47 Replies to “Probably Just Coincidence”

  4. very, very sly of the graph maker to include the current president’s real surname.
    lovnin’ it…

  5. Why would you say that’s his real name? His mother married Soetaro years after Barack was born.

  6. Why would you say that’s his real name? His mother re-married years after Barack was born.
    The name Saetoro is also spelled wrong, which is usually a tip-off that the rest of the “facts” are billshoot.

  8. “correlation doesn’t mean causality”
    It absolutey does, when their primary role is to set tax rates, economic policy, and spend public money.
    Besides, why not ask them? When the numbers go their way, they’re the first ones to claim credit.

  9. Right. The Senate controls the employment levels in the economy.
    Jeez, get an education Kate.

  10. Hairy Balls:
    I agree. Government does not create jobs, they just create atmospheres through taxation policy which kill jobs.
    Example? The current recession is a logical consequence of wishful thinking that social justice could be achieved through political will that allowed ninja loans.
    Ninja? No income, no jobs, no assets. Government says it’s OK to lend you money because it’s your right to have a house.
    Example2? How’s the stimulus working for you so far. Cash for clunkers worked for a while, now car sales are flat again. The only difference is there’s a bigger debt piling up.
    Like the lesson Obama has not learned from Bob Rae’s Ontario … you can’t spend your way into prosperity.

  12. The government didn’t say it was “ok” for banks to do mortgage lending to high risk clients – they forced them to through legislation.

  13. As Bill O’Reilly said earlier this year: If the government knew there was a car being manufactured and they knew the wheels would fly off when the car reached speeds of 100 mph, they would be negligent if they did not pass some form of safety standards.
    In the case of the ninja loans, the regulators knew the wheels would fly off eventually, but were negligent in warning investors because it fit their social justice agenda.
    Then they blame Wall Street for their greed?
    What part of Wall Street has perfected the science of greed for decades did they not understand or expect? If nothing else, nobody in the history of mankind has been as successful in harnessing the greed within us all and turning it into riches than the United States.
    Without the ‘we can do anything’ attitude, the ninja loans would not have been possible.

  14. Economics for Dummies….
    Yep this economic mess was created by Clinton and enforced by the “community organizer” and encouraged by ACORN. Bwarney Fwank and the Dem Congress blocked Bush from putting things right.

  15. HJB: Clinton was running the US into the ground until The mid-term elections brought in the huge GOP majority led by gingrich and the contract with america.
    Governments CAN create jobs – by getting out of the way. The graph ably demonstrates the point.

  17. My point of caution about correlation and causation is that economies are complex, influenced by multiple factors.
    I agree that the legislature sets taxes, regulations etc…and most certainly, the US govt insanely forced banks to make those disastrous loans – and that was indeed a major cause of the recession- those low interest rates followed by the increase in rates in 2006 (when the Democrats took power in the Senate).
    BUT, to compare, we in Canada also entered into a recession with job losses and our banks did not make such loans. Our recession is not as bad as that of the US, thanks to our govt, BUT, we were affected. And problems arose in Japan, Germany,UK, which affected the US export and import economy.
    I’m not absolving the US Senate/House at all, just saying that it’s a complex situation.

  19. ET, your point is valid for the most part. The effect the U.S. economic policy has on the rest of the planet is because of the sheer size of their economy. Just like the analogy of the elephant that rolls over and crushes the mouse( USA vis a vis, Canada) applies to the same extent as the other G8 or G20 countries. The mistakes made by Clinton is so perfect of an example of unintended consequences as to be text-book. Wall Street made the best of a bad situation. Bad loans given out by the local banks(by CRA laws) to poor folk had to be underwritten by bigger banks further up the food-chain. Once the gravity of the situation was fully evident, the big-money people had little choice but to make the best of a bad situation. When the housing prices tumbled, the domino effect was unstoppable.
    Every bank, in every country was affected in some fashion. Even in Canada, our charter banks took a hit regardless of whether they gave out bad loans or not. The consequences of the Community Reinvestment Act had global implications that, once set in motion, were the start of the slippery slope to inevitable catastrophe. Other country’s laws and banking regs were no longer able to be insulated from the train wreck. Global finance is just too inter-connected to avoid what took place.
    The needed ‘correction’ today is to place strict lending safeguards and minimum requirements on those who wish to buy a home. In hindsight, it seems so ‘obvious’, but the U.S. congress thinks the way to fix it is to double-down and continue with status quo.
    Insanity is not strong enough a word to describe their thinking or actions.
    When banks are in peril of failing, you want as much debt as possible in those institutions. You certainly don’t want to have assets in them.

