Comments on: 3 REASONS WHY MORE BLACK SWANS ARE IN STORE FOR THE U.S. ECONOMY

By: jt26

jt26 — Sat, 24 Oct 2009 17:21:36 +0000

Carol …
- my comment on ultra low interest rates (+ other drastic measures) was directed at the main article, and the fact that every crisis has been met with more drastic anti-biotics having less and less effect .. that is a recipe for even worse black plaques …
- likewise, “very scary” referred to the Fed running out of bullets every time it tries to address a crisis which can mean only two things … the crises are getting worse or the the Fed’s ability to address them is becoming more impotent. Either conclusion means the next crisis will be worse.

By: Tradermarket247

Tradermarket247 — Sat, 24 Oct 2009 08:57:54 +0000

Wow This is one very informative post! 5 star!

By: TPC

TPC — Sat, 24 Oct 2009 00:54:41 +0000

Should be running smooth as butter now….

By: TPC

TPC — Sat, 24 Oct 2009 00:34:17 +0000

Doing a little evening housekeeping on the problem to ensure that it is finally resolved. Thanks for commenting on it though. It should be taken care of completely by the end of the weekend. If not, it’s time to take drastic measures….Thanks.

By: gordon

gordon — Sat, 24 Oct 2009 00:32:37 +0000

Fine piece thanks.
However, and notwithstanding your housekeeping post below, I again find that the site has slowed down to a crawl. So much so that while one pragcap page is loading I can comfortably finish reading an article from another site called up on a separate Tab.

By: carol

carol — Fri, 23 Oct 2009 16:50:40 +0000

jt26 said: “…massive Fed balance sheet … very scary”

But what about this graph, showing central banks’ asset as % GDP,

http://blogs.ft.com/economistsforum/files/2009/10/martin-wolfs-chart-of-the-week.jpg

reading between the lines of many Fed speakers these days, suggests that many voting Fed members have seen that graph as well and concluded that a lot more QE can be done.
So that leaves my question above still open.

By: jt26

jt26 — Fri, 23 Oct 2009 16:00:56 +0000

Related to the comment on ultralow interest rates.
One thing that has been apparent is that the Fed has been running out of bullets (probably because the “fed put” is being repriced everytime it is used).
98: 3%
02: 1%
09: 0% + QE + massive Fed balance sheet and monetary base expansion (inc. nationalization +++)
(Note the big jump from 02 to 09.)

Very scary.

By: TPC

TPC — Fri, 23 Oct 2009 14:28:40 +0000

Sorry Kevin. I thought I had labeled the chart. It is the total % of job lost. The error has been fixed.

By: carol

carol — Fri, 23 Oct 2009 14:13:42 +0000

It seems the Fed’s and Geithner’s only concern are the Wall Street giants balance sheets. With less competition, ZIRP, QE, and shoveling of bad assets from off-balance sheets of the giants onto the governments balance sheet, the reflation task appear to be working.

- with $15000 tax credit to all home buyers (some 8% of median price) this will (at taxpayers’ expense) inflate the housing markets bottom.

- with ZIRP and low mortgage rates, the resets in your graph and mortgage payments are less of a problem, while the earning spread for banks it at a record high.

- the record issuance of Treasuries (both new debt and roll-over: average age of treasuries now 4 years, down from 7!), mostly to pay for measures to abate the crisis caused by Wall Street, gives these ‘proprietary traders’ record fees.

- All new mortgage issuance has in fact been taken over by the Fed, with almost full guarantee by FHA (taxpayer).

- QE has removed a lot of bad assets away from the banks in return for money with which those giants have obtained record trading profits. As reported in the FT today, QE in the UK seems more likely (even after the record QE thus far).

So banks are well underway to ‘earn’ their balance sheet losses away. Though it may be considered horrible from a moral perspective (privatization of profits, socialization of losses etc.), morals and integrity don’t play a roll anymore.

Could the black swan swim towards the taxpayers in stead of to the Wall Street giants, i.e. could this Wall-Street-lobbyists/Bernanke/Geithner approach work, from a bankers point of view?

By: rick

rick — Fri, 23 Oct 2009 14:12:34 +0000

The vertical axis should be labeled “% employment change”.

The chart indicates that the loss of jobs in this recession is significantly deeper than previous recessions.

The agency that puts out these numbers (name escapes me) has also indicated that their “birth/death” model has, in fact, been adding phantom jobs all year and that when they restate the number for 2009 (in March of next year), it will be bumped up by another 10%.
Sorry… forgot to say great post – can’t wait to read your next one!