At least on paper all the profits and all the work of the last two decades has disappeared. The tangible assets are still there, but they’re essentially worthless because they can’t be sold and turned into anything else. I live in aq place essentially untouched by the events of the last twelve months. My state has been rolling in money and spending it liberally. Tourism was good, though it was a lot more foreigners than ever before. I felt the oil/gas price spike but only at the margins; it didn’t effect my driving at all but it, in combination with a cold, wet summer really effected my use of my boat - at a gallon to the mile you really have to want to go.
My wife and I had good jobs and now have a good retirement plus I still earn a good bit of money as a consultant. We didn’t do ALL the stupid things that so many Americans have done; the house is small, the cars are nice, but not extravagant and are paid for, the boat and wine are about the only vices we have. The house should be paid for but we re-fi’d it to get kids through college and do some “bucket list” things because they were giving money away, but we never took anything like a preponderance of the equity out of it. So, we’re OK so long as things don’t get so catastrophically bad that the State drastically changes or reneges on our retirement. It could happen, but I must presume that things would be so bad by then that the faith and credit of the State of Alaska would be among my lesser worries.
All that said, fear and fear alone has driven down the housing market here so much that in appraisal terms I have almost no equity. If I had to get out of it, credit is so hard to get that I’m not sure I could find a buyer at any price. My boat is essentially worthless for the same reason; the only way I could sell it would be if I found someone who wanted it and who had some acceptable amount of cash in small used bills. My property in the Lower 48 has no liabilities other than taxes and maintenance, but my tenants are complaining that business is so bad that they are having trouble with the rent.
The Left began talking down the economy the minute GWB was first sworn in and it finally worked for them and got someone elected who would NEVER have won in anything resembling a good economy. Until a couple of months ago, there was no objective evidence that the fundamental economy in this Country was in difficulty. Foreclosures were rising a bit, but anyone with a brain could see that some of “free” loans to unqualified people were going to fail. And then, the whole Damned economy collapsed!
No one will convince me that much of what we’ve seen in the last few months wasn’t market manipulation for political purposes. Was that willful manipulation enought to cause all this? I don’t know, but I do know that there are powerful interests who have the money and power to act as the fulcrum on which the economy might be tilted. People here poo-pooed the notion that much of the oil price spike was speculation, but it is now clear that it was or the speculative bubble would not have burst so quickly. Even throwing the North Slope and the North Sea on the market in the 70s and early 80s took the better part of five years to break the OPEC price; there’s been nothing like that kind of change in either supply or demand, though I suspect some spigots were twisted open in an attempt to influence the election. It was just too convenient that when “Drill Now” put McCain ahead, the price collapsed and gas prices were no longer an issue.
I don’t know which is scarier, that our economy could be brought to its knees by political manipulation or that the people running the banks, the brokerages, the funds, and the government are so out of touch and incompetent that they just let this happen. The money power players in this Country aren’t a bunch of uncaring fat cat robber barons who smoke cigars and sip brandy in their wood paneled club rooms. Some are really rich, and some have old money, but they are in the main managers and bureaucrats and graduates of America and the World’s finest biz schools. If this class of people made this happen for political or personal advantage, they are evil. If they let it happen and were caught unawares, they are criminally incompetent and that says something really, really bad about the institutions that produced them, hired them, and promoted them.
Anyway, I remember the old trunk in my grandmother’s room when I was a kid in Georgia. Under a false bottom in that trunk were my gg/grandfather’s letters from Virginia and the letter from his Captain informing my gg/grandmother that she was a widow, a Testament and a bedroll, and a whole lot of Confederate currency and bonds. I kinda wish I still had all that Confederate paper. If I could find the right wealthy collector, it would probably be the most valuable asset I had.
Getting the herd to stampede
Darin_H Saturday, November 22nd at 1:15PM EST (link)I do believe we had some manipulation going on this summer and especially this fall. I’m not one to entertain conspiracy theories, so I don’t think it was vast and wide spread, but I do think there were some movers moving. Enough to get the herd turned into their direction.
The solution? Buy now if you’ve got the time (30 years for me).
___________________________________
Achance, you sound like my Dad!
