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Daily Digest - Feb 3

Monday, February 2, 2009, 9:23 AM
  • The Economic State of Play in Washington - NYTimes (Video)
  • Is the US heading for a depression? 
  • Data from 1930s
  • I have fallen into recession's web of fear
  • ShadowStats Interview on C-Span (Video) Unemployment (Hat Tip SC Student)
  • Macy's To Cut 7,000, And That May Not Be The End
  • Another half million jobs lost, survey says
  • Global Unemployment (Chart)
  • Bernanke says crisis ‘no comparison' to Great Depression
  • Retail Breaks Support (Chart)
  • Zimbabwe dollar sheds 12 zeros 
  • China puts police and military on alert
  • Time for a new world order: PM 
  • "Top Talent": What Does That Mean?
  • Downturn causes 20m job losses in China 
  • Global financial crisis sparks unrest 
  • Global Food Prices are Rising Fast  (Hat Tip Christopher Peters)
  • Hyperinflation will begin in China and destroy the dollar (HatTip Christopher Peters)
  • Peston's daily Davos round-up: Day3 (Video) No Coordinated Action
  • In time of crisis, looking to U.S. with wariness and hope
  • Premier Wen makes "trip of Confidence" to Europe (Hat Tip PineCarr)
  • Fed Monetizes Debt, Investors Buy Gold
  • Population: The elephant in the room (Hat Tip Futuo) 

Economy 

The Economic State of Play in Washington - NYTimes (Video)

Is the US heading for a depression?  

The sharp contraction of the US economy accelerated in the last three months of 2008, with official figures showing GDP shrinking at an annualised rate of 3.8%. 

With forecasters already predicting the worst US recession since World War II, how big a danger is there that the US economy will slip into a depression similar to the 1930s?

The latest figures paint a gloomy picture of the US economy.

Consumer spending, which makes up two-thirds of the economy, fell for the second quarter in a row, by 3.5%.

This drop was led by a 22% drop in spending on durable goods like automobiles and washing machines.   The decline in motor vehicle production was so great that it alone contributed 2% to the fall in GDP. 

Data from 1930s

I have fallen into recession's web of fear 

In the middle of last week I tipped over from a state of mild fearfulness about the global economy to one of wild panic over what is to become of us. 

On Wednesday, I became host to all sorts of crazy worries - big, unmanageable ones as well as little, stupid ones. I worried about there being anarchy on the streets of London - while at the same time fretting over whether I should have painted the boxroom cream rather than white.

This is the sort of mixed-up mental state I am familiar with from bouts of wakefulness at three in the morning. Never before have I known it at three in the afternoon.

The thing that tipped me over was tiny and distant and concerned a woman I have never met, who lives 3,000 miles away. There were plenty of other bigger things that happened to me last week, but none of them really moved me.

On Monday, I stayed at the InterContinental Hotel in Cologne - a vast temple to the god of business travel - and found myself in a ghost hotel. The miles of corridor I walked to my room were deserted and the breakfast buffet bar offered a bounty of cheese and ham but there were no takers.

On Tuesday, I met a perpetually cheerful friend who runs a hitherto successful advertising agency who was grimly preparing to fire large numbers of her capable staff. And later that day I made a nasty discovery that my own financial cushion was considerably less comfortable than I had thought it was. All of this was dismal, but not unbalancing.

Instead, I tripped and fell at a moment when I should have been safe from economic harm. I was sitting in the rare books room at the British Library surrounded by scholars in scuffed shoes for whom the recession is not even of academic interest. 

ShadowStats Interview on C-Span (Video) Unemployment (Hat Tip SC Student)

Macy's To Cut 7,000, And That May Not Be The End 

Macy's (M) will cut 7,000 workers, about 4% of its work force. The company says it will also slash its dividend. 

Macy's same-store sales were off 4% in December. Many analysts believe that retailers which aim at middle class buyers will have an especially hard year. Some estimates put the total number of retail locations that will close in the US in the first half of this year at 72,000.

Macy's has over 850 stores and 182,000 employees.

