View Full Version : The credit crunch, another view
Actual credit data, sourced directly from the Fed:
http://www.nowandfutures.com/images/credit_types_roc_short_term.png
Actual US commercial interbank loan data, directly from the Fed:
http://www.nowandfutures.com/images/interbank_loans.png
Longer term, same item:
http://www.nowandfutures.com/images/interbank_loans_long.png
Intentionally posted without comment
grapejelly
10-22-08, 03:53 PM
wow, it's all seized up. Really a tragedy. No bank will lend to another. All at zeroes.
The media got it right again. The gubmint is telling the truth as usual.
Thanks Bart, for posting this...I keep getting these 0% offers in the mail for credit cards and mortgage offers and I know they would all say "no way" if I actually responded to these pre-approved offers.
Everyone's all seized up. Right-ee-o.
I've posted those last two charts on every board and list that I'm on, plus sent them to a few key folk I know.
Let's see who has the stones to take it to an even broader audience...
phirang
10-22-08, 04:08 PM
Add some V and we've got liftoff... too bad that won't happen till there's a backstop to these defaults.
I've posted those last two charts on every board and list that I'm on, plus sent them to a few key folk I know.
Let's see who has the stones to take it to an even broader audience...
I'm missing it. The charts look like they were worse in 2001, no?
I'm missing it. The charts look like they were worse in 2001, no?
They were indeed... and we have a lot more the sky is falling and multi hundred billion bailouts and stimulus talk & action and emergencies etc. now.
Add it up and the picture smells quite bad to me, to say the very least.
Add some V and we've got liftoff... too bad that won't happen till there's a backstop to these defaults.
You mean the defaults that resulted from letting Lehman go under? *cough, cough*
And yes, there are very real and very many derivatives issues still out there... and *who* was supposed to regulate them and refused to, ignoring warning after warning after warning. And its not just Greenspan and a very few "very best people".
And *who* told us that interbank lending was critical and virtually non existent, in spite of the Fed's very own data?
I've posted those last two charts on every board and list that I'm on, plus sent them to a few key folk I know.
Let's see who has the stones to take it to an even broader audience...
Sorry Bart, I've already posted this link in Finster's forum. It seems somebody has stones:
http://www.minneapolisfed.org/research/WP/WP666.pdf
I'm trying to educate ITulipers for quite a while about Problem-Reaction-Solution scenarios, financial manipulation scams and about the artificial "crisis" that doesn't really exist ... but to no avail ... this is getting funny...:)
Sorry Bart, I've already posted this link in Finster's forum. It seems somebody has stones:
http://www.minneapolisfed.org/research/WP/WP666.pdf
I'm trying to educate ITulipers for quite a while about Problem-Reaction-Solution scenarios, financial manipulation scams and about the artificial "crisis" that doesn't really exist ... but to no avail ... this is getting funny...:)
I've had this data for literally years (ever since I was the first to reconstruct M3 in early 2006), and have been waiting to post it for someone - anyone - to even vaguely mention the area. It's almost unbelievably ironic that it was one of the smallest districts of the Fed itself that opened it up.
I'm too well know as a tinfoil hat guy these days, and it would likely not have been believed and just blown off.
Sorry, I am a step slow and missed the sarcasm. So we should all go long for POOM now as the crisis is BS?
phirang
10-22-08, 05:08 PM
You mean the defaults that resulted from letting Lehman go under? *cough, cough*
And yes, there are very real and very many derivatives issues still out there... and *who* was supposed to regulate them and refused to, ignoring warning after warning after warning. And its not just Greenspan and a very few "very best people".
And *who* told us that interbank lending was critical and virtually non existent, in spite of the Fed's very own data?
I dunno... I've seen projects put on hold and careers frozen (ahem ahem) because of lending constraints.
Now, whether or not the lending constraints were truely justified is another story... well, certain plump men in smoky rooms would concur they are! :)
Sorry, I am a step slow and missed the sarcasm. So we should all go long for POOM now as the crisis is BS?
No need for apologies. I'm having a great deal of trouble holding my emotions in check, considering the size of the engineered BS pile and all the other heinous crud from the Fed, Treasury and the US Congress.
The crisis isn't BS in most of the minds of investors world wide, and there have also been huge and real negative effects to economies world wide. The partially engineered recession (or possible upcoming depression if you prefer) is also very real, as is the crisis of confidence in economies, countries and monetary systems.
The thought has occurred to me that one possible reason for the Fed to have released that study is that they're trying to reverse the very large confidence damage - in and of itself a warning sign and sign of some desperation.
Bottom line, I'm still in CYA mode and trading and investing very cautiously, with hedges on most of my hard/tangible asset positions. The future remains very dicey and "the basics" continue to be the best investment, and "insurance" is also wise.
BiscayneSunrise
10-22-08, 05:27 PM
I dunno... I've seen projects put on hold and careers frozen (ahem ahem) because of lending constraints.
Now, whether or not the lending constraints were truely justified is another story... well, certain plump men in smoky rooms would concur they are! :)
I'll second that notion of projects going on hold. A friend who is a leading contractor in the area told me about a week ago his customers can't get funds. Zip, nada, nothing. Not from the banks, not from their country club buddies, not from anyone. And we're not talking speculative projects either. My friend got out of residential about 4 years ago and was concentrating on municipal backed infrastructure of all things.
So with all due respect to the Minneapolis fed and their working paper 666, it's not how things are down here.
Which brings me to my main question. The media (unreliable according to the Minny Fed) say that banks are sitting on all this new liquidity and either want to pay off debt or use it to finance acquisitions. This is, of course, totally believable, given the arrogance and political tin ears of many in the finance industry. So when teh fed studies their tea leaves and sees liquidity they may not know if it is in fact reaching those who need it. When will this infusion of cash reach main street?
phirang
10-22-08, 05:30 PM
No need for apologies. I'm having a great deal of trouble holding my emotions in check, considering the size of the engineered BS pile and all the other heinous crud from the Fed, Treasury and the US Congress.
The crisis isn't BS in most of the minds of investors world wide, and there have also been huge and real negative effects to economies world wide. The partially engineered recession (or possible upcoming depression if you prefer) is also very real, as is the crisis of confidence in economies, countries and monetary systems.
The thought has occurred to me that one possible reason for the Fed to have released that study is that they're trying to reverse the very large confidence damage - in and of itself a warning sign and sign of some desperation.
Bottom line, I'm still in CYA mode and trading and investing very cautiously, with hedges on most of my hard/tangible asset positions. The future remains very dicey and "the basics" continue to be the best investment, and "insurance" is also wise.
Don't get too wise for your own good, ya hear! :)
I'm thinking of moving back into GSE mortgage reit's once Q3 ends: LIBOR has been "fixed", and if it seizes up again, my shitty gold should retrace...
Don't get too wise for your own good, ya hear! :)
I'm thinking of moving back into GSE mortgage reit's once Q3 ends: LIBOR has been "fixed", and if it seizes up again, my shitty gold should retrace...
Finster has been known to tell me that I'm a wiseass, and I never disagree with someone who has a basement dungeon... ;)
And on a more serious note, I'm aware of various risks... and more aware of my conscience and "karma".
GSE wise, the GSDS charts on my Fed Watch page may be helpful in timing your entry. You have way more cojones than I for playing in that area.
phirang
10-22-08, 05:37 PM
Finster has been known to tell me that I'm a wiseass, and I never disagree with someone who has a basement dungeon... ;)
And on a more serious note, I'm aware of various risks... and more aware of my conscience and "karma".
Naaah... you may just end up articulating and promulgating something that Lady MacBeth would rather keep hidden.
You know how callous and obdurate old-money can be... comes with the sense of entitlement, non?
No need for apologies. I'm having a great deal of trouble holding my emotions in check, considering the size of the engineered BS pile and all the other heinous crud from the Fed, Treasury and the US Congress.
The crisis isn't BS in most of the minds of investors world wide, and there have also been huge and real negative effects to economies world wide. The partially engineered recession (or possible upcoming depression if you prefer) is also very real, as is the crisis of confidence in economies, countries and monetary systems.
