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[mainiac]

California alone ranks in the worlds top 10 economies. I would also point out that it pays far more to the federal government than it gets back. Meaning that if it ceded from the union, it could solve its current budget problems completely from the tax money that it no longer bleeds into the Midwestern red states that get more money back from the federal government than they pay.

Midwestern states?  The midwest comes out roughly even.  It's the deep south and the plains states that are sucking at the federal teat.

[RedKing]

California alone ranks in the worlds top 10 economies. I would also point out that it pays far more to the federal government than it gets back. Meaning that if it ceded from the union, it could solve its current budget problems completely from the tax money that it no longer bleeds into the Midwestern red states that get more money back from the federal government than they pay.

Midwestern states?  The midwest comes out roughly even.  It's the deep south and the plains states that are sucking at the federal teat.

"Midwest" and "Plains States" are pretty much synonymous, IMHO. 
(Iowa, Kansas, Nebraska, the Dakotas, maybe Oklahoma, Missouri and Colorado if you're being generous with the term).

There's some jitter in the data from year to year as outlays change (especially due to BRAC), and population changes, but the top 10 "donor" states (in dollar-for-dollar return on Federal tax receipts) are typically:

Colorado
New York
California
Delaware
Illinois
New Hampshire
Minnesota
Connecticut
Nevada
New Jersey

while the top 10 "teat-sucker" states are:

Mississippi
New Mexico
Louisiana
Alaska
West Virginia
North Dakota
Alabama
Virginia
Kentucky
South Dakota

Common element on nine of the last ten is that they're predominantly rural and poor. Virginia is an exceptional case that I suspect has a lot to do with the billions of dollars of Federal outlays in the greater DC metro area of Northern Virginia, and the massive Naval complex at Norfolk/Newport News/Virginia Beach (the largest military installation in the world, actually).

EDIT: There's also a fair amount of military facilities in those bottom ten, especially Air Force bases. North Carolina places right around the middle of the pack, being a slight "recipient" state, at about $1.08 of Federal spending for every $1.00 of tax revenue (per 2005 figures). That's actually shocking considering the massive amount of defense expenditures in this state (Ft. Bragg, Seymour Johnson AFB, and Camp Lejeune are all major installations for their respective branches). We're getting screwed somewhere else, then.

[counting]

One major indices that's related to derivatives - VIX. Jump from 32 to 46. It's a panic indices measuring the expected volatility (a kind of futures). Everyone is selling short. Simply put a lot of the investors bet on daily changes of the major indices change 3%/day. (46/16) for 1/3 of the time, 6% for 1/3 of the time, 9% for 1/3 of the time in the following months. It's highest price is close to (Highest:46.90, closing:46.36) the closing price. No one is buying against the selling short.

This is not good. Most investors were becoming irrational today. Hopefully some good news will come out this week, and everyone stays rational. Or we will be watching another major crash in stock market. (it will be a small one regardless, probably already)

[Aqizzar]

Ouch. Most indices down around 5% (currently -538.60 on the Dow). Bad, but not colossally bad.

It feels colossally bad when its been doing for so many days in a row.  Oh well, it'll go back up once people stop panicking.

It's how markets work, because the irrationality of trading is it's own rationality.  If people abandon a stock, it's value drops, so people go "oh shit my stocks dropping", abandon it, and it keeps going until only the slow and the believers hold it, and then people willing to make bets start buying it again.  It's the same reason the upper echelons of American business are sitting on about $2trillion in capital and not spending it - they're holding their cash waiting for the market to stabilize, which itself makes the market "uncertain", which makes more people want to hold their money out of the system.

Basically, it's going to keep wobbling like this until either it either crashes like never before, of the Treasury declares financial martial law and America starts taking and spending money in a manner that actually follows economic understanding instead of pure faith.

[counting]

Ouch. Most indices down around 5% (currently -538.60 on the Dow). Bad, but not colossally bad.

It feels colossally bad when its been doing for so many days in a row.  Oh well, it'll go back up once people stop panicking.

It's how markets work, because the irrationality of trading is it's own rationality.  If people abandon a stock, it's value drops, so people go "oh shit my stocks dropping", abandon it, and it keeps going until only the slow and the believers hold it, and then people willing to make bets start buying it again.  It's the same reason the upper echelons of American business are sitting on about $2trillion in capital and not spending it - they're holding their cash waiting for the market to stabilize, which itself makes the market "uncertain", which makes more people want to hold their money out of the system.

