Larry Doyle’s (LD’s)Dollars and Sense “Central Station”
By Larry Doyle on January 17, 2009 at 9:00 AM in American Consumers, Auto Industry, Banking Institutions, Bernie Madoff, Credit Card Companies, Current Affairs, Earmarks, Economic Stimulus, Economy, Infrastructure, Insurance Policies & Industry, Real Estate, Retail Businesses
The station is filling up as the weather outside is getting very blustery.
The markets and economy remain turbulent. Economies overseas are also in the midst of stormy weather.
Banks are flooded with bad loans. The auto industry is praying for an Obama lifeline!
Residential housing and commercial real estate continue to take on water.
Where can you go to get away and make some “sense” of this madness? Central Station has a train departing at 9am that will take your questions and comments on the markets, economy, and world of finance at large.
Your conductor, LD, is not a professional financial planner but is a Wall Street veteran.
Bring your coffee, invite a friend, settle down as you’re amongst friends here. Selling nothing other than honest opinions and advice. We’ll be departing momentarily…….so….
Aaaaaaaaaal Aboard!!
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Until these folks are truthful about how bad things REALLY are this is just throwing bad money after bad. All of these retail outlets closing and I imagine, in the end some of these banks too–lots of jobs lost, for sure. But my question is WHO IS GOING TO LEASE THE VACANT COMMERCIAL SPACE LEFT AVAILABLE? This is very troubling.
Preachers. Church preachers and pastoral compensation is booming.
They will be truthful when pastors and preachers require them to be truthful in order to get to heaven. Since the mantra is lie, sin and then say a four word prayer of less than a second and everything is peachy keen right away, then forget about truthfulness.
Pastors and preachers are in control of truthiness and so far there is not one of them benefiting from it.
And then of course the same apply to teachers and college professors. We are the children of the liars.
There will be massive job losses and nothing to replace them with. The nondemocratic Government we have now wants all people to be dependent on the Government and under their control. President Odrama will not be creating jobs, only despair. He wants to keep the American people down and he will.
I agree. And then the massive interest debt that we will incur to so call rescue our present day economy will hamper future generations to the point where the only solution will be to dissolve the country as we know it and default on its promises. What’s funny is that a few days ago I read a headline saying that the CIA was worried that Mexico would perish under the weight of corruption and crime. Ha ha. Another preamble. The weight of corruption and crime? Lets get used to dissolution, crime and bankruptcy so that when it arrives as the norm then the abnormal would be honest work.
I totally agree we didn’t need a socialist at this critical time, we needed a true free market capitalist. Carl Jung talked about the socialist society that infantilizes its citizens, they’re all like Oliver Twist holding their bowls up to the arrogant, America hating liars and begging, “Give me more,please sir.” Now that’s power. Get ready because it’s survival time, by this time next year unemployment will probably hit 30%. Not one sector will be left unscathed, Bush opened the door to this inferno and now BO will lead the entire country down to the depths. The money’s gone, the jobs are going and the union of Wall Street, the media conglomerates and the political scum has been consummated to give birth to the One, not in a manger but in the White House the former symbol of freedom and democracy for all.
After your tome on Schipiro, I took the time to watch the Senate Bank committee (Dodd and Shelby) hearing on her confirmation. The follow up hearing on the Council of Economic Advisors and the Fed appointment is also very interesting.
It was all love fest, however it pointed out how the Bush Administration was at sleep on the Regulatory monitoring and she was part of it. It remains to be seen how complicent she was, or was she a lower ranking person frustrated about what was going on.
That said, do you have any opinion on the bad / good bank buying bad assets talk ging on. The continued controversy of Citigroup and Bank of America seems to portray we are not at the end of it. I also noticed that a lot of CNBC commentators are shifting the recovery from end of 09 to begin of 10. Any Opinion?
Fiscal….
Stay warm out there!!
I hope that Ms. Schapiro is forced to come back to the Hill and answer some real questions. The public deserves answers. I have calls into my reps (Himes and Dodd) to provide insights on Finra. I have also been sending this Schapiro piece to other outlets including the WSJ. We can only hope that these issues get more air time and expose the underlying issues. I concur with your assessment.
In regard to the good bank/bad bank, this is where it will really get very interesting. We need real transparency at this juncture because we are talking about a transfer of assets from private hands to public hands. What are the assets? How are they priced? What will be the capital structure of the good banks and the bad banks?
Should certain banks literally be allowed to fail and open the opportunity for private capital to start new banking institutions? Meredith Whitney is proposing that concept.
In summation, I have a hard time understanding how this accelarates our recovery. We are finally getting out that there are another $1 trillion in losses in the system. That bill must be paid and in doing so it will inhibit growth going forward.