The thought has occurred to me that one possible reason for the Fed to have released that study is that they're trying to reverse the very large confidence damage - in and of itself a warning sign and sign of some desperation.
Bottom line, I'm still in CYA mode and trading and investing very cautiously, with hedges on most of my hard/tangible asset positions. The future remains very dicey and "the basics" continue to be the best investment, and "insurance" is also wise.
Bart, if this is an engineered panic, and your charts and @$#'s Fed link are provocative, then the insiders go long right when the rest of the world cries uncle if I have it right, non? Forgive the training wheels, they are a bit ungainly. And it would seem bank stocks and real estate may be much less weak than they appear.
Naaah... you may just end up articulating and promulgating something that Lady MacBeth would rather keep hidden.
You know how callous and obdurate old-money can be... comes with the sense of entitlement, non?
That was no lady, that was Mac the Knife? :rolleyes: ;)
I'll just say that I know a lot more than I allow to show, and leave it at that.
Bart, if this is an engineered panic, and your charts and @$#'s Fed link are provocative, then the insiders go long right when the rest of the world cries uncle if I have it right, non? Forgive the training wheels, they are a bit ungainly. And it would seem bank stocks and real estate may be much less weak than they appear.
In my opinion, its only partially engineered - but the spin and lies and crud and misdirection etc. are unmistakable. And most folk of a certain profession are bankers, not banksters, to clarify something in general that some may wonder about.
Anyhow -- fundamentals are always present and can't be set aside, but manipulation and spin and behind the scenes stuff sure can massively confuse the basics and perception of most. I blow it too sometimes.
As far as bank stocks or real estate or other sectors, I'm a short term futures trader so don't go there much... but I *never* fight a trend, and both those sectors are still down trending - same as the majority of sectors. Trying to catch falling knives, whether caused by manipulation or spin or not, is usually painful.
Stated another way, I'm happy if I take the middle 50% of a move even if I do occassionally catch close to a top or bottom.
In my opinion, its only partially engineered - but the spin and lies and crud and misdirection etc. are unmistakable. And most folk of a certain profession are bankers, not banksters, to clarify something in general that some may wonder about.
Anyhow -- fundamentals are always present and can't be set aside, but manipulation and spin and behind the scenes stuff sure can massively confuse the basics and perception of most. I blow it too sometimes.
As far as bank stocks or real estate or other sectors, I'm a short term futures trader so don't go there much... but I *never* fight a trend, and both those sectors are still down trending - same as the majority of sectors. Trying to catch falling knives, whether caused by manipulation or spin or not, is usually painful.
Stated another way, I'm happy if I take the middle 50% of a move even if I do occassionally catch close to a top or bottom.
Do these charts make you rethink the silver lined hat a bit? (I have inferred from past posts and your avatar that you have a protective SHTF long position in silver, so forgive me if I am mistaken) More simply, is the end not nigh in your view? Or is your silver position insurance that the spinmeisters might lose control of their awakened beast?
Bart,
$#* had an interesting link (http://itulip.com/forums/showpost.php?p=56058&postcount=2) to a paper from the Minneapolis Fed
Myths about the Financial Crisis of 2008 (http://www.minneapolisfed.org/research/WP/WP666.pdf)
Clearly, the United States and the world economy are undergoing a major Financial crisis. Interbank borrowing and lending rates have risen to unprecedented levels relative to U.S. Treasury Bills. Several major Financial institutions have failed. These real problems have also been associated with four widely-held myths about the nature of the financial crisis and the associated spillovers to the rest of the economy. The financial press and policymakers have made four claims about the nature of the crisis.
1. Bank lending to non…nancial corporations and individuals has declined sharply.
2. Interbank lending is essentially nonexistent.
3. Commercial paper issuance by non…nancial corporations has declined sharply and rates have risen to unprecedented levels.
4. Banks play a large role in channeling funds from savers to borrowers.
Here we examine these claims using data from the Federal Reserve Board. At least based on data up until October 8, 2008, we argue that all four claims are false.
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Bart,
$#* had an interesting link (http://itulip.com/forums/showpost.php?p=56058&postcount=2) to a paper from the Minneapolis Fed
Myths about the Financial Crisis of 2008 (http://www.minneapolisfed.org/research/WP/WP666.pdf)
It suggests the same provocative thoughts.
From the paper it appears that the crisis is coming from financial and nonfinancial commercial paper (http://en.wikipedia.org/wiki/Commercial_paper) -- in other words Hedge fund derivatives
In the global money market, commercial paper is an unsecured promissory note with a fixed maturity of one to 270 days. Commercial Paper is a money-market security issued (sold) by large banks and corporations to get money to meet short term debt obligations (for example, payroll), and is only backed by an issuing bank or corporation's promise to pay the face amount on the maturity date specified on the note. Since it is not backed by collateral, only firms with excellent credit ratings from a recognized rating agency will be able to sell their commercial paper at a reasonable price. Commercial paper is usually sold at a discount from face value, and carries shorter repayment dates than bonds. The longer the maturity on a note, the higher the interest rate the issuing institution must pay. Interest rates fluctuate with market conditions, but are typically lower than banks' rates.[1]
It also tells you that the money creation in the current economy is not backed by any concrete assets, but rather only a promise to pay
phirang
10-22-08, 06:29 PM
From the paper it appears that the crisis is coming from financial and nonfinancial commercial paper (http://en.wikipedia.org/wiki/Commercial_paper) -- in other words Hedge fund derivatives
It also tells you that the money creation in the current economy is not backed by any concrete assets, but rather only a promise to pay
Is this a giant ploy to impose Sharia banking in the West? :D
Do these charts make you rethink the silver lined hat a bit? (I have inferred from past posts and your avatar that you have a protective SHTF long position in silver, so forgive me if I am mistaken) More simply, is the end not nigh in your view? Or is your silver position insurance that the spinmeisters might lose control of their awakened beast?
No - no change in my *long* term target of silver well over its $50 1980 peak. And yes, I do have a substantial core position that includes silver... which has been hedged to varying degrees since April 2008 or so.
My hard/tangible asset position is both an investment and "insurance".
Is this a giant ploy to impose Sharia banking in the West? :D
May be Schumacher's Buddhist Economics? (http://www.smallisbeautiful.org/buddhist_economics/english.html)
Also you may find this interview (http://www.transaction.net/press/interviews/lietaer0497.html) with Bernard Lietaer interesting
Few people have worked in and on the money system in as many different capacities as Bernard Lietaer. He spent five years at the Central Bank in Belgium, where his first project was the design and implementation of the single European currency system. He was president of Belgium's Electronic Payment System, and has developed technologies for multinational corporations to use in managing multiple currency environments.
He has helped developing countries improve their hard currency earnings and taught international finance at the University of Louvain, in his native Belgium. Bernard Lietaer was also the general manager and currency trader for one of the largest and most successful offshore currency funds. He is currently a fellow at the Center for Sustainable Resources at the University of California at Berkeley
<dl><dt>Sarah van Gelder of <tt>YES!</tt>:
Why do you put so much hope into the development of alternative currencies?</dt><dd>
</dd><dd>Bernard Lietaer:
Money (http://www.transaction.net/money/) is like an iron ring we've put through our noses. We've forgotten that we designed it, and it's now leading us around. I think it's time to figure out where we want to go--in my opinion toward sustainability and community--and then design a money system that gets us there.
</dd><dt> So you would say that the design of money is actually at the root of much else that happens, or doesn't happen, in society?</dt><dd>That's right. While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money - using markets and resources to do so. So designing new money systems really amounts to redesigning the target that orients much human effort.</dd><dd>
Furthermore, I believe that greed and competition are not a result of immutable human temperament; I have come to the conclusion that greed and fear of scarcity are in fact being continuously created and amplified as a direct result of the kind of money we are using.
