Today's quote:
I love that quote, even if it is only 99% accurate (I DESPISE political special interest groups - well, what can be done with a hardcore Libertarian?)
So let's engage our problem solving machine... but before I move on... Do you know what today is? Today is the 60th anniversary of the Korean War. Keep that in mind when thinking about Iraq and Afghanistan...
I was speaking with the Mad Scientist the other day. He had an interesting thought on the potential cause of the shipping and rail decline/bond yield curve/gold and silver:
Perhaps the CDS's backing B.P.'s bonds are causing fits with the banks - especially the European banks. He read my post about my thought that something bigger than AIG was in the offing and thought this was more likely than a default by Italy.
I thought that was one of the smarter thoughts someone shared with me in a while. There is simply no way that B.P. does not default on those bonds if the GOM Well cannot be capped (though I think B.P. will survive, MUST survive if Obama is survive and eventually his team will get that, that does not mean its stockholders or bondholders necessarily have to survive).
The number of guarantees and cross-guarnatees on CDS's of B.P.'s debt is just mind-boggling. Those banks are already very, very sick... In any event, it is a h*ll of a coincidence.
25 comments:
CDSs are systemic risk multipliers. Not only do the bonds go bad, the CDSs go bad with them. Who invented these things?
Regards,
Coal Guy
The problem for the banks would be the CDS, not the bonds. Me thinks this has potential.
BP and GOM is a genuine Black Swan event, unlike Italy and Greece et al, which anyone could see coming. I wonder how many of these BS events we need to tip us over? Or will this be enough?
Is it just me, or is there a long line of 'negatives' out there and a VERY short line of possible positives?
I mentioned BP and CDSs in a previous comment. Why's Scientist getting all the credit? :)
Here's some positives ... low interest rates and energy prices, the supermarkets are all open, and the gas stations are all filled.
Bur, low interest rates and cheap gas and food are all good and fine, but what about those who have no credit or money? Maybe that's why so few are buying?
Don't be fooled. :) People have WAY more money and credit than they would want anyone to believe.
Bur:
I don't know why you persist in this.
Who said the world was coming to an end, or that their would be no gas at the station?
When I began this blog I directed my discussions to guys like me - middle aged, family men with a few hard earned bucks. I don't write this for "doomers", the super rich, or "kids" - though I have met some very intelligent netizens here... I write this mostly for what I call my "Middle Class Millionaire" partners, friends, and family.
Peak Oil and the unwinding of the debt bubble will not effect Bill Gates, Steve Jobs, OR the homeless guy down the street under the bridge. It WILL effect my dentist, my lawyer, my CPA, my Doctor, and the rest of my reasonably well-to-do-but-not-quite rich friends. And it will effect the next generation of professionals - the next generation of middle class millionaires.
Please stop your incessant taunting. If you something to add regarding the markets or politics, please do.
Bur-
Why are you posting on this blog? This is a forward-looking group that is trying to figure out the impact of some major train wrecks coming our way ie peak oil, vulnerability of major oil importing nations, etc.
You are continually suggesting that because the sun is shining today, it will never ever rain again.
You are wasting everybody's time.
Regards, Marshall
My dear Jeffers,
I don't think you know exactly who is reading your blog, if the commenters are any indication.
Please read Marshall's quip above ...
"Why are you posting on this blog (Bureaucrat)? This is a forward-looking group that is trying to figure out the impact of some major train wrecks coming our way ie peak oil, vulnerability of major oil importing nations, etc."
Does this sound like a doctor? Or a lawyer? Or even a typical "middle aged family man with a few hard-earned bucks?" Marshall's comments are not unusual on here.
Marshall is not only predicting train wrecks and doom .. he's going to DELIGHT in it. He's a typical guns & gold man, very typical of the people who comment on here, who if they are serious, are totally out of touch with present reality.
Sorry about the supermarkets and gas station mentions over and over, but I do like to talk about the REAL world, like how the massive world debt COULD affect the future (Greece, etc.), like how the inventories of oil and gasoline stay over the 5-year average time and time again, and other things having to do with what I see.
I'm waiting for all the shit to hit the fan too .. and have been waiting ... and waiting ... and waiting ...