Basically, it's going to keep wobbling like this until either it either crashes like never before, of the Treasury declares financial martial law and America starts taking and spending money in a manner that actually follows economic understanding instead of pure faith.

I don't think the top rich's capitals are in the form of 2-trillion cash (that's colossal stupid, no returns at all).  Most rich people holds a lot of properties that generate revenues (not in physical form but in the form of security). And the "real currency" is mostly sitting in your pockets, and bank accounts.

The purchasing power of stock market is indeed very irrational, and most financial market are holding in founds and security firms (in the name of investors). They can decide a major proportion of the stock market rises of falls. And the "understanding" of economics I think is far far away from becoming politicians' concerns as always. (They mostly concern the immediate effect, and short-term stimulate before elections, and economic cycle sometimes reflects not economical reasons but different political decisions. Like the famous Clinton-Bush changes).

[Aqizzar]

Okay, so the trading day being over, here's what some of the guys who watch this stuff for a living think.  The markets panicked at the S&P announcement, because everyone figured everyone else would panic and flee American bonds... but the value of T-bills actually rose slightly over the day.  Everyone abandoned ship figuring the stock market was going to crash, which indeed crashed it, but they all took refuge in US Treasury bonds.  Apparently, the world financial market still considers US bonds the safest place to hold your money, even as they were fleeing the market fearing the repercussions of those same bonds being downgraded by one (and only one) agency.

In other words, nobody trusts anybody else or has any confidence in the market in general, but nobody trusts S&P either.

[Virex]

Okay, so the trading day being over, here's what some of the guys who watch this stuff for a living think.  The markets panicked at the S&P announcement, because everyone figured everyone else would panic and flee American bonds... but the value of T-bills actually rose slightly over the day.  Everyone abandoned ship figuring the stock market was going to crash, which indeed crashed it, but they all took refuge in US Treasury bonds.  Apparently, the world financial market still considers US bonds the safest place to hold your money, even as they were fleeing the market fearing the repercussions of those same bonds being downgraded by one (and only one) agency.

In other words, nobody trusts anybody else or has any confidence in the market in general, but nobody trusts S&P either.

Except the people that are shortselling stuff like madmen of course, they fully trust the market to panic out in their advantage.

[counting]

Selling short is profitable in futures (in economics term, futures) "IF" there is someone against you. If not, the "price" (like VIX indies) of selling short will hang high and dry. (Every other time a trader raises the price a little, no one answers, and he keeps raising). It's in reverse in stock market. (a counter balance you may say - the derivatives are designed to quantified risks hence stabilize the market)

The traders in modern stock market don't just buying stocks using their saving or hard earning money, but use the money from other investors, and they are most likely securities as well. (Borrowed money). Hence it's the process of not willing of risking the opportunities and the burden of interests make a lot of the big players want to "cash-out" thus pay back their borrowings). Once it returns to a level where people are comfortable with financial risks in stock market, they will start borrowing again and buying in.

In any case, the bonds, notes, bills, as national debts (most nations not just U.S.) are way smaller than (<<) the risk of stock market. As the problem of US government securities goes, it's their quantity makes it impossible to avoid. (And issuing even more after the crisis). As long as there are some large financial organizations absorbs them (Fed and other central banks who have a lot of USD in foreign exchange reserves are major buyers), the long-term interest rate will keeps down, but at the price of issuing/importing more "currency". Another round of inflating USD may start to emerge (again), as already observed in the exchange rate, no one wants USD. (Euro as well, they are doing the same thing as US, and possibly even worse.)

P.S. Inflating currency isn't the same as "inflation", it's different concept and things. Don't confuse them. If you print a lot of "currency", but a lot of them are keeps in savings without entering the field of exchange, the inflation (against commodity) may not occurs. A likely scenario is that the banks are flooded with "currency" and no where to "sell" them to the loaners. Since no one is willing to take the risk in the future and borrowing more. Hence no more producing/selling goods, no raising in salaries, no one has the money to buy things, deflation may occurs against common sense. It's this anomaly that against many macroeconomic theory will make things going from bad to worse. (if the policy makers using the old economic policy as if things are still normal and thriving.)

[mainiac]

"Midwest" and "Plains States" are pretty much synonymous, IMHO. 