</dd><dd>
For example, we can produce more than enough food to feed everybody, and there is definitely enough work for everybody in the world, but there is clearly not enough money to pay for it all. The scarcity is in our national currencies. In fact, the job of central banks is to create and maintain that currency scarcity. The direct consequence is that we have to fight with each other in order to survive.</dd><dd>
Money is created when banks lend it into existence [see article by Thomas Greco (http://www.well.com/user/cmty/market/money/) on page 19 of this issue]. When a bank provides you with a $100,000 mortgage, it creates only the principal, which you spend and which then circulates in the economy. The bank expects you to pay back $200,000 over the next 20 years, but it doesn't create the second $100,000 - the interest. Instead, the bank sends you out into the tough world to battle against everybody else to bring back the second $100,000.</dd></dl>
From the paper it appears that the crisis is coming from financial and nonfinancial commercial paper (http://en.wikipedia.org/wiki/Commercial_paper) -- in other words Hedge fund derivatives
...
It also tells you that the money creation in the current economy is not backed by any concrete assets, but rather only a promise to pay
Agreed on both points, and I'm glad that the Minneapolis Fed is helping to clear the air a little.
Here's a picture of comm'l paper components, per Fed weekly data. It isn't pretty, but its very far from catastrophic.
http://www.nowandfutures.com/images/comml_paper_components.png
Is this a giant ploy to impose Sharia banking in the West? :D
Cage. You. Now. ;)
Agreed on both points, and I'm glad that the Minneapolis Fed is helping to clear the air a little.
Here's a picture of comm'l paper components, per Fed weekly data. It isn't pretty, but its very far from catastrophic.
I think you are underestimating the impacts of derivatives in the current economic situation. Look at the liquidity pyramid -- and I believe it became even worse later - closer to 85% of world liquidity!
http://www.marketoracle.co.uk/images/global_liquidity.gif
I think you are underestimating the impacts of derivatives in the current economic situation. Look at the liquidity pyramid -- and I believe it became even worse later - closer to 85% of world liquidity!
Perhaps... but here's a chart that I've never(?) posted here before that shows an out there and alternative take on total money supply - with strong deflationary overtones.
http://www.nowandfutures.com/images/m3_credit_derivatives_bkx_adj.png
And I have an entire page on my site devoted to derivatives, with data sourced directly from the BIS and US Treasury, as well as many references to the "WMD" nature of them.
I'm unclear about what you're driving at.
I was just reacting to the phrase "far from catastrophic" in your previous post -- and I was just trying to imply that the intense deflationary scenario we are facing is in fact the catastrophe. I think the issues will come to the fore in a few months when the goods pipeline starts drying up -- that is when EJs scenario of inflation in a deflation will happen -- it will impact the US more because there are very few local producers -- in my view, the inflation will be selective -- first effecting products that are transported over large distances -- which is where letters and lines of credit are essential -- point in fact being the precipitous drop of the Baltic Dry Index
Idianov had an interesting post (http://itulip.com/forums/showpost.php?p=56126&postcount=2) about a forecast from the IMF which appeared to be forecasting a sudden stop
IMF is forecasting Sudden Stop (http://www.itulip.com/forums/showthread.php?t=5403&highlight=sudden+stop) in the case of significant financial shock in 2009:
http://www.itulip.com/forums/attachment.php?attachmentid=718&d=1224726413
And the World Economy is getting it:
http://www.itulip.com/forums/attachment.php?attachmentid=719&d=1224726598
Effective Fed rate is under 1%:
http://www.itulip.com/forums/attachment.php?attachmentid=720&d=1224726692
No - no change in my *long* term target of silver well over its $50 1980 peak. And yes, I do have a substantial core position that includes silver... which has been hedged to varying degrees since April 2008 or so.
My hard/tangible asset position is both an investment and "insurance".
Some of us are VERY SLOW on the uptake, can you please put what you think into some plain clear english that is easy to understand.
I don't need qualifiers, I do need to know what you are REALLY THINKING right now. Please don't hold back, I REALLY REALLY WANT TO KNOW.
No sarcasm in the above and none intended.
I think you got something big to say and MY EARS ARE WIDE OPEN.
Please say it, I'm listening.
I was just reacting to the phrase "far from catastrophic" in your previous post -- and I was just trying to imply that the intense deflationary scenario we are facing is in fact the catastrophe. I think the issues will come to the fore in a few months when the goods pipeline starts drying up -- that is when EJs scenario of inflation in a deflation will happen -- it will impact the US more because there are very few local producers -- in my view, the inflation will be selective -- first effecting products that are transported over large distances -- which is where letters and lines of credit are essential -- point in fact being the precipitous drop of the Baltic Dry Index
Ah - makes sense now. My basic points remain the same though, the actual stuff that has been put up and promoted so broadly as the huge or catastrophic problem just plain isn't.
Credit and interbank lending is in reasonably decent condition, and lending standards being as tight as they are and much saner than they were isn't horrible news.
It's well beyond ridiculous - lie and BS after lie and BS, vaguely reminiscent of the boy who cried wolf.
And yes, the BDI is in pretty bad shape. I used to use it as a trading aid when it led the various stock markets.
http://www.nowandfutures.com/images/baltic_dry_index_sp500.png
And a longer term picture:
http://www.nowandfutures.com/images/baltic_dry_index_sp500_long.png
<embed id="VideoPlayback" src="http://video.google.com/googleplayer.swf?docid=-4873798893434355104&hl=en&fs=true" style="width: 400px; height: 326px;" allowfullscreen="true" allowscriptaccess="always" type="application/x-shockwave-flash">
(Or direct Google link: http://video.google.com/videoplay?docid=-4873798893434355104 )
I always had the utmost admiration for those crooks and scam artists able to tell the most outrageous lies with a completely straight face ... http://www.itulip.com/forums/picture.php?albumid=7&pictureid=29
Great charts Bart. Thanks. Now I can wear my tinfoil hat with pride .... :D
Some of us are VERY SLOW on the uptake, can you please put what you think into some plain clear english that is easy to understand.
I don't need qualifiers, I do need to know what you are REALLY THINKING right now. Please don't hold back, I REALLY REALLY WANT TO KNOW.
No sarcasm in the above and none intended.
I think you got something big to say and MY EARS ARE WIDE OPEN.
Please say it, I'm listening.
No problem. I really don't know how to say it any clearer, while at the same time expressing that the future is uncertain and composed of probabilities.
I am uncertain, but I'm also very concerned about the next months and years - not a surprise at all.
How about this (and the last time I said this, I got flamed for being a gloomer and fear monger etc.) - if one does not have significant CYA insurance in place or at least plans underway in the areas of inflation protection and reasonably assured basic income and even a few weeks or even months of basic supplies, its unwise in my opinion.
Another way to state the same thing - the old Boy Scout motto of "Be prepared".
For me to state anything else or in stronger words would likely be inflammatory, and that would be even less wise. I'm not saying and guaranteeing that all hell will break loose or that massive S will HTF or that its TEOTWAWKI. I am saying that its well beyond prudent to take more than average precautions.
The government and many of our institutions have been lying to us, in greater or lesser degree, intentionally or not. It has been going on for far longer than most suspect (even me, as little as 4 years ago).
Much of our media has been complicit.
Investigative reporting quality and general integrity is as low as I've ever seen it in my over 60 years.
The average Congress person is very poorly educated on basic economics and economic history, at best.
There has never been a period in my life where the basic principles of the Constitution and Bill of Rights have been more trampled on as they have been in the last 7+ years.
The average school in the US is not a practical and broad based educational experience, to put it mildly.
We have money and power/control whores in many high positions in many companies, and on Wall St., and in most countries.
Derivatives are WMDs and their grand total is well over 10x world GDP.
Huge quantities of prescriptions for Prozac and similar mind altering drugs have been written and are being taken.
The Patriot Act.
We have guns and ammunition being bought and discussed in way higher than normal quantity.
Capital controls have been seriously discussed here and on many other forums.
Sudden currency devaluations do occur.
I do expect either something like the Amero or a global currency like Robert Mundell's Intor to come about within the next 10 years, but its just a semi educated opinion.
"Bad" people do exist.
"Social unrest" does occur throughout history.
We have terrorists based in a country that also has nuclear weapons (Pakistan).
Divisiveness is as high as I've ever seen it in the US, and even higher than the '60s althugh expressed in different ways - and excluding that we're in political silly season.
We have a President and Congress with amongst the lowest approval ratings in history, and who didn't listen to their constituents requests on the recent bailout/rescue.
There's lots more but you likely get the point, and belaboring it is also unwise. I've probably already scared the <censored> [censored] out of some.