The super-markets are open with some sources claiming over 20% inflation on food since last year alone. Gas prices haven't skyrocketed but then again gas usage, as Greg has shown, is down what 7% per month at least for a while there? If I remember right.
Bur is living in a State that can't pay it's bills, where it's IOU's are not even being accepted and where the LEO's have to pay out of pocket for their own ammo now.
Chicago may still look the same and act the same but the taxpayers in Southern Illinois are losing services (especially the elderly and school systems) faster than Sean Penn can hug a communist.
Yet we are the crazy ones?
These train wrecks are not imagined btw but are happening now.
Nah Bur is kinda like the mascot who happens to look like (in imagination only) Marie Antoinette and reminds us all that some still manage to live sheltered lives :)
And for the record I don't own physical gold (just some silver), have a safe full of guns and do believe we have entered a period of decline which will result in stronger communities and local farms. I don't think we are going to enter some mad max future but I don't rule out some sectionalist violence in the near future either. Oh and I am not rich either :( Damnit.
@bureaucrat
Here's some positives ... low interest rates and energy prices, the supermarkets are all open, and the gas stations are all filled.
Curious if you think the people of Maywood, CA thought the same thing about their city services or how about the example of Argentina in just the last 20 years. You seem like an intelligent chap so go read some history and find out how societies diminish.
On a long enough timeline, the survival rate for everyone drops to zero
My friends (and enemies) :) ...
1) Food: milk is a good indicator .. price was $2.24 a year ago here, but is now $2.99 at Jewel, but you can get it for less at CVS and Walgreens. Yep it is up, because there was so much milk the daily guys couldn't make any money. Now they can stay in business.
2) Gasoline (if that is the gas you are talking about) demand continues to be where it is supposed to be (bottom of page)..
http://tonto.eia.doe.gov/
oog/info/twip/
twip_gasoline.html
3) America's IOUs are not only accepted (China continues to buy U.S. bonds), the interest rates are so low because we have NO problem finding buyers for our debt.
4) Can't pay for ammo? ONE Illinois prison? That's a trend? Good, bullets kill people. :)
5) Lost services in Southern IL -- I'll bet those people are getting services from their families somehow.
and 6) Maywood, CA -- population 28,224 (i read Mish too). That is one town out of THOUSANDS of towns, and is not even a big town, and the services will be provided by an adjointing town.
Guys, you have to give me meat, not little scraps, signifying nothing. :)
Oooops, I mean Dairy :)
I forgot to mention my DCA is still below what I bought it at. Commodity prices for corn, wheat, rice & soybeans are still at lows, therefore food prices are very affordable, or will be very affordable soon. :) Meat, however, is a little higher now, tis true.
bureaucrat said...
" Don't be fooled. :) People have WAY more money and credit than they would want anyone to believe."
I'm sorry, but are YOU KIDDING ME?
Believe me, I know all too many people that barely are making it from pay check to pay check or welfare payment to welfare payment for whatever reason.
There is nothing else to think Bur than you are a completely out of touch federal bureaucrat. Either that or you simply like trolling on this blog.
I'm sorry, but you need to get out more.
Heh...
Let them eat cake....
Marie errr I mean Bureaucrat.
Hmmm just today yet another article on Illinois finance problems.
East Dunde, Ill. police pensions to eclipse city tax levy by 2016.
I guess one man's frying pan is another man's pastry oven :)
First off who is this "Mish" that you keep referring to? Some doomer website, or a finance person, or what?
Second, when discussing possible future scenario's, constantly talking about the present is why I get frustrated with Bur. Unless your saying that b/c things are the way the are currently, they will stay the way they are--then fine. But most of your responses just seem geared toward "doomers", rather than people just trying to make educated guesses on the trends to come in the next couple years. And with this federal job--do you post on your 15min breaks and lunch break, b/c it certainly seems like you post the most out of anyone--just like the watchdogs of financial industry spending countless hours on websites/porn sites etc.
It's sunny out today, guess its never going to rain, eh?
-Meiyo
I'm a bureaucrat (I work for a state prison, though, which even most libertarians don't mind) and it's not rainbows and unicorns here. The 90 dwarves (state legislature) sold the capital building along with other property in order to squeeze by this year. I don't expect to see the pension promised to us, although my contribution to that pension fund has been climbing at double the cost-of-living increases for the last 5 years (so in effect we've had a pay cut every year).
