Balog's Bad News thread

[longeyes]

Every dog has its day.

China's getting old, it's polluted, there's a shortage of women, 750M restive peasants, and they're losing manufacturing jobs to lower strata nations.

When everyone is shouting "China, China, China!" you can bet you are five years too late.

Invest in the Sudan and Somalia.  So very low P/E ratios there.  :)

[Balog]

When even the New York Times is saying our debt is unserviceable, you know it's bad. Lots moar at linkie.

http://www.nytimes.com/2009/11/23/business/23rates.html?_r=1

The problem, many analysts say, is that record government deficits have arrived just as the long-feared explosion begins in spending on benefits under Medicare and Social Security. The nation’s oldest baby boomers are approaching 65, setting off what experts have warned for years will be a fiscal nightmare for the government.

The current low rates on the country’s debt were caused by temporary factors that are already beginning to fade. One factor was the economic crisis itself, which caused panicked investors around the world to plow their money into the comparative safety of Treasury bills and notes. Even though the United States was the epicenter of the global crisis, investors viewed Treasury securities as the least dangerous place to park their money.

On top of that, the Fed used almost every tool in its arsenal to push interest rates down even further. It cut the overnight federal funds rate, the rate at which banks lend reserves to one another, to almost zero. And to reduce longer-term rates, it bought more than $1.5 trillion worth of Treasury bonds and government-guaranteed securities linked to mortgages.

The White House estimates that the government will have to borrow about $3.5 trillion more over the next three years. On top of that, the Treasury has to refinance, or roll over, a huge amount of short-term debt that was issued during the financial crisis. Treasury officials estimate that about 36 percent of the government’s marketable debt — about $1.6 trillion — is coming due in the months ahead.

[Balog]

Even some banks see it coming...

http://www.telegraph.co.uk/finance/economics/6599281/Societe-Generale-tells-clients-how-to-prepare-for-global-collapse.html




Société Générale tells clients how to prepare for potential 'global collapse'

Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.

Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.

(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).

The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said.

Inflating debt away might be seen by some governments as a lesser of evils.

[Balog]

The number of defaults on fixed rate loans to people with good credit is rising. Well, that's not a good sign is it?

http://www.star-telegram.com/business/story/1776829.html

Driven by rising unemployment, such loans accounted for nearly one-third of new foreclosures last quarter. That compares with 21 percent a year ago, when high-risk subprime loans made during the housing boom were the main reason for default.

At the same time, the proportion of homeowners with a mortgage who were either behind on their payments or in foreclosure hit a record high for the ninth straight quarter, rising to 9.64 percent.

Lost jobs are now the main reason that homeowners fall behind on mortgages. By contrast, during the housing boom, dubious and risky loans were the leading cause.

[Gewehr98]

If it's a good sign, it probably shouldn't be in this thread. 

 

[Balog]

25 million people either under- or un-employed, so it's no wonder job seekers exceed openings by 6 to 1. I'm so glad I have a job.

http://www.nytimes.com/2009/09/27/business/economy/27jobs.html?_r=1&hp

Job seekers now outnumber openings six to one, the worst ratio since the government began tracking open positions in 2000. According to the Labor Department’s latest numbers, from July, only 2.4 million full-time permanent jobs were open, with 14.5 million people officially unemployed.

The dearth of jobs reflects the caution of many American businesses when no one knows what will emerge to propel the economy. With unemployment at 9.7 percent nationwide, the shortage of paychecks is both a cause and an effect of weak hiring.

This is why I'm glad to be learning a trade. Always needed, can save lots of money DIYing, and able to barter skills for tangible goods.

In the suburbs of Chicago, Vicki Redican, 52, has been unemployed for almost two years, since she lost her $75,000-a-year job as a sales and marketing manager at a plastics company. College-educated, Ms. Redican first sought another management job. More recently, she has tried and failed to land a cashier’s position at a local grocery store, and a barista slot at a Starbucks coffee shop.

[RocketMan]

The number of defaults on fixed rate loans to people with good credit is rising. Well, that's not a good sign is it?

I think that is what you meant.

[Balog]

I think that is what you meant.

D'oh! So it is. Correcting....

