I've been thinking a lot about how much is riding on the economy at the moment. Not Wall Street, but Main Street. Yada yada no savings lots of debt no prospects nothing to lose. We armchair warriors are one thing, but we too have lots to lose from a breakdown in social order - not just people parking in front of hydrants, but a real failure of the social contract. Each of us here with our high speed internet, full slate of vaccinations, 3 squares a day and all that, are 1 percenters ourselves, even though we need to work for a living and have plenty to worry about.
I'm all for picking up bargain priced investments, but a real chew-the-tread-off-a-tire crash is not what anyone truly wants. Good luck entering an order in a true Mad Max scenario, and good luck trying to spend it. Etc. If the powers-that-be are flooding the markets, however futile it may or may not prove to be, I'm hoping for it to succeed. The alternative is unthinkable.
They've been ratcheting up fear all weekend, making the worst-case scenarios seem like the most-likely scenarios.
It's the same playbook they rant in 2009 to demand bailouts on casino capitalism's terms.
Eff 'em. I hope opponents to yet another corporate bailout hold the line.
Let their bondholders takeover Boeing and United and the rest of them.
Let there be markets.
Let there be capitalism.
Policy makers are clueless that Covid19 is not the cause of the crisis. It's just the catalyst that triggered the end of the 25 year credit bubble that was inevitable anyway. Had not the system been at the maximum fragility as a result of blowing the bubble to its actual limit, this crash would not have happened. Covid19 would have been a blip in the big scheme of things.
No. This crash is the end of bubble dynamics. It changes the way all of us think about the world.
And the first people to wake up to the change and react to it were the first leveraged long traders who started selling way back in September when repo funding rates went through the roof.
Then gradually more of the smart guys caught on. The trickle of selling became a wave, and the wave became a tsunami.
Collapsing asset values now destroy money faster than the Fed can replace it. Absolutely nobody wants credit for speculation any more. All they want to do now is liquididate and deleverage.
The Old Time religion is coming home after Greenspan and Bernanke kicked it out into the wilderness. They allowed, promoted, and enabled moral hazard to grow far beyond anything the normal human mind could imagine.
Finally in September we hit the limit. The system was no longer able to support the growth of the game. Everybody was margined to the hilt. And people started to go in reverse.
There's no turning back now. The big leveraged players who drove this have been destroyed. They are no more than smouldering piles of ash now. The smart money that got out first will now sit and wait, but there is too little to restart the game. We'll all be dead and gone for decades when the next game comes.
After this, people will be risk averse for two generations. There's a playbook for this. It's called the 1929 Crash and the Great Depression.
The tsunami will recede in a few weeks, and the destruction left behind will be generational.
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This is a very helpful link - you can view all of US but the top drop down let's you look at numbers for your own state for bed, ICU and ventilator shortages. This is from WU and based on their model I would say this will start of noisy (wrong) but as time goes on will get more and more accurate. So you can get a pretty good idea if you should stay in your state if you are at risk. California is in good shape in terms of ICU/Beds but we need more than a thousand ventilators. New York needs to massively expand.
Jimi, Sandy et. al.
I'm so grateful and proud that you guys have come back and made such valued contributions to the discussion. I hope you stick around this time when the bull comes back, but if not, thank you anyway from the bottom of my heart.
Jimi- I'm really glad to hear that you and your family got that ordeal!
Now on with the show!
There's a huge difference between now and 2009. The Fed started direct QE in March 2009. It worked immediately.
It started direct QE this time in late September. It worked for a while but the bubble had become so brittle that it collapsed anyway.
That was at the end of a 30 month bear market. Psychologically the players were ready..
This on just started.
This one faces trillions in new Federal Debt. All other nations area also issuing massive amounts of debt to fund stimulus.
So there's QE, and maybe it's starting to work on a delayed basis.
Or maybe this is just another countertrend bear market rally, and this is October 30 1929, not March 1933.
Which came AFTER the bank holiday.
I don't know if this is the bottom or not, but I doubt it.
"What concerns me most right now is how fast we can increase the number of ventilators and Extracorporeal membrane oxygenation devices (ECMO) in the next couple of months. A clinician is going to be less worried if the patient is dying of X than if the patient isn't able to breath and they can't do anything about it. We need oxygen. My second concern is PPE personal protective equipment for medical workers. If we have those two things ready I care a whole lot less about testing in term of immediate impact. "
I think SIP didn‘t realize that those links which we see in his post were not copied into the Stool Board. It is 6:50 a.m. in Europe right now. Guess once he woke up and logs into the Stool he will fix that. 🙂
btw Sandy, I like your insightfull very much. Thanks a lot! 🙂✌🏻
Not only "professionals". Also all those bloggers and "financial freedom with 30"nutcases, all those "Frugalists", Hipsters and all that other crap. They are all a sign of all 10 year long relentless bull market, which only saw minor downmove which were all corrected quickly by CB intervention. They are all playing moral hazard although they say only others do so. No. Every blogger who say that you only should buy the MSCI World every month with a fixed contribution plays moral hazard. No one on earth would have come up with such an idea in 1980 or 1981.
What we would need is a 10 year long relentless bear market to cure all that crap out. So that Schumpeter comes into play.
Problem is: we won't get a 10 year long bear market.
Italy demands solidarity from Germany, or EU 'will cease to exist'
European Union in 'mortal danger' because of divisions over virus crisis, says former Italian premier
My wife talked to her sister last night - an ER doctor in LA.
Running very, very low on masks.
Staff doing what it can to sterilize & reuse supplies.
April begins and this country still without coordinated overwhelming response.
$2 Trillion package - where are the masks?
I said last Friday or something that they would shut down the country over the weekend. Because they had no choice. I was wrong. It is mind-blowing that the administration and some governors are letting this continue to run amok.
This first wave has been "localized" to the largest American cities. Now watch this video:
Look at the bright lights in Atlanta - as spring breakers pass through its airport hub. Tell me the South isn't going to be engulfed in 2-4 weeks. Tell me that having first hammered 10 of the country's largest cities, that in 2-4 weeks, the next 90 largest cities are somehow not going to be hammered.
Texas Governor issues executive order for quarantine of new arrivals from tri-state region & New Orleans:
This sets the precedent - states are going to start limiting traffic between them... because the Federal government has told states to take care of the pandemic themselves, and because some states are letting the pandemic spread & spread, thereby threatening all the others.
Just horrifying what's been allowed to unfurl... that continues to do so.
I'd betchya the closest COVID-19 case is a lot closer than 600km away from you.
They're simply gonna have to shut the country down this weekend. Trump administration's incompetent feckless delays have left no alternative.
Hard times. Dead ahead.
Macy's should offer to convert its national retail floor space to giant hospital wards. US Army could move all the inventory out and stash it somewhere - anywhere. Macys have receiving docks for equipment. They are located in urban areas that will be hit, and they are often attached to malls that have food courts, that could support the medical community on site supporting the sick. And the B&M anchor retailers are all broke anyway - pay 'em for the service.
I want to show my 13 year old how to access executive compensation data, and have him start a non-stop Twitter feed documenting every MFer by name & trailing 10-year compensation.
Start with the airlines.
Then the cruiselines.
Then the banks.
FED LOWERS DISCOUNT RATE 1.50-PT TO 0.25%
FEDERAL RESERVE CHANGES FED FUNDS RANGE TO 0.00% TO 0.25%
FED WILL PURCHASE $500 BILLION IN TREASURY SECURITIES
FED WILL PURCHASE $200 BILLION IN MORTGAGE-BACKED SECURITIES