Stocks Dive 208 on Credit Problems

[Wiley]

rb,

Factor in inflation and your growth disappears.

[rb_engineer]

Wiley,

I don’t think recession is calculated with gdp growth adjusted for inflation. Correct me if I’m wrong.

[rb_engineer]

Wiley,

I don’t think recession is calculated with gdp growth adjusted for inflation. Correct me if I’m wrong.

[rb_engineer]

Wiley,

I don’t think recession is calculated with gdp growth adjusted for inflation. Correct me if I’m wrong.

[tangouniform]

Engineer, you’re mistaken if you think the fragments from imploding leveraged funds are less important than IEDs in “The Iraqi Oilcapades (Smart People on Sand!)”.

Like the newer IEDs found propped in the roadside rubble, the whole MBS market looks like a copper EFP aimed right at Mr/Mrs America’s tricked out, bought on HELOC-money Hummer. Bummer.

We’ve seen the central banks’ liquidity body armor in action the past few days but if you’re getting body armor hits then you’re too close to the fight, pardner, and you’re one lucky shot away from a body bag.

The other problem with being too close to the fight is air support is more difficult to direct. Sure, you can call in Helicopter Ben for a drop but some of your guys are going to get killed…

The bottom line is that while we may be using billions of OPM in Iraq and enslaving our kids, we don’t see the immediate effects. When the credit market and the housing market finally get marked back to rational levels we are going to see the effects first-hand and personally.

[tangouniform]

Engineer, you’re mistaken if you think the fragments from imploding leveraged funds are less important than IEDs in “The Iraqi Oilcapades (Smart People on Sand!)”.

Like the newer IEDs found propped in the roadside rubble, the whole MBS market looks like a copper EFP aimed right at Mr/Mrs America’s tricked out, bought on HELOC-money Hummer. Bummer.

We’ve seen the central banks’ liquidity body armor in action the past few days but if you’re getting body armor hits then you’re too close to the fight, pardner, and you’re one lucky shot away from a body bag.

The other problem with being too close to the fight is air support is more difficult to direct. Sure, you can call in Helicopter Ben for a drop but some of your guys are going to get killed…

The bottom line is that while we may be using billions of OPM in Iraq and enslaving our kids, we don’t see the immediate effects. When the credit market and the housing market finally get marked back to rational levels we are going to see the effects first-hand and personally.

[tangouniform]

Engineer, you’re mistaken if you think the fragments from imploding leveraged funds are less important than IEDs in “The Iraqi Oilcapades (Smart People on Sand!)”.

Like the newer IEDs found propped in the roadside rubble, the whole MBS market looks like a copper EFP aimed right at Mr/Mrs America’s tricked out, bought on HELOC-money Hummer. Bummer.

We’ve seen the central banks’ liquidity body armor in action the past few days but if you’re getting body armor hits then you’re too close to the fight, pardner, and you’re one lucky shot away from a body bag.

The other problem with being too close to the fight is air support is more difficult to direct. Sure, you can call in Helicopter Ben for a drop but some of your guys are going to get killed…

The bottom line is that while we may be using billions of OPM in Iraq and enslaving our kids, we don’t see the immediate effects. When the credit market and the housing market finally get marked back to rational levels we are going to see the effects first-hand and personally.

[rb_engineer]

tangouniform,

Not sure how to respond. I’ll try your last paragraph:

“The bottom line is that while we may be using billions of OPM in Iraq and enslaving our kids, we don’t see the immediate effects. When the credit market and the housing market finally get marked back to rational levels we are going to see the effects first-hand and personally.”

Result of things going on in the credit market will mean just one thing: higher rates. That will hamper demand and cause prices to come down to compensate. This has been happening for the last 3 years and will continue to happen until supply and demand is met. Basically, this is market at work and not very surprising. Not as scary as you think…

[rb_engineer]

tangouniform,

Not sure how to respond. I’ll try your last paragraph:

“The bottom line is that while we may be using billions of OPM in Iraq and enslaving our kids, we don’t see the immediate effects. When the credit market and the housing market finally get marked back to rational levels we are going to see the effects first-hand and personally.”

Result of things going on in the credit market will mean just one thing: higher rates. That will hamper demand and cause prices to come down to compensate. This has been happening for the last 3 years and will continue to happen until supply and demand is met. Basically, this is market at work and not very surprising. Not as scary as you think…

[rb_engineer]

tangouniform,

Not sure how to respond. I’ll try your last paragraph:

“The bottom line is that while we may be using billions of OPM in Iraq and enslaving our kids, we don’t see the immediate effects. When the credit market and the housing market finally get marked back to rational levels we are going to see the effects first-hand and personally.”

Result of things going on in the credit market will mean just one thing: higher rates. That will hamper demand and cause prices to come down to compensate. This has been happening for the last 3 years and will continue to happen until supply and demand is met. Basically, this is market at work and not very surprising. Not as scary as you think…

[HereWeGo]

I now find myself agreeing that a slowdown is in the cards. I did not agree with the whole MEW-consumer slowdown-etcetc bottom-up recession scenario, but this massive hit to the confidence of the credit markets could indeed squeeze the economy from the top down, especially if the Fed continues to sit on the sidelines. Consumer confidence hit a record high in July; I’d be willing to wager it will take a record 1 month drop from July to August.

[HereWeGo]

I now find myself agreeing that a slowdown is in the cards. I did not agree with the whole MEW-consumer slowdown-etcetc bottom-up recession scenario, but this massive hit to the confidence of the credit markets could indeed squeeze the economy from the top down, especially if the Fed continues to sit on the sidelines. Consumer confidence hit a record high in July; I’d be willing to wager it will take a record 1 month drop from July to August.

[HereWeGo]

I now find myself agreeing that a slowdown is in the cards. I did not agree with the whole MEW-consumer slowdown-etcetc bottom-up recession scenario, but this massive hit to the confidence of the credit markets could indeed squeeze the economy from the top down, especially if the Fed continues to sit on the sidelines. Consumer confidence hit a record high in July; I’d be willing to wager it will take a record 1 month drop from July to August.

[bsrsharma]

rb_engineer,

The credit crunch, its impact on home buying, bankruptcies of mortgage lenders with attendent unemployment of thousands, distress among home builders etc., are all strong indicators of downturn. But when the largest low end retailer has problem meeting expectations, I think we are in severe distress. What you are seeing is the result of households running out of spendable cash flat out. Obviously, it will take a while to restore normal spending pattern again. Since consumer spending is 2/3 of economy, the jump from Wal-Mart’s distress to general Economic distress is pretty easy. I am fairly confident in predicting a recession before middle of 2008.

[bsrsharma]

rb_engineer,

The credit crunch, its impact on home buying, bankruptcies of mortgage lenders with attendent unemployment of thousands, distress among home builders etc., are all strong indicators of downturn. But when the largest low end retailer has problem meeting expectations, I think we are in severe distress. What you are seeing is the result of households running out of spendable cash flat out. Obviously, it will take a while to restore normal spending pattern again. Since consumer spending is 2/3 of economy, the jump from Wal-Mart’s distress to general Economic distress is pretty easy. I am fairly confident in predicting a recession before middle of 2008.

[Author]

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