Alberta Saturday, November 22nd at 1:49PM EST (link)And my Dad owns a Financial company! He’s one of those guys who went to a fancy business school, has bacholers of science, a CA, a MBA, made some money trading on the futures market before he was 25, and then spent his remaining youth in Afgahnistan, so even though he wont admit it to me or my bro, we figure he was a drug smuggler of some sort. Not an ivory tower guy, although he did go to ivory towers.
So when I say that my father, like Achance, smells a dead fish, I tend to take it with a little more gravity then if it was some 9/11 truther.
He goes even further then you do though, he thinks what we witnessed was the biggest thief operation of all time, refering to Paulson and TARP. He posited to me that he thinks the people in charge are trying to mess up the market so their is less opportunity, less wealth, and hence more dependence on politicians and their handouts, essentially creating classes of people, like politicians, who normal people will be utterly beholden too.
I used to think he was a little, uhh, imaginative. But Im not so sure anymore.
Sir, my concern is not whether God is on our side; my greatest concern is to be on God’s side, for God is always right.
Abraham Lincoln
I'm with you Art.
mbecker908 Saturday, November 22nd at 2:14PM EST (link)And in my head the most pregnant thought of all is the response of the current Administration. I haven’t had the time or energy to put together a timeline of economic events over the last 20 years, but the odor of rotting mackerel keeps hitting my olfactory senses every time I think of Paulson.
That bald head of Paulson's
Achance Saturday, November 22nd at 2:25PM EST (link)does kinda remind me of a dead mackeral “shining and stinking in the moonlight.”
In Vino Veritas
Dead fish, all right.
Vladimir Saturday, November 22nd at 2:34PM EST (link)I would absolutely love to know what George Soros’s financial position is right now. He’s made a ton of money in the past by cynically manipulating currencies.
He’s the kind of guy who the Left would turn into a bogeyman (like Cheney or Halliburton) if his own politics weren’t so hard Left.
I have a hard time believing that even Soros could control the oil markets to that degree, though, because of their sheer size.
But I smelled a rat when that first bailout vote laid an egg in the House.
Now, we’ve signed on for a $700 billion bailout plan and given Sec. Paulson carte blanche on what to do with it. Originally, the money was intended for mortgages; now, it’s being injected into banks and maybe car companies. And at the end of the day, the economy will be no more healthy, but dominated by the government.
There is no opinion, however absurd, which men will not readily embrace as soon as they can be brought to the conviction that it is generally adopted. - Arthur Schopenhauer
Recommended if only for this
Jack_Savage Saturday, November 22nd at 2:40PM EST (link)“People here poo-pooed the notion that much of the oil price spike was speculation, but it is now clear that it was or the speculative bubble would not have burst so quickly.”
Exactamundo.
Everybody Knew Oil Was a Speculative Bubble
IJB Saturday, November 22nd at 5:52PM EST (link)Just like everyone knew the housing boom of 2003-2007 was a bubble too. These weren’t mysteries to anyone watching CNBC.
That doesn’t necessarily mean they were “manipulated” (at least, not in any significant way).
It’s called the “boom & bust cycle” for a reason - human psychology virtually demands that speculative bubbles form like this from time to time. People just need to accept that.
It’s what people do after the bubbles burst that makes all the difference.
Who might have benefited
Francis Cianfrocca Saturday, November 22nd at 6:21PM EST (link)You mention Soros. It’s known that his firm made about $3 billion in August 2007 by recognizing that the collapse in subprime MBS would spread to higher-rated mortgage paper. (At this time, remember, everyone in authority was saying the problem was small and self-contained.)
About oil prices, remember I told you all this past summer that they would collapse below $100. That’s because I figured underlying demand to be supportive of a price like $75 or $80. (Below $50, that surprised me.)
But to the point about whether this whole mess has been engineered by manipulators, this would be my question:
Look at just the US stock market. It’s down nearly 50% from its high, reached thirteen months ago. That’s quite a few trillion dollars of value gone poof.
If this was a grand manipulation, then someone somewhere must be about $10 trillion richer. It’s not George Soros. It’s not the Chinese, and it’s not the Saudis. Their markets have all collapsed even more than ours.