[Balog]

No, they tried to make things look better? I can't believe that...  


http://www.foxnews.com/politics/2009/11/24/economic-growth-revised-rd-quarter/

Economic Growth Revised Down in 3rd Quarter

The economy grew at a 2.8 percent pace last quarter, as the recovery got off to a slower start than first thought.

The Commerce Department's new reading on gross domestic product wasn't as energetic as the 3.5 percent growth rate for the July-September period estimated just a month ago.

The main factors behind the downgrade: consumers didn't spend as much, commercial construction was weaker and the nation's trade deficit was more of a drag on growth. Businesses also trimmed more of their stockpiles, another restraining factor.

Growth probably won't be strong enough to quickly drive down the nation's unemployment rate, currently at 10.2 percent. It's only the second time in the post-World War II period that unemployment has topped 10 percent.

^^ But, but, but... it's a jobless recovery!

On the business side, companies cut back spending on commercial construction -- a weak spot in the economy -- at 15.1 percent annualized pace. That was deeper than the 9 percent annualized cut back first estimated.

^^ I work in commercial property management, and I was talking to one of our electrical contractors. Their shop went from 150 to 30 people, and she's been getting 20 hours a week for a while. And her firm does remodels! The new construction people are really hurting...

Unlike past rebounds that were driven by the spending of everyday Americans, this one appears to hinge on spending by businesses, foreigners and -- until it runs out -- the government.

[Balog]

So fed.gov's enabling risky behaviour has... spurred more risky behaviour? Must be one of those lies told by the vast right wing conspiracy.

http://www.bloomberg.com/apps/news?pid=email_en&sid=a5WUfwKBQm9Y

U.S. stocks and oil fell, the dollar weakened against the yen and Treasuries rallied as a Federal Reserve warning that low interest rates may cause “excessive risk-taking” drove investors to the relative safety of government debt.

“There was a tech bubble and there was a real estate/financial bubble, and those were aided and abetted by Federal Reserve policy,” said Dean Gulis, part of a group that manages $2.5 billion for Loomis Sayles & Co. in Bloomfield Hills, Michigan. “It’s not unreasonable to suggest that some of the same characteristics are evolving.”

[Balog]

45 banks from around the globe evaluated for stability, and all fail badly. Awesome. On the other hand, I like this writer's style. "Spectacularly useless..."

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6638922/Most-global-banks-are-still-unsafe-warns-SandP.html

Every single bank in Japan, the US, Germany, Spain, and Italy included in S&P's list of 45 global lenders fails the 8pc safety level under the agency's risk-adjusted capital (RAC) ratio. Most fall woefully short.

While some banks may look healthy under normal Tier 1 and leverage targets, critics claim these measures can be highly misleading since they fail to discriminate between high-risk and low-risk uses of leverage. The system failed to pick up the danger signals before the financial crisis. The supposedly moderate leverage of US banks in 2007 proved to be a spectacularly useless indicator.

[Balog]

Revivifying this one, as I still think the purpose is good.

It's a slow fall, but we're still headed down.

http://bayourenaissanceman.blogspot.com/2014/06/dont-lose-sight-of-slow-motion-economic.html

[makattak]

When Japan started on the path we are on (it began in the nineties and continues to today, actually), they called it the "Lost Decade".

We'll be lucky if that's as long as it lasts.

[lee n. field]

I've wondered for years when it's all going to fall apart.  When nobody gets fooled by the lies anymore.

[Ron]

Once the active committed moochers hit 51% of the population is there any going back?

 

[RoadKingLarry]

I've been of the opinion for a long time that we are passed the point of recovery. It's just a matter of how soon and how deep the crater will be.

[cassandra and sara's daddy]

I've been of the opinion for a long time that we are passed the point of recovery. It's just a matter of how soon and how deep the crater will be.

I wish I could disagree. I fear for my kids


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[tokugawa]

They could have at least tried to keep up airspeed and set us up for a hard dead stick landing, but no- the fools have the stick pulled full back and we are going for the full stall-spin-crater scenario.

 When we crash hard, the PTB will point the finger at the middle class , call them the "rich", and pay their dependents, in food, to go "get those greedy hoarders" or some such. It is the logical evolution of what we are seeing every day.