Another half million jobs lost, survey says 

WASHINGTON (MarketWatch) - The axe fell on an expected half million jobs last month, economists say, and the only reason the job losses weren't larger is that weak hiring for temporary jobs in November and December meant fewer people were laid off in January. 

The Labor Department will report on the January employment report on Friday, the cap of another busy week for economic data, most of which are expected to be gloomy, if not doomy.

The data calendar includes January purchasing-managers surveys from the Institute for Supply Management; January auto sales; December data on consumer spending, consumer credit, factory orders and construction spending; and the latest weekly figures on jobless claims. The Federal Reserve is also likely to report on its quarterly survey of lending conditions at banks.

The news is expected to be universally grim. The jobs report is the big one, however.

"Rapid reductions in head count likely continued in January" because of the "cratering of economic activity," said economists for Credit Suisse in a weekly report to clients. "Layoffs are still on the rise."

The economy lost 1.5 million jobs in just the final three months of the year, bringing the losses for the entire year to 2.6 million, the worst since 1945. 

Global Unemployment (Chart)

Bernanke says crisis ‘no comparison' to Great Depression 

"Well, you hear a lot of loose talk, but let me just ... say, as a scholar of the Great Depression - and I've written books about the Depression and been very interested in this since I was in graduate school, there's no comparison," Bernanke said in a question period after an address in Austin, Texas 

Retail Breaks Support (Chart)

Zimbabwe dollar sheds 12 zeros  

Zimbabwe is revaluing its dollar again, removing twelve zeros from the currency with immediate effect. 

The country's central bank is introducing seven new notes in an effort to stave off economic collapse.

The country is in the grip of world-record hyperinflation. The most recent estimate in July 2008 put it at 231m%.

Only last month, a Z$100 trillion note was introduced and the government moved to allow people to use foreign currencies alongside Zimbabwe's dollar.

The announcement will see Z$1 trillion reduced to Z$1.

The denominations of the new notes are Z$1, Z$5, Z$10, Z$20, Z$50, Z$100 and Z$500.

The governor of the Reserve Bank of Zimbabwe, Gideon Gono, said: "Yesterday's trillionaires, I am sorry, will not be able to buy their favourite drink today," according to the AFP news agency.

China puts police and military on alert 

The specter of millions more unemployed clearly has the Chinese government worried. The government has not released annual figures on social unrest - what it terms "mass incidents" - for several years, but foreign media reports suggest growing protests as unemployment spreads. A January article in Outlook Weekly, a magazine published by the government news agency Xinhua, predicted a record year for mass protests. "It is fair to say that the Chinese government takes very seriously the issue of employment of migrant workers," said Chen Xiwen, a senior rural planning official who released the joblessness estimate at Monday's briefing. "Guaranteeing employment and livelihood is to guarantee social stability," he said. 

Mr. Chen advised government officials to actively intervene to head off protests, rather than "shy away from coming out and let public security departments and police go to the front lines." The military called upon its forces Sunday to exercise strict obedience to command in the face of challenges to social stability. 

Time for a new world order: PM  

KEVIN RUDD has denounced the unfettered capitalism of the past three decades and called for a new era of "social capitalism" in which government intervention and regulation feature heavily. 

In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.

"The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes," he writes of those who placed their faith in the corrective powers of the market.

"Neo-liberalism and the free-market fundamentalism it has produced has been revealed as little more than personal greed dressed up as an economic philosophy. And, ironically, it now falls to social democracy to prevent liberal capitalism from cannibalising itself."

Mr Rudd writes in The Monthly that just as Franklin Roosevelt rebuilt US capitalism after the Great Depression, modern-day "social democrats" such as himself and the US President, Barack Obama, must do the same again. But he argues that "minor tweakings of long-established orthodoxies will not do" and advocates a new system that reaches beyond the 70-year-old interventionist principles of John Maynard Keynes.

"A system of open markets, unambiguously regulated by an activist state, and one in which the state intervenes to reduce the greater inequalities that competitive markets will inevitably generate," he writes.

He urges "a new contract for the future that eschews the extremism of both the left and right".