Financial assets around the world have lost value fundamentally because private credit formation has ended. There are a lot of reasons why that happened, but that’s another story.
What’s the one financial asset in the world that has held its value?
The US dollar.
Who are the key holders of US dollars and dollar-denominated debt? Foreign central banks and sovereigns.
They’re the people who are really calling the shots now. They’re the reason Fannie and Freddie were nationalized. And they’re the reason we will only be able to create so much inflation over the next few years.
But blackhedd, what if an attempt to turn the herd
Achance Saturday, November 22nd at 7:12PM EST (link)got out of control and the herd ran over a cliff? I don’t have tinfoil in my hat, though I do believe in black helicopters, or at least very dark green ones.
As I said above, I don’t think anybody could do this, but I think that there are some who could influence things, turn the herd was the phrase used above. Well, what if it worked and the herd did turn, but suddenly and catastrophically. The law of unintended consequences is a b@#$h.
We all know that fiat currency is nothing other than confidence in a promise. What if such a good job was done of damaging that confidence, that no one believes the promise anymore? Yes, the sovereigns have to act like they believe it, they have no choice; there but for the Grace of God go they. Now the sovereigns and all their horses and men have to try to put it all back together again.
In Vino Veritas
I agree with your Dad, except I also believe the Republican Party is unable to pull the trigger right now.
nogyro35 Saturday, November 22nd at 8:28PM EST (link)I don’t think he is being “imaginative”, but prudent.
I’d like to see the passage written by Adam Smith that states free markets cannot be manipulated.
The day can, (and maybe has) come where an American economy all but stripped of its Christian roots, can be used to frighten the populace into giving up their sense of personal responsibility before God.
Unfortunately, we have the right people coming into power to make this happen.
We also have an impotent out-going President who gave up the fight long ago, and he has left us fractured.
There is much talk of rebuilding the Republican Party to be conservative. By the time we do, I’m afraid the damage may be permanent.
What the opposition is doing is working, even on obviously well prepared, hardworking folks like Achance.
When an enemy ambushes you with overwhelming force, you don’t hit the deck and try to think how to respond, or you will be overrun.
No, you turn into the enemy and advance with everything you have in order to survive.
There is no time to worry about custom and courtesy. We know where the enemy is.
The enemy is the Democratic Party.
We need to instinctively pull the trigger and fire back with everything we have.
Maybe I'm insane, but................
Kenny Solomon Saturday, November 22nd at 11:47PM EST (link)again, I’m not any type of financial wizard………….
Why would someone have to make $10 trillion if the market went down that much?
It’s not a zero-sum thing.
The market went poof and some people/entities definitely benefit, but not in dollars.
They benefit in control…….. Total control of our national debt.
China, Germany, Saudi Arabia…….. I asked this awhile back on first joining here at RedState ……….. What if the Chinese, Saudis and others up and say “margin called” ?
It may not be in allot of international best interests to do that in the short term. But what if they don’t care and want us wiped out?
There’s been a huge inter-connected, tin-foil-hat-wearing thought that maybe the oil producing countries (all of ‘em) got together and said “let’s get the USA”.
They all take a hit for a bit, watch our market go to Hades-in-a-gift-basket, then pounce.
Ahhhhhhhh, I haven’t really slept with any kind of normalcy in days, so my mind is a raging torrent, flooded with rivulets of thought cascading into a waterfall of creative alternatives.
Cheers !
Of course you can have my guns……. Bullets first.
I didn’t say rounds, shells or magazines……
I said bullets first.
Show me who made a profit
Francis Cianfrocca Sunday, November 23rd at 12:20AM EST (link)Your original question was “Did we lose a war or something?” I think your point is that this whole thing has been so evil that it can’t be a natural process, ergo there’s someone out there with a guilty conscience.
My own sense, from long experience with markets, is that grand opportunities for manipulation are very rare. Usually when someone tries to mess with the system, there are enough other people to pick up on it, and they mess with him instead. Markets are brutally efficient that way.