And again, there are no guarantees of any future scenario, and prudence is wise as is not panicing. Panicing is about the worst thing that can be done.
How's that?</censored>
Great charts Bart. Thanks. Now I can wear my tinfoil hat with pride .... :D
Hey, he always said, "it was about the American people."
:):(:confused::mad::p;):D:o:rolleyes::cool::eek:
....he just didn't say what position they would be in to take it.
phirang
10-22-08, 09:47 PM
Great charts Bart. Thanks. Now I can wear my tinfoil hat with pride .... :D
guys, watch out for: PEAK CHEAP TIN FOIL!!!
I just can't live this down... forgive me. :P
Shit, I thought I was ready, but now I'll have to get some more red wine for the cellar. ;)
(Bait taker) OK, soooo, short PM's, long commercial real estate in the rust belt right?
:D
phirang
10-22-08, 09:55 PM
(Bait taker) OK, soooo, short PM's, long commercial real estate in the rust belt right?
:D
I'd actually be interested in some junk bonds, assuming the chinese will buy them from me at a premium.:D
No problem. I really don't know how to say it any clearer, while at the same time expressing that the future is uncertain and composed of probabilities.<censored></censored>
I agree with you save a few qualifiers :
Sudden currency devaluations do occur.Especially if they are strictly controlled at about 25-30% in order to "miraculously" solve the housing bubble at the expense of the ROW which financed it. :rolleyes:
In order to extent the debt seignorage to the rest of the world (aka New World Order) in the medium term future (I believe 4-8 years) they need to get US in a really good economic shape (through re-industrialization and infrastructure boom) while ROW will be set on FIRE. The manufactured/false TEOTWAWKI "reality" cannot last more than 3-6 months after the elections.
The Anointed One and his three wise men (Volker, Buffet and Stiglitz) will just act on a predetermined script but they will be credited with the "miraculous rescue"
http://blogs.cfr.org/setser/files/2008/10/trade-august-08-2.png
As phirang well said: "This whole thing is visibly a sham. They can make Borat Minister of Dollar, and it'd change nothing."
I want to close my tinfoil hat arguemnts with a literary quote form another site (with restricted access).
For centuries alchemists all over the world tried to discover the Philosopher's Stone ... that magic stone able to transform dirt and lead into pure gold. They believed that such a stone could offer the power to dominate the whole world just by the ability to create money at will and in any quantity.
So far the only result of centuries of work was the creation of modern chemistry. Even today, gold ore still has to be extracted from the ground, separated from tons of sterile rock or dirt, concentrated, purified, melted and poured into bars. The ancient alchemists failed in their quest, but not because they were uneducated, lazy or unlucky. They failed only because they were incredibly stupid.
The modern (Illuminati-NWO -cool boys) alchemists are a different breed. Their quest for obtaining the Philosopher's Stone can be summarized in the following time line:
-the engineered crash of 1907 resulted in the creation of the Federal Reserve System in 1913
-the engineered Great Depression of 1929 produced by excessive expansion of derivatives (stock/shares/loans-for-buying-shares) resulted in a huge deflationary spiral that could be ended only by reinflating the money supply.
-5th of April, 1933, Presidential Executive Order 6102 (not an act of Congress) made it illegal for ordinary citizens to use/posses gold as money. Gold is confiscated.The banks could still use gold as power-money, but that gold had to be kept by the Treasury and it's release was controlled by the Fed.
- by 1960 practically US had a global monopoly on world's gold reserves used as power money. But the Federal Reserve System could not remove the gold standard in banking as long as the US economy was in a good shape and the gold backed dollar a pillar of global financial stability. A departure from the gold standard could be produced only after many consecutive years of sustained US deficit and inflation.
- November 22, 1963, JFK is assassinated, one day after signing an executive order to withdraw all American troops form Vietnam in less than 6 months.
- November 23, 1963 LBJ cancels JFK's executive order and begins the escalation of the war in Vietnam (containment policy, domino theory, the Tonkin Gulf incident that never happened) as well as a set of costly, but ineffective set social programs (The Great Society).
- By the early 1970s, as the Vietnam War accelerated inflation, the United States as a whole began running a trade deficit (for the first time in the twentieth century). The crucial turning point was 1970, which saw U.S. gold coverage deteriorate from 55% to 22%.
- On December 17 and 18, 1971, the Group of Ten, meeting in the Smithsonian Institution in Washington, created the Smithsonian Agreement which devalued the dollar to $38/ounce, with 2.25% trading bands. It was intended to be a "temporary measure" introduced in order to "stabilize" the US economy.
- February 1973, the Bretton Woods currency exchange markets closed, after a last-gasp devaluation of the dollar to $44/ounce, and reopened in March in a floating currency regime. That was the end of gold standard in international banking, but gold still remained a small and very important component of the global power money reserves.
- 2001 GWB is sworn in office. September 11, 2001 AQ terrorist attacks. The Global War on Terror begins creating increased spending, high trade/government deficits and out of control growth of US debt as a result of military campaigns in Afghanistan and Iraq. US Federal Reserve lowers Federal funds rate 11 times, from 6.5% (May 2000) to 1.75% (December 2001)
- 2005 Housing Bubble bursts
- 2007 Subprime Meldown . The Commodities Bubble starts it's final upswing.
- July 2008-? Commodities Bubble bursts. The Great Deleveraging starts.
- August 2008-? The Great Global Liquidity Crisis starts.
- September 2008 - ? violent swings in the price of gold as well as the collapse of paper gold certificates market, result in the complete removal of gold as the most valuable and solid component of Power-Money banking reserves of the Global financial system.
- 2009 -??? - US Treasuries (printed-paper) becomes the only source of power-money which is the base of global banking system. The modern (NWO) alchemists finally achieve the centuries old goal of creating the Philosopher's Stone (aka Paulson's printing shop). They get an exclusive and unlimited source of money.
"He who controls all the Money of the World, controls the World!"- quote attributed to Mayer Amschel Rothschild
(this is June 2008 stuff, but probably it will hold till at least next year :D)
I'd actually be interested in some junk bonds, assuming the chinese will buy them from me at a premium.:D
Won't they be too busy buying US Trasheries? ;)
No problem. I really don't know how to say it any clearer, while at the same time expressing that the future is uncertain and composed of probabilities.
I am uncertain, but I'm also very concerned about the next months and years - not a surprise at all.
How about this (and the last time I said this, I got flamed for being a gloomer and fear monger etc.) - if one does not have significant CYA insurance in place or at least plans underway in the areas of inflation protection and reasonably assured basic income and even a few weeks or even months of basic supplies, its unwise in my opinion.
Another way to state the same thing - the old Boy Scout motto of "Be prepared".
For me to state anything else or in stronger words would likely be inflammatory, and that would be even less wise. I'm not saying and guaranteeing that all hell will break loose or that massive S will HTF or that its TEOTWAWKI. I am saying that its well beyond prudent to take more than average precautions.
The government and many of our institutions have been lying to us, in greater or lesser degree, intentionally or not. It has been going on for far longer than most suspect (even me, as little as 4 years ago).
Much of our media has been complicit.
Investigative reporting quality and general integrity is as low as I've ever seen it in my over 60 years.
The average Congress person is very poorly educated on basic economics and economic history, at best.
There has never been a period in my life where the basic principles of the Constitution and Bill of Rights have been more trampled on as they have been in the last 7+ years.
The average school in the US is not a practical and broad based educational experience, to put it mildly.
We have money and power/control whores in many high positions in many companies, and on Wall St., and in most countries.
Derivatives are WMDs and their grand total is well over 10x world GDP.
Huge quantities of prescriptions for Prozac and similar mind altering drugs have been written and are being taken.
The Patriot Act.
We have guns and ammunition being bought and discussed in way higher than normal quantity.
Capital controls have been seriously discussed here and on many other forums.
Sudden currency devaluations do occur.
I do expect either something like the Amero or a global currency like Robert Mundell's Intor to come about within the next 10 years, but its just a semi educated opinion.
"Bad" people do exist.
"Social unrest" does occur throughout history.
We have terrorists based in a country that also has nuclear weapons (Pakistan).