He mocks neo-liberals "who now find themselves tied in ideological knots in being forced to rely on the state they fundamentally despise to save financial markets from collapse". 

"Top Talent": What Does That Mean? 

I keep hearing that if compensation schemes change at Wall Street firms that took TARP money that "top talent" will leave. They keep saying that if bonuses are cut that "top talent" will leave. Excuse me? Who the hell is this "top talent"? Are these the brokers and bankers paid millions to sell people into failed long only and buy and hold strategies for the last three decades? At the end of the day if the "top Wall Street talent" can't show exactly how they make money for clients, well, let's stop calling them "top talent". For many of these people their only talent was to be part of a bull market, and now that the bull has slowed we are going to find out that many of these folks have no talent. Harsh? Yes. Deserving? Yes. 

Downturn causes 20m job losses in China  

More than 20m rural migrant workers in China have lost their jobs and returned to their home villages or towns as a result of the global economic crisis, government figures revealed on Monday. 

By the start of the Chinese new year festival on January 25, 15.3 per cent of China's 130m migrant workers had lost their jobs and left coastal manufacturing centres to return home, said officials quoting a survey from the agriculture ministry. 

FACTBOX-Global financial crisis sparks unrest  

* FRANCE
-- Hundreds of thousands of strikers marched in French cities on Thursday to demand pay rises and job protection. Some protesters clashed with police, but no major violence was reported.
-- The one-day strike failed to paralyse the country and support from private sector workers appeared limited. Labour leaders hailed the action, which marked the first time France's eight union federations had joined forces against the government since President Nicolas Sarkozy took office in 2007.

* RUSSIA
-- Thousands of opposition supporters rallied in Moscow and the far east port of Vladivostok on Saturday in a national day of protests over hardships caused by the financial crisis. On Sunday hundreds of demonstrators in Moscow called for Russia's leaders to resign.
-- Street rallies were held in almost every major city over the weekend. The pro-Kremlin United Russia party also drew thousands to rallies in support of government anti-crisis measures.
-- About 100 protesters were arrested in Vladivostok last month during protests against hikes in second hand car import duties aimed at protecting jobs in the domestic car industry.

* MADAGASCAR
-- More than 100 people were killed in civil unrest in Madagascar last week, according to the U.S. ambassador. Police previously confirmed 44 deaths, with most of those in a store burned during looting when an anti-government protest degenerated into violence.
-- The mayor of Antananarivo, Andry Rajoelina, galvanised popular frustrations to spearhead demonstrations and strikes against President Marc Ravalomanana's government. The violence came amid an oil and minerals exploration boom in Madagascar.

Global Food Prices are Rising Fast  (Hat Tip Christopher Peters) 

NEW DELHI: Costlier food items and a marginal increase in prices of decontrolled fuels pushed up inflation for the second week running even as economists stuck to their estimate of near zero inflation by the middle of 2009. 

Government data showed inflation for the week ended January 17 at 5.64% against 5.6% in the previous week. The annual rate of year-on-year inflation was 4.45% in the corresponding week last year.

RBC News reports the same story in Russia, as inflation creeps up .

Russia's inflation amounted to 0.8 percent between January 20 and 26, 2009, and 2 percent for the year to date (compared to 2.2 percent for the same period of January 2008), the Federal State Statistics Service (Rosstat) reported today. In January 2008 as a whole, the inflation rate stood at 2.3 percent. 

Hyperinflation will begin in China and destroy the dollar (HatTip Christopher Peters) 

The conventional wisdom on China is dead wrong. Specifically, there is a widespread belief, as expressed by Goldman Sachs, that "China will keep the yuan trading within a narrow range in 2009 due concerns about exporters." Worse still, others are even predicting that China will devalue its currency! The sheer wishful thinking is astounding! The idea that "China will keep the dollar peg to help its exporters" ranks all the way up there with "Housing prices always go up" and "You can spend your way to prosperity". 

