Comments on: The Debt and Nothing but the Debt http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/ inferis blogere quam dissimulari cœli Wed, 28 Jul 2010 00:42:11 +0000 hourly 1 http://wordpress.org/?v=3.0 By: RCAR http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-331 RCAR Thu, 16 Jul 2009 13:28:53 +0000 http://ckmac.com/thewholething/?p=120#comment-331 Jem,Cutting through your comment,in 2007 70% of GDP was consumer driven,Debt has strangled that 70%,with that sector collapsed,companies are shedding workers due to declining sales which leads to more layoffs, consumer debt expands ,classic deflationary cycle,for the present. Jem,Cutting through your comment,in 2007 70% of GDP was consumer driven,Debt has strangled that 70%,with that sector collapsed,companies are shedding workers due to declining sales which leads to more layoffs, consumer debt expands ,classic deflationary cycle,for the present.

]]> By: JEM http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-330 JEM Thu, 16 Jul 2009 13:09:13 +0000 http://ckmac.com/thewholething/?p=120#comment-330 Hiring and the economy are not necessarily in lock step. Yes stories of the US manufacturing demise is overblown. All developed or strong developing countries are losing maunfacturing jobs due to efficiency gains. China is losing them just as fast, so don't worry. If we would just decide to grab the energy wealth we have right now the big scary trade balance numbers that everyone likes to cry about would at least look better to every one. For unemployment, it has little to do with macro economics on issues of debt, etc. The problem is that no business is willing to hire. With work hours down we have plenty of straight time hours to put towards any increased needs, and that is before any overtime is considered. With a very uncertain regulatory climate, no business is going to hire right now. The healthcare bill recently announced will result in a 5 to 10% reduction in employment just to cover the payroll tax penalty for firms that don't offer healthcare. It is a little more complicated than that, but business abhors uncertainity, and this current government is creating that product with great skill. Washington's stimulus and budget bills were horrible macro economic policies which have long term issues to damage our economy. But to be fair, the regulatory and tax outlook is doing its best to short circuit anyone hiring unless they really have to. Hiring and the economy are not necessarily in lock step. Yes stories of the US manufacturing demise is overblown. All developed or strong developing countries are losing maunfacturing jobs due to efficiency gains. China is losing them just as fast, so don’t worry. If we would just decide to grab the energy wealth we have right now the big scary trade balance numbers that everyone likes to cry about would at least look better to every one.

For unemployment, it has little to do with macro economics on issues of debt, etc. The problem is that no business is willing to hire. With work hours down we have plenty of straight time hours to put towards any increased needs, and that is before any overtime is considered. With a very uncertain regulatory climate, no business is going to hire right now. The healthcare bill recently announced will result in a 5 to 10% reduction in employment just to cover the payroll tax penalty for firms that don’t offer healthcare. It is a little more complicated than that, but business abhors uncertainity, and this current government is creating that product with great skill. Washington’s stimulus and budget bills were horrible macro economic policies which have long term issues to damage our economy. But to be fair, the regulatory and tax outlook is doing its best to short circuit anyone hiring unless they really have to.

]]> By: RCAR http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-299 RCAR Wed, 15 Jul 2009 21:09:34 +0000 http://ckmac.com/thewholething/?p=120#comment-299 Quill,Here's your homework: http://www.bloomberg.com/apps/news?pid=20601109&sid=ajsCDAWaoANg http://www.counterpunch.org/whitney07132009.html http://www.realclearmarkets.com/blog/06%252030%252009%2520-%2520More%2520Power%2520to%2520the%2520Systemic%2520Risk%2520Generator.pdf http://business.theatlantic.com/2009/07/exclusive_interview_what_is_shadow_banking_and_how_did_it_fail.php Quill,Here’s your homework:

http://www.bloomberg.com/apps/news?pid=20601109&sid=ajsCDAWaoANg

http://www.counterpunch.org/whitney07132009.html

http://www.realclearmarkets.com/blog/06%252030%252009%2520-%2520More%2520Power%2520to%2520the%2520Systemic%2520Risk%2520Generator.pdf

http://business.theatlantic.com/2009/07/exclusive_interview_what_is_shadow_banking_and_how_did_it_fail.php

]]> By: Quill http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-297 Quill Wed, 15 Jul 2009 21:01:04 +0000 http://ckmac.com/thewholething/?p=120#comment-297 OBS liabilities are not nearly the problem they used to be, IMO. Enron was probably the high water mark. Accounting rules have changed to eliminate the awful merger rules that existed 10 years ago. I don't think Mortgage Backed Securities called into question all asset backed securities, or derivatives. For the most part, companies know how much debt they have and can assess its market value. When you are talking toxic assets, you really are just talking about banks. And that's still a work in progress. Hiring, however, is a lagging indicator. So, if that's what you are waiting to see, you will have missed the inflection point. Stocks will rally well before you see unemployment improve. Of course, my crystal ball hasn't been the same since it rolled off the kitchen table. OBS liabilities are not nearly the problem they used to be, IMO. Enron was probably the high water mark. Accounting rules have changed to eliminate the awful merger rules that existed 10 years ago. I don’t think Mortgage Backed Securities called into question all asset backed securities, or derivatives. For the most part, companies know how much debt they have and can assess its market value.

When you are talking toxic assets, you really are just talking about banks. And that’s still a work in progress.

Hiring, however, is a lagging indicator. So, if that’s what you are waiting to see, you will have missed the inflection point. Stocks will rally well before you see unemployment improve.

Of course, my crystal ball hasn’t been the same since it rolled off the kitchen table.