Divisiveness is as high as I've ever seen it in the US, and even higher than the '60s althugh expressed in different ways - and excluding that we're in political silly season.
We have a President and Congress with amongst the lowest approval ratings in history, and who didn't listen to their constituents requests on the recent bailout/rescue.
There's lots more but you likely get the point, and belaboring it is also unwise. I've probably already scared the <censored> [censored] out of some.
And again, there are no guarantees of any future scenario, and prudence is wise as is not panicing. Panicing is about the worst thing that can be done.
How's that?</censored>
Got ALL that (and agreed).
I was more interested in what you were leaning towards in terms of the reality of the present "crisis".
I thought you were going to say something, then appeared to stop short.
I just want to know (if you don't mind expanding) what that trailing thought was.
Down Under
10-22-08, 10:51 PM
Thanks for your reply, bart. However, I'm still having trouble understanding the overall gist of this thread. The gist, as I understand it, is that the credit lockup has been a lie, correct? Or, at the least, far less severe than painted.
Okay, I have accepted that the US has been lying for some time about a lot of things; that is not a surprise to me. But, if the credit lockup is largely a lie, what I don't get, what purpose has this served?
So, bart, I'd much appreciate your take on this, as I'm still struggling to get my head fully around this, even with your helpful response to jtabeb.
Got ALL that (and agreed).
I was more interested in what you were leaning towards in terms of the reality of the present "crisis".
I thought you were going to say something, then appeared to stop short.
I just want to know (if you don't mind expanding) what that trailing thought was.
Cool.
I thought that's what you were driving at, and you're right... but there are some things that I prefer not to rant about or inadvertently scare others about who don't have a broad enough view to put it proper perspective, and also some things that I can't or won't say due to promises or proprietary research or whatever - even non publicly.
Thanks for your reply, bart. However, I'm still having trouble understanding the overall gist of this thread. The gist, as I understand it, is that the credit lockup has been a lie, correct? Or, at the least, far less severe than painted.
Okay, I have accepted that the US has been lying for some time about a lot of things; that is not a surprise to me. But, if the credit lockup is largely a lie, what I don't get, what purpose has this served?
So, bart, I'd much appreciate your take on this, as I'm still struggling to get my head fully this, even with your helpful response to jtabeb.
Yes, you're correct - the credit lockup is horse puckey on the whole.
Part of it is undoubtedly covered in this quote:
"Never ascribe to malice that which is adequately explained by incompetence."
-- Napoleon Bonaparte
Part of it is the endemic disease amongst politicians or folk like Paulson to misdirect away from the truth as an operating rule, and then madly avoid and ignore and pretend etc. about the forthcoming foot bullets. The great unwashed masses are stupid, after all and the very best people must protect them... :rolleyes:
Part of it is as I noted before - there's more than a small chance that the reason the data was released in that Fed paper is that lack of confidence is now a major issue, and the Fed etc. wants to calm it down, even at the risk of tarnishing their own and others reputations. I note in passing a comment I made on another thread earlier today - the ESF has done more dollar interventions the last two weeks (this time via the Yen account) and just made the data public late yesterday. The dollar is not nearly as strong as some think - money is "an idea backed by confidence".
Part of it, sad to say, is that I think the worst is yet to come and we will likely not hear about many of them (at least directly) for years or decades to come, not unlike the Gulf of Tonkin or Pearl Harbor etc. since they're "national security" issues.
Stated another and darker way, its another 1984ish warm up (or in tinfoil hat mode, a test by & for the PWG/PPT) and also a prelude for the next acts to come.
phirang
10-22-08, 11:31 PM
Yes, you're correct - the credit lockup is horse puckey on the whole.
Part of it is undoubtedly covered in this quote:
"Never ascribe to malice that which is adequately explained by incompetence."
-- Napoleon Bonaparte
Part of it is the endemic disease amongst politicians or folk like Paulson to misdirect away from the truth as an operating rule, and then madly avoid and ignore and pretend etc. about the forthcoming foot bullets. The great unwashed masses are stupid, after all and the very best people must protect them... :rolleyes:
Part of it is as I noted before - there's more than a small chance that the reason the data was released in that Fed paper is that lack of confidence is now a major issue, and the Fed etc. wants to calm it down, even at the risk of tarnishing their own and others reputations. I note in passing a comment I made on another thread earlier today - the ESF has done more dollar interventions the last two weeks (this time via the Yen account) and just made the data public late yesterday. The dollar is not nearly as strong as some think - money is "an idea backed by confidence".
Part of it, sad to say, is that I think the worst is yet to come and we will likely not hear about many of them (at least directly) for years or decades to come, not unlike the Gulf of Tonkin or Pearl Harbor etc. since they're "national security" issues.
Stated another and darker way, its another 1984ish warm up (or in tinfoil hat mode, a test by & for the PWG/PPT) and also a prelude for the next acts to come.
DOES THIS MEAN I SHOULD SELL ALL MY STOCKS WHEN THE DOW HITS 6000?! :D:D:D
DOES THIS MEAN I SHOULD SELL ALL MY STOCKS WHEN THE DOW HITS 6000?! :D:D:D
1. I'll consult my Oiuja board
2. What's your sign?
3. Do you want to super size that?
4. Will that be Mastercard or Visa?
:rolleyes: :eek: :cool: :D
World Traveler
10-23-08, 12:25 AM
I have no expertise in this area, so I cannot comment. I'll just post article from Clusterstock.com. When I went over to that site tonight (I like their style of brief articles), I noticed that they had an article about the charts from the Minneapolis Fed. Below.
Is The Credit Crunch A Myth?
Joe Weisenthal (http://www.clusterstock.com/joe-weisenthal) | Oct 22, 08 3:07 PM
Remember a few weeks ago? Interbank lending had seized up. Small businesses couldn't get loans and large companies couldn't roll over their commercial paper.
Right?
A new paper from a trio of economists (http://www.minneapolisfed.org/research/WP/WP666.pdf) (.pdf) (via Organizations & Markets (http://organizationsandmarkets.com/2008/10/22/what-credit-crunch/)) at the Minneapolis Fed say it's all a myth. The argument: the numbers just don't bear it out. The economists present several slides, all culled from Federal Reserve data, suggesting that the reported stories aren't borne out by the facts. This first chart shows total bank credit for all US commerical banks up until Oct. 8th.
http://static.10gen.com/clusterstock.com/%7E%7E/f?id=48ff73a3796c7a2e006fdf43&ctxt=wwwr1.7.1&maxX=568&maxY=388
The next chart shows commercial, non-financial loan volume over the same time period:
http://static.10gen.com/www.clusterstock.com/%7E%7E/f?id=48ff746e796c7a2e006fe060&ctxt=wwwr1.7.1
The paper is filled with similar charts, all pointing to something similar. But we still feel it's lacking, because if there wasn't (or isn't) a credit crunch, then what's going on? What did everyone see that was so freakout-worthy?
Update: Felix Salmon (http://www.portfolio.com/views/blogs/market-movers/2008/10/22/the-credit-crunch-isnt-a-myth) chimes in with a confident explanation for why the credit crunch isn't a myth. He notes, as a commenter did below, that companies quickly accessed revolvers/bank lines once traditional markets started siezing up. Meanwhile, certain charts in the study don' t point to an interest rate spike, but, when you factor in that risk-free interest rates plummeted, you still get a severe spread widening.
http://www.clusterstock.com/2008/10/is-the-credit-crunch-a-myth-
grapejelly
10-23-08, 03:44 AM
Update: Felix Salmon (http://www.portfolio.com/views/blogs/market-movers/2008/10/22/the-credit-crunch-isnt-a-myth) chimes in with a confident explanation for why the credit crunch isn't a myth. He notes, as a commenter did below, that companies quickly accessed revolvers/bank lines once traditional markets started siezing up. Meanwhile, certain charts in the study don' t point to an interest rate spike, but, when you factor in that risk-free interest rates plummeted, you still get a severe spread widening.
and it doesn't take much to throw the system into severe dis-equilibrium, does it? When there is so much leverage.
We have learned here about the FIRE economy. But there are degrees of FIRE. The community bank around the corner is a low degree of leverage. The investment banks and big banks are highly leveraged and dangerous.
