Please vote in this poll using the sidebar.
National Credit Crisis / Economic Crunch: Which Inning are We In?
- 1st Inning (7%, 25 Votes)
- 2nd Inning (19%, 69 Votes)
- 3rd Inning (32%, 116 Votes)
- 4th Inning (17%, 61 Votes)
- 5th Inning (10%, 37 Votes)
- 6th Inning (5%, 17 Votes)
- 7th Inning (5%, 19 Votes)
- 8th Inning (3%, 9 Votes)
- 9th Inning (1%, 4 Votes)
Total Voters: 357
This poll will be active and displayed on the sidebar through 03.29.2008.
Jump to the bottom to add your comment. ↓
42 responses so far ↓
1
The Tim
// Mar 23, 2008 at 10:41 am
I stole the idea for this poll from rose-colored-coolaid’s forum poll.
Happy Easter everybody.
2
Ben
// Mar 23, 2008 at 12:05 pm
Funny - I picked 3rd inning because it felt about right. We cannot claim that the national anthem is playing when Bear Stearns just went under. And that is the highest so far.
Interesting how there is almost a normal distribution at the moment. I bet Alan could explain why to me.
3
B&W Nikes
// Mar 23, 2008 at 12:17 pm
We are all still early in the game:
Britons are spending more than they earn, racking up a household debt-to-income ratio of 1.62 compared with 1.42 in the United States and 1.09 in Germany. -NYTimes
But they still have their wit:
“As yet, we have no confirmation that a new breakfast cereal, Credit Crunch, is replacing the customary Danish and coffee breakfasts at morning meetings across the City and Wall Street.” FT
Happy Egg Hunt!
4
Geode
// Mar 23, 2008 at 12:24 pm
6 th inning. For the past year we have been leading up to this nasty mess. I am looking for the home team to stay quiet through this year. Next year we can start cheering again. Hopefully we can put this lousy game behind us and look to the 09 season.
5
Scotsman
// Mar 23, 2008 at 2:07 pm
“You guys notice how this has evolved?
The consumer is still strong…Subprime is not a problem…Ok, subprime is a problem, but it will stay contained…OK, it’s not contained, but it will only affect the banks and not the broader market…OK, we will have a slowdown, but not a recession…OK, we will have a recession, but only a short/small one…no banks are in trouble…OK, Bear Stearns imploded, but that’s it, it’s over, it’s contained…”
Hard to hit a moving target!
Happy Easter!
6
Ira Sacharoff
// Mar 23, 2008 at 2:34 pm
This one may go into extra innings, depending on who we’ve got on the mound.
7
gitano
// Mar 23, 2008 at 2:51 pm
This one is in the 4th inning and it is going to cause some serious pain. The wonderful gains caused by easy credit is going to cause the opposite effect on the downward side. There were lot of people warning us against this is easy credit ride but we did not listen. The chickens are coming home to roost!!! Everyone will pay including wonderful SEATTLE!
8
Michael
// Mar 23, 2008 at 3:24 pm
I think that we will see a short term bubble 2.0, followed by a bailout and hyper inflation and then a longer term crash. I think credit will stabilize for six months as inflation booms and then the pressure of inflation will force the fed to cut interest rates. In fact I’m betting on this happening just as our new president takes office.
I said that the Fed would print more money and buy the mortgaged backed securities from the banks. Someone on the board said that the US mint prints money. While technically accurate it is the central bank (the Fed) that distributes and decides how much currency goes into circulation. The bank requires reserves from commercial banks which is why it is called the Federal Reserve but the Federal Reserve function and the Central Bank function are two separate roles. The reserves from commercial banks ARE NOT the only funds that the federal reserve has access to.
One of the main reasons the Fed exists is so that the branches of government can not simply print money when it is convenient. Zimbabwe was a developed country that tried printing money and ended up destroying the economy with hyper inflation. Wall Street has been up because the Fed is giving loans to investment banks (terrible idea) backed by mortgaged back securities. In other words the Fed is going to own the junk mortgages. The Fed is creating what in economics is called a “moral hazard”. The investment banks get huge profits as the bubble expands and then dump the investment on the taxpayer when it goes bad.
