Disqus - Latest Comments for crazynutjob

Re: Here’s how it goes: Greece=>Italy=>Brussels=>BofA=>everything

crazynutjob — Fri, 04 Nov 2011 03:05:40 -0000

Update: employees are rushing for the exits at BofA. Might have to move that one forward, too.

Re: Here’s how it goes: Greece=>Italy=>Brussels=>BofA=>everything

crazynutjob — Thu, 03 Nov 2011 03:01:13 -0000

France nationalizing the banks wouldn't be an extreme move for France politically (as it would be for the US), but they really can't afford it. Soc Gen is leveraged about 50:1. If they go down, French GDP can't fill the gap. If they're smart, they'll nationalize community lenders or something similar and sever themselves from the larger investment banks.

As for the US: political will, PR, and what actually happens are a bit of a blur. The Fed basically has the ability to expand the money supply at will. If they want to, they can pretend insolvency problems are liquidity problems for several years. But our banks will be zombies during that time (Japanese-style). Alternatively, they can do what they've been doing, which is monetizing newly issued debt so that banks turn a profit buying treasuries and selling them to the Fed a week later. That also takes a while. But free money government bailouts will probably lead to violence in the streets this time around. Congress might try some sort of "bad bank" model that accomplishes roughly the same thing (exchanging crap assets for treasuries is almost as good as exchanging nothing for cash). But aside from bankruptcy alternatives from congress, I don't see them doing a lot. Mostly creative stuff from the Fed.

Re: Here’s how it goes: Greece=>Italy=>Brussels=>BofA=>everything

crazynutjob — Wed, 02 Nov 2011 10:29:26 -0000

Oh, and I should clarify: If things degrade *right now*, Italy very well could fail before Portugal (so you needn't stand corrected. You can sit and ponder). I just think they'll kick the can just far enough to let Portugal degrade. That's when they realize they don't have enough bailout money to keep this up.

Re: Here’s how it goes: Greece=>Italy=>Brussels=>BofA=>everything

crazynutjob — Wed, 02 Nov 2011 10:21:46 -0000

Well, they'd at least come after Italy. Probably either right before or after BofA (assuming BofA would collapse at the same time as some player like Goldman). This speculation is based on the fact that while French banks are bag holders on a lot of euro-debt, they are insured through CDSs with the big US banks. If the Greek resolution doesn't trigger CDSs (and they're doing everything to make sure it doesn't), it's bad for euro-banks, good for US banks in the short term. But I expect that there will be guarantees that a Portuguese bailout does trigger CDSs. Europe needs to collect on their insurance policies. By and large, their banks still haven't written down Greek debt because it would expose how thinly capitalized they are.

Re: Here’s how it goes: Greece=>Italy=>Brussels=>BofA=>everything

crazynutjob — Tue, 01 Nov 2011 22:43:42 -0000

High probability of a Portugal coming in between Greece and Italy

Re: http://crazynutjob.com/post/11563021625

crazynutjob — Mon, 17 Oct 2011 10:35:09 -0000

I have access to data for Western Europe, but it isn't as convenient as for the US (translation ... too lazy to tabulate that right now). I can make a few comments on the UK, though. In the years leading up to the financial crisis, the UK economy grew. However, all sectors except the financial services sector shrunk. So a bit more than 100% of their economic growth was due to the financial sector. In other words, not only was it becoming a bigger slice of the total pie, but it was masking a multi-year contraction everywhere else.

Re: http://moorewr.tumblr.com/post/11024503696

crazynutjob — Tue, 04 Oct 2011 20:53:13 -0000

But seriously, any kind of denial-of-service attack on the big trading houses could be huge. I had a friend with a server on the stock exchange that was connected to the internet. He wanted to try an arbitrage strategy based on the drift between the ECNs and the actual exchange. Turns out that while such opportunities occurred, others were faster at executing on them. Anyway, many such computers exist. And since not all such machines are hosting client data, not all are guaranteed to be locked down as well as they should be.

