The Great Recession - post mortem

[SportsDino]

I think deflation is being used in the wrong way by the media to try and convince people of one thing, while the truth is something else entirely. If prices snap back say, in July, then it was not deflation, it was prices being screwed up because everyone was chopping the hell out of their companies in a panic and didn't feel like buying anything. Then you'll see the talking heads come out on the tv and start saying how inflation is a great danger to the economy, and how we need to jimmy the rates and all that jazz.

The end result is, when the big head honchos screwed up and lost tons of money, their political cronies cried deflation, print a bunch of money, and just happened to hand it to their friends the big head dumbass honchos. Then, after that wave of destruction passes, and people like, say me, are drudging up funding for a new business to create jobs... all the rates are high, and all the prices on my supplies are higher too... in fact everything that could actually have some benefit to the economy is that much harder to obtain because we printed money to soak up the puddles of piss in some banks boardrooms when they were caught.

If you honestly go to the store next Christmas, and you can get the same pile of junk you got two years ago for a lot less money, and we are out of the whole 'discount clearance sale' phase of the economy... then I'll buy the whole deflation story. Until then it is just economy cutting causing an anomaly in prices, a natural reaction in difficult economic times (companies cut wages, purchases, and what not while they weather the storm).

[Flasch186]

so only time will tell.

I will say that if inflation begins to be spotted to the point where we need to raise rates to fight it it'll mean a lot of other GOOD things are occurring and Ill take it. In the meantime, I believe we have damaged a lot of the American consumer psyche and this deflation you think is short term will be longer than Im will to label as 'short'. We shall see but I am NOT hedged against inflation at this time.....<----that doesnt mean much since Im just as down on my portfol....(I lost the I and O) as anyone else.

[Fidatelo]

Originally Posted by Flasch186

so only time will tell.

I will say that if inflation begins to be spotted to the point where we need to raise rates to fight it it'll mean a lot of other GOOD things are occurring and Ill take it. In the meantime, I believe we have damaged a lot of the American consumer psyche and this deflation you think is short term will be longer than Im will to label as 'short'. We shall see but I am NOT hedged against inflation at this time.....<----that doesnt mean much since Im just as down on my portfol....(I lost the I and O) as anyone else.

There will be nothing good about the upcoming inflation. It will not be a result of any kind of recovery, it will be a result of money being printed + scarcity of resources. And there will be no way to fight it effectively with interest rates because no one will be afford to pay them, which would just further deepen the mortgage crisis.

As for consumer psyche, it is irrelevant. Our days of buying new iPods to replace the ones we bought last year are over. O.V.E.R. The only result of the next 12-36 months will be a serious lowering in standard of living for everyone in North America, save for the uber-rich that are robbing us blind as I type.

[sterlingice]

Originally Posted by cartman

I hope this doesn't get buried in the thread, but here is a pretty amazing read about how the CEO of Overstock.com fought a bitter battle to expose the illegal practice of naked short selling. This is where you short a stock, but don't actually control any shares. It is done by exploiting a loophole in the system. Evidently this practice was honed to a fine art by persons in the media, and was used to take down over 1,000 companies, including Bear Stearns.

Warning, it is a long read, it took me over an hour to get through it, and I'm a speed reader.

Deep Capture | The Story of Deep Capture | Deep Capture Blog

I'm only though part of the first chapter so far but I'm really enjoying the read. I'm both appalled and not really surprised. We were chatting about this at lunch today and in agreement that white collar badly needs new laws that throw some of these people in "federal pound-me-in-the-ass" prison.

SI

[SportsDino]

I'm all for white collar crooks being treated the same as a suspect for homocide. Or at the very least grand theft auto, or robbing a bank.

As for deflation/inflation, I'm generally in the camp of Warren Buffett... stuff was really screwed up last year, and could have been disastrous, but inflation is on the way. No one that I respect as an economist and talk to personally considers this deflation, though they split the spectrum on their stance about recent policy/situation. Finance guys I know are more quick to throw around the deflation and 'necessary inflation' terms, but most deep conversations tend to root out that we really are just trying to cover up a mess (we differ on whether that is a good thing or not, obviously I'm in the hang em camp).

[SteveMax58]

Originally Posted by Fidatelo

There will be nothing good about the upcoming inflation. It will not be a result of any kind of recovery, it will be a result of money being printed + scarcity of resources. And there will be no way to fight it effectively with interest rates because no one will be afford to pay them, which would just further deepen the mortgage crisis.

As for consumer psyche, it is irrelevant. Our days of buying new iPods to replace the ones we bought last year are over. O.V.E.R. The only result of the next 12-36 months will be a serious lowering in standard of living for everyone in North America, save for the uber-rich that are robbing us blind as I type.

+1...namely the bolded parts.

This is why my belief is that the Stimulus bill could have been half as much or twice as much, but it needed to be entirely driven towards eliminating outgoing expenses...such as for oil.