In short, I don’t find it credible that the global economic system has hidden fragilities that are exploitable by a small number of actors, so as to create widespread distress.
However, it’s entirely credible that the system is vulnerable to changes in sentiment by large numbers of actors. That, in fact, has happened innumerable times since our ancestors climbed down from the trees.
What happens when nearly every consumer in the country suddenly looks at the value of her house relative to her mortgage payment, and says “I gotta start saving some more money”?
Answer: instant recession.
Then who is going to buy their oil?
JustLeaveMeAlone Sunday, November 23rd at 1:55AM EST (link)If they take us down, demand for their product falls, and they end up eating sand. And while the jihadists may hate us enough to suicide bomb our markets, I’m not sure the money guys there aren’t enjoying all those decadent western consumer goods they’d lose.
I can’t see King Abdullah trading in his Rolls for a camel. Meanwhile, if that happens, I’ll move back to the family farm, put in a big garden, and start keeping chickens. Plenty of deer in the woods, too.
“To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.” Thomas Jefferson
A confluence of events COMBINED to cause this panic
Mike gamecock DeVine Sunday, November 23rd at 9:32AM EST (link)A confluence of events COMBINED to cause this panic
It was not wilful manipulation designed to cause a deep recession.
The events (most all of which were necessary to cause the fall):
Late90s:
1-Fannie et al presume lenders are racist to make them loan money to low income potential buyers
2-But don’t worry lenders, we will back the loans and the securitization packages
2000
3-Tech bubble bursts sending stockholders to real estate
2001
4-911 keeps stock market flat for years keeping former stock market players in real estate
2002
5-post Enron, congress overeacts and passes Sarbanes-Oxley that criminalizes business failure and mark to market rules ruins balance sheets
6-Greenspan keeps interest rates at 1% for three years after 911 thus heating up the r/e market
Housing bubble bursts
No one is smart enough to have concocted that plan and made it happened.
The lesson is keep the govt out of the market as much as possible due to its distortions.
But also, its all damage control since Eve bit the apple and un til Christ returns.
We have the worst econ system on earth except for all the others, ever.
We will have ups and downs. Our political system allows for corrections, albeit slowly.
Mike DeVine’s Examiner.com, Charlotte Observer and The Minority Report columns
“One man with courage makes a majority.” - Andrew Jackson
I'm not sure that any of us with "long experience"
Achance Sunday, November 23rd at 10:53AM EST (link)can rely on that experience with the certainty that we once could. The things that aren’t in our long experience are instant, universal communications and universal computerization.
A smart person with long experience sees someone trying to corner the silver market and they pounce on him. Likewise, if someone (s) is thought to be bidding up oil futures from a short position, they are vulnerable to anyone who figures it out and wants to play with them.
Today, only a very minor fraction of the billions of shares traded every day are traded by people at all, let alone people with long experience. A person with long experience may not be susceptibe to manipulation or even if so, the market will sort it out, but somebody who understands the trading algorithms can sure manipulate a computer program. Just look at how easy it is for those who want to to manipulate the “Recommended” algorithm here, and it doesn’t take many to do it.
In Vino Veritas
Some oil price perspective from a producer.
Achance Sunday, November 23rd at 11:51AM EST (link)When I use the term producer, I mean an entity that actually owns oil, not leaseholders or developers such as private oil companies. Alaska as a state owns the oil, the companies lease and produce. That’s the status of most oil around the World; about 70% is owned by a sovereign of some sort.
I was organizing files in my computer recently and ran across a memo I wrote to Governor Murkowski’s COS back in ‘05. We were have a devilish time with the unions that work our ferry system and the media were giving us Hell about it. Particularly, I was catching Hell about it in the media and I didn’t like it at all. I had lost the argument about what we should have done and was carrying out other people’s plans and taking all the abuse for it. So I posited to the COS something like, “Oil is around $50/bbl. and we’ve got plenty of money. Let’s throw some around and get these people off our backs.”
I’m starting to hear the bleating and wailing here about how the sky is falling at $50/bbl. when it was in the $140s not long ago. Lower prices just mean you can’t do as much. We kept Alaska running and the Permanent Fund growing when oil was under $20; didn’t like it, but could do it. The Saudis won’t have to give up the Rolls at any price. The only thing they’re worrying about - and we should be worrying about - is whether they want to keep all their accrued wealth in things denominated in US Dollars.