Could it be that when this is all done, we will still have the corner banks standing? And could it be that it's the big banks, Big FIRE, that is "on fire" right now, and crunched?
I expect...
1. Credit card lending will continue
2. Small business lending will continue
3. Big corporate lending will continue
4. All financed by the government one way or another
What gets crunches is all the big boys.
On a local and personal level, this recession/depression that is rapidly settling in...it will greatly affect people with assets, the middle class, and could wipe them out. It is already happening with the stock market crash. Normal folks who don't have a pot to piss in won't realize much in the way of anything better or worse. They'll still be sleeping in their cars.
What is going to happen I think is that the middle class is in the process of having all its assets looted away. I think the government will be there to make those good in nominal terms, but of course there will be an utter collapse in all assets that are financed, and soon all paper.
I don't think that's the end. I think there still will be institutions left standing, like I said. But nothing highly leveraged will last, and the value of physical tangibles will rise.
Sorry Bart, I've already posted this link in Finster's forum. It seems somebody has stones:
http://www.minneapolisfed.org/research/WP/WP666.pdf
I'm trying to educate ITulipers for quite a while about Problem-Reaction-Solution scenarios, financial manipulation scams and about the artificial "crisis" that doesn't really exist ... but to no avail ... this is getting funny...:)
Doubleyou P 666
Clearly your Congress needs to quickly make a law against civil servants with a sense of humour :D
Actually an inability to charge interest on credit would solve the 'money scarcity' problem. I for one would welcome that.
marvenger
10-23-08, 08:31 AM
i'm starting to think that maybe phirang is right. at first i thought that the US is going to be in serious trouble, they're still going to hurt, but a consolidation in power is happening in the US financial sector and these chosen few are becoming better capitalised and will be able to direct investment in a new economy it would seem; again financed to a large extent by overseas and the american taxpayer who gets to work as slave labour in the new economy for quite a while it seems. These pricks did nothing in my view to deserve this kind of influence other than being masters at controlling money through obsfucation and abuses of power.
phirang
10-23-08, 09:19 AM
i'm starting to think that maybe phirang is right. at first i thought that the US is going to be in serious trouble, they're still going to hurt, but a consolidation in power is happening in the US financial sector and these chosen few are becoming better capitalised and will be able to direct investment in a new economy it would seem; again financed to a large extent by overseas and the american taxpayer who gets to work as slave labour in the new economy for quite a while it seems. These pricks did nothing in my view to deserve this kind of influence other than being masters at controlling money through obsfucation and abuses of power.
Said it once, will say it again: there is no shortage of capital, but new rules are being written(not laws, but trade/fx etc). Once that it done, you'll be amazed how wrong these armageddon calls are.
Said it once, will say it again: there is no shortage of capital, but new rules are being written(not laws, but trade/fx etc). Once that it done, you'll be amazed how wrong these armageddon calls are.
In a fiat currency economy, there is never a shortage of money -- however, a shortage of "trust" can develop.
-- hopefully the new rules are written and implemented, and it is something as simple as a "system reboot"
-- but any good sysadmin knows that when a major change is made to a system, there are times when you wish you could just go back to the "old system!"
Bart,
One question for you regarding this 'credit crisis' being a sham:
The graphs don't seem to show a drop in lending, but similarly don't show a spike from the massive liquidity injections being made by the Fed and Government.
Unless I'm missing something, this would seem to lead to the conclusion that the graphed data is not linked to actual events.
There could be several reasons for this:
1) the credit crisis is not specifically a bank one, but rather a derivative lending one i.e. shadow banking system is collapsing
In this case, the bank lending might not be changing much, but the leverage allowed by the banks in its debtors is being reduced which in turn is affecting the entire economic system as this 'secondary leverage'/shadow banking was the actual lender of much investment
An obvious conclusion from this is that the 'value' created by the hedge funds/PE/whatnot (USIPs) and what not was really just the USIPs acting as leveraged intermediaries to the banking system. Or put yet another way: the USIPs were just using the same playbook as LTCM - vacuuming nickels on sure bets (lending, as opposed to speculating) and increasing results via massive leverage to show fantastic returns.
2) the problems we're seeing isn't because of a contraction in lending, but rather a lack of expansion in lending. In other words, the $s of loan vs. $ of GDP expansion that's been going on for 30 years recently has gone vertical, but the willingness/ability of the system (banking or otherwise) has not compensated. Thus economic problems due to effective credit withdrawal. A lot of words to describe a Ponzi scheme.
I'm not sure how important this is because if either case were true, the entire system is based on a pyramid which will inevitably collapse.
Of course the original conclusion could still be valid, but it is very clear that there are effects from lack of lending in the economy already:
witness rates of stock buybacks, M & A activity, housing sales, etc.
That many of these were artificial to begin with is irrelevant. The point is once you've punched the extra holes in your belt, going back to where you were before is always a letdown :p
c1ue,
I'm not sure of the question. but if you look at just the commercial bank lending portion of my credit chart below you'll see quite a spike that was date coincident with the bailout. It jumped from about 5.5% annual change rate to 9.5% in just 3-4 weeks. Comm'l/industrial loans jumped from about 12.5% to 14.6% annual change rate too. There is no reliable public USIP data that I've located, but I suspect a similar pattern shows with them.
The crisis is indeed a derivatives one, based on the (lack of) confidence in both their actual worth and their longer term reliability, as well as pyramid or Ponzi situations. Money in them is an idea backed by confidence too, and the confidence is rightly very low. Note the large drop in growth rates of them starting in mid 2007 too.
As far as overall lending, it has indeed contracted, peaking in roughly late 2005 and slowly sliding to about 10% annual growth in Aug 2007, and dropping recently to about 6% annual growth... and has perhaps reversed in the last few weeks, but the jury is far from in on that. For perspective, annual credit growth dropped to the 3.7% annual rate range at the bottom in 2002.
Keep in mind the concept of monetary lags ( http://www.nowandfutures.com/money_and_lags.html ) and the effects of dropping velocity too - quite complex inter relationships.
http://www.nowandfutures.com/images/credit_types_roc_short_term.png
Additional thoughts from JesseL, roughly in the area of the topic:
http://jessescrossroadscafe.blogspot.com/2008/10/buyers-of-treasuries-cannot-take.html (http://jessescrossroadscafe.blogspot.com/2008/10/stand-and-fail-to-deliver-massive-fails.html)
http://jessescrossroadscafe.blogspot.com/2008/10/just-theory-but.html
Additional thoughts from JesseL, roughly in the area of the topic:
http://jessescrossroadscafe.blogspot.com/2008/10/buyers-of-treasuries-cannot-take.html (http://jessescrossroadscafe.blogspot.com/2008/10/stand-and-fail-to-deliver-massive-fails.html)
This is the correct link for "Buyers of treasuries..."
http://jessescrossroadscafe.blogspot.com/2008/10/buyers-of-treasuries-cannot-take.html
http://jessescrossroadscafe.blogspot.com/2008/10/just-theory-but.html (http://jessescrossroadscafe.blogspot.com/2008/10/just-theory-but.html)
This is a very interesting entry:
Much of the selling in these markets is pure forced liquidation by the institutions and the funds, both hedge and index, that are being squeezed out by redemptions and credit tightening by their prime brokers and commercial bankers.
How can there be a liquidity crunch?
Because the biggest pigs are at the Fed and Treasury program trough, where all the short term liquidity is being served, and they are crowding out the rest of the market, and sitting on their reserves.
It might just be out of fear, but a better look at the numbers would disclose if they are also selectively shorting the market to drive down prices, and will then buy up some fairly valuable assets on the cheap while covering at the bottom and the turn up.
It is most likely, if true, that this is an 'unintended consequence' of supplying massive amounts of cheap liquidity to a "national economy" through the somewhat narrow conduit of nine banks who are more market players and traders than bankers, and not constrained them in its use.
Will the US end up with a set of oligarchs who own most of the goodies? One can only wonder.
My take: After each crisis the US ends up with a set of oligarchs who own most of the goodies.