But alas...I've thought the US standard of living was unsustainable for quite a while now. Maybe nothing would have changed that.

[SirFozzie]

Re: DeepCapture

I've talked via email to both Judd Bagley (author of material on deep capture as well as antisocialmedia.com) and Patrick regarding how NSS crossed over on WIkipedia.

[lungs]

This recession is all in your heads. What a nation of whiners we've become.

[sterlingice]

Originally Posted by SirFozzie

Re: DeepCapture

I've talked via email to both Judd Bagley (author of material on deep capture as well as antisocialmedia.com) and Patrick regarding how NSS crossed over on WIkipedia.

A lot of this is scary, whether true or not. Just a simple search of some of the players and terms on the internet and you're completely slimed no matter which side of the aisle you're on. Frankly, I think I know where I'm leaning just based on who has the most to gain/lose in this and the fallout, but even the side who is basically "in the right" has been completely obliterated while the other side looks equally bad (tho mainly because it looks like they are that bad).

SI

[sterlingice]

Originally Posted by lungs

This recession is all in your heads. What a nation of whiners we've become.

Cowboy up?

SI

[sterlingice]

Originally Posted by cartman

I hope this doesn't get buried in the thread, but here is a pretty amazing read about how the CEO of Overstock.com fought a bitter battle to expose the illegal practice of naked short selling. This is where you short a stock, but don't actually control any shares. It is done by exploiting a loophole in the system. Evidently this practice was honed to a fine art by persons in the media, and was used to take down over 1,000 companies, including Bear Stearns.

Warning, it is a long read, it took me over an hour to get through it, and I'm a speed reader.

Deep Capture | The Story of Deep Capture | Deep Capture Blog

I'm still only 20 pages into the ~70 page but the cliff's notes version, more with an emphasis on web 2.0 and new media and not as much on the naked short selling game, there's an interesting ~60 minute presentation that Judd Bagley did. The first half is about short selling and naked short selling. The second half is, well, it's about web 2.0.

For added fun, you get a nice chill about "new media" and similarities to "Ministry of Truth" in 1984 and how easy it is to manipulate things even, especially in wikipedia.

http://antisocialmedia.net/lecture1/player.html

SI

[SirFozzie]

Well, let me say this re:Wikipedia.

I was heavily involved with the issues with NSS on Wikipedia. I think even Judd admits in his speeches on the subject that when he sought to link the account "Mantanmoreland" to that of "Gary Weiss, financial journalist", that he didn't do it quite right, and it looked like a personal vendetta. So, the natural thought when you see an editor being attacked is to circle the wagons around them. That led to it looking like we were protecting an editor.

There was a point however, when it looked like Mantanmoreland had used multiple accounts to slant NSS articles on Wikipedia in a pro-NSS viewpoint, and I was part (I started it, but others did a hell of a lot of work on it) of an investigation on this./ It was all circumstantial, a lot of it was due to him using open proxies to hide the link between the two accounts, but there was a point where there was enough circumstantial evidence that he got restricted from the articles, and then when he tried to edit it with yet another account, he got banned from Wikipedia..

Is it perfect? No. In fact, there is a group of vandals who are using Wikipedia to try to harass and stalk others, both publicly and privately. One of my best friends on Wikipedia just retired from there, and turned in all her rights, because she had burnt herself way the hell out trying to keep up with the level of defamation and harassment going on, and to keep it"under wraps" I still think it's worthwhile to work on, but there are days where I pretty much hate Wikipedia, and the fights and the trouble it causes.

[SportsDino]

I don't know much about the deep capture storyline, but I've ranted and raved on here before about my hatred of the media and business, and in particular CNBC. I've got enough anecdotal statistic data to consider them either completely stupid, or more likely some form of the devil. Every time I listen to their drivel I can spot a flaw or light review of their 'picks' usually result in epic failure. Media = poo!

[cartman]

Originally Posted by SportsDino

I don't know much about the deep capture storyline, but I've ranted and raved on here before about my hatred of the media and business, and in particular CNBC. I've got enough anecdotal statistic data to consider them either completely stupid, or more likely some form of the devil. Every time I listen to their drivel I can spot a flaw or light review of their 'picks' usually result in epic failure. Media = poo!

The story follows your assertions. The folks investigating found a large number of financial journalists with strong ties to several CNBC talking heads, namely Cramer. They found that anytime Cramer talked down a company, they were able to show a massive increase in naked short selling of that company's shares.

[sterlingice]

Originally Posted by SportsDino

I don't know much about the deep capture storyline, but I've ranted and raved on here before about my hatred of the media and business, and in particular CNBC. I've got enough anecdotal statistic data to consider them either completely stupid, or more likely some form of the devil. Every time I listen to their drivel I can spot a flaw or light review of their 'picks' usually result in epic failure. Media = poo!