On the back end of this is the massive deficit. I believe that over time government rates will have to trend higher (including mortgage rates) while consumer and corporate rates will remain at the current high levels.
We have not even started to discuss the situation within the municipal sector. Where does that money come from? Remember, 6 governors were proposing a $500 billion capital injection for state and local governments over the next two years.
The printing press at Treasury HAS to be running 24/7.
Truly fascinating times.
Everyone was happy to benefit from the scam and now everyone is also happy to benefit from the scam being perpetrated on the scam. Scam art.
Just like laws of physics, there are laws of economics and all of this borrowing will come to a end with higher interest rates. LD’s article about tonnage comming down in international shipping trade (especially China)are clear signs that we need to get ready that China will not have money to loan us. They will have their own insurrections of unhappy people to take care of.
We need to remember: Standard of living can come down, but quality of life can be improved. We do not need yahts to play a game of cards in our communities.
Thank you my friend. Sanity just returned to my brain. Now I go to enjoy the day with my granddaughter. Thanks again.
Re- Stay warm out there!!
Zero here and some of the best snow ever for cross country Skiing. I go daily. In your first show, you mentioned Warren County. With our Boy Scouts we spent quite a bit of in the “Blue Line” park. I remember one weekend in a scout cabin east of Lake George when it was 20 below all weekend and only a fire place with concrete floor. Kids kept warm, splitting wood for the fire place. We had to heat the popane coleman stoves with other torches to get the to work properly. Probably should have gone home, but we stuck it out and the kids remember it well. Example of low standard of living and quality of life.
Ultimately it is about people and relationships.
Thanks for sharing…
YES! It’s the only way to get the money flowing again. Current banks and lenders are just too burnt-out and scared to lend. Banks will take the bail-out money and sit on it while the economy tumbles down further.
If new players are on the scene lending, they won’t have shell shock or fear to lend. Yes. New players will be only too eager to lend and get the sluggish economy going. “Borrowers lie and banks die” is my new motto. With the advent of technology, it is far too easy for borrowers to create clear professional looking documents that are fraudulent and lenders are scared to make a move. Lack of morals from the bottom up is crushing USA. Will we follow the fate of corrupt Mexico? Clean up your act people. Cheating has a payback.
Very generous of you Larry to offer up assistance to us novices and amateurs!
I am one step below that if possible but I’ve concluded that if I read you and other comments here I may be better informed later.
Luckily, I’ve lost nothing in all of this as I had nothing to gamble. (first time I can say being poor as a church mouse has actually paid off) hehee!
Thanks again!
My pleasure.
LD, thanks for your continued monitoring of the economic situation.
From what I have seen so far, the first items on the stimulus list are medicare, education, and other assistance to state debt and deficits.
The term “shovel-ready” is thrown about, but no state has projects ready to go…they couldn’t contract them.
If the bulk of the money is only going to “buffer” debt, how is that going to create a flow into the coffers of business?
Sassy….you are correct. The money will not IMMEDIATELY flow into the coffers of business.
This entire scenario will take TIME to play out. I honestly think that we will be dealing with this for the next few years before we start to rebound in a meaningful fashion.
Again, just my opinion but we had a solid 5-7 years of debt accumulation. We are now about a year and a half into the unwind. “Time, Why You Punish Me?”
Hang in there!!
oops, medicaid not medicare.
LD – for those interested in a full stimulus explanation, you can go to the House Appropriations Website and they have a fairly readable summary of what the stimulus will be.
My take on this is it will help in the long run, but only shore up status quo. They need to find a way to leverage private capital and that is not in the DNA of current thinking. Until all of this bail out activity stopes, private capital will sit on the side lines or go overseas.
Fiscal…
Thanks for sharing that website. I will definitely check that out.
I concur with your assessment about private capital. Sheila Bair acknowledges that the system badly needs private capital. What does private capital want? A chance to manage a business without having the government as a partner and without excessive taxation.
What we obviously need badly is effective and aggressive regulatory oversight that properly monitors private enterprise. Aggressively punish those who engage in fraudelent, illegal, and corruptible business practices.
So much to do but currently so much uncertainty. In the face of that uncertainty private capital is on the sidelines looking for guidance before committing.
In the process of assessing the situation, though, and given the challenging nature of these times, we need to be participants in the process.
Spread the word and keep the faith!!
LD – love your pieces.I read and reread them in an effort to understand at least some of what is going on. In my small community a Mervyn’s has closed and two Circuit City ’s are going to soon, plus lots of for lease signs around.Loss of sales tax will be a big problem for local cities.I dont see these spaces being filled any time soon.