It is obvious that the $700 bailout was nothing else than cheap selective financing for the basket of bargain priced goodies. X-mas in October ;)
marvenger
10-23-08, 07:11 PM
well paulson knows what his trading banking buddies will do with first access to the cash, they know they've got everyone goolies, and these guys think its their right to take whatever they can manipulate. Get rid of the FED!
friendly_jacek
10-24-08, 09:54 AM
The crisis isn't BS in most of the minds of investors world wide, and there have also been huge and real negative effects to economies world wide. The partially engineered recession (or possible upcoming depression if you prefer) is also very real, as is the crisis of confidence in economies, countries and monetary systems.
The thought has occurred to me that one possible reason for the Fed to have released that study is that they're trying to reverse the very large confidence damage - in and of itself a warning sign and sign of some desperation.
Bottom line, I'm still in CYA mode and trading and investing very cautiously, with hedges on most of my hard/tangible asset positions. The future remains very dicey and "the basics" continue to be the best investment, and "insurance" is also wise.
This is a very interesting thread and gives more substance to $#* (did I spell it correctly?) and phirang's claims, that are outrageous on a surface.
I personally am an anti-conspiracy person, as unusual things do happen without external help all the time, but this gives me a lot of food for thought.
Lets think about motives:
1. Paulson and his Wall Str cronies stealing more money: possible but way too simplistic
2. Banking cartel getting worldwide power: likely, I guess this is the main thesis by $#*
3. Total lack of competence at the top, very likely, but read below
3. An attempt to shot down commodity prices that went wrong (too well)
I think it is safe to assume that the MO of Bush administration is mitigating the peak oil (acknowledged indirectly by them, the oil guys who know some about geology). The plan A, Irak war did not work well. This could be plan B, cooling global demand to lessen the visible bubble in oil future markets.
Alternatively, there is no conspiracy at all and the global economy caved under the oil shock this summer, and officials (in a pocket of oil lobby) are pointing at banking as scapegoats, so no one would be blaming the oil shortage. This could be as well plan C, deny and ridicule peak oil as long as possible, till it is self evident (worked for long time with global warming).
friendly_jacek
10-24-08, 09:57 AM
It is obvious that the $700 bailout was nothing else than cheap selective financing for the basket of bargain priced goodies. X-mas in October ;)
I would say even more, the same way injections of liquidity went into oil speculation back in march 2008, the same way the extra liquidity now went long onto $ USD (or effectively shorting everything else).
"First they came for the Russians; I crunched the numbers, and did nothing.
Then they came for the Brazilians; I crunched the numbers, and did nothing.
Then they came for the Koreans; I crunched the numbers, and did nothing.
Then they came for the Germans; I crunched the numbers, snickered, and did nothing.
Then they crunched my numbers, and I did something: I took out my big fat wallet and said, "I'll charge that to American Express."
:eek:
labasta
10-24-08, 07:46 PM
I agree with you there Grapejelly.
Lending will have to come from the government again like it always did traditionally. No highly leveraged stuff anymore. It puts globalisation at severe risk still as no-one is quite sure just how little clothes the Emperor is really wearing.
I'm putting together my thoughts on this entire issue. I've thought out most of it. I hope to have it ready by the end of the weekend and post it for comment. It'll be a simpleton's view of the this crisis.
Labasta,
You may consider reading Elaine Supkis (http://elainemeinelsupkis.typepad.com/)
She uses interesting metaphors but it should give you some thoughts to think over
This is a very interesting thread and gives more substance to $#* (did I spell it correctly?) and phirang's claims, that are outrageous on a surface.
I personally am an anti-conspiracy person, as unusual things do happen without external help all the time, but this gives me a lot of food for thought.
Lets think about motives:
1. Paulson and his Wall Str cronies stealing more money: possible but way too simplistic
2. Banking cartel getting worldwide power: likely, I guess this is the main thesis by $#*
3. Total lack of competence at the top, very likely, but read below
4. An attempt to shot down commodity prices that went wrong (too well)
I think it is safe to assume that the MO of Bush administration is mitigating the peak oil (acknowledged indirectly by them, the oil guys who know some about geology). The plan A, Irak war did not work well. This could be plan B, cooling global demand to lessen the visible bubble in oil future markets.
Alternatively, there is no conspiracy at all and the global economy caved under the oil shock this summer, and officials (in a pocket of oil lobby) are pointing at banking as scapegoats, so no one would be blaming the oil shortage. This could be as well plan C, deny and ridicule peak oil as long as possible, till it is self evident (worked for long time with global warming).
The whole "conspiracy" area is something else, and quite difficult (at least for me) to put into words clearly. I very much *do not* believe in the classic smoke filled back room where the evil people meet to plot taking over the world, and believe that its closer to an alternate definition: A joining or acting together, as if by sinister design: a conspiracy of wind and tide that devastated coastal areas. The word cartel also works for me.
And with all the research I've done and all the behind the scenes stuff I've located and documented over the years, and doing things like reconstructing M3 when the Fed discontinued it supposedly because it would save then $500k, etc. etc. - well, I've been forced to acknowledge that my previous way of looking at the Fed, Treasury, Congress, etc, was woefully short sighted and that I was badly under educated and unaware of the full picture.
At any rate, I'll just comment on your points:
1. Greed does play a part, unquestionably
2. Power & control over others is a facet of a certain type of person, and some of those are "bad" people in the sense that the effects that they create hurt way more folk than they help over the long term. There are others like Volcker in the early 1980s who hurt many on the short term but helped more in the long run too.
3. "Never ascribe to malice that which is adequately explained by incompetence."
-- Napoleon Bonaparte
4. Very far from impossible... and also part of the '70s pattern (and similar patterns or cycles throughout history) in the sense of "History doesn't repeat itself, but it does rhyme." -- Mark Twain... but with the volume turned up.
Then there's:
"In politics, nothing happens by accident. If it happens, you can bet it was planned that way."
-- Franklin D. Roosevelt
as well as many other applicable quotes, the law of unintended consequences, criminals, over and under regulation by governments throughout history... and the very general "the human condition" which describes it all but also doesn't do much for helping to resolve it other than providing a label.
But bottom line, things like the massive lying and spinning as documented by the initial charts in this thread and their confirmation by the Minneapolis Fed itself (as well as items documented in threads like Commonly held false data (http://www.itulip.com/forums/showthread.php?t=4482) ) tell us a great deal about where we are and what the Fed, the Treasury and much of the government and various politicians are *not* doing about it, and that there is a large group of folk that do not have the country's and world's best interests at heart for whatever reason or reasons... and if nothing else, that's a conspiracy of false and sometimes heinous ideas and actions with which we all need to deal with in the best ways we can find and take action on.
EasternBelle
10-25-08, 05:41 AM
Bart,
thanks for the info. On first view it seems to show that there is no such thing as a frozen market in interbank lending. On the other hand tif the data is nominal I and since M3 (according to John Williams at ShadowStats) money has been growing in the double digits this past year(s), maybe so has interbank lending. It doesn't mean that all the banks get the money they need/want to borrow. could you expand on the conclusions that you draw?
The other data showing credit growth does seem to hold with the current view of a fall of in credit and commercial. Real estate might be picking up again because of the de facto nationalisation of the market.
Eastern Belle
Bart,
thanks for the info. On first view it seems to show that there is no such thing as a frozen market in interbank lending. On the other hand if the data is nominal and since M3 (according to John Williams at ShadowStats) money has been growing in the double digits this past year(s), maybe so has interbank lending. It doesn't mean that all the banks get the money they need/want to borrow. could you expand on the conclusions that you draw?
The other data showing credit growth does seem to hold with the current view of a fall of in credit and commercial. Real estate might be picking up again because of the de facto nationalisation of the market.
Eastern Belle
Conclusion wise, besides the points and recap in post #48 the basic concept is the continual and unending attempts to do sentiment and confidence control.
Money, being at root an idea backed by confidence, must have the confidence of the folk using it. Otherwise, the whole monetary system has cardiac moments... and that's what we've seen for weeks and even months now - worldwide. And its far from just being about the US dollar.
