had been cancelled due to non use. It was still in her purse, but it was no good for a month before she got the letter. I have a card from the same company, had it for eighteen years, never a late payment. It's due to expire soon and I hadn't received my replacement card, so I called. Much to my surprise they said, "Due to lack of use, we are closing your account." I just used the thing two weeks ago to pay my Spring tuition. Granted, it was the first time I used the card in two years, but shit, give people a heads up. It gets better. My better half is talking to her Mom and mentions the incident. Mom has a card from the same issuer, and yup, you guessed it, cancelled. No notice or warning whatsoever, yet.
If any of you have those emergency cards you stash in your wallet and hardly ever use, check them.
Incidently, this company took billions of our tax dollars and still pulled shit like this.

"Obama banking on large scale public works projects"

http://news.yahoo.com/s/ap/20081207/ap_on_bi_ge/obama_economy

I like this! Spend a trillion dollars or so making every federal building energy-efficient. Helps the economy now and saves money in the future.

The president-elect's address never once used the word "spend," relying instead on "invest" or "investments," and pledging wise stewardship of taxpayer money in upgrading roads and schools, and making public buildings more energy-efficient.

"We won't just throw money at the problem," Obama said. "We'll measure progress by the reforms we make and the results we achieve — by the jobs we create, by the energy we save, by whether America is more competitive in the world."

Obama said his plan would employ millions of people by "making the single largest new investment in our national infrastructure since the creation of the federal highway system in the 1950s." He said state officials would lose the federal dollars if they did not quickly

Gold is experiencing downward pressures like most commodities. Supply is appearing again. Take a look at Kitco.com. Three weeks ago the cupboard was bare - I mean bare. Now they've got just about everything available. My local coin shop has gold and siver eagles again. People will unload more bullion as spot and futures fall. Yes, the premium you pay for physical is still high, but that will ease too. Gold was at $1002 in March 08. Gold was over $850 most of the year until the wild gyrations at the end of summer. Spot is $754 today. 25 percent down from the top. Is that a how a great investment performs? I'll be surprized if it stays above $500 for long.

My humble opinion, but not investment advice.

"I like this! Spend a trillion dollars or so making every federal building energy-efficient."

I like it too. Better than just throwing money away with bailouts. But it is still not a solution. Japan's government spent billions on public works trying to defeat deflation. It didn't work for them, it won't work for us. You can't spend your way to prosperity.

Unalloyed, agree that gold may see more downside in the short term and little upside thereafter until monetary inflation returns. Unfortunately for some of the gold bugs on this blog, this probably won't happen for several years.

What I meant by that is if the gov wants to throw money at the problem, a “jobs program” would be better than a “stimulus” handout.

Absolutely, from the point of view that we (the taxpayers) will at least get new roads and bridges for our money.

I like it too. Better than just throwing money away with bailouts. But it is still not a solution. Japan’s government spent billions on public works trying to defeat deflation. It didn’t work for them, it won’t work for us. You can’t spend your way to prosperity.

Depends how you define *work* I guess.

Stability and sustainability are a higher priority than prosperity, in my opinion.

Edit: I higher priority given the potentially catastrophic alternatives.

When I just came to the U.S., I didn't know the word "mortgage" and "credit", seriously. Four years later, I argued with my professor that we shouldn't use credit cards, she laughed at me.

"Depends how you define *work* I guess."

In this context, inflation or a reversal of deflation.

What was stabilizing or sustainable about Japan's public works program?

What was stabilizing or sustainable about Japan’s public works program?

Well, there weren't riots in the streets for one.

I think the lesson here is that no country can grow forever. Sooner or later you get over-leveraged and the whole thing comes crashing down.

Well, there weren’t riots in the streets for one.

I think deflation had more to do with that than the public works program.

SP @ December 5th, 2008 at 11:10 pm:
Tulving? Is there a local dealer who can handle such a transaction?

If you're buying in quantities like that, you might want to look into LBMA Good Delivery bars. If I had millions in USD to convert to physical gold, I would go to a refiner and buy LBMA bars off them direct. Don't take delivery on a futures contract, the overhead charges are usually not worth the speculative bother (unless you know the gold languishing period we are in right now is about to vaporize).

On the other hand, if you only want up to 2-300 troy ounces, in a format that is retail-friendly, then yeah, Tulving is as good a place as any to get gold coins, small bars, and kilo bars. Be certain what your purpose for the gold is, whether it is for conversion inside or outside the epicenter of a financial crisis. As one Argentinean blogger found out, gold rings were a better format than gold coins after the Argentinean peso devalued, if one was trying to convert the gold inside Argentina for currency. It turned out that jewelry stores were almost the only ones accepting gold in the aftermath of the devaluation, certainly the only widespread establishments. However, counterfeiting was such a problem that they simply treated all gold items with the same junk plating status, offering very low exchange rates per ounce. People who had crap gold jewelry were treated the same as people coming in with solid gold coins.

Of course, Argentineans who were able to leave the nation, then exchange physical gold outside of Argentina for harder currency, or simply tap harder currency accounts outside of Argentina to bring back into the country, fared much, much better than the average citizen. There were very, very few who were perspicacious enough to set that up ahead of time, though.

Boomer alert! ;)

www.pbs.org/boomercentury

PBS has a new documentary about how great the boomers are. It airs tonight on most PBS stations. I'm sure that surfer-exlax will want to tune in. :)