Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

The Pool Hall I Loved as a Kid is Now a 7-11

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In Simon Jonson’s excellent Powerpoint presentation “Economic Recovery and the Coming Financial Crisis,” he argues that financial sector compensation and flawed  incentives were integral to causing the event, and that so far, the crisis has solved nothing (“the surviving oligarchs are stronger”). He copied a chart from the Wall Street Journal showing how distorted financial sector pay is to the rest of the economy in the long view (see below).  The Wall Street Journal reports tonight that 2009 bonuses will be at record levels, exceeding 2007.


 In other words, the people, companies and distorted incentive systems that managed to drive the financial system to the brink of collapse have not changed at all.  Extraordinary costs have been borne by our society (and our children), yet it is business as usual on Wall Street. 


The Greenspan put has morphed into the larger and more expansive and more morally hazardous Bernanke put, the people who did not see the crisis are selling hard that all the “toxic” problems have been remediated, and Washington is paralyzed by the power and access of the ever stronger financial oligarchs.

 

Johnson suggests that in the big picture it will end badly.  Who knows, but the compensation issue is not going to go down well with a weary public.


Pay2 

Nathaniel’s Bank Run (by Nathaniel Goodwin)

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Heavy snow and ice did some major damage to my house the past month, and the cheapest quote we got to repair the roof, gutter and siding was $9000. The homeowners check will not be here for another two weeks, so Mom and Grandma put some money in my account so we could pay the contractor who is supposed to finish the job by tomorrow. Today the contractor told me that we could get a 10% discount if we pay cash, so I decided to go to the bank and get the cash to pay him tomorrow (Friday).

$9000 is a lot of loot for someone like me, so I was a little nervous going in there asking for it let alone walking out in public with that amount. I went up to the teller and told him I would like to make a withdrawal. He asked my account number and how much, I mumbled, "$9000, please." He looked up at me, and said "$9000?" I told him yes, and he said he would need to talk to his manager.

He walked towards the back and began talking to an older woman, both started looking over and pointing to me in an odd way. Instead of staring back at them I started looking around nervously; noticing the security cameras pointing at me thinking, "Shit… they probably think I'm going to go buy some crack or something."

The older woman came up to me and said, "Hello Nathaniel, I'm afraid we will not be able to give you that amount today." (Crap, she knows my name, I'm began sweating profusely), "Can you give us two business days to get that amount for you, we have a nearby branch and could get that amount for you in two business days?"

"No!" I replied with my voice cracking, "I really need that money today!" (I can't wait two days, the contractor would be finished tomorrow, and I would lose the 10%.)

"Well can we get you a money order instead, would that work?" she asked. (The contractor is not going to accept a money order, I think he is trying to cheat on his taxes… Good lord, I'm in over my head…)

I told her no again and that I need cash, I need it today! She asked what I needed it for, like she knew I was doing something illegal. Sweating bullets and red in the face; I said, "I can't tell you what it's for; I need to pay someone for something, and I need the money tomorrow. I can't wait two business days!"

She said there was nothing she could do and that I would have to wait two days for that amount. I ran out of the bank, totally paranoid and my glasses were fogged up from the sweat. I ended up paying the contractor with a check for the whole amount, and the bank tellers probably think I'm a heroin addict or have gangsters after me.

When I got home I pulled up a chart of XLF, here is what I found. Makes me question the strength of some banks right now.

XLF 

 

My question is why couldn't the bank give me that amount of cash? I'm sure some readers here work for banks, maybe they could answer that. Do they not hold much cash in these small branches? What if Prechter's P3 really did happen, and people really did start pulling cash out of their accounts quickly?

It’s About Time

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Just for the halibut, I fired up Excel last night to do a quick time calculation. I entered the date of the market's nominal top (cell A1), the date of the bottom so far (A2), calculated the difference in calender days (B2), multiplied it by a Fibonacci .618 of those days (B3), and then added that sum to the date of the market's bottom. The result is in A3. And with that, I'm going to resume putting books in boxes……

0115-time