What cartman said.

I find it a fascinating read, personally, and it kept me up until about 4am last night reading. If what is alleged is true, there's a pretty sophisticated network of hedge funds with large parts owned by media members (and, allegedly, the mafia) who talk down stock right after short selling them. That would be shady and anyone with half a brain would see that as a complete conflict of interest and unethical.

Basically the idea is that there is a group in the media who run/own significant interests in a constellation of hedge funds along with other seedy and sundry characters (evil greedy people, lawyers, lots of convicted financial felons, and the mafia) who use the finance media to target companies to drive down their stock prices and make a ton of money by naked shorting companies into the ground.

The common tactic is that these funds will naked short sell a company, have someone in the media who owns a piece of the action (say, Jim Cramer) go on the news and bash that stock relentlessly. Then others of this group (they work for WSJ, CNBC, NY Post, thestreet.com, and more- tho it seems Forbes is mostly clean, just by omission) will join in and they have internet misinformation down to a science from playing the media and other reporters to editing wikipedia, in a "rewriting history" sense. Then they initiate an SEC investigation with their ties to a fake "investigative organization" so that it looks like they're dirty and have a crooked law firm file trading class action lawsuits against the company.

Then, these companies can't raise any capital and they pile on by naked short selling tons of the stock, more than even exists. So, this further dilutes the stock price and they can't make any money by releasing any more stock and their credit rating is shot so they are finished.

Oh, and this looks like these attacks have happened to hundreds, maybe thousands of companies and that there are an estimated $150B of phantom shares out there on the market right now.

The SEC looks inept (really, who didn't think that), the DTCC looks really really crooked- like "should have been what they blew up at the end of 'Fight Club' crooked, the press either crooked and in on it or negligent as they just continue to parrot the false information while doing no investigation of their own, and we just sit idly by not even understanding what is happening and even if we did, wouldn't care.

The really scary part is that, frankly, it seems really plausible and they have a pretty convincing paper trail connecting a lot of the people and a lot of the dots.

Again, SD, it may read like a bad movie script (actually, it reminds me a little of "And the Band Played On" in terms of style)- but I think you'd enjoy the read.

SI

[NoMyths]

I'd like the DeepCapture essay more if the author didn't fancy himself the second coming of Hunter S. Thompson in economics-jive form. Halfway through the first page I'm having to keep hitting the "don't bail" button on my bullshit detector based partially on the writing style, which is obscuring the meat of the piece.

[sterlingice]

It *does* read like B movie script. What's the financial equivalent of a "made for Sci Fi channel movie" script?

SI

[sterlingice]

Originally Posted by SirFozzie

Well, let me say this re:Wikipedia.

I was heavily involved with the issues with NSS on Wikipedia. I think even Judd admits in his speeches on the subject that when he sought to link the account "Mantanmoreland" to that of "Gary Weiss, financial journalist", that he didn't do it quite right, and it looked like a personal vendetta. So, the natural thought when you see an editor being attacked is to circle the wagons around them. That led to it looking like we were protecting an editor.

There was a point however, when it looked like Mantanmoreland had used multiple accounts to slant NSS articles on Wikipedia in a pro-NSS viewpoint, and I was part (I started it, but others did a hell of a lot of work on it) of an investigation on this./ It was all circumstantial, a lot of it was due to him using open proxies to hide the link between the two accounts, but there was a point where there was enough circumstantial evidence that he got restricted from the articles, and then when he tried to edit it with yet another account, he got banned from Wikipedia..

Is it perfect? No. In fact, there is a group of vandals who are using Wikipedia to try to harass and stalk others, both publicly and privately. One of my best friends on Wikipedia just retired from there, and turned in all her rights, because she had burnt herself way the hell out trying to keep up with the level of defamation and harassment going on, and to keep it"under wraps" I still think it's worthwhile to work on, but there are days where I pretty much hate Wikipedia, and the fights and the trouble it causes.

I understand it from close enough to Wiki's point of view. Noob comes in and starts messing with long time mod's friends- who's going to get sided with? Yeah, exactly. It's like what Ben says about new posters here having a shorter leash and different standards than longtime posters.

I don't envy wikipedia editors- that sounds like a nightmare considering its greatest resource of having everyone able to contribute is also its greatest curse.

This case, frankly, seemed like the wiki community not knowing that something much bigger was going on than they realized and when you have someone you think is kindof on the onside feeding slanderous information, it's hard to know who to believe and not just go to the "don't make me turn this online encylopedia around" card. In short, the whole of wiki got in over their head and there was no way of knowing that was what was happening when you can't see out of the mess you are in because the view of the situation keeps being warped. It was a "no win" situation and that's what Weiss took advantage of.

SI

[SportsDino]

I second the language turn off aspect, it made it hard to get deep at all because my natural curiousity for all things potentially evil was battling with my 'are they just biased' mode. I'll give er a second look if I get a moment.

