dimelab dimelab: shrinking the gap between talk and action.

pain Topic in The Credit Debacle Catalog

considerable pain (1); Financial Crises Suggest Pain (1); New York Times heirs feeling paper's pain (1); painful contractionary medicine because (1); painful path (1); painful recession (1); real pain (1); repeated painful lapses (1).

naked capitalism Sun 2010-10-10 13:23 EDT

Jim Quinn: Consumer Deleveraging = Commercial Real Estate Collapse

...Retailers expanding into an oversaturated retail market in the midst of a Depression, when anyone without rose colored glasses can see that Americans must dramatically cut back, are committing a fatal mistake. The hubris of these CEOs will lead to the destruction of their companies and the loss of millions of jobs. They will receive their fat bonuses and stock options right up until the day they are shown the door. All of the happy talk from the Wall Street Journal, CNBC and the other mainstream media about commercial real estate bottoming out is a load of bull... there is absolutely no chance that commercial real estate has bottomed. There are years of pain, writeoffs and bankruptcies to go...

Commercial Real Estate Collapse; Consumer deleveraging; Jim Quinn; naked capitalism.

Jesse's Café Américain Wed 2010-09-29 09:13 EDT

Slouching Towards Bethlehem: Double Dip or Banana Split?

NBER: "If the 2010 contraction we are now monitoring in consumer demand for discretionary durable goods scales to the full economy as faithfully as the "Great Recession" did, the second dip will, at minimum, be 33% more painful than the first dip and will extend at least half again as long." This is the case for trouble dead ahead, a worse decline in consumer activity and therefore GDP than the first, and the likelihood of further quantitative easing from the US Federal Reserve to patch over the inability of the political process to reform the financial system and balance the real economy because of their myriad conflicts of interest. These policy errors favoring a small minority will most likely result in a stagflation of the most pernicious and corrosive kind, high unemployment and a rising price of essentials, that may ultimately test the fabric of society...

Banana Splits; Bethlehem; double dip; Jesse's Café Américain; Slouching.

Credit Writedowns Sat 2010-05-22 20:38 EDT

Out of control US deficit spending [MMT introduction]

Regular readers know that, while I have a little of what Marshall Auerback calls deficit terrorism in my DNA, I fully support fiscal stimulus as a means to arrest a deep downturn...the US economy will not be able to sustain recovery for long without stimulus. The likely result of withdrawing stimulus is a recession that is deeper than the last one aka a major depression...a lot of talking heads are trying to bamboozle people with tales of woe about hyperinflation and sovereign bankruptcy in the US to support specific claims about what deficit spending can and can't do. Deficit hawks, in particular, are on the warpath...I am throwing in the towel on policy makers because it's clear that Obama has been captured by the deficit hawks and we are headed for a painful recession within the next two years...The policy debates aren't working because the actual mechanics of a fiat monetary system are being obscured by ideological political debates. So, what I want to do is lay the foundations of modern money with you so we can strip away the politics and ideology from the economics...

control; credit writedowns; deficit-spending; MMT introduction.

zero hedge Fri 2010-04-23 20:02 EDT

How Lehman, With The Fed's Complicity, Created Another Illegal Precedent In Abusing The Primary Dealer Credit Facility

Five months ago, Zero Hedge observed the nuances of the Federal Reserve's Primary Dealer Credit Facility (PDCF) and concluded that this artificial liquidity boosting construct was nothing more than yet another scam to allow banks to extract ever more money from taxpayers, with the complicit blessing of the Federal Reserve Board Of New York (as the original piece also provided an in-depth discussion of the triparty repo market which is now a parallel to the buzzword of the day in the form of Lehman's "Repo 105" off balance sheet contraption, it should serve as a useful refresher course to anyone who wishes to understand why while Repo 105 with its $50 billion in liability contingency may have been an issue, the true Repo market, with over $3 trillion of likely just as toxic assets, is where the real pain in the future will come from). The PDCF would allow assets of declining and even inexistent value to be pledged as collateral, thus making sure that taxpayer cash was funneled into sham institutions holding predominantly toxic assets, and whose viability was and is limited, yet still is backed by the Fed, which to this day continues to pour our money into them. Today, with a tip from the NYT's Eric Dash, we demonstrate just how grossly negligent the Federal Reserve was when it came to Lehman's abuse of the PDCF, and how the trail of slime of Lehman's increasingly obvious manipulation of its books goes to the very top of the Federal Reserve Bank of New York, and its then governor - a very much complicit Tim Geithner...