In Vino Veritas
In case anyone is still paying attention...
Francis Cianfrocca Sunday, November 23rd at 2:28PM EST (link)The reason that people can’t compete against algos is because they’re not fast enough
Global finance is going through a massive transition from a high-risk/high-return world to a low-risk/low-return world. That means that people are rotating lots of money among different asset classes. Much of this rotation is being done under duress, either because people have losses, because they want to run higher capital ratios, or both.
Additionally, the outlook for corporate earnings is totally opaque, everywhere in the world, which means that stock and corporate bond markets have no information to discount. That’s one reason (there are others) why they’ll go off on a wild tear, moving 10% on no news at all.
Markets are people too. Whenever you’re trying to understand them, ask what you’d do. If you were looking out at the stock market, it might seem rational to imagine that it’s undervalued.
But ask yourself what you’d do if you had no certainty that next year will see a recovery, or the first year of Great Depression II?
Wouldn’t you sell everything you own, just in case, and wait for some clearer signs?
That’s what markets are doing.
Of course, this also means that as soon as there is a recovery (whether it happens in 2009 or 2019), markets will rocket up so fast you might not even have time to get aboard.
Timing on this stinks - $700Billion bailout on NOV 15
David123 Sunday, November 23rd at 3:27PM EST (link)instead of Sept 15 and we’d probably be looking at president-elect McCain.
I am not sure what good the $700Billion bailout accomplished, either.
David123
Media hardly innocent in this
CFPeterson Monday, November 24th at 9:31AM EST (link)The media’s reporting had to fuel more than a little of the hysteria that leads to “bubbles” and bursts, especially the crude oil one.
This fall as the media shifted its attention from oil prices to the election coincided with the time that commodity prices began to fall.
Don't forget fraud...
izoneguy Monday, November 24th at 9:45AM EST (link)Real Estate and Mortgage Fraud Roundup
Don’t forget - the criminals got in on the housing frenzy as well. It was a drop in the TRILLION dollar bucket but it is still going strong.
Records show WaMu, America’s largest savings and loan, financed at least 43 mortgages worth $24.5 million on properties bought and sold by members of the Soni family since 2007. Of the 22 homes sold in that period, at least six have become problems for WaMu: Four were foreclosed, one received a notice of default and another was listed for sale at a $260,000 loss. Total value of WaMu’s mortgages on the troubled properties: $2.7 million.
A Kansas City businessman was sentenced to 13 years in prison for a $17 million mortgage fraud scheme that included buying a home owned by former Jackson County Executive Katheryn Shields and her husband. Raymond Zwego Jr. will also pay nearly $5.6 million in restitution and serve three of those years in prison for a probation violation.
“When the government fears the people, there is liberty. When the people fear the government, there is tyranny.”
Thomas Jefferson
There is a very firm linkage between oil price bubbles and recessions
streetwise Monday, November 24th at 10:14AM EST (link)1973, 1979, 1990 and 2008 are all examples.
Poor John McCain campaigned amidst a cosmic screwing. First the voters were pauperized and then, as they cut back spending, they started to be fired. While the financial system was cracking due to ANOTHER bubble burst, the one in MBS.
It’s always something!
The right needs to learn that Wall Street is not our friend necessarily, although we both have an interest in free markets. Of course, WE want liberty and prosperity. THEY want pillage, momentum investing, huge commissions and the right to walk around with a shit-eating grin about how much better they are than the peons.
There is a very firm linkage between oil price bubbles and recessions
streetwise Monday, November 24th at 10:29AM EST (link)1973, 1979, 1990 and 2008 are all examples.
Poor John McCain campaigned amidst a cosmic screwing. First the voters were pauperized and then, as they cut back spending, they started to be fired. While the financial system was cracking due to ANOTHER bubble burst, the one in MBS.
It’s always something!