  20. If big unions are an intergral part of a political party in power, count on higher unemployment rates ceretis paribus arising out of their policies.
    Unions seek to reduce the supply of labour to keep its price higher than otherwise possible.
    It’s just a natural consequence – think of the NDP winning federally – what might happen to the unemployment rate?

  21. Careful Kate,
    Even though you’re in another country, I don’t think that would stop Obama from putting you on their black list.
    Now, why don’t you be like a good little Joe Kline, fall in line and start parroting Dem talking points.
    After all, you want to be a “real” blogger don’t you?

  22. still, It’d make a hell of a campaign poster for the upcoming house elections. With Barry’s name spelt correctly. Or perhaps a little icon of his joker face with the “socialism” tag under it. Perhaps as much a statement of the health of the US economy as “Labour isn’t working” did for Margaret Thatcher’s first election in the UK.
    http://images.google.ca/images?gbv=2&hl=en&safe=off&q=labour%20isn't%20working%20poster&um=1&ie=UTF-8&sa=N&tab=wi
    nota. at some point, making O.Hussien’s list of enemies will be looked at in the same light as making Charles’s “I’ve been banned” list at LGF.

  23. Here is a great example of revisionist history for you, the much maligned by President Obama NAFTA Agreement came into Effect in 1994, while being blamed for massive job losses the years following its introduction saw the best levels in employment ever recorded and moved the US into a high growth, low unemployment period for 20+ years. (6% unemployment is considered historically low)
    NAFTA is a prime example of the duplicitous and revisionist nature of the left, they talk up the new economy, but use the loss of the old economy to win support by rewriting the truth about the NAFTA impact, which really was a shift to a new free-trade growth economy.
    How anyone can back a policy platform so at odds with itself is beyond me, this applies in Canada and the USA.

  24. Illiquid assests….The only way to get the Zero and leftards to speak good about NAFTA is to re-name it Islamic something or other,and bring in all the rich cultural and economic things Islamofacists have produced. Oh wait. That’s what our are immigration depts. are doing. Silly me. I always wanted a suicide vest and woman in a feed sack.

  25. My post should read “12+ years”
    Obviously 20+ never happened because we all melted down recently for a completely different reason.
    Just like my brain did on the 2007-1994 mind bending mathematical equation.

  26. Well, I’ve seen a graph outlining increased spending during Republican presidencies, and decreased spending during Democratic presidencies.
    So, I agree with ET, one graph doesn’t really say much.
    Part of the problem is that I’m not really up to speed with how US politics actually runs – does the president run the show, or Congress, or the Senate? I’m really just too lazy to find out on my own.

  27. I believe the executive branch, the president proposes the budget , and the legislative branches , congress and senate have to approve or amend it. congress does not prep. the budget or provide direction , sort of like a board of directors.