I really think the only way to combat what you briefly summarized is a complete revolution in the way we run and report business data. There really is no excuse for public corporations to not have highly transparent information (yes I'm talking beyond SEC reports, and yes provisions would be necessary for trade secret data which is maybe 1% of all data max if you boil it down).

Anyhoo, without such access to information you basically end up with a caste of grand poobahs of information (the media and or finance advisors), and with large pools of relatively uninformed money (investors who do not or cannot do their own research, which is nearly everyone)... I dunno, I find that very scary.

The situation you describe sounds vaguely like front running (say X is a broker working for Y, and Y puts in a buy order at P, X knows for certain they can sell at price P so they buy the share at price P - M and profit an illegal marginal amount M from control of information and transaction ordering). The difference is they would be taking a risk, loading up huge on a position and then hoping to spur the macro crowd in a general direction with a panic statement (easy to do though)... sounds highly illegal and evil, and certainly what I would consider gross speculation that is destructive in economies. (Note, this is why I hate giving tax cuts in capital gains where most of the people going up in this economy are short monsters like myself... does not grow economies at all)

Given my belief at the massive amount of sheep money out there, I can easily believe that the margins on such a scheme could be quite huge indeed with all the volatility. Heck, I make a crazy cut on just the volatility in one direction (i.e. I predict a trend up or down), if I could engineer the volatility and its timing that would be a terrible thing to behold. They can't possibly have perfect control though, I would assume the big money (banks) would just ignore the media and might derail some of the more crazy schemes if these hedge fund phantom shorters get too greedy. Granted, phantom shorts take a recovery to put the pain on... it might be in their interest for the economy to continue in a depression.

I should probably just read the article before I get too deep in speculation land!

[SportsDino]

Wow, that is a scary read (and there are apparently are a crazy number of side links). Can't really say what is true or not.

I will say looking at the interview where he was talking about his company, that it was completely silly. I may not know whether Overstock specifically is all that great, but it is an expected practice for companies to burn venture capital and have net losses. And if the growth numbers are true, he was following that model very successfully. Especially for a young e-business you would kind of expect that sort of situation.

As for the manipulating stock prices through the media thing, if even a fraction of it is true, its illegal as all hell (at least to me). I've been sold on the SEC being corrupt as it gets for quite some time (read the Madoff investigation article posted elsewhere in this thread, for a less theatrical take on that same corruption). They simply don't enforce what is on the books as it is, yet alone have the right stuff in the books to begin with.

I dunno, there is a lot in there that is worrisome, hard to know where to start. I will say Cramer is certainly a lying bastard, I've seen his show enough times (its good for a laugh and I'm a terrible channel surfer)... besides putting off the wrong vibes he is internally inconsistent in his statements so often that even sporadically seeing him on the television is enough to collect some contradictions.

And phantom stock is certainly real. I've heard of companies with volume greater than the amount of stock in existance, and I think I even recall when the executive of that one company (something Links) bought all of his own stock to prove that the market was still trading phantom shares.

[sterlingice]

Originally Posted by SportsDino

Wow, that is a scary read (and there are apparently are a crazy number of side links). Can't really say what is true or not.

Like I said in a previous post, I look at motivation. Short of having some crazy obsession with Kramer and the others, I don't see what Byrne has to gain. It's kindof like complaining at the refs after they make a bad call that costs you the game- yeah, people know the refs blew it, but you still lost the game so it's just going to look like you're whining.

So, I'm not sure what his angle could be other than that.

As for the manipulating stock prices through the media thing, if even a fraction of it is true, its illegal as all hell (at least to me). I've been sold on the SEC being corrupt as it gets for quite some time (read the Madoff investigation article posted elsewhere in this thread, for a less theatrical take on that same corruption). They simply don't enforce what is on the books as it is, yet alone have the right stuff in the books to begin with.

I read a couple of things on the "Easter Bunny" 's site, which is oh so melodramatic. But after doing some reading, he was very right about a couple of things with regards to the SEC. It does look like the only reason they went after Madoff and now Stanford (another $8B scheme) was because Markpolos made the entire case for them, wrapped it in a bow tie and delivered it, and then ran to the media to light them up when he ignored them now that he can get enough press and the public is out for blood.

And phantom stock is certainly real. I've heard of companies with volume greater than the amount of stock in existance, and I think I even recall when the executive of that one company (something Links) bought all of his own stock to prove that the market was still trading phantom shares.

I want to say they mentioned this on one of the sites or maybe the presentation. How some guy bought up all of his stock and then the next day another $30-something million just appeared on the market and how at that point he pretty much knew he was screwed.