I've never heard them that way.  IMHO, midwest refers to the rust belt, stuff no farther west then Minnesota and Iowa.  When people talk about "the decline of the midwest" they are talking about car manufacturing, not farms.  And the midwest states are not sucking on the federal tit.  The great plains definitely stop west of Minnesota and Iowa.

While I'm not an expert on this issue, I believe that most of the "teat sucking" takes the form of medicare and medicaid bringing a lot more federal funds then then federal payroll taxes in the states pay for.

[counting]

Asian market opening low again. I got bad feeling about what VIX will be like at the end of the week.

[Nadaka]

The Nikkei fell... BELOW 9000!!!!1111eleven1! This was inappropriate humor.

[PTTG??]

Okay, so the trading day being over, here's what some of the guys who watch this stuff for a living think.  The markets panicked at the S&P announcement, because everyone figured everyone else would panic and flee American bonds... but the value of T-bills actually rose slightly over the day.  Everyone abandoned ship figuring the stock market was going to crash, which indeed crashed it, but they all took refuge in US Treasury bonds.  Apparently, the world financial market still considers US bonds the safest place to hold your money, even as they were fleeing the market fearing the repercussions of those same bonds being downgraded by one (and only one) agency.

In other words, nobody trusts anybody else or has any confidence in the market in general, but nobody trusts S&P either.

In other words, the announcement that something is worse than the alternatives caused everyone to rush to buy it?

[KaelGotDwarves]

Well, glad I dumped before the announcement because I figured rightly on being screwed over. Now if only everyone else I talked to listened...

EDIT: This upcoming New Yorker cover is relevant.

[RedKing]

"Midwest" and "Plains States" are pretty much synonymous, IMHO. 

I've never heard them that way.  IMHO, midwest refers to the rust belt, stuff no farther west then Minnesota and Iowa.  When people talk about "the decline of the midwest" they are talking about car manufacturing, not farms.  And the midwest states are not sucking on the federal tit.  The great plains definitely stop west of Minnesota and Iowa.

Hmm...must be regional differences in terms. I'd describe what you're referring to as "Midwest" as either "Great Lakes states" or "Ohio Valley states". And at least according to the Census Bureau, it does include the plains states. But anyways...

While I'm not an expert on this issue, I believe that most of the "teat sucking" takes the form of medicare and medicaid bringing a lot more federal funds then then federal payroll taxes in the states pay for.

Medicare should be higher based on age differentials. I could see that argument for places like Florida and Arizona, but neither of those are in the top 10 list. Elderly people don't retire in large flocks to Mississippi or South Dakota.

This PDF has some useful charts to break it down. Fig. 5 breaks it down by broad categories, per state. For Alaska and Virginia, the largest category of Federal expenditures is Procurements followed closely by Grants; for states like Alabama, Mississippi and West Virginia, the top category is "Retirement and disability".

Fig. 7 breaks it down per agency per state, and you see that for Alaska and Virginia, DoD is the lion's share of Federal expenses (you've got NORAD and the Pentagon & Norfolk/COMATLFLT, respectively). Fairly big DoD chunk in Hawaii (Pearl Harbor and COMPACFLT), whereas in New Mexico it's very low, and HHS and Social Security are relatively low as well. Main agency spender in NM is "Other Agencies", which could be a combination of the Bureau of Indian Affairs (there are a lot of reservations), the Bureau of Mines, the Department of Energy (Los Alamos), etc.

In some of the later charts, it's clear that Virginia is on the top 10 list almost entirely because of procurement contracts. Virginia gets more spending in Federal procurement contracts (most of it defense-related) than any other state, and almost twice as much as the #2 state, Texas. A lot of that has to do with defense contractors having their HQs in N. Virginia, to be close to the centers of decision-making, even though the actual expenditures might be used in factories elsewhere. North Carolina gets a disproportionate amount of spending on military salaries (#2 behind Texas...we even get more than California, despite the presence of 29 Palms and San Diego Naval Station).

There's a TON of good data in that document, and if I had the time, I could go through and probably come up with good explanations for each state's Federal expenditures. And for the most part, it's not just "they're a bunch of lazy, fat white people collecting Social Security and disability". I guess what I'm getting at is that while I agree with your assertion that many "red" states where Republicans bemoan Federal taxation and "big government" are actually net recipients of Federal largesse, that does not mean that those states should be looked down upon for being net recipients. There are often good, often progressive reasons why they receive disproportionate outlays.

[counting]

We are at float. And FED was really desperate.