But market technicals are extremely weak right now. Look at the VIX. Look at today's market close from a single headline. Look at credit spreads. You only need a few dozen key traders to panic into the open. Anyone with access to a Bloomberg terminal could really plan it out by just going through resumes or a list of market-makers. Or... just target AAPLs market-makers (since AAPL is such a large percentage of the Nasdaq index). Since Anon isn't against breaking the law, just collude to buy puts and sell calls in a widespread coordinated effort. This is a fairly low-cost way to force market-makers to dump the stock, which actually makes the strategy profitable as well ... provided you have enough players ... otherwise, a bigger player can cause the whole strategy to explode. This is like those "short-selling raids" that are the bogeymen of poorly run companies when their stock is plummeting. But if you just want to cause havoc on the exchange, do you really care if the strategy was profitable? If Anon decides to get in on the identity theft game, they don't even need skin in the game to launch such an attack.

Re: http://moorewr.tumblr.com/post/11024503696

crazynutjob — Tue, 04 Oct 2011 20:11:37 -0000

Like I needed a reason to fade the market on Friday (or Wednesday, for that matter).

Re: http://crazynutjob.com/post/10840656125

crazynutjob — Mon, 03 Oct 2011 10:16:44 -0000

Banks provide a service and charge in both cases.

In one case, for debit card transactions (this is because the Durbin act greatly reduced the ability for banks to charge merchants these same fees).

In the other case, it's to match lenders with borrowers in an environment where lenders take no liquidity risk. There's no reason to believe that the interest rate for those lenders should be anywhere close to the interest rate for the borrowers. The banks take on a huge amount of liquidity risk.

What's more, in both cases, you can always take your money elsewhere. I recommend a credit union. Since credit unions are non-profit, you can't blame profit-seeking on the difference between lending and borrowing rates. Yet there is still a large gap.

Re: http://moorewr.tumblr.com/post/10557384502

crazynutjob — Fri, 23 Sep 2011 21:54:33 -0000

Two other observations:

1. One of the biggest input costs into health care is the educational costs. A salary that can pay off med school student debts is necessary to attract doctors to the field, particularly when you can't easily discharge student debt. No matter how well intentioned the doctors, nobody can enter a field that immediately results in bankruptcy. So you've really got that education bubble hurting in a couple of ways. Tackle that and you might see a lot of costs come down. Other input costs, like the fact that health record systems cost 100x what financial record systems cost, likely have other solutions. I'm a little more optimistic on those.

2. Bubbles go on longer than anyone expects. Be very careful when you say "late in the stages" of a bubble. :) (though, due to the fact that it is intricately tied to the credit bubble that is in the process of deflating, I think you're probably safe on this call).

Re: http://vruz.tumblr.com/post/10512601761

crazynutjob — Thu, 22 Sep 2011 10:16:41 -0000

Wait. Read this bit:

"The DEA ruled in June that marijuana should remain classified as a dangerous drug like heroin because studies have not confirmed it’s medicinal value, but the agency may itself be to blame for the lack of evidence."

Like heroin? It is worth mentioning that no such blocking exists for heroin or cocaine. Morphine and Novocaine are derivatives of those two drugs (and there are others). There are no bans on poppyseed muffins because of the dangers of heroin, but growing cannabis plants is illegal. This makes the choice to single out Marijuana stand out even more.

Re: http://moorewr.tumblr.com/post/10503067217

crazynutjob — Wed, 21 Sep 2011 23:20:47 -0000

Japan's trigger has always been demographics. Nothing new seems to have changed, and there's always the possibility that they'll develop some fantastic new technology that pays off all their debt. And, even more than the US, Japan's debt is owned by the Japanese. Don't worry about their implosion until people start to retire.

Re: http://jtem.tumblr.com/post/10424753717

crazynutjob — Tue, 20 Sep 2011 02:14:32 -0000

Who made it: Don Hertzfeldt, former UCSB film studies student, nominee for academy award (for Rejected, watch it). Hosts "The Animation Show" with Mike Judge.

Re: http://jeffmiller.tumblr.com/post/10163360244

crazynutjob — Tue, 13 Sep 2011 10:25:40 -0000

The problem with this sentiment is that fear is easily manipulated. We fear the drug-user because ... well, pretty sure they fund terrorists (perhaps are terrorists themselves). I'm sure you've seen the anti-drug ads.

Heck, we fear all criminals. Therefore, we should keep them in prison. Sadly, I think the only people we draw this distinction for are white-collar criminals like Ken Lay. Perhaps Hollywood celebrities? And if we only apply the rule there, it becomes quite a stretch to consider our court system a "justice" system. We lock up poor people for petty crimes because we fear them. We let the rich go because we are merely mad at them.