Sunup….Thanks for the plug. I hope we can make some sense of this madness for you and everybody else. Remember, one of the rules on our “train” is “there are no bad questions.” If there is ever anything that I can try to further explain, please do not be bashful.
What you are seeing in your community is truly reflective of our entire economy. It is hard on the people who worked at those shops. I truly empathise.
Yeah, truly reflective of our entire economy. Poor engineering at all levels. When was the last time you spoke with a mechanical engineer that said to you, “That’s no problem.” Actually I know you don’t know at this stage any engineer that has solved any problem that you know of lately. No?
The Circuit City in Lancaster PA is starting its liquidation sale today. Their website has been taken down and an announcement put up explaining what is going on.
If you have Circuit City gift cards use them today because when the sale is over they won’t be worth the plastic they’re made of.
MrMike…Good point. For that very reason people who have gift cards at other retail outlets may want to use them sooner rather than later.
I pity the owners of the vacant buildings, knowing they can’t meet the mortgage payment with vacancies. And victims of bank failures where the note balloons, can no longer get extensions under their loan contract because the contract for extensions is null and void once the bank fails and FDIC takes over. They then end up losing the property to the new note buyer because they can’t get a new loan because the credit market is frozen. Sheila is right. There needs to be money for the private sector or this is likely to blow up into a catastrophic mess beyond anything we have ever seen. The top down bail-out is not the way to go. They need to start with bottom up bail-out and they need to do it now. Credit is in the DEEP FREEZE with no end in sight. If an owner of a vacant building could get a cash-out refi with loose vacancy rate guidelines, that cash-out could buy them time and save their property until the market comes back or until they get new rental leases.
The whole thing is sickening and we need to stop comparing this to the crash of 1929. This is so huge it’s nothing like anything we have ever seen. But the whole truth is not out there yet. The media will peddle what they want you to believe and all along it’s much worse than the average American knows. I have to speak up because no one is paying attention. The Housing credit market went bust long before anyone admitted there was trouble in the market (besides Hillary). Now they are doing the same thing with ignoring the plight of Commercial and this is going to affect everyone unless there is a bottom up bail-out. They need to tighten unsecured credit card lending and loosen mortgage lending. But lenders are too scared to lend on secured credit and are loose with unsecured lending. It’s insanity plain and simple. So there you have it. DEEP FREEZE.
No credit=no refi or purchases=loss=stagnant economy=argh!
All engineering is basically working to meet the code. The Code. Code enforcement. Government. All engineering is basically working to meet government requirements.
That is funny because if some manufacturing would be allowed in those spaces, then they would fill up in a flash. And what is needed is an enhanced fire protection system that works well and is able to contain any fire produced by any of the chemicals that may be used in production. And how hard for a society like ours to design and deploy a fire protection system that can assure fire containment. Not to hard. I mean not to hard if we could graduate mechanical engineers that know what they are doing. Too bad that universities cannot graduate mechanical engineers worth a damn.
Jan 15 2009 11:44AM
Another Great Depression
James Turk
http://www.kitco.com/ind/Turk/turk_jan152009.html
Massive unnemployment, Retail, Industrial contractions:
http://jsmineset.com/
LD – WSJ article regarding Bank of America today titled Bank of America goes on Offense. Complexity is amazing
More interestng – in the comments one writer has a extensive coment on how BOA had derivatives on Contrywide paper ( I think). So they had to buy them to protect themselves.
This “Shadow Banking system” really got out of control. CNBC commetators were wondering if Grahm-Leach-Baily should be repealed.
Having worked at JP Morgan for 6 years I saw plenty of things that needed addressing but ultimately when they brought in Jamie Dimon he addressed the issues.
We need strong, capable, competent leaders filled with integrity in Washington, NYC, and throughout our economy.
In the absence of “strong, capable, competent leaders filled with integrity”, how do we get weak, ambitious and incompetent leaders to do the right thing?
I ask myself that question every day.
Obama saids you good people “SACRIFICE’ so i haven`t got to.I got to have 150 million for my party!!!!!!
LD – Interesting ediorial in WSJ about “Mugging Bank of America”. Paulson pushed Merrill on BOA because they were big and could absorb them. Lewis wanted to back out of Merrill to protect his share holders. However his biggest share holder ( US Govt) vetoed it. Wonder if this true or what really happened.
Some how Goldman Sachs seems to be able to escape all of this.
I definitely believe that. Paulson and Bernanke have been largely orchestrating this because they knew that most of them were toast or a semblance thereof.
GS is being saved because AIG is propped up.
Off to a college hockey game with the 10 yr old boy!
Have a good night.