THERE ARE NO FREE LUNCHES

If you have learned nothing else in the last year and a half, you should have learned that if something sounds too good to be true, that is because it IS too good to be true. The media overwhelmingly presents China's dollar peg as a win-win situation: Americans get cheap imports and low interest rates while China gets a strong manufacturing sector. While commentators do sometimes debates whether China will keep lending us money forever, they never talk about the REAL problem with the dollar peg. 

Peston's daily Davos round-up: Day3 (Video) No Cordinated Action

In time of crisis, looking to U.S. with wariness and hope 

DAVOS, Switzerland: This was supposed to be the year the United States came in from the cold at the annual gathering of world leaders here. But instead of receiving a warm embrace, American policies were rebuked again and again in rhetoric that recalled the anger of the Bush years - except the ire this time was mostly directed at Washington's economic failings, rather than its diplomatic ones. 

There is a deep reservoir of good will for President Barack Obama personally and the change in direction he represents. But his administration is about to discover that the rest of the world does not seem to be in a hurry to forgive and forget - and that it sees a new threat in the form of U.S. protectionism.

Despite the pledges to encourage international trade and economic cooperation that accompanied the closing sessions of the gathering, the World Economic Forum, on Sunday, there were clear signs that deep divisions between the United States and the rest of the world remained.

"There is such a level of concern, despair and anxiety that as welcome as the new president is, no one is inclined to cut the U.S. much slack," said Richard Haas, president of the Council on Foreign Relations.

Or as Niall Ferguson, the Harvard historian, put it, "If GM got a new CEO, does that mean people would suddenly want to buy their cars?" 

Premier Wen makes "trip of Confidence" to Europe (Hat Tip PineCarr) 

China, Switzerland agree to begin feasibility study on FTZ

BERN - China and Switzerland decided Tuesday to begin a joint feasibility study in the second half of this year on creating a bilateral free trade zone in preparation for formally launching negotiations on the issue. [Switzerland is a slow moving country, so something like this is a bigger deal than it sounds]

During talks in the Swiss capital, visiting Chinese Premier Wen Jiabao and President of the Swiss Confederation Hans-Rudolf Merz exchanged views on the current international financial and economic situation and briefed each other on the policies and measures China and Switzerland have taken regarding the international financial crisis.

The two leaders agreed that it is an urgent task for the two countries to work more closely together to tide over the difficulties against the backdrop of the financial crisis.

The feasibility study on a free trade zone is one of the measures the two nations agreed to take in order to jointly tackle the challenges brought about by the international financial crisis.

Other measures include deepening financial cooperation, expanding trade and investment, opposing trade protectionism, and promoting reform of the international financial system.

China and Switzerland will also boost joint work in technology, energy, environmental protection, as well as in the medical and cultural sectors. 

Fed Monetizes Debt, Investors Buy Gold 

In January gold rose significantly against all major world currencies. In most currencies except in the US dollar and the Japanese yen, gold actually made an all-time-high. 

Environment 

Population: The elephant in the room (Hat Tip Futuo) 

Uncontrolled population growth threatens to undermine efforts to save the planet, warns John Feeney. In this week's Green Room, he calls on the environmental movement to stop running scared of this controversial topic. 

Our inability to live as we do, at our current numbers, without causing pervasive environmental degradation is the very definition of carrying capacity overshoot It's the great taboo of environmentalism: the size and growth of the human population.

It has a profound impact on all life on Earth, yet for decades it has been conspicuously absent from public debate.

Most natural scientists agree our growing numbers and our unchecked impact on the natural environment move us inexorably toward global calamities of unthinkable severity.

They agree the need to address population has become desperate.

Yet many environmentalists avoid the subject, a few objecting strongly to any focus on our numbers.

Some activists insist acting to influence population growth infringes on human rights; they maintain that it is best to leave the problem alone.

Let's dispense with this confused notion right now.

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48 Comments

Davos's picture
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Re: Daily Digest - Feb 3

US GDP

Nime's picture
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Re: Daily Digest - Feb 3

Some worrying news from the tech startups sector: angel investor funding is drying up (NYT). 

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Re: Daily Digest - Feb 3

Hello Davos/Chris,

I am a long time lurker, and like Chris and all the posters here, are incredibly interested in what is going on w.r.t our problems. I would like to take a moment for Chris putting together the Crash Course, I found it incredibly refreshing that it avoided conspiracy and partisan tones. 