Frankly, again, the most damning part- well, I don't know if I can even say that because there's so much crap going on in this story that there's a lot of damning stuff- aside from the SEC being completely inept or compliant is the black box DTCC. The whole ~1% per day of stocks not being delivered just sounds like the lame Superman 3/Office Space plot about stealing fractions of pennies and no one will notice only on a bigger scale and larger percentage because no one can track and audit them. The circumstances surrounding Weiss and the wikipedia article are troubling in that either he or someone he knows was working on an obscure article article from within the DTCC and really makes it sound like there is someone on the inside doing this or at least allowing this to happen.

SI

[Mizzou B-ball fan]

Interesting story from a friend. I hadn't talked to him in a couple of months. He just informed me that he purchased a home in Vegas that had been foreclosed. 4,000 sq. ft., 5 bedroom, 7(!) car garage for $350,000.

Cripes. I had heard that market was rough, but that's unbelievable.

[flere-imsaho]

Originally Posted by lungs

This recession is all in your heads. What a nation of whiners we've become.

I wonder if Gramm had any money with Madoff or Stanford. That would be pretty funny.

[JonInMiddleGA]

re: the SEC -- Anybody know what their caseload:investigator ratio is like? I wonder if they're in a similar situation to the FCC where there simply isn't anything remotely resembling enough bodies to investigate the number of cases that are generated. "Uncle Charlie" certainly has more than its share of village idiots & isn't immune to criticism by any stretch of the imagination but I know that their lack of speed does have a pretty understandable reason behind it. There is, quite literally, only so much one person can do and I just sort of randomly wondered whether the SEC was as understaffed in the enforcement end as the FCC is.

I figure some of our more inside-the-business posters here will have at least a general answer about that.

[Mizzou B-ball fan]

Originally Posted by JonInMiddleGA

re: the SEC -- Anybody know what their caseload:investigator ratio is like? I wonder if they're in a similar situation to the FCC where there simply isn't anything remotely resembling enough bodies to investigate the number of cases that are generated. "Uncle Charlie" certainly has more than its share of village idiots & isn't immune to criticism by any stretch of the imagination but I know that their lack of speed does have a pretty understandable reason behind it. There is, quite literally, only so much one person can do and I just sort of randomly wondered whether the SEC was as understaffed in the enforcement end as the FCC is.

I figure some of our more inside-the-business posters here will have at least a general answer about that.

I think I saw in a recent article where the FBI is currently involved in 60+ major financial fraud investgations. They've certainly got their hands full.

[SFL Cat]

Originally Posted by Mizzou B-ball fan

Interesting story from a friend. I hadn't talked to him in a couple of months. He just informed me that he purchased a home in Vegas that had been foreclosed. 4,000 sq. ft., 5 bedroom, 7(!) car garage for $350,000.

Cripes. I had heard that market was rough, but that's unbelievable.

That almost makes me want to yell, "BULLSH*T!"

[Buccaneer]

In reading Buffett's latest doom about falling off a cliff, there is still something I am not grasping. Consumers are spending less and presumably, incuring less debt. Is that such a bad thing? Less consumerism means less resources being used (that's a good thing, right?), while less debt means a more stable financial situation. Someone mentioned about a lowered standard of living as the result. Is it heresy to suggest that having less debt actually raises your net worth, thus your standard of living? I have always thought that driving a 9 year old car that is paid off is a better standard of living than having a new car with a $15k debt. Is this economy so dependent upon people maxing out their credit line?

[Flasch186]

As Ive said repeatedly, I dont think me and my ilk are saying that more saving and the 'lower' standard of living is a bad thing, what Im saying is that the unwind needs to be orderly. Thus far it's been about as orderly as can be AND they even took a chance at seeing what 'disorderly' looked like (see Lehman) and said that that wasn't acceptable considering the aftershocks that reverborated through the entire year.

[JonInMiddleGA]

Originally Posted by Buccaneer

Is this economy so dependent upon people maxing out their credit line?

Yes.

Glad I could help.

[duckman]

What recession?

[JPhillips]

Originally Posted by Buccaneer

In reading Buffett's latest doom about falling off a cliff, there is still something I am not grasping. Consumers are spending less and presumably, incuring less debt. Is that such a bad thing? Less consumerism means less resources being used (that's a good thing, right?), while less debt means a more stable financial situation. Someone mentioned about a lowered standard of living as the result. Is it heresy to suggest that having less debt actually raises your net worth, thus your standard of living? I have always thought that driving a 9 year old car that is paid off is a better standard of living than having a new car with a $15k debt. Is this economy so dependent upon people maxing out their credit line?

The problem is speed. Going from a slightly net negative national savings to around twelve percent in under six months pulls a shit load of cash out of the system so quickly that it crushes businesses. We need to save more(me included), but taking twelve percent out of the economy right now won't help us recover.