  28. I blame Bush for one aspect of the economic collapse, that being the lifting of the “uptick rule” and the creation of 3X ETFs within the stock market, as well as a completely hands off approach to the bond and derivative markets.
    This allowed large hedge funds to drive down stocks far further than would’ve been possible; and to target large institutions for bear raids. The result was an incredible loss of wealth by Mutual Funds, Pension Funds, Sovereign Wealth Funds, banks, etc., and the collapse of several large banks. There is a very clear trail that leads right to these hedge funds, but since they grease both the GOP and DNC, only the small fish like Madoff will pay.
    These hedge funds created far more panic than need be through their Bush given power to drive stocks down unchecked. Bush lifted controls in 07 which had been in place since the Great Depression and what do you know, it took only 1 year for the predators to strike. Bush had a purist view of Capitalism, which was a complete hand’s off approach. The result was the greatest wealth destruction in nearly a hundred years.
    The Bush administration is a lot more to blame than most conservatives care to admit or care to educate themselves about. All the Democrat inspired foolishness with mortgages and Fannie and Freddie is true, but Bush and GOP politicians are as much to blame. Obama was handed a bad hand but he turned around and made it much much worse.
    Those trying to draw a correlation between Democrat and Republican run senates or houses since 2000 forget that most Republicans by 2000 were big government phonies … much like the CPC is slowling becoming today.

  29. Repealing the Glass-Steagall Act in 1999 set the stage for the fiasco.
    An overwhelming majority of congress (Senate and House of Representatives) voted to repeal the act. Due to the large majority, Clinton could not veto the will of Congress.
    Therefore, all brakes were off and both political parties are culpable for the fiasco.
    Is it any wonder that 67% of Republican voters say their party does not represent their interests (Rasmussen, I believe).

  30. Erik – the OMB, the office of management and budget, an executive office, prepares and proposes the budget. By the way, I think that Obama is currently smearing its actions just as he is also denigrating the CBO or Congressional Budget Office which checks and verifies spending estimates etc during the year.
    At any rate, they take their agenda from the president’s ideas of what he wants to do that year. This office, the OMB, prepares the budget, submits it to the president, who then submits it to both the house and the senate. It must be submitted by the first Monday in February of each year.
    Then, using this as a base, each part of Congress comes up with their own budget by mid April, and then, develops 13 bills by the end of June.
    Each step along the way is debated, with many advisors and so on.
    I presume it works; the many steps can insert both checks/balances and also, partisan interference.

  31. The houses of Congress can also enact, independent of the President, non-budgetary legislation which may require spending or taxation. These bills pass through each bodies’ Ways & Means Committee who develop the spending appropriations, borrowing requirements or taxation needed for the bill. It is a VERY powerful committee. Whatever party controls the body appoints the committee chair and the majority of its members. If the controlling party are tightwads or big spenders they can effectively ruin a President’s budget plans. The POTUS is influencial but not all powerful over the Congress.

  32. What is equally interesting is how the employment varies with the degree of left/rightness of the president. Under Reagan the rate drops quite quickly after that disaster of a president Carter left office and ramps up very quickly under the stewardship of that even worse disaster Owebama. That being said I also agree with ET that the senate may be a contributor to but is not necessarily the driver of the rate.

  33. C JUNK, NICE TO SEE SOMEONE UNDERSTANDS WHAT TOOK PLACE AND HOW, OR AT LEAST WE AGREE WITH OTHER, CHUCKLE. THE UPTICK RULE IS NOT PART OF THE CAUSE BUT WHEN THE SELLING BEGAN ADDED FUEL TO THE FIRESTORM. THIS PILING ON SELL OFF COULD HAVE BEEN PREVENTED IN LARGE PART OR AT LEAST SLOWED HAD THERE BEEN A PROPER UPTICK RULE IN PLACE. NOW OF COURSE GOVERNMENT REGULATORS WILL OVER REACT AND TRY AND TO BAN THE SHORT SELLING. FORGETTING OF COURSE WHO THE BUYERS WERE AT THE HEIGHT OF THE SELL OFF AND GETTING SOME OF THE LONGS OFF THE HOOK.
    HOPE YOU GOT THE GIST, LONG SATURDAY IN THE GARDEN AND MORE THAT A FEW RUMS.