The Problem: The State

I think we all know what the problems are.  The purpose of the State (nothing more than a group of people that have a monopoly on violence) is for insiders to loot and plunder the citizenry.  We cannot vote our way out of this mess - any politician who gets into true circles of power who wants to affect change for the benefit of his/her constituents would be long vetted out of the political system by the incumbents or by the dumbed-down voter.  Tax resisitance is futile for the State has amassed superior firepower to protect itself from its citizens in the name of national defense.  Any partial, let alone full, tax resistance will result in the State deploying the bad guys in clown suits brandishing guns and badges to your home to waterboard you and your family.  Your employer acts as an unremunerated tax collection agent by collecting your tribute to the State on its behalf.  There are 50+ taxes on a loaf of bread from the field to the table. Your taxes are used to kill people.  We are all directly contributing to this and from what I have read on this site, we want out.  I could create the world's longest post listing all of the State's endless scandals, boondoggles, expansion of power, wars, mass murder, and citizen brutality, but that is beyond the scope of this post, and a reader on this site already has their own personal list.

One of the major fallacy traps that "awakened" people fall into is that they seek to limit the State's power enabled by the taxation/inflation system we are enslaved to, leeching off our productivity to support nefarious and incompetent agendas.  This is goodness.  The badness is that we expect the State to help us with the implementation!

There is a way out.

The only non-violent mechanism that I can think of that stands a non-zero chance of success is to bring together like minded people and create a counter-economy where trustworthy trading partners would buy and sell their products and services using whatever sound money trading parties agree on (most likely gold and silver coin/rounds).  The counter-economy enables people to fully enjoy the fruits of their labours without having it directly stolen via taxation.  Using gold and silver coin prevents theft via inflation.  This is called "agorism"  - a term coined by Samuel Konkin III (SEK3 in webspeak).

For those of you who are familiar with Ayn Rand's "Atlas Shrugged", you will be well versed in "Galt's Gulch".  For those of you who aren't,  essentially the producers of the world rejected the notion they should labour for the benefit of the looters (the State and connected insiders) who held the gun at their heads.  The would leave the world and go to a secret location where they could voluntarily associate and trade with each other.  They would come back when the State collapsed and people were ready to deal with each other as humans.  

Sometimes, I wonder if "Atlas Shrugged" was fiction. However, the beauty of agorism is that you do not have to physically relocate.  You can hide in plain sight!

Initially, we could only work part-time in this counter-economy as not all of the products/services we require would be readily available in the network in addition to whatever extortion money (i.e. property taxes etc) the State demands from us.  However, as the counter-economy grows with more and more people participating in it, the number of goods/services increases.  Perhaps your local beer/wine brick and mortar store would be willing to participate part time in the network.  Then a independently owned gas-station.  People who bake, and make clothes and so forth. A shoemaker might spring up.  Is it becoming clearer?

The collapse of the State is When, not If.

Or we wouldn't be interested in Crash Course, would we?  Should we sit idly by and get dragged down with it? OK, even if I am wrong in that prediction, how much value to your productivity would be retained by creating your agorist network?  If the State does collapse, you will be better prepared for it as you will have your established network of trading partners.  How much value is there in that?

The will and the way

This post is getting a bit long, but I could certainly contribute more information if posters are interested and willing to do more.  Let's see what reception it gets.

It's time to posit a workable solution.  Agorism is the only one I have run into that has not been torn to shreds by my own critical thinking.  I am not being an egoist, snooty, or preachy.  Like all of you, I am deeply concerned, we all know what is wrong.  It is a matter of what to DO about it.

Cheers!

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Re: Daily Digest - Feb 3

I just want to thank you for doing this, gathering the info for us... you and Chris both.

On a lighter note, this made me chuckle - Crisis sounds so cool (stock charts fed into MS's Songsmith):

Some folks have too much time on their hands.