[JPhillips]

Originally Posted by JonInMiddleGA

re: the SEC -- Anybody know what their caseload:investigator ratio is like? I wonder if they're in a similar situation to the FCC where there simply isn't anything remotely resembling enough bodies to investigate the number of cases that are generated. "Uncle Charlie" certainly has more than its share of village idiots & isn't immune to criticism by any stretch of the imagination but I know that their lack of speed does have a pretty understandable reason behind it. There is, quite literally, only so much one person can do and I just sort of randomly wondered whether the SEC was as understaffed in the enforcement end as the FCC is.

I figure some of our more inside-the-business posters here will have at least a general answer about that.

My wife worked at the SEC a couple of years ago. I don't know about investigators, but the legal staff handling violations is too small and the ease at which defendants can extend cases slows down the entire process.

I should add that all the political pressure, and this comes from both parties, is onreducing penalties and investigations. There's no money pushing more enforcement.

[Galaxy]

Originally Posted by JPhillips

My wife worked at the SEC a couple of years ago. I don't know about investigators, but the legal staff handling violations is too small and the ease at which defendants can extend cases slows down the entire process.

+1

Kind of the same idea with government spending. Spend when your down, save when your good (in economic terms).

[digamma]

Originally Posted by JonInMiddleGA

re: the SEC -- Anybody know what their caseload:investigator ratio is like? I wonder if they're in a similar situation to the FCC where there simply isn't anything remotely resembling enough bodies to investigate the number of cases that are generated. "Uncle Charlie" certainly has more than its share of village idiots & isn't immune to criticism by any stretch of the imagination but I know that their lack of speed does have a pretty understandable reason behind it. There is, quite literally, only so much one person can do and I just sort of randomly wondered whether the SEC was as understaffed in the enforcement end as the FCC is.

I figure some of our more inside-the-business posters here will have at least a general answer about that.

The SEC doesn't publish data on investigations, but they do publish data on enforcement actions initiated. If I recall correctly, the number of enforcement actions is up significantly (40% comes to mind) from 2008 to 2007. I believe there was a similar increase from 2007 to 2006.

I have no doubt that the staff of the enforcement division has a full agenda, however, I think the larger problem may be the organization of the SEC into the various divisions and the seeming lack of communication with the divisions. Most investors' interactions with the SEC are with the Division of Market Regulation. Those in the financial industry may deal with the Division of Investment Management. Issues that arise in these divisions must then be referred to the Enforcement Division for handling. Anecdotal evidence suggests this referral and transition process is less than efficient.

[flere-imsaho]

I'll bet the SEC is just as appropriately staffed as the FDA is. Which is to say: not at all.

[Galaxy]

Citigroup CEO says bank operating at profit - U.S. business- msnbc.com

[sterlingice]

I wonder how bad they had to cook the books to get to that conclusion

SI

[Flasch186]

it's before their marks so that number he's looking at could be BILLIONS off...

that being said I think that this will be the first cog in a run of better than expected news for awhile before settling in for the grind to 600 on the S&P.

(So Contra-flasch people should see a nice long term rally )

I got a nice $/avg on GE now so hopefully it'll stay up here and start to chew some gains before I can get out with the first profit in a stock in a long long time. I have enough carry over loss to last decades.

[Flasch186]

DOLA

Looks Like B. Frank dropped a nugget that they might reinstitute the uptick rule in a month. This is a very good thing and maybe Im right in that the next few weeks will see a bunch of good news coming out to alleviate some pressur eon the stock market and the capital raising/needs.

[sterlingice]

Strange how all of these regulations from the 30s (Glass-Steagall, uptick) actually made sense and that getting rid of them causes horrible problems.

As an aside, people wonder why we say "things used to be better" politically and the response is always "this is how it has always been- politics has always been partisan and nasty". Well, yes, up to a point but sometimes good stuff got done whereas it seems now nothing can be done that isn't at least partially screwed up.

SI

[Fighter of Foo]

Originally Posted by Buccaneer

In reading Buffett's latest doom about falling off a cliff, there is still something I am not grasping. Consumers are spending less and presumably, incuring less debt. Is that such a bad thing? Less consumerism means less resources being used (that's a good thing, right?), while less debt means a more stable financial situation. Someone mentioned about a lowered standard of living as the result. Is it heresy to suggest that having less debt actually raises your net worth, thus your standard of living? I have always thought that driving a 9 year old car that is paid off is a better standard of living than having a new car with a $15k debt. Is this economy so dependent upon people maxing out their credit line?

Long term, it's a very good thing. Short term it's terrible, because when we all cut back, more of us lose jobs, there's less $$$ floating around, and so on.

The current economy was indeed built on massive amounts of excess debt. The people yelling loudest for a return to that level are the ones who were benefiting the most.

[SportsDino]

I blame America's general acceptance of political corruption for those regulations being removed and all hell breaking loose. If you make it too easy for people to be crooks you will find plenty that go that way.