]]> By: RCAR http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-295 RCAR Wed, 15 Jul 2009 20:36:52 +0000 http://ckmac.com/thewholething/?p=120#comment-295 Quill,"But you are overplaying your hand." I hope so,but until they start hiring,i'll be growling. We have a small difference in how we look at toxic assets,I see an 80% difference,it could be 100% if the government wasn't propping up those assets. What you're not counting is the "off balance sheet" toxic assets which,in my opinion,are 2x what is on the sheets. If I'm wrong,you tell me how much they're trying to hide. Quill,”But you are overplaying your hand.”

I hope so,but until they start hiring,i’ll be growling. We have a small difference in how we look at toxic assets,I see an 80% difference,it could be 100% if the government wasn’t propping up those assets. What you’re not counting is the “off balance sheet” toxic assets which,in my opinion,are 2x what is on the sheets. If I’m wrong,you tell me how much they’re trying to hide.

]]> By: Quill http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-294 Quill Wed, 15 Jul 2009 20:25:44 +0000 http://ckmac.com/thewholething/?p=120#comment-294 PPI for June accelerated to almost 2% from about flat in May. It was a broadbased increase. CPI, which also came out today, showed a similar jump. Stocks are up 3% today on good news from Tech and Banking, which suggests an improved earnings outlook. Deflation is fading as a risk. By this time next year, I think people will be more worried about inflation. Now, as far as debt on balance sheets goes, I think there's maybe a 15-point avg. difference between book value and market value of debt, which should be impounded already in stock prices. Things are not rosy. But you are overplaying your hand. Embrace your inner bull. PPI for June accelerated to almost 2% from about flat in May. It was a broadbased increase. CPI, which also came out today, showed a similar jump.

Stocks are up 3% today on good news from Tech and Banking, which suggests an improved earnings outlook.

Deflation is fading as a risk. By this time next year, I think people will be more worried about inflation.

Now, as far as debt on balance sheets goes, I think there’s maybe a 15-point avg. difference between book value and market value of debt, which should be impounded already in stock prices.

Things are not rosy. But you are overplaying your hand. Embrace your inner bull.

]]> By: RCAR http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-293 RCAR Wed, 15 Jul 2009 19:57:58 +0000 http://ckmac.com/thewholething/?p=120#comment-293 Quill, We're in a Deflationary,Debt Crisis;this might turn into an inflationary crisis eventually,but not for several years to a decade,the debt has to be leeched from the balance sheets to release the Inflation. Quill, We’re in a Deflationary,Debt Crisis;this might turn into an inflationary crisis eventually,but not for several years to a decade,the debt has to be leeched from the balance sheets to release the Inflation.

]]> By: RCAR http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-292 RCAR Wed, 15 Jul 2009 19:55:15 +0000 http://ckmac.com/thewholething/?p=120#comment-292 CK,you were right in 2006 about our rankings,but things are changing fast,in about a year we'll get today's #s,but here is the latest I can find,China is 4x what she did in 2006,because she includes the sales of American Mfg. subsidiaries from China to the US in her figures,we account for those expenses in a different way. http://en.wikipedia.org/wiki/List_of_countries_by_exports CK,you were right in 2006 about our rankings,but things are changing fast,in about a year we’ll get today’s #s,but here is the latest I can find,China is 4x what she did in 2006,because she includes the sales of American Mfg. subsidiaries from China to the US in her figures,we account for those expenses in a different way.
http://en.wikipedia.org/wiki/List_of_countries_by_exports

]]> By: RCAR http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-291 RCAR Wed, 15 Jul 2009 19:46:00 +0000 http://ckmac.com/thewholething/?p=120#comment-291 Joe NS,"Joe NS wrote: When you say still the world’s leading manufacturer and exporter, CK, do you mean exclusive of agriculture?" Joe we have huge problems in the reporting of economic metrics. The following basic measurements are too inaccurate to discuss seriously,manufacturing output,exports.imports,GDP,unemployment rate,amount of Government debt,financial debt,even the true cost of the Vietnam war is mired in inaccuracy. Total Tax Collections are down 34% from a year ago,that means the entire economy has siezed up,but pundits are still saying our GDP is at 14 Trillion,that isn't possible. It has to be shrunk to around nine Trillion by now. Joe NS,”Joe NS wrote:
When you say still the world’s leading manufacturer and exporter, CK, do you mean exclusive of agriculture?”

Joe we have huge problems in the reporting of economic metrics. The following basic measurements are too inaccurate to discuss seriously,manufacturing output,exports.imports,GDP,unemployment rate,amount of Government debt,financial debt,even the true cost of the Vietnam war is mired in inaccuracy. Total Tax Collections are down 34% from a year ago,that means the entire economy has siezed up,but pundits are still saying our GDP is at 14 Trillion,that isn’t possible. It has to be shrunk to around nine Trillion by now.

]]> By: Quill http://ckmac.com/thewholething/2009/07/15/the-debt-and-nothing-but-the-debt-by-rcar/#comment-290 Quill Wed, 15 Jul 2009 19:45:37 +0000 http://ckmac.com/thewholething/?p=120#comment-290 That's the upside of inflation. Debtors love it, at least if their debt is set at a fixed rate. Then they pay with cheaper dollars than they borrowed; that is, their real interest rate declines. So fear not. The market will take care of it. Heck, in a few months, you're going to find out that the recession ended today. Capitalism is far more robust than you give it credit for. That’s the upside of inflation. Debtors love it, at least if their debt is set at a fixed rate. Then they pay with cheaper dollars than they borrowed; that is, their real interest rate declines.

So fear not. The market will take care of it.
Heck, in a few months, you’re going to find out that the recession ended today.

Capitalism is far more robust than you give it credit for.

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