abuse; created; Fed's Complicity; Illegal Precedent; Lehman; Primary Dealers Credit Facility; Zero Hedge.

naked capitalism Sat 2010-04-03 09:55 EDT

Guest Post: Top Analyst Says ``Developed Market Governments Are Insolvent By Any Reasonable Definition''

Dylan Grice, a top analyst for European financial giant Société Générale, writes: Developed market governments are insolvent by any reasonable definition. Who could have known? Everyone, actually...Grice also says: Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK . Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold.

developed market governments; Guest Post; insolvent; naked capitalism; reasonable definition; Top Analyst Says.

Jesse's Café Américain Thu 2010-04-01 08:44 EDT

The Monetary Base During the Great Depression and Today

...I always allow that deflation and inflation are policy decisions, at some point a threshold can be passed, and the likelihood of one event or the other becomes more compelling. The US is at that crossroads wherein it must change, or go down the painful path of selective monetary default, of a degree different than a hyperinflation, more similar to that which was seen in the former Soviet Union, than the monetary implosion of a Weimar. One can watch the growth of the traditional or even innovative money supply figures, and be reassured at their nominal levels, only to misunderstand that money has a character and quantity of backing, that can erode as surely as the supply of money can increase, to produce a type of inflation that comes upon a nation quickly, like a thief in the night. It will bear the appearance of stagflation, because it is caused by a degeneration of the productive economy coupled with a disproportionately increasing money supply...

Great Depression; Jesse's Café Américain; monetary base.

naked capitalism Fri 2010-03-19 16:10 EDT

Lehman: Regulators Chose to Deny, Extend and Pretend

The Lehman Examiner's report gives an unintentionally damning portrayal, both of the the structure of financial regulation in the US and how regulators failed to use the powers they had effectively...the authorities recognized Lehman had a large negative net worth. Yet rather than move decisively towards an unwind, they proceeded inertially. They urged Lehman CEO Dick Fuld to find a rescuer (who would invest in that garbage barge, particularly when Andrew Ross Sorkin's account makes clear that Fuld's moves were so obviously desperate and clumsy as to be certain to fail) and also promoted the notion of an LTCM-style ``share the pain'' resolution. Yet with the rest of the industry weak, and the magnitude of hole in Lehman's balance sheet a mystery, these courses of action had low odds of success from the outset (indeed, the ``Lehman weekend'' in which the authorities almost bulldozed through a deal, seemed designed to avoid sober analysis of how bad things were at the failing investment bank)...As much as the SEC did not cover itself with glory in this exercise, its lapses are somewhat comprehensible. By contrast, the Fed's are much harder to explain or excuse. And guess who is about to be given more oversight authority?

denied; extends; Lehman; naked capitalism; Pretends; Regulators Chose.

Jesse's Café Américain Fri 2010-01-29 16:27 EST

Morgan Paying Out 62% of Revenues in Bonuses and Pay While Average Families Face 'Years of Pain'

One has to wonder how much of that 'revenue' is merely the result of artificial mark to market accounting and prop desk speculation, and not real cash flow from commercial banking operations.That is not the pay method for a bank. That's a hedge fund. And that would be all very well and good if they were a hedge fund and responsible for their own failures and successes, but they are obtaining the discount window and federal guarantees and subsidies from the taxpayers as though they were a commercial bank...if the bankers keep taking 50+% of all the cash that touches their hands from the public subsidy, then what trickles down to the people won't accomplish anything. Years of zombie-like stagflation look to be the prognosis...The economic hitmen and the corrupt politicians are taking their pay, and the people and their children and most likely grandchildren will be stuck with unpayable debts. Just like a third world nation, which is what the US will look like when they get done cutting health, infrastructure, education, and basic services to pay for this.

