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bubba99
ParticipantVery soon we will have employment/unemployment numbers for 2007. Initially they will be O.K. The statistical model that BLS is using ignores the 5% of the work force that has been out of work for a year or more, and 80% of the remainder of the employment number is based on population, not real/actual employment numbers.
Since population is still headed up, the employment numbers will still be O.K. despite the construction, real estate, and finance layoffs. We will continue to see un-employment numbers below 5% through the middle of 2008, and most of America will still believe that we are not in a real recession, just a real estate slow down. The real un-employment numbers are already about 10% and growing.
The real kicker is that inflation will continue to grow, and is already in the neighborhood of 10% per year if calculated the same way it was in the 1970’s. The “new” way ignores most upticks by geometrically weighting increases and changing the “bread basket” to include a lot of “magic” calculations to lower the CPI in order to overstate the GDP. GDP is already negative and has been for some time if inflation is calculate in a non-political way.
So America has probably been in a recession for most of 2007, but the media and most of American do not know, nor understand why or what it means. So as long as the talking heads tell everyone that the economic numbers look good, the market and housing will stay “bubbled”. Even if ma and pa kettle are underwater, they will believe that a turn around is just ahead. Or at least until a real economic event like the trillions is credit default swaps based on mortgages explode.
ParticipantVery soon we will have employment/unemployment numbers for 2007. Initially they will be O.K. The statistical model that BLS is using ignores the 5% of the work force that has been out of work for a year or more, and 80% of the remainder of the employment number is based on population, not real/actual employment numbers.
Since population is still headed up, the employment numbers will still be O.K. despite the construction, real estate, and finance layoffs. We will continue to see un-employment numbers below 5% through the middle of 2008, and most of America will still believe that we are not in a real recession, just a real estate slow down. The real un-employment numbers are already about 10% and growing.
The real kicker is that inflation will continue to grow, and is already in the neighborhood of 10% per year if calculated the same way it was in the 1970’s. The “new” way ignores most upticks by geometrically weighting increases and changing the “bread basket” to include a lot of “magic” calculations to lower the CPI in order to overstate the GDP. GDP is already negative and has been for some time if inflation is calculate in a non-political way.
So America has probably been in a recession for most of 2007, but the media and most of American do not know, nor understand why or what it means. So as long as the talking heads tell everyone that the economic numbers look good, the market and housing will stay “bubbled”. Even if ma and pa kettle are underwater, they will believe that a turn around is just ahead. Or at least until a real economic event like the trillions is credit default swaps based on mortgages explode.
ParticipantThe idea that the contracts are balanced relies on each party being able to perform. If somewhere in the line of balances defaults, I don’t get paid, and then cannot pay out the whole chain unravels and no one gets paid. And this assumes that I ever had the ability to pay. One end of the CDS is mortgage or bond assets that may be worthless. The other is Joe CDS seller and his 2 or 3 hundred basis point premium to provide the swap. This is hardly going to cover a hundred million dollar loss.
Credit Default Swaps (CDS’s) are functionally like insurance, but with no retained asset requirements like a real insurance company. Some articles I have read put the amount of 43 trillion on garbage backed paper – you know CMO’s or marginal corporate bonds. This is the dirty little secret that will cause the FED to do everything it can to head off a financial “event”. The implications of a wide spread failure are staggering.
ParticipantThe idea that the contracts are balanced relies on each party being able to perform. If somewhere in the line of balances defaults, I don’t get paid, and then cannot pay out the whole chain unravels and no one gets paid. And this assumes that I ever had the ability to pay. One end of the CDS is mortgage or bond assets that may be worthless. The other is Joe CDS seller and his 2 or 3 hundred basis point premium to provide the swap. This is hardly going to cover a hundred million dollar loss.
Credit Default Swaps (CDS’s) are functionally like insurance, but with no retained asset requirements like a real insurance company. Some articles I have read put the amount of 43 trillion on garbage backed paper – you know CMO’s or marginal corporate bonds. This is the dirty little secret that will cause the FED to do everything it can to head off a financial “event”. The implications of a wide spread failure are staggering.