The Fed has already proven that they are incapable of stopping bubbles because of the pressure from member banks so they WILL BAIL OUT INVESTMENT BANKS and stupid lending will continue for another six to eight months. As hyper inflation hits the Fed will panic, interest rates will rise and the Bubble will suddenly deflate.
But I could be wrong.
9
Michael
// Mar 23, 2008 at 6:43 pm
http://www.bloomberg.com/apps/news?pid=20601087&sid=ad0zneiPUVjA&refer=home
Bailout on the way! Six trillion goes to the Fed.
10
matthew
// Mar 23, 2008 at 7:07 pm
Michael,
You are wrong. We will not face hyper inflation but massive deflation. The FED DOES NOT PRINT MONEY! The Fed sets the rate at which money is borrowed. The Fed has approximately 800 billion dollars it can lend, and its already borrowed approximately 500 billion dollars.
Any attempt at hyper inflating our way out of this mess nukes the bond market, the Fed knows this and will not “print”.
11
matthew
// Mar 23, 2008 at 7:08 pm
that sentence should say already lent 500 billion.
12
John
// Mar 23, 2008 at 7:59 pm
Baseball can be quite boring and I am already bored with the credit crisis. More! More! Show me the next trick!
13
toad37
// Mar 23, 2008 at 8:03 pm
Matthew,
No, you are wrong. We’ll see deflation in stocks and real estate, and inflation for things people need for day to day living- Food, water, gas.
We are in the 2nd inning an extra inning game.
Toad
14
matthew
// Mar 23, 2008 at 8:28 pm
We are experiencing monetary deflation, not to be confused with price inflation. Certain goods and services may experience some price inflation, but in the greater scheme of things what we are experiencing is a massive deflationary spiral.
15
Michael
// Mar 23, 2008 at 8:57 pm
Mathew,
Don’t you think we would have been bankrupt years ago if a guy with a printing press decided how much currency to put into circulation and thus the value of the US dollar?
The fed sets the discount rate NOT THE INTEREST RATE . The discount rate is the interest rate that is uses for short term lending to commercial banks (and now Investment Banks. It doesn’t matter who has the printing press only who tells them how much to print and the distributes it. This is the job of the federal reserve as “Central Bank.” What you are refering to is the “Reserve” part of the Federal Reserve System - the amount of money that a commercial bank is forced to keep in the Federal Reserve to opperate. This is immaterial because the fed is not limited to “Reserve” deposits.
Here are sources saying as much:
FROM THE FED WEB SITE:
“The Federal Reserve orders new currency from the Bureau of Engraving and Printing, which produces the appropriate denominations and ships them directly to the Reserve Banks. Each note costs about four cents to produce, though the cost varies slightly by denomination.
FROM WIKIPEDIA
“As part of this service relationship, the Fed sells and redeems U.S. government securities such as savings bonds and Treasury bills, notes and bonds. It also issues the nation’s coin and paper currency. The U.S. Treasury, through its Bureau of the Mint and Bureau of Engraving and Printing, actually produces the nation’s cash supply; the Fed Banks then distribute it to financial institutions.[17]“
16
Michael
// Mar 23, 2008 at 9:02 pm
Deflation: Priced of down
Inflation: Price go up
If anyone has seen prices go down then I would love to know about it.
17
matthew
// Mar 23, 2008 at 9:08 pm
Michel,
Let me ask you this, when Japan was suffering a massive housing correction and they cut their rate to 0, did they suffer hyper inflation?
18
Sniglet
// Mar 23, 2008 at 9:10 pm
Just ask the mill workers being laid off how well lumber prices are holding up. Concrete prices are beginning to fall too. Then, there are all the tradesmen who are being told they have to accept significant pay-cuts (regardless of their materials costs) from the contractors they depend on for business.
And this isn’t even mentioning both stocks and residential real-estate prices that have been falling all year. Even more bizarely, many private universities are starting to lower tuitions (who would have thunk it).
It seems that prices are indeed coming down in many areas.
19
matthew
// Mar 23, 2008 at 9:13 pm
Housing prices have gone down. Stock prices have gone down. Total dollars in the financial markets are down.
BSC didn’t just go TU because there is tons of liquidity flowing through the markets.