  35. I love it when Kate weighs in.
    CJunk, as a seasoned commodity trader I propose to you that the uptick rule just delay’s the inevitable. All markets exceed on both the downside and the upside. The absence of an uptick rule in Stocks merely means we get where we are going faster. Not a bad thing at all. The uptick rule is a manipulation that only serves to allow the politically inclined time to think of how they are going to explain the collapse away. The uptick rule simply does not exist in vastly larger markets like foreign exchange. \\
    If it were not so why on earth is there not a downtick rule for upside action? Simple, the vast majority do not understand that markets move both ways and only play from the longside.
    Uptick rule is federally legislated training wheels. Dumb as s**t. If you lose in markets its because you had no risk control strategy. Simple as that.
    Community Reinvestment Act. Glass Steagal, Democratic Congress There’s your culprits.

  36. RCGZ: With hundreds of billions of dollars held in 3X short ETFs, there’s no doubt among not only seasoned pros, but academics, that the lack of the uptick magnified the sell-offs by hundreds of percent. It also meant that some Hedge Funds were able to crush entire sectors at triple the power using the new “Bush Special” ETFs … the uptick rule neutralizes the cumulative power of 3X ETFs (but surely, as a “seasoned” trader, you understand the math). The uptick rule, at the very least, greatly lengthens the time it takes to destroy a stock, hence quelling panic, and allowing for reason to take hold; if not actual vetting of the facts. All of this crushing power was made possible only after 2007 when the first 3X ETFs were introduced along with removal of the uptick.
    The combination of holding massive positions in Puts, and using triple short ETFs to drive down entire sectors at relatively small cost compared to gains in puts, created artificial downward pressure, which only fed panic selling.
    I do find it strange though, that as a “seasoned trader”, you so disparage rules that were in place since the Great Depression and acted to stem and cushion predatory practices. I also find it strange, that among the seasoned traders I know, you are the only one that views the uptick rule as a “training wheel” … when all the pros I know understand the relationship between highly leveraged short ETFs, the uptick rule, and/or, the combination of using artificial shorting of stocks in order clean up with puts. Even those who support the repeal of the rule, understand that without a vastly stronger and aggressive SEC, the repeal gives predators incredible power.
    Being a seasoned commodity trader, you understand then that a $70 stock can collapse between after market close and pre-market open; that commodity trading and stock trading are very different animals, as are currency exchanges. Commodities tend not to collapse in 1 hour … ever, and manipulation of them takes days or months to unfold if it is tried. For instance, can you envision nat. gas going from $6.50 to .03 cents in 1 hour …
    You also seem to confuse the use of safeguards in funds, to the actual destruction of companies and economies. Sure, a conservative hedging strategy can protect a fund, but it can’t protect trillions of dollars of corporate value or national wealth. That market, as you know, that falls 80% instead of 60% because of predatory practices can mean the difference between bankruptcy or survival … it can mean the difference between a solvent or insolvent pension fund, or depression and recession for an entire nation.
    There is no “down tick” rule of course, because you can’t destroy an economy, a company, or fund, by panic buying stocks and the velocity of buying never comes even remotely close to that of panic selling; especially on the macro scale.

  38. RCGZ: A commodity price collapsing over weeks or months is vastly different than a corporation’s stock going to near zero in one day. Furthermore, resource companies hedge against such moves to cushion commodity price volitility; something that can’t be done if an individual companie’s stock comes under attack. This gives them time to lay off workers, suspend drilling, reduce inventories, etc. Their actual stock price slides along with commodity slides, but never to the same degree as the commodity slide, and sometimes hardly at all.
    Another aspect is that governments move in to seize finacial firms when their capital levels fall below a certian minimum. This means that a bear raid can destroy a financial firm in a day, no matter the realities, no matter the actual facts, no matter the condition of the company books. A simple rumour can do this in nervous times. That’s why I’d like to see Chuck Schumer locked up for his rumour mongering and part in the destruction of IndyMac. There is compelling evidence that Schumer was the trigger for a bear raid that destroyed the firm, involving naked short selling and puts, made all the more possible by the lack of the uptick.
    Naked shorting, by the way, was never a massive problem until the uptick was repealed. From summer 07 until March 09, naked shorting combined with 3X ETFs and no uptick to crush the market far more than could’ve previously been possible.
    How many millions of individuals are out of work today partly because of this, we’ll never know. My guess is, many.
    Here’s a nice little primer:
    http://antisocialmedia.net/short-selling-hedge-funds-and-the-global-economic-meltdown/