I trust Citi about as far as I can throw them, which if they keep shedding jobs I might indeed soon be able to throw them. So I guess I'll trust them when some of those asses finally get fired. I think the Citi bounce will run a bit because they are practically a penny stock now, but I'm watching them for a downturn at some point if the stock goes too gangbusters.

I think my pulling the trigger on GE at 6.0 (well 6.17) was the right move. I think as long as the news is majority decent they should do fine, although it really is long term play (I think they will be back over my old 11 within a year).

Liquidated my SDS and SKF on Friday during day, again, yippee!

Personally I am hoping for very boring news days for like a month. Market jumps like a bunch of morons on every tidbit of news, and Christmas time and first quarter always seem like people are stir crazy from winter or something. Even though I make more money off the shorting of crazy ass market volatility I'd rather do something else than time sells and covers. Not to mention I've got too much GE in my long portfolio now so I'd rather start hunting for other long term rebounders.

Ack, too much happiness. Economy is still screwed up folks if we don't fix some crap. Plenty of chances for it to keep going down, especially if Flasch's whole idea of a deflationary spiral is true (versus my idea of a cost cutting price anomaly). In this case we really want Flasch to be wrong, if that period was truly deflation a recovery is farther off, if it was economic panic cost cutting... there is the potential some businesses will get cut this year (perhaps a few more banks, maybe even one of them big), but the opportunity for others to start rebuilding in the wreckage.

Also jobs are still terrible, ya the market monkeys are all psyched about some hot air out of Citi and what not... but they'll get depressed next time an article hits about unemployment rate. There is no market bottom until jobs recover (note the bottom may statistically precede the job recovery because of the forward predicting nature of the market, i.e. the prices of stocks rebound before the actual hires occur, but it is because the company has regained its outlook of growth and is planning expansion, so it gets priced in).

[Arles]

I haven't been following this thread of late, but I figured it was a good spot to mention that the company I work for nearly tripled their orders from February to March. We were expect an increase, but we didn't think we'd be at this level until May at the earliest. Not that it means a ton, but semiconductor manufacturing is usually a leading indicator (by about 6-8 months usually). So, that could be a good sign for the fall.

[SportsDino]

I am hopeful we are going to see the other side of the frenzy when people realize they like making money again! But I don't want to say anything even remotely like a prediction. I will say the company I work for has an uptick as well. Unfortunately I'm afraid the FED of doom will decide to early on that they want to play games again, mess with things, and stall the whole process. It really is a bad thing to have power wielded by a special interest, because they have a tendency to make really bad decisions for the overall picture to satisfy that interest. In this case I'm afraid the FED will play with rates to try to give the banks more profit on their recently white-out covered balance sheets, and not quite cause a credit freeze, but divert more recovery dollars to making the banks look rosy and slow down investment as a side effect. Unfortunately the FED members themselves have too big a stake in the stock price of banks, they are hurting, and I think they are gonna take care of 'friends' first and gimp job creation to a pace slower than it could be.

[Galaxy]

I've been thinking the same thing for quite a while, but Meredith Whitney believes that the next credit crunch is coming with credit cards:

http://www.reuters.com/article/newsO...52921M20090310

Whitney says credit cards are the next credit crunch
Tue Mar 10, 2009 8:38am EDT



(Reuters) - Prominent banking analyst Meredith Whitney warned that "credit cards are the next credit crunch," as contracting credit lines will lower consumer spending and hurt the U.S. economy.

"Few doubt the importance of consumer spending to the U.S. economy and its multiplier effect on the global economy, but what is underappreciated is the role of credit-card availability in that spending," Whitney wrote in the Wall Street Journal.

She said though credit was extended "too freely over the past 15 years" and rationalization of lending is unavoidable, what needs to be avoided was "taking credit away from people who have the ability to pay their bills."

Whitney said available lines were reduced by nearly $500 billion in the fourth quarter of 2008 alone, and she estimates over $2 trillion of credit-card lines will be cut within 2009, and $2.7 trillion by the end of 2010.

"Inevitably, credit lines will continue to be reduced across the system, but the velocity at which it is already occurring and will continue to occur will result in unintended consequences for consumer confidence, spending and the overall economy," Whitney said.

Currently, there is roughly $5 trillion in credit-card lines outstanding in the U.S., and a little more than $800 billion is currently drawn upon, she said.

"Lenders, regulators and politicians need to show thoughtful leadership now on this issue in order to derail what I believe will be at least a 57 percent contraction in credit-card lines," she said.

Over the past 20 years, Americans have also grown to use their credit card as a cash-flow management tool, she said adding that 90 percent of credit-card users revolve a balance at least once a year, and over 45 percent of credit-card users revolve every month.

Whitney said the five lenders which dominate two thirds of the credit-card market need to work together to protect one another and preserve credit lines to able paying borrowers by setting consortium guidelines on credit.

