Balog's Bad News thread

[Balog]

Very interesting animated map demonstrating unemployment rates over time.

http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html

[Balog]

Ireland to pay immigrants to repatriate, as they cannot afford to provide social services ie welfare, to so many people. One wonders if the idea of cutting the welfare ever occurred to them...

http://www.guardian.co.uk/world/2009/nov/15/ireland-pay-immigrants-go-home

[Balog]

Financial types fear asset prices may be rising too fast, too soon. What's that line about people who don't learn from the past? Mashie the linkie, these are just a few excerpts.

http://www.guardian.co.uk/business/2009/nov/14/bubble-fears-as-asset-prices-jump

Around the world, asset prices are booming. Relief that the global economy has avoided the Armageddon feared in March, combined with large dollops of virtually free money, have helped put a smile back on the faces of the speculators. Too big a smile, according to some experts, since the buoyancy of asset markets is not reflected in the real economy.

Away from the frenzied financial world, among struggling firms and cash-strapped families, signs of recovery from the worst downturn since the 1930s have been much patchier. The US returned to growth in the third quarter, thanks to Washington's cash-for-clunkers scheme and tax breaks for first-time homebuyers. But unemployment is at its highest level since 1983 and the number of Americans losing their homes is still rocketing, so Fed chairman Ben Bernanke still has plenty to worry about.

"Growth" that consists of wasteful fed.gov spending and people getting loans they may not be able to pay off. Yeah, how could that go wrong?

He is not the only Cassandra. Nouriel Roubini, one of the few economists to see the crisis coming, warned this month that the US had replaced Japan as the centre of the global "carry trade" (whereby investors borrow money cheaply in a currency with low interest rates and buy risky assets that offer a return higher than the interest due on the loan). With the US Federal Reserve pledging to keep interest rates only just above zero for "an extended period", Roubini says dollars, instead of yen, are now being used in "the mother of all carry trades", forcing up the price of all kinds of other assets

But markets tend to have only two moods: deep gloom and wild euphoria. Having prepared for the return of soup kitchens in the spring, they are now betting on a strong and rapid return to business as usual – a so-called "V-shaped recovery". And that's what worries analysts, who are not comforted by the age-old cry that "it's different this time".

"It sounds too good to be true and it is," says Robert Barrie of Credit Suisse. "It's time to take asset prices and credit more seriously. They can have long-run effects that are big and problematic. They took a long time to show themselves last time and could do so again."

Concerns about a new speculative bubble fall into three categories. The first is that the recent track record of central banks does not engender much optimism that they will be able to distinguish between a credit bubble and an irrational exuberance bubble, or indeed spot either sort developing. The Fed, for example, denied that the US housing market was a bubble right up until the point the global financial system was paralysed by the sub-prime meltdown in 2007, and the Bank of England flatly rejected arguments that central banks ought to "lean against the wind" and prevent prices in markets such as housing getting out of kilter.

[Balog]

A Wall Street Journal article that's also expressing concerns that the Fed is creating yet another credit bubble. Lots more at the link.

http://online.wsj.com/article/SB10001424052748704402404574529510954803156.html

In the Woody Allen film "Annie Hall," the main character tries to explain irrational relationships by recounting an old joke. "This guy goes to a psychiatrist and says, 'My brother's crazy, he thinks he's a chicken.' The doctor says, 'Well, why don't you turn him in?' And the guy says, 'I would, but I need the eggs.'"

It takes similar reasoning to reconcile the elation felt across America every time the stock market rises—partially replenishing personal investment portfolios and 401(k) retirement plans—with the uneasy feeling that we are being set up for yet another big financial disappointment. We dare to hope that the economy is growing solidly once more, that the Federal Reserve has superior knowledge about providing liquidity, and that the U.S. Treasury knows what it's doing by guaranteeing money market-fund assets.

But what if the Fed's efforts to stoke a recovery are merely creating asset bubbles in equities and elsewhere? What if government guarantees—explicit and implicit—are encouraging high-risk investment behavior rather than restoring conditions for normal market returns? What if excess dollars produced here are being channeled by speculators into foreign stock and bond markets as part of a currency play?

[Balog]

Another on the danger of continued near zero interest rates, this time talking about the "dollar carry trade" aspect. Moar at zee link.

http://business.timesonline.co.uk/tol/business/economics/article6915447.ece

The global economy may be poised for the creation of a massive and potentially explosive “dollar carry trade” — just like the pre-crisis yen carry trade, only more frightening and potentially much bigger.

The warning was issued today at a summit of Asia Pacific leaders in Singapore and comes as a diverse variety of assets have begun to display bubble-like patterns of inflation: everything from gold and copper to fine wine and Hong Kong penthouses.

The dollar carry trade, whereby investors borrow dollars at near zero interest rates to fund asset-buying sprees around the world, has been lurking as a possibility since the collapse of Lehman Brothers last year and the extreme monetary response to its aftermath.

[RaspberrySurprise]

I am so totally blaming your for my depression.

(I'm kidding here folks, we all know it's Fistful's fault.)