You could play games with semantics about who we *should* fear and be mad at, but I'm pretty sure you'd be splitting hairs at that point.

Re: http://davereed.tumblr.com/post/9633312082

crazynutjob — Thu, 01 Sep 2011 02:16:06 -0000

Clearly these people have never traveled with a headwind / tailwind.

Re: http://davereed.tumblr.com/post/9641284008

crazynutjob — Thu, 01 Sep 2011 02:09:43 -0000

On my way to meet my advisor from work the other day, I was riding in the right turn lane to get on the freeway. Bike lane to my left. A car from a gas station entrance decides to move completely enter my lane perpendicular to my direction of motion. Fortunately, I have a heuristic that says that all drivers intend to kill me, so I was prepared and able to stop. Coincidentally, I couldn't swerve around the car because of a bicyclist (something I always watch for; people on two wheels have to look out for one another). The poor bicyclist in the bike lane nearly shit herself. She was convinced that either the car would pull out far enough to hit her or I'd swerve and nail her (basically using the same heuristic, but noticing the situation developing too late to do anything about it).

There was a stoplight shortly after where this all happened. I lifted the face of my helmet and offered her words of assurance. It was really sad how relieved she was. It shouldn't be the exception that people look out for each other.

Cars are one of the most lethal interfaces around, and they are used by more people than just about any other lethal interface. A sailor can look away from a missile defense system on a destroyer for 8 seconds and not worry that everyone is going to die. The same is not true about a car. Take you eyes off the road while driving for 8 seconds and odds are you've already killed someone. But drivers are very cavalier about the dangers that a car poses. Drivers joke about sideswiping bicyclists for points. People get offended when someone even hints at using a gun for violent purposes. But being careless with a car is acceptable. People change lanes without looking. People get angry at bicyclists for exercising their right of way. These acts aren't the equivalent of shooting a gun in the air. They are the equivalent of shooting a gun at someone. Everyone is lucky that people miss.

It is interesting that the OP believed he had the right of way. In most states (not just Oregon), the bicyclist actually does own the lane (in addition, most municipalities with colleges provide laws even in the states where this isn't the case). But the idea that right of way is justification for murder is appalling.

Re: http://jtem.tumblr.com/post/9577339196

crazynutjob — Wed, 31 Aug 2011 01:27:35 -0000

Reminds me of a friend of mine, self-described "Left wing gun nut."

Re: http://crazynutjob.com/post/8514144572

crazynutjob — Mon, 08 Aug 2011 19:49:58 -0000

It's not unusual for a market crash to spawn a series of events that results in the ultimate low being reached 2-3 years after the initial crash with a substantial rally in between. For example, the bottom for the dot-com bust was 2003. The jobs market wasn't that great during the entirety of that particular recovery, though. When it does recover in the interim, it tends to turn down in the second slump as well. This has been true internationally as well. Some, like Pakistan, start and end worse, but some, like Japan, actually do pretty well on employment (their stock market never recovered, though, and their demographics problem makes our social security problem look like a walk in the park).

So yes, I do believe that the S&P could easily head through the 666 that it set on March 6th. Of course, we could steep ourselves in inflation and make the nominal result higher, but that would probably have some rather dire consequences for those living (err... dying) on a fixed income.

A lot of people restrict their analysis of stock market dynamics to the US stock market. And while our market may have peculiarities that makes it special, I think it also has enough similarities that makes it worthwhile to look at foreign markets. For example, there's an irrational belief that the US stock market must always recover simply for the fact that it always has. But we've also had a very small sample of crashes from which to draw this conclusion. Stock markets worldwide (Japan and France are both good examples. Shanghai composite also fits, but I think the differences in exchange dynamics probably outweigh the similarities except for the initial crash-recovery-crash dynamics) exist that have crashed and never fully recovered.