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Re: Daily Digest - Feb 3

Davos,

I sometimes find myself hitting refresh in hopes of seeing the next daily digest magically pop up on the screen. You have a strong following, and we all appreciate your efforts.

Rog

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Re: Daily Digest - Feb 3

http://www.nytimes.com/2009/02/03/business/worldbusiness/03kazakh.html?_r=1 Kazakhstan Takes Control of 2 Banks,

Quote:

MOSCOW — Shaking up the tight world of banking in Kazakhstan, the government announced on Monday that it would take controlling stakes in two private banks as a condition of keeping them from a possible bankruptcy filing.

The troubles with Kazakh banks began a year ago. Banks had borrowed excessively from international lenders when terms were easy, and those lines of credit dried up in Kazakhstan quicker than elsewhere, given the risky nature of doing business in the country. The banks teetered.

In official statements, Kazakh officials said they would bail out BTA Bank and Alliance Bank in exchange for shares, and later sell the shares when the market recovers. The officials played down suggestions of backtracking on privatization in the former Soviet state.

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Re: Daily Digest - Feb 3

Hello TheRemnant:

I often wonder how this will play out. I see only a few in the mainstream media that realize that this isn't a credit crisis, that it is really an insolvency crisis. Then, even if the masses knew, I'm sure the problem would be "special "interestized," spinning the problem into a cause to tilt power to some group. Hope I'm wrong, but when I post an article http://www.wired.com/techbiz/people/magazine/17-02/st_thompson like this...

Hello Rog & BlackCoyote: It is a pleasure to contribute to this fine community that Chris created, I can find few days where I don't get back more than I give. I speed read and in the forums what I miss gets explained or pointed out to me. Take care

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Re: Daily Digest - Feb 3

Make sure to read the comments on the "Hyperinflation will start in China" article.  There's a great debate between Eric, the author of the article, and Mish.

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Re: Daily Digest - Feb 3

Davos wrote:

Hello TheRemnant:

I often wonder how this will play out. I see only a few in the mainstream media that realize that this isn't a credit crisis, that it is really a we are insolvency crisis. Then, even if the masses knew, I'm sure the problem would be "special interestized," spinning the problem into a cause to tilt power to some group. Hope I'm wrong, but when I post an article http://www.wired.com/techbiz/people/magazine/17-02/st_thompson like this...

You are correct.  The credit crisis is a hoax.  What we are witnessing is simply yet more consolidation of power. The movie I.O.U.S.A is a perfect example of establishment deflection.  The problem is not so much that the movie itself is inaccurate, but you can bank dollars to donuts the only solutions allowed to permeate mainstream is that the people who led us into the mess are the only ones that can lead us out.

The rabbit hole runs deep.  We spend the first 12-13 years of our lives schooled in government indoctrination camps euphemistically coined 'public education', a subversive/ignorant mainstream media cartel, and a $700 billion dollar a year advertising industry that does nothing but hire gaggles of psychiatrists/psychologists to figure out how to pry the want for products you don't need into our skulls.

It is very traumatic for people to break "pro-State trolling" mentality as we have been brainwashed from the cradle to the grave.  Think back to your personal awakening.  Did you go numb when you learned to see?  I like to think of myself as "recovering" Laughing

The trap we must overcome is going from "doom and gloomers" and harnessing all of that rage into something productive.  I don't see much point in reforming the State as "voting is pointless".

We let very small men rule our world.  It's time to take it back.

Cheers.

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Re: Daily Digest - Feb 3

"Reform cannot be achieved by a well-intentioned leader who recruits
his followers from the very people whose moral confusion is the cause
of the disorder." - Socrates

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Re: Daily Digest - Feb 3

"Reform cannot be achieved by a well-intentioned leader who recruits
his followers from the very people whose moral confusion is the cause
of the disorder." - Socrates

 

Deep... and very true!  Even to this day.

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Re: Daily Digest - Feb 3

"Well, you hear a lot of loose talk, but let me just ... say, as a scholar of the Great Depression - and I've written books about the Depression and been very interested in this since I was in graduate school, there's no comparison," Bernanke said in a question period after an address in Austin, Texas 

 

So if it doesn't compare