I have a job still, which is more than many can say. We just expanded the prison system by 10% to make room for all the illegals that are caught after committing felonies, but will have no more people to man them. We are already running 20% below the personnel level that the prisons were designed for, so the risk level and burnout is higher than ever.
So far the US is coping and maintaining a facade of business as usual, but for how long? We in Arizona aren't directly affected by the oil catastrophe in progress, instead we're held in disfavor by the current royalty for daring to deal with yet another situation they ignore.
I personally am in good shape financially, but a quarter of my pre-tax income has been going to family members who are in trouble. The US is resilient, but I'm feeling and seeing the stretch.
bureaucrat, apparently the recent example of Argentina is irrelevant in your mind?
Anon @ June 26, 2010 10:07 AM
http://lmgtfy.com/?q=mish
Cities, towns and states have defaulted on bonds before. What happens is the bond holders get screwed, and then they are shut out from the bond market for a period of time.. Usually some higher authority (states in the cities cases, the feds in the states cases) gives them some financial assistance. If banks lose money on BP bonds or CDs so be it. They should have done more research on the company before investing.
The quality of life in the US is deteriorating rapidly, and will probably continue to deteriorate for some time. Hunker down for hard times ahead. Sometimes really hard times are necessary to instigate true change.
Sorry, I had a long response to the latest "Bureaucrat" mentions but the FUCKING BLOG ATE MY WORDS!
Those words looked like CAKE!!! :)
Ok, I have stepped away, and refreshed .. this is my post (abbreviated) addressing the points above ..
1) Someone is buying all the cigarettes, booze, lottery tickets, porn, and visiting the casinos, all supposedly discretionary expenses. At the supermarket, I often stand behind a person paying with a Illinois "Link" food welfare card. Any decrease in spending is measured by "single digit" reductions. There is lots of money and credit out there -- if they need it, people can find it.
2) I grew up near East Dundee, IL, and saw the NBC report tonight on Maywood, CA. A town of 28,000 does not mean much to the 19,400 other cities in the U.S., very few of whom declared bankruptcy this year. When you all hear something about a bankruptcy of #1 New York, #4 Houston or #8 San Diego, then we have a little crisis. :) Towns reorganize all the time. The services will still be provided in Maywood, just by other towns.
3) Mish is Michael Shedlock, a blogger near Chicago (Google "Mish" to find his site). He is a Libertarian like Jeffers, and hates government unions with a passion (which I find small-minded). But he also was one of the first to say "deflation" was coming in 2007, rather than the hundreds of people (gold bugs mostly) that saw inflation ahead. He is annoying right about a lot of things. Sometimes the Libertarians are right (Tomorrow the Supreme Court will make guns again legal in Chicago. Bang, bang! ;))
4) I don't mind predictions. That is how people invest and make big money. My points in the last couple of years are that there is no indication -- NONE -- of anything wrong at this time. No doom, no apocalypse, no inflation, no government collapse, no shortage of oil/gasoline/diesel, or anything else. In a deflation, we overproduce everything -- you can get anything you want today. We borrowed too much, and we'll have malaise for some years because of it.
5) The bullet provider for the Illinois jails wanted cash to sell them bullets. Big deal. How many jail riots are there? IL will find the money, or another bullet provider, or just not buy so many bullets.
6) Argentina: the Agora people who publish online the "Daily Reckoning", which is full of Libertarian claptrap, seems to think that, if you just keep in mind the Argentine government cannot manage its finances (they are chronic currency printers and defaulters), it is a pretty nice country to retire to, full of resources.
Ok, whose next? :)
Mish is great. I actually think I was linked here through an article or something from his site. There are usually 3 or 4 blogs a day.
Bur,
I hate the unions and anyone would if you actually had to deal with their crap. We use to go union on large commercial block/concrete Jobs and it was literally head splitting, crybaby's one and all. We just don't bid anything now over a couple hundred thousand in revenue. You cannot justify the expenses that are inherent in union’s wages and benefit packages.
Post a Comment