[Headless Thompson Gunner]

The carry trade thing is interesting.  It deserves some thought.

[Gewehr98]

So after having about a dozen threads consolidated into one I got the hint and have decided to start one thread as a running repository of all the negative news stories I'm finding these days

Only part of the hint, evidently.

For a minute there, I almost thought a certain departed, OMGWTF poster had since returned, but it does indeed say Balog's Bad News Thread on the topic header.  

In response to my own somewhat pointed, what-value-added-to-APS question, I'm still trying to grok what the motivation is to start such a Gloom & Doom thread.  My head 'asplode, so I'm logging off and walking the dog again.  At least that makes sense...

[Balog]

Wow.

For a minute there, I almost thought Manedwolf had returned, but it does indeed say Balog's Bad News Thread on the topic header.   

Hey, I'm just posting 'em, not frothing about 'em. Besides, it's all economics, no little kids peeing in the streets. :D

[Headless Thompson Gunner]

Tough crowd.

First depression, and now you're as bad as manedwolf.

[RevDisk]

In response to my own somewhat pointed, what-value-added-to-APS question, I'm still trying to grok what the motivation is to start such a Gloom & Doom thread. 

...

Wha?  Value added to APS?   WHAT MADNESS IS THIS?

 

[French G.]

It has value, since as a less less risk averse than most private investor I am trying to read the big picture tea leaves for the next 6-9 months and make some decisions. My personal feeling is that most stock market indices will continue to gain until about early spring then the bottom is going to fall out. Again. We'll see, just my guess based on some of the gloom and doom I've read.  My retirement, fully recovered from the great recession of 07-09, is not looking for another bloodbath.

[Headless Thompson Gunner]

Credit behavior is the tell.

[Balog]

I don't understand; I'm not very good at hints, especially over the internet.

Am I not allowed to post negative news stories, or just not a lot of them, or.... I respect this is Oleg's house and ya'll are his choices to regulate it. I want to abide by the rules and be a peaceful and productive poster, but I'm genuinely confused. As far as I can see I've violated no rules, nor breached any etiquette aside from posting so many threads at once that first time. And I started this thread to fix that issue. Heck, I even started a fun and light hearted thread about bands to try to counterbalance this one.

I think America is headed down a bad path, and I am trying to educate myself on the actual state of things. I thought others might be interested in what I find, or might want to discuss it. If another, more severe market crash is coming as I think, being informed can only be a good thing.

As for the Manedwolf comparison, that's unfair. I post a description/comment on each article so it's not a drive-by, then put the facts out for inspection. The problem with Maned was he freaked out and ranted and raved; he also (pretty viciously at times) attacked anyone who disagreed with him/was a free stater or Paulian/was a Democrat. This thread and it's predecessor makes no "Wolverines!!" fantasy teotwawki claims, insults no forum members, and as far as I can tell does no harm to the content or reputation of APS.

In any case, I respect that the mods have the final say about the forum. If this thread isn't appropriate lock it or send it to the land of wind and ghosts and I'll stop posting news stories. I guess I won't be updating this thread until I hear the verdict from the assorted mod types. :(

[FTA84]

I find this thread of value.  I am interested in such stories but working 60hr weeks leaves me little time to go out and find these stories on my own.

Thanks for sharing Balog.

[French G.]

I can tell you what doesn't add value to APS and that is a Barney Frank avatar.

[Headless Thompson Gunner]

Barney Frank doesn't add value anywhere.

[roo_ster]

Can't...resist...

Barney Frank doesn't add value anywhere.

True, he'll, uh, siphon off value from every commercial concern he roughly regulates. 

(Except those involving prostitution rings run from his apartment by his partner.)

[SADShooter]

Don't forget the diminished impact on horticultural endeavors. He's not much of an outdoorsman, after all.

[roo_ster]

As regards "Balogs Unremitting Catalog of Depression," it seems pretty harmless if contained in this one thread.

Obviously, Balog ought to get a copy of this in his stocking come Christmas:
http://www.amazon.com/Are-Doomed-Reclaiming-Conservative-Pessimism/dp/0307409589/ref=sr_1_1?ie=UTF8&s=books&qid=1258573555&sr=1-1

[MicroBalrog]

Why would we want to reclaim pessimism?

[roo_ster]

Why would we want to reclaim pessimism?

Pessimism WRT human nature relative to the "scratch a swarthy savage with a bone through his nose and you'll find an American" optimism.

[BridgeRunner]

If you think we have a lot of banks, you should see how many Starbucks we've got... 

Hey, there are only half a dozen Starbucks in my town.  I even verified that on their website.  Of course, we have about three dozen Biggbys.

[Regolith]

We only have two Starbucks here.  Though, that may be because the market was already thoroughly saturated before the second one moved in.  We have somewhere around 10 different coffee/espresso joints.  Maybe more. 

[Strings]

Where I live, our population is 80,641. We have 5 different coffee shops, 10 banks, and 66 churches. Not gonna try and count all the bars...

Remember: in Wisconsin, all you need to count as a town is to have a church and a bar. Don't have those (regardless of population), you don't have a town...