20
Sniglet
// Mar 23, 2008 at 9:34 pm
Oh… Did anyone happen to notice that gold and commodities (including oil) had their worst price drop since the 1950s last week? There were clearly a bunch of large funds getting margin calls, and liquidating whatever they could to raise cash.
I fully expect there to be some sharp whip-saw rallies, but the over-all trend for commodities will be down. Bear markets are always punctuated with the sharpest of rallies, but they are always short-lived.
21
wreckingbull
// Mar 23, 2008 at 9:48 pm
Another example of deflationary pressures, (as pointed out on Mish’s site) is new automobiles. Prices are being slashed; incentives piled on. The simple fact is that today, there are far fewer dollars chasing more or less the same amount of assets. Add to this that auto lending has tightened, just as home lending has. If anyone is looking for a new car, you will find the current and future deflationary environment to your liking, especially if you are paying in cash.
Don’t let rising commodity prices cloud your vision.
22
Jillayne Schlicke
// Mar 23, 2008 at 9:51 pm
This whole mess took 7 to 9 years to run up and it looks like it’s going to take 7 to 9 years to come back down. 2007 was year or inning number 1.
23
Eleua
// Mar 23, 2008 at 11:00 pm
Where do I click for “National Anthem?”
24
Scotsman
// Mar 23, 2008 at 11:16 pm
Eleua- I think AC/DC’s “Highway To Hell” is more what you’re after… ;-) Press B4
25
GregBiller
// Mar 24, 2008 at 12:46 am
Home prices were HALF the price they were in 1998 in “cool” locations like Seattle & San Diego. We were also in the middle of the “Good Times” of the DotCom boom. And everybody seemed like they had a good job; we all remember that, dont we? This tells me:
1. Inflation is WAY too high
2. We have way more people borrowing money(too many)
3. We have way too many people coming to this country(not to be racist)
As long as the Fed keeps cutting interest rates, inflation will rise(dollar will weaken). And we hold off the inevitable bad resession(possible depression). We havent seen the worst of this yet.
I’d say we are in the 2nd inning and we are trailing 3-0 with the potential of a 15-2 blowout loss.
Options:
1. Raise the interest rates to 8 or 9% and watch housing fall to Year 2000 prices, and wait 2 or 3 years for the economy to rebound.
2. Keep Cutting rates and watch housing lose only some value in ‘dollars’ because of inflation.
Too many Americans are too short sided and like having the homes they bought for $175,000 be worth 350K today, no matter what inflation says. They will want Option 2. And by judging all 3 Presidential candidates, they will give them Option #2.
We will be like Japan. Overcrowded, leading in technology, but with a severely bloated currency and borderline job market.
26
what goes up comes down
// Mar 24, 2008 at 6:01 am
hey where do you vote for no game at all — I am sure magnolia44 would agree with me, what is being talked about here doesn’t even exist — well, at least not in Seattle, LOL.
27
Moe Ronn - Realitor®
// Mar 24, 2008 at 6:58 am
Actually, I think the run-up happenend post 2002 and peaked around mid-2007 for us.
And, just to make a very blunt point. To say there is no economic crunch related to housing is to say that the sub-prime fall-out is contained. Did anyone own BSC stock. I’d bet you’d agree then, finally.
28
J.R.
// Mar 24, 2008 at 8:46 am
What should I choose if the game is over and the home team lost?
29
softwarengineer
// Mar 24, 2008 at 9:08 am
I’D SAY WE’RE IN THE 8TH INNING
And the score is 12 to 0, we’re behind too.
30
Buceri
// Mar 24, 2008 at 9:20 am
Great; “existing homes” sales went up in February (even though prices continue to go down).
One more number to drive the media’s “it’s the plateau”. “Get ready for the run-up” theories.
Oh well, “No one ever lost money underestimating the intelligence of the American people.” P.T. Barnum.
31
Cougar
// Mar 24, 2008 at 9:55 am
The game was cancelled when the Umps found out they weren’t gonna get paid. Fans left holding tickets rioted in the streets and did mass destruction. The stadium currently is being used to shelter homeless families no longer able to pay their mortgage.