Occam's Razor wise, its the simplest view in my opinion to just take the data as issued by the Fed & Treasury at face value (regardless of how accurate or inaccurate it may be) and just go from there. My own weekly M3 reconstruction, which was published months before Mr. Williams one, shows the same very high growth rate - currently just shy of 16%. That kind of high growth rate will eventually translate into significant inflation.
Interbank lending, while a little bumpy, shows zero real problem and is not even close to the reaction post 9/11. Credit growth has indeed fallen quite a bit... but is still far above the growth rate at the bottom in the last recession. The comm'l/industrial, real estate and bank credit sectors have shown rather large growth spikes in the last few weeks too. Note that I'm not saying that we've hit bottom, just that bottom fishers and similar have jumped back in lately.
The Fed has virtually doubled its balance sheet in just the last few weeks, and the word unprecedented is a severe understatement. Last week, the Treasury TIO pool (which I use as a proxy for the PWG/PPT actions) reached a spike total of about $80 billion in an effort to support the markets since its now a matter of "national security".
The real problems are not about interbank lending or credit growth or recession or even inflation/deflation, but rather a crisis of confidence about fiat money itself and also of course the WMD of derivatives themselves. It's far from over.
phirang
10-25-08, 06:03 PM
Conclusion wise, besides the points and recap in post #48 the basic concept is the continual and unending attempts to do sentiment and confidence control.
Money, being at root an idea backed by confidence, must have the confidence of the folk using it. Otherwise, the whole monetary system has cardiac moments... and that's what we've seen for weeks and even months now - worldwide. And its far from just being about the US dollar.
Occam's Razor wise, its the simplest view in my opinion to just take the data as issued by the Fed & Treasury at face value (regardless of how accurate or inaccurate it may be) and just go from there. My own weekly M3 reconstruction, which was published months before Mr. Williams one, shows the same very high growth rate - currently just shy of 16%. That kind of high growth rate will eventually translate into significant inflation.
Interbank lending, while a little bumpy, shows zero real problem and is not even close to the reaction post 9/11. Credit growth has indeed fallen quite a bit... but is still far above the growth rate at the bottom in the last recession. The comm'l/industrial, real estate and bank credit sectors have shown rather large growth spikes in the last few weeks too. Note that I'm not saying that we've hit bottom, just that bottom fishers and similar have jumped back in lately.
The Fed has virtually doubled its balance sheet in just the last few weeks, and the word unprecedented is a severe understatement. Last week, the Treasury TIO pool (which I use as a proxy for the PWG/PPT actions) reached a spike total of about $80 billion in an effort to support the markets since its now a matter of "national security".
The real problems are not about interbank lending or credit growth or recession or even inflation/deflation, but rather a crisis of confidence about fiat money itself and also of course the WMD of derivatives themselves. It's far from over.
I am concerned that after all this sturm und drang, we get a dull thud rather than a POOM.
It would make many an oligarch roll on the floor in laughter, watching hapless investors get crushed in their inflation and crisis hedges.
I am concerned that after all this sturm und drang, we get a dull thud rather than a POOM.
It would make many an oligarch roll on the floor in laughter, watching hapless investors get crushed in their inflation and crisis hedges.
That's why I'm both a trader and have had my inflation positions hedged to varying degrees, starting last April. There are no guarantees.
"When the facts change, I change my mind. What do you do, sir?"
-- John Maynard Keynes
phirang
10-25-08, 07:11 PM
That's why I'm both a trader and have had my inflation positions hedged to varying degrees, starting last April. There are no guarantees.
"When the facts change, I change my mind. What do you do, sir?"
-- John Maynard Keynes
Ironically, the safest and most lucrative inflation hedge would be GSE paper... if that doesn't close the spread to t-notes soon, it's over for everyone.
Ironically, the safest and most lucrative inflation hedge would be GSE paper... if that doesn't close the spread to t-notes soon, it's over for everyone.
Perhaps, but the risks are way too steep and the possible returns way too low for my taste.
phirang
10-25-08, 07:58 PM
Perhaps, but the risks are way too steep and the possible returns way too low for my taste.
If that doesn't happen, then the deflation continues...
ThePythonicCow
10-25-08, 10:13 PM
Random thought of the moment: Could the Baltic Dry Index (BDI) be manipulated by JPMorgan? This would seem possible, if having just a few banks, led (perhaps at gun point) by JPMorgan refuse letters of credit to shippers would collapse BDI.
I remain convinced that a substantial part of what we're seeing is an operation by JPMorgan to consolidate "their" banking industry. The descendents of Rothschilds, Morgan and Rockefeller have long disliked competition. They are the top predators of the worlds financial system.
we_are_toast
12-12-08, 08:04 AM
Just heard a guy on MarketPlace make the same argument Bart makes at the start of this thread. Using Fed data he says the credit crises was and is phony. It's not as bad as everyone is saying.
Just heard a guy on MarketPlace make the same argument Bart makes at the start of this thread. Using Fed data he says the credit crises was and is phony. It's not as bad as everyone is saying.
For those who lost their jobs (regardless if they are Lehman or Chicago Windows) employees the crisis is very real and it's bad.
The crisis is phony only if you use phony as a synonym for intentionally manufactured or engineered.
And there are two ways to get out of this crisis:
-by wating patiently until they finish their game and they get filled like bloated ticks
-or we should send home OBL's driver, gardener, pet-goat walker, hair stylist and interior cave designer we are holding in Gitmo, fill the facility with the cream of the Fed, Treasury and Wall Street and tell to the military interrogators (and their dogs if posible) they should ger more in touch with their artistic side. The economy would recover itself in a few months in the absence of the source for actively manufactured disequilibrim.
Just heard a guy on MarketPlace make the same argument Bart makes at the start of this thread. Using Fed data he says the credit crises was and is phony. It's not as bad as everyone is saying.
Just to clarify, a financial crisis unquestionably exists and there is a very significant effect on things like letters of credit and interbank trust amongst large banks, and those issues have a large effect on Main St. etc..
The interbank trust area is in my opinion only related to the mess with MBS, CDS and other derivatives and the technical bankruptcy/insolvency of most of the major international banks.
The actual availability of credit for those with a good track record and who are unleveraged and with good cash flow, etc. is basically unchanged - which is the point of that chart which shows things like consumer, real estate, bank and similar credit is still growing. Stating it another way, those with integrity and sane money management practices are doing generally ok.
My attempt to show that there was little problem with "interbank lending" was about trust and the real problem (derivatives and actual value of L2 and L3 assets, and real solvency), not that there are no problems with lending. The MSM and most of the financial press just simply got it wrong due to not doing their homework and buying extant BS and lies.
The real basics covered in a real Econ 101 course are true and always will be... and can also be covered up for a while.
All truth passes through three stages. First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.
-- Arthur Schopenhauer (1788-1860)
The good news is that at least we're in step three and barely beginning to dealk with the real issues.
we_are_toast
12-12-08, 03:00 PM
The actual availability of credit for those with a good track record and who are unleveraged and with good cash flow, etc. is basically unchanged - which is the point of that chart which shows things like consumer, real estate, bank and similar credit is still growing. Stating it another way, those with integrity and sane money management practices are doing generally ok.
My attempt to show that there was little problem with "interbank lending" was about trust and the real problem (derivatives and actual value of L2 and L3 assets, and real solvency), not that there are no problems with lending. The MSM and most of the financial press just simply got it wrong due to not doing their homework and buying extant BS and lies.
Sorry for being unclear, I didn't mean to imply there weren't any credit problems, but according to Octavio Marenzi, for the vast majority of people with very good credit, there is plenty of money available to them. I believe he found something very similar to what you found.
So we found that bank lending is at a record high, consumer credit is at a record high, inter-bank lending is at a record high. All these things that we've been told have basically dried up are actually flowing quite well.http://marketplace.publicradio.org/display/web/2008/12/12/credit_and_crisis/
Sorry for being unclear, I didn't mean to imply there weren't any credit problems, but according to Octavio Marenzi, for the vast majority of people with very good credit, there is plenty of money available to them. I believe he found something very similar to what you found.
http://marketplace.publicradio.org/display/web/2008/12/12/credit_and_crisis/
We're cool.
I just didn't want to take a chance at being misunderstood... even though it happens so very infrequently on the internets... :rolleyes:
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