The right needs to learn that Wall Street is not our friend necessarily, although we both have an interest in free markets. Of course, WE want liberty and prosperity. THEY want pillage, momentum investing, huge commissions and the right to walk around with a shit-eating grin about how much better they are than the peons.
Thy wit doth tend to the pithy sir
Hermes Monday, November 24th at 12:16PM EST (link)“But also, its all damage control since Eve bit the apple and until Christ returns.”
Best. Quote. Ever.
Guvment doth need checketh itself before it wrecketh itself. I bite my thumb at Hank of the House of Paulson, Alan of the House of Greenspan, and Ben of the House of Bernancke, foul villains, all. Likewise do I call down furies and cacodeamons upon the heads of Barney the Frank, Harry the Dusty, and Nancy the Perfidious Lady o’ the Bay. And for our so-called lords, they o’ the Great Bailout. Pah!
Clubs, bills, and partisans! strike! beat them down! Down with the Capulets! Down with the Montagues!
The Fish Head
jimmuy8 Monday, November 24th at 12:27PM EST (link)Here it is, November 24, and they’ve only spent about half of what they “must have–NOW!” And they won’t tell us what they spent it on? And things are even worse than when they “started to fix things?”
Some emergency.
If it really was such an emergency, how come they’ve got such large piles of cash lying around that they are “slinging a dead cat” to figure out who to give it to?
Right.
If it was as they said it was, and if it required what they said it did, then: All the money would be gone by now–within days of authorization–and all the “toxic” assets would have been quarantined. And don’t give me this bull about “not being sure what assets were bad or would go bad.” Everyone knew and has known for months what assets were going south. They’ve been reading their bottom line. They couldn’t have even called it a crisis without having first identified what the problems were.
So yeah, it was a crock and they are still selling it.
You are exactly right: delay this 60–or even 30–days and we are talking about President-elect McCain.
Get your hand out or get run over by those that do . . . .
It is all in God's hands, it is He who giveth and taketh away....
Cheetah772 Monday, November 24th at 2:24PM EST (link)If you want to know who’s causing this financial trouble, then look no further than us. Because of our sinful nature, we are imperfect creatures, thus tend to make fatal mistakes in every category you can think of.
But I firmly believe it is God who gave us the final nudge into one of the biggest financial disasters in recent memory. Why? I don’t know the answer to that question, if it were so, then I’d be like God, which obviously I’m not. In Romans 8:28, it says all things work out good for God’s purposes.
Thankfully, I’m not one who’s so easily given in to tinfoil conspiracies, as there are more important things to do in my daily life. But the devil knows what our position is, he’s been watching us for the last six thousand years, his ultimate purpose is to gather as many humans to form a single world government and rebel against God (read Revelations). Now, this may be something that’s part of God’s plan, or it may be simply the case of unintended consequences unfolding according to underlying biblical principles (greed leads to greater troubles, etc).
Whatever it is, it’s a done deal. Now, we are to pray for President-elect Obama and hope for the best. Let us pray that God may be merciful to us and deliver from this political wilderness in 2010 and 2012.
Daniel 2:20 And he [God] changeth the times and seasons: he removeth kings, and setteth up kings: he giveth wisdom unto the wise, and knowledge to them that know understanding.
On reflection, the one thing nobody addressed
Achance Monday, November 24th at 4:58PM EST (link)was my alternative proposition that the meltdown was the result of incompetence.
I always had a general rule in government that when I was presented with a choice between conspiracy and incompetence, I always chose incompetence to explain the inexplicable.
So, some think there was a conspiracy, some authoritative posters say a conspiracy is impossible. So, we lost more money and power in the last couple of months than we lost at Pearl Harbor or on 9-11 (No I’m not saying they are equivalent, no lives have been lost in this “crisis,” though I wouldn’t mind taking some.). We’ve looked real hard for blame for Pearl Harbor and 9-11. If there was a conspiracy, we should find them and shoot them, and, yes, I do mean that literally. If it was incompetence, we should find them and fire them and make sure that the best job they can get is as an ACORN voter registrar.
In Vino Veritas
nonsense
charliehall Tuesday, November 25th at 1:03AM EST (link)Wall street is interested in free markets only until they need a bailout.
Charlie Hall