Without significant economic restructuring, the US will be unable to recover without a recovery in housing. And that doesn't mean smoke and mirrors, that means write-downs and bankruptcies of those carrying that debt (Fannie, Freddie, big banks, and a few developers). Our bailouts were not just financial, but also regulatory (we promoted smoke and mirrors in the hopes that profits elsewhere could recover losses in housing financing). But as long as shit remains on the books, that industry does not appear able to recover. Imagine if we simply passed a law that switched us from 30 year fixed mortgages to cash-only home-buying. That's effectively what the housing overhang has done. So you can either view the federal guarantee of Fannie/Freddie as the only thing that allows the market to continue forward at all, weak as it might be, or you can view it as preventing a necessary restructuring, dragging out our slump.

Our economy doesn't know how to recover without housing leading the way. So, either you can expect housing to lead the way again, which requires some massive restructuring in the financial sector, or something else must lead the way, which will require massive structural changes to our economy at large (tack on another couple percent unemployment at a minimum). You can also accomplish either of these with time, but that means a lot of mediocre growth for an extended period.

So... no asteroid, but no forecasts for rainbows any time soon.

Re: http://crazynutjob.com/post/8514144572

crazynutjob — Mon, 08 Aug 2011 09:40:02 -0000

"Somewhere between good and mediocre" is crowing?

It's good to identify turning points. We've had a string of sub-optimal job reports. Not high-loss reports, but not keeping pace with current demographics.

There were some leading consumption indicators that turned over in April/May (most important: petroleum). Domestic demand will likely follow. Global consumption growth has slowed, but not necessarily turned over (though that appears to be the case for US goods and services).

We're a few months from the seasonally strong retail hiring period. If we stumble or fall before then, we expect a dark November jobs report. Such seasonal hiring not materializing will result in a larger negative number than equal job losses in the in-between months. Of course, a worst-case scenario means larger (not equal) losses in the in-between months.

Re: http://moorewr.tumblr.com/post/8446820820

crazynutjob — Wed, 03 Aug 2011 19:20:33 -0000

Fun with polls: perform the same poll, but also say how much the garbage collector makes (to get the response on teacher salary, not garbage collector salary).

Re: http://crazynutjob.com/post/8413389915

crazynutjob — Wed, 03 Aug 2011 18:27:29 -0000

I actually expected a downturn in China to propagate to Australia as the trigger for their housing market. Ben and I occasionally exchange emails, so I found his update particularly interesting.

Re: Crazy Nut Job: Wait...

crazynutjob — Wed, 03 Aug 2011 10:44:15 -0000

Well, current leadership should be part of your support/disgust. What would an extra billion do for the federal budget? Would it get spent building bridges at home or blowing them up abroad? Starving the beast works a lot better when tried on the actual beast: the military industrial complex.

Re: http://moorewr.tumblr.com/post/8428146456

crazynutjob — Wed, 03 Aug 2011 10:41:14 -0000

There's still a silver lining for you: remember, spending on both military and non-military spending went up. If this got reclassified as military spending, it means there were even more increases in what is traditionally labeled non-military spending.

Re: Crazy Nut Job: Wait...

crazynutjob — Tue, 02 Aug 2011 23:48:58 -0000

I'm disappointed in you. You give up on this too quickly. Where's your "But Dems actually have something genuine to complain about?"

If not for prioritizing the stupid shit before the programs they care about, I'd actually have to sympathize with some Dems here. Many social programs actually have to increase their funding just to maintain services in light of increasing commodity prices. Also, I'd feel worse if it weren't government monetary policy that caused the goddamn commodity prices to spike in the first place. Seriously, who put a bunch of fools in charge of everything? Wait... we did.

Re: http://jeffmiller.tumblr.com/post/8085531670

crazynutjob — Tue, 26 Jul 2011 10:31:15 -0000

This falls under the heading "new policies." Anything Bush added to government spending must be maintained in perpetuity. After all, government spending can only rise. That is why we so frequently hear about "cuts" while aggregate spending increases. Usually the cuts are from proposed new spending.

Unfortunately, the military industrial complex prevents much of the progress on spending. Why *would* a progressive agree to cut a program they believe helps when we still operate military bases and weapons manufacturing programs built up in a strategy against the Soviet Empire? We maintain huge amounts of waste to protect ourselves against an enemy that no longer exists. In the meantime, we've felt the need to create new spending to protect ourselves against the enemy that is everywhere (the war on terror has been quite a nice expansion for defense contractors). You could cut a significant chunk of defense spending with zero impact on our current troop involvement. Cut our current troop involvement (bring them home) and you could cut a lot more.