  39. CJunk,
    You are entitled to your view of course. Here is the fatal flaw in your argument.
    “you can’t destroy an economy, a company, or fund, by panic buying”
    Well yes you can. Think tulip bulb mania. Dot.com mania.
    Dot.com companies WHERE destroyed during a period when the uptick rule was in place.

  40. A “vastly stronger and aggressive SEC”.
    You mean the same SEC that refused to bring Madoff to heel despite investigation after investigation?

  41. “that the lack of the uptick magnified the sell-offs by hundreds of percent.”
    How do you know this? An opinion from the University of Texas academic does not count. Hard evidence please.
    This should be interesting. I predict the conversation ends here.
    We’ll see I guess.

  42. RCGZ: Yet, that same SEC, the same one whose regulators usually move on to work for the very same firms they were regulating. Either reconstitute the SEC by vastly increases salaries and powers, or abolish the SEC and give the job to the FBI under a new financial division which pays huge sums to its investigators.
    As to the other part of our discussion; I’m simply stating that the repeal of the uptick enabled greater predatory practices and deepened the stock market collapse. Of course, the market would’ve collapsed even with the uptick, but opening of the market to 3X ETFs and the repeal of the uptick made the collapse much more precipitous. I speculate that the March bottom would’ve been more like the November bottom, a difference of trillions of dollars of value and perhaps financial markets wouldn’t have frozen up and would’ve unwound in a more orderly collapse. Lehman was the final straw; and Lehman was the result of a predatory raid.

  43. Oh,
    “resource companies hedge against such moves to cushion commodity price volitility; something that can’t be done if an individual companie’s stock comes under attack.”
    Of course they can hedge, puts on their company stock for one. Secondly, what does the stock price have to do with the viability of the business? It only comes into play when they go to raise money via secondary offerings CJunk.

  44. “repeal of the uptick made the collapse much more precipitous”
    Perhaps, but again you claim to know the unknowable.
    ‘vastly increases salaries and powers”
    Oh please. I can’t believe I am hearing this.

  45. RCGZ: The stock price comes into play with financial institutions, it’s part of the formula that goes into tier one capital. A stock price collapse means default. For instance, if BMO suddenly fell to $1.00, it would be in default and seized by the government.
    With non-financials the stock price is figured into the net value of the company. A stock collapse can mean default with creditors, etc., and insolvency. It all depends on how leveraged the company is and how much of a role its stock value plays in the bottom line.
    … and yes, you’re hearing me correctly. It is lack of strict regulation and powers that allow bear raids to take place. Would you, for instance, be for a smaller police force with smaller budgets? We are talking about crime here; crime enabled by feable rules and regulatory bodies.
    I’m glad though, that America is moving towards greater regulation of “the market” and especialy hedge funds who at this time operate in virtual secracy.

  46. You apparently want more government to protect you.
    You make good arguments…… and the financial markets are littered with the corpses of people who made good arguments, were absolutely correct…. but were too soon or too late.
    Personally, I will practice risk control rather than rely on Government to guard me against financial ruin.
    I wish you very Good luck in your investing/trading CJunk. I mean that sincerely.

  47. Thanks RCGZ, and I wish you the same.
    It’s funny in a way, talking about this, as my favorite trading is in 2X ETFs, and on occasion, 3X if there is a very clear and strong trend.
    But then, my stash couldn’t move a grocery store’s stock, least of all Lehman’s.
    Good luck then, and let’s hope for a horribly cold winter in the USA … I’d like nothing better than a nice run in Nat. Gas 😉

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