(Reporting by Ratul Ray Chaudhuri in Bangalore)

[Flasch186]

well at this point it's hard to argue with her since she's been spot on thus far....unfortunately.

I dont know how the CC mentality is for regular people since I dont use one thereofre it's hard for me to have any anecdotal feelings on it or evidence to draw from. Do a lot of people view their CC limit as a part of their wealth equation?

[Galaxy]

Originally Posted by Flasch186

well at this point it's hard to argue with her since she's been spot on thus far....unfortunately.

I dont know how the CC mentality is for regular people since I dont use one thereofre it's hard for me to have any anecdotal feelings on it or evidence to draw from. Do a lot of people view their CC limit as a part of their wealth equation?

I pay mine off every month, so I with you on that count.

[sterlingice]

Originally Posted by Flasch186

well at this point it's hard to argue with her since she's been spot on thus far....unfortunately.

I dont know how the CC mentality is for regular people since I dont use one thereofre it's hard for me to have any anecdotal feelings on it or evidence to draw from. Do a lot of people view their CC limit as a part of their wealth equation?

I think a lot of people do. That "I'm in debt up to my eyeballs" commercial was out there because it resonated with people.

Personally, I just use mine for convenience and to rack up some reward points. Around the time I got out of college, however, I was living off of it and it took a while to pay it back so I don't ever plan on doing that ever again.

I'm worried that everyone's credit ratings are about to be battered when they start canceling or butchering everyone's credit lines indiscriminately. Then again, they were passing out money (credit) like drunken sailors so it's not like they're going to be responsible now.

Oh, and Capital One- I just got my reward from you last month. After jacking up my rate for no reason to 29%, I'm using one of the other cards I have now.

SI

[Galaxy]

Credit cards are managed by banks and lending institutions, correct, in terms of loan and setting the limits?

[Flasch186]

I think and it's a shot in the dark that when we're through this mess, on the other side, the gauge as to what is below, average, above FICO scores will have to be adjusted, for better or worse.

Originally Posted by Article

Japan Wholesale Prices Slide, Deflation Beckons
Topics:Inflation | Nikkei | Stock Market | Economy (Global) | Japan
By: Reuters | 10 Mar 2009 | 09:34 PM ET
Text Size

Japanese wholesale prices marked their biggest annual fall in nearly six years in February, prompting warnings that Japan faces broader deflation than just the one-off effect of sliding oil prices.

Japanese Yen
Photo by: Jesse Braun
Japanese Yen

In another gloomy sign, core machinery orders fell 3.2 percent in January as companies cut spending in response to a global downturn that is pushing Japan into the worst recession since World War Two.

Wholesale prices fell 1.1 percent in February from a year earlier, accelerating sharply from the 0.3 percent annual drop seen in January.

"Price declines are spreading from materials to other goods, and consumer prices are likely to start falling," said Azusa Kato, an economist at BNP Paribas.

"Japan is likely to enter a mild deflationary period. Other countries may not follow Japan into deflation because their level of inflation was originally much higher than Japan's."

Japan's economy is on course for its longest recession in modern times as a collapse in export demand is prompting companies like Toyota Motor [TM 60.18 2.50 (+4.33%) ] and Sony [SNE 18.31 0.73 (+4.15%) ] to slash jobs and scale back investment in factories.

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The Nikkei 225 Average [NIKKEI 7338.16 283.1802 (+4.01%) ] gained almost 4 percent in early trade Wednesday, with banking shares rising after Citigroup's chief executive said it was making profits, boosting Wall Street.

But shares are still lurking around 26-year lows and the Japanese government, which has already proposed its biggest budget ever to revive the economy, faces calls from ruling party lawmakers to take additional measures to support growth.

Falling oil and other commodity prices have eased costs for Japanese firms, but have stoked fears that price falls and weak demand could feed each other in a vicious deflationary spiral.

The final price companies charge each other for goods fell 3.1 percent from a year earlier, the largest decline since February 2001. Economists view final prices as a rough guide to likely pressure on prices in stores, and many see consumer inflation turning negative.

"Wholesale prices will continue to fall toward next year as companies are facing growing pressures to cut prices of consumer goods such as electronic items, heightening the risk of deflation," said Takeshi Minami, chief economist at Norinchukin Research Institute.

The annual slide in wholesale prices was the biggest since June 2003, although it roughly matched economists' median forecast of a 1.2 percent fall.

While the drop in core machinery orders in January was slightly smaller than a median forecast for a 4.5 percent decline, few analysts are optimistic about the outlook for capital spending.

"The pace of decline in core orders was somewhat narrower than expected, but the data still confirmed that companies keep cutting capital spending as their profits deteriorate," Minami said.

I know it's Japan and it's very very different than here but we ARE seeing signs of deflation and I truly hope Im wrong that it'll last a while because my money is bet otherwise and I hope it's a one-off.