[roo_ster]

Once the active committed moochers hit 51% of the population is there any going back?

There are ways to attrit the FSA to a lesser proportion of the population.

I wish I could disagree. I fear for my kids

Me, too.  One reason why wife and I are thinking of using the summers in high school for votech training before we send them off to college, if we can still afford to do so when the graduate HS.  Between a substantive degree and a trade, we hope they will be able to bob & weave and hold things together enough to make a living.

[AJ Dual]

They could have at least tried to keep up airspeed and set us up for a hard dead stick landing, but no- the fools have the stick pulled full back and we are going for the full stall-spin-crater scenario.

 When we crash hard, the PTB will point the finger at the middle class , call them the "rich", and pay their dependents, in food, to go "get those greedy hoarders" or some such. It is the logical evolution of what we are seeing every day.

Quit it... you're giving me a stiffy.

[birdman]

This is why I'm glad to be learning a trade. Always needed, can save lots of money DIYing, and able to barter skills for tangible goods.

Unfortunately, you, and probably the majority of people on here who CAN DYI are outnumbered by the herds of sheeple who don't even know where food comes from, let alone could fix even something simple.

The Golden Horde is in fact, comprised of people who have no clue how to build/fix/operate or add value to anything really.

[Balog]

http://bayourenaissanceman.blogspot.com/2014/06/a-different-and-scary-look-at-inflation.html

[RoadKingLarry]

Unfortunately, you, and probably the majority of people on here who CAN DYI are outnumbered by the herds of sheeple who don't even know where food comes from, let alone could fix even something simple.

The Golden Horde is in fact, comprised of people who have no clue how to build/fix/operate or add value to anything really.

I see so much of that in so many aspects of life. Recent examples are the other folks with sailboats at the marina I'm at. I mention having done some project or repair on my boat and there always seems to be a handful of people that are amazed that I did that all by myself.
Most of the close circle of people I associate with are of the DIY types. We're the ones that are amazed that someone didn't have the ability to do some (to us) simple repair/project.

I could probably make pretty good spending money doing odd jobs for boat folks but that would be undermining the marina. I like the folks running the marina and I also think that it's fair for folks to have to pay for their ignorance.

[lee n. field]

http://bayourenaissanceman.blogspot.com/2014/06/a-different-and-scary-look-at-inflation.html

Was planning on mentioning that.  Preacherman being his usual cheery self.

Put another way the price of everything assuming constant technology has approximately doubled and your purchasing power has been cut in half.

[KD5NRH]

Most of the close circle of people I associate with are of the DIY types. We're the ones that are amazed that someone didn't have the ability to do some (to us) simple repair/project.

This is one of the things my landlord likes about having me as a tenant.  He stopped by a couple days ago to check on a fallen tree on the vacant lot next door, (Black walnut.  I lost my chainsaw in the divorce, or the logs would already be curing in the shop.) and I was priming the stairs with some leftover Kilz from some other project at a previous house.  (Already had the roller out to paint the wall behind the stove, and I don't even try to clean roller covers after using them with oil-based paint.)  They've needed it for years, but the college kids he's had living here weren't the DIY types...to the extent that they peed in the bathtub for two days until he could get there to fix the broken clip on the toilet's flush chain.  Bonus for me; now that they're white instead of half bare weathered wood and half battleship gray, I can see them in the moonlight when I forget to leave the porch light on.

I've already planned out replacing the copper-tubing-and-chain shower curtain frame with conduit on standoffs, and making a pot rack for the kitchen the same way, and will probably replace the decking on the porch by the end of the year.  He offered to discount the rent for materials, but I'm planning to deck with pallet scraps from work, (We get a lot topped with 3/4" marine plywood that the edges get trashed on, so it ends up being a 4x6' sheet with a couple of nail holes in it.  Not a standard size, but it's free and the boss doesn't have to deal with so much bulky stuff headed to the burn pile.) and conduit is so cheap it's not worth keeping receipts for two sticks.  He'll probably drop some reasonable, round number off the rent at Christmas and/or start dropping off any extra supplies he has from working on his 6-7 other rent houses.  Either way, he won't raise the rent on me for repairs and improvements I do, (been there, resisted the urge to drop a match on my way out) and it's already only $300/mo.