32
gitano
// Mar 24, 2008 at 10:06 am
I am starting to wonder! The following house sold in 4 days
http://www.trulia.com/property/1053607127-13735-Roosevelt-Way-N-WA-Seattle-98133
Not sure if there is a comeback!!
33
Lionel
// Mar 24, 2008 at 11:01 am
“Great; “existing homes” sales went up in February (even though prices continue to go down).”
But down 30% YOY, despite it being a leap year, so 3.6% more days.
34
Buceri
// Mar 24, 2008 at 11:56 am
Good point Lionel. But chearleaders will spin it the other way.
35
Lionel
// Mar 24, 2008 at 11:59 am
Correction, drop was “only” 24%.
36
AndyC
// Mar 25, 2008 at 10:46 am
In a shout-out to the esteemed gentlemen at Lookout Landing, I would like to compare the current economic crisis to the 2007 Mariner’s. (Note: I use gentlemen loosely, and leave the ladies out because I would like to think that the fairer sex would avoid an environment dripping with testosterone and Napoleonic Complexes. I too am a Mariner fan, but sweet lord to they spend a lot of time analyzing useless statistics [ie how fast Manny Ramirez ran during one play, in one game, almost a year ago] I’m sure they would say the same thing about us, but I digress.)
With this in mind, I think we are likely in the top of the 4th inning. Jeff Weaver gave up 5 runs in the first two innings and the manager made a move to the bullpin, but brought in Ryan Feierabend (I don’t know who he is either, but his stats are AWEFUL) who proceeded to give up two more runs in the third.
Meanwhile, the Mariner’s have taken one step forward and two steps back in each inning. With the score at 8-2, Ben Bernanke… errr… Mike Hargrove (note he quits midseason) has to make a decision. Will he make a feable attempt to win the game by burning up his well rested bullpin, potentially leading to greater problems in the long run? Or will he conceed the loss and hope he wins the second half of the double header (aka rebuilding a stable economy).
Disclaimer: By using the Mariner’s as my example, I don’t mean to make the situation appear hopeless - though the Mariner’s appear to be a lost cause once again this season (I’m kinda like Randy Quaid in “Major League” - a fabulous film which earned an Academy Award nomination for Best Foreign Language Film - Note that it was the Japanese Film Academy).
37
Ira Sacharoff
// Mar 25, 2008 at 10:52 am
Sportswriter Tyler Kepner of the New York Times picks the Mariners to win the AL West in 2008…I think their prospects are much rosier than the 2008 housing market.
38
Climbwithoutadbt
// Mar 25, 2008 at 12:57 pm
If what Goldman Sacs says is true we are barely out of the 2nd Inning!
http://biz.yahoo.com/rb/080325/usa_credit_goldman.html
Goldman sees $1.2 trillion global credit loss
” U.S. leveraged institutions, which include banks, brokers-dealers, hedge funds and government-sponsored enterprises, will suffer roughly $460 billion in credit losses after loan loss provisions, Goldman Sachs economists wrote in a research note released late on Monday.
Losses from this group of players are crucial because they have led to a dramatic pullback in credit availability as they have pared lending to shore up their capital and preserve their capital requirements, they said.
Goldman estimated $120 billion in write-offs have been reported by these leveraged institutions since the credit crunch began last summer.”
39
Climbwithoutadbt
// Mar 25, 2008 at 12:59 pm
Forgot to mention, so if it took us 8-9months to get to the 2nd Inning, it may be another 20-24 months before we see all the write offs and a true bottom.
40
rose-colored-coolaid
// Mar 26, 2008 at 7:43 am
#1 You saved yourself with this post Tim. I saw the poll and thought…wait a minute. This is my poll with extra innings added! But since you gave me credit all is good. ;-)
#38 I voted for 2nd inning. Now I don’t know whether to feel smart that it meshes with Goldman Sachs, or to rethink my answer since none of the insiders have had a clue the entire way through this thing.
41
old timer
// Mar 27, 2008 at 7:41 am
To those who think we are at the 9th inning, may I please have some of whatever it is that you are drinking?
42
rose-colored-coolaid
// Mar 28, 2008 at 1:26 pm
#41, I have some kool-aid you can drink.
Just kidding.
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