62; Average Families Face; bonus; Jesse's Café Américain; Morgan pay; pain; pay; Revenues; years.

zero hedge Thu 2009-12-31 11:52 EST

Shadowstats' John Williams: Prepare For The Hyperinflationary Great Depression

John Williams, who runs the popular counter government data manipulation site Shadowstats, has thrown down the gauntlet to deflationists, and in an extensive report concludes that the probability of a hyperinflationary episode in America over the next year has reached critical levels. While the debate between deflationists and (hyper)inflationists has been a long and painful one, numerous events set off in motion by the Bernanke Fed (as a direct legacy of the Greenspan multi-decade period of cheap and boundless credit) may have well cast America as the unwilling protagonist in the sequel of the failed monetary policy economic experiment better known as Zimbabwe.

Hyperinflationary Great Depression; John Williams; prepared; ShadowStats; Zero Hedge.

zero hedge Mon 2009-10-12 10:10 EDT

Albert Edwards Warns Of Western Authorities' Positioning For Dismal Failure, As US Becomes Japan Redux

Albert Edwards continues doling out common sense; everyone, and the market in particular, continues ignoring it...The post-bubble whiplash in the economic and profits cycle is exactly a replay of Japan?'s experience. They too had seen an extended period of strong and steady growth going into the peak of the bubble. It took many years, repeated painful lapses back into recession, and sharp declines in equity markets before investors fully de-rated valuations low enough to reflect a new new paradigm...To gauge whether the world economy can surprise and escape this balance sheet recession, keep a very close eye on the bank lending numbers.

Albert Edwards Warns; Becomes Japan Redux; dismal failure; positive; Western authorities; Zero Hedge.

Thu 2009-02-26 00:00 EST

Mish's Global Economic Trend Analysis: Bleeding Times

New York Times heirs feeling paper's pain

Bleeding Times; Mish's Global Economic Trend Analysis.

Wed 2009-02-11 00:00 EST

Mish's Global Economic Trend Analysis: Open Letter To Congress On Sharing The Pain

``I call for the resignation of Fed Chairman Ben Bernanke, the abolishment of fractional reserve lending, and the end of the Fed itself''

Congress; Mish's Global Economic Trend Analysis; Open Letter; pain; shares.

Sat 2009-01-03 00:00 EST

naked capitalism: Past Financial Crises Suggest Pain Far From Over

Economists Carmen Reinhart and Kenneth Rogoff show historical financial crises more severe and protracted than ordinary recessions

Financial Crises Suggest Pain; naked capitalism.

Fri 2008-11-07 00:00 EST

naked capitalism: "Fears mount in Japan over complex yen products"

power reverse dual currency notes (PRDC) sold concealing hugely complex structures with ``multiple points of pain''

complex yen products; fears mounting; Japan; naked capitalism.

Sun 2008-08-24 00:00 EDT

Guest Commentary

The Great Consumer Crash of 2009, by James Quinn (Prudent Bear); ``the tremendous prosperity that began during the Reagan years of the early 1980s has been a false prosperity built upon easy credit''; ``We have outsourced our savings to the emerging economies, along with our manufacturing jobs.'' ``the gathering storm has arrived. It will be long, painful and destructive.''

guest commentary.

Wed 2008-08-13 00:00 EDT

Mish's Global Economic Trend Analysis: U.S. Dollar Rally Continues

"Dollar bears and commodity bulls could be in for some considerable pain"

Mish's Global Economic Trend Analysis; U.S. Dollar Rally Continues.

Wed 2008-06-04 00:00 EDT

JS Online: House of pain

by Cary Spivak and Daniel Bice; mortgage fraud personified

Housing; JS Online; pain.

Fri 2008-03-21 00:00 EDT

naked capitalism: "We may just have started to feel the pain"

Carmen Reinhart, Kenneth Rogoff; pdf link; Reinhert: we run our bank regulation like a banana republic's

feeling; just; naked capitalism; pain; start.