ParticipantThe idea that the contracts are balanced relies on each party being able to perform. If somewhere in the line of balances defaults, I don’t get paid, and then cannot pay out the whole chain unravels and no one gets paid. And this assumes that I ever had the ability to pay. One end of the CDS is mortgage or bond assets that may be worthless. The other is Joe CDS seller and his 2 or 3 hundred basis point premium to provide the swap. This is hardly going to cover a hundred million dollar loss.
Credit Default Swaps (CDS’s) are functionally like insurance, but with no retained asset requirements like a real insurance company. Some articles I have read put the amount of 43 trillion on garbage backed paper – you know CMO’s or marginal corporate bonds. This is the dirty little secret that will cause the FED to do everything it can to head off a financial “event”. The implications of a wide spread failure are staggering.
ParticipantThe idea that the contracts are balanced relies on each party being able to perform. If somewhere in the line of balances defaults, I don’t get paid, and then cannot pay out the whole chain unravels and no one gets paid. And this assumes that I ever had the ability to pay. One end of the CDS is mortgage or bond assets that may be worthless. The other is Joe CDS seller and his 2 or 3 hundred basis point premium to provide the swap. This is hardly going to cover a hundred million dollar loss.
Credit Default Swaps (CDS’s) are functionally like insurance, but with no retained asset requirements like a real insurance company. Some articles I have read put the amount of 43 trillion on garbage backed paper – you know CMO’s or marginal corporate bonds. This is the dirty little secret that will cause the FED to do everything it can to head off a financial “event”. The implications of a wide spread failure are staggering.
ParticipantThe idea that the contracts are balanced relies on each party being able to perform. If somewhere in the line of balances defaults, I don’t get paid, and then cannot pay out the whole chain unravels and no one gets paid. And this assumes that I ever had the ability to pay. One end of the CDS is mortgage or bond assets that may be worthless. The other is Joe CDS seller and his 2 or 3 hundred basis point premium to provide the swap. This is hardly going to cover a hundred million dollar loss.
Credit Default Swaps (CDS’s) are functionally like insurance, but with no retained asset requirements like a real insurance company. Some articles I have read put the amount of 43 trillion on garbage backed paper – you know CMO’s or marginal corporate bonds. This is the dirty little secret that will cause the FED to do everything it can to head off a financial “event”. The implications of a wide spread failure are staggering.
ParticipantI can’t figure out if this is some new R.E. mortgage scam, or they just get better drugs than the rest of us.
ParticipantI can’t figure out if this is some new R.E. mortgage scam, or they just get better drugs than the rest of us.
ParticipantI can’t figure out if this is some new R.E. mortgage scam, or they just get better drugs than the rest of us.
ParticipantI can’t figure out if this is some new R.E. mortgage scam, or they just get better drugs than the rest of us.
ParticipantI can’t figure out if this is some new R.E. mortgage scam, or they just get better drugs than the rest of us.
Participant“I’ve come to find you are all the same. Numbers oriented, mostly bitter, engineers.”
I always thought this was Piggington’s strength. People who understood finance, and understood that there was going to be an adjustment. Granted we were all wrong on timing and the “stickyness” of housing prices, but we did see the comming decline in prices as early as 2005 – some earlier.
Although we have re-hashed a lot of the mortgage meltdown “Numbers”, I would still like to see more on the real economy vs. the reported numbers, and more on the upcomming melt down in credit card debt. You know a numbers oriented analysis by some of our bitter engineers.
Participant“I’ve come to find you are all the same. Numbers oriented, mostly bitter, engineers.”
I always thought this was Piggington’s strength. People who understood finance, and understood that there was going to be an adjustment. Granted we were all wrong on timing and the “stickyness” of housing prices, but we did see the comming decline in prices as early as 2005 – some earlier.
Although we have re-hashed a lot of the mortgage meltdown “Numbers”, I would still like to see more on the real economy vs. the reported numbers, and more on the upcomming melt down in credit card debt. You know a numbers oriented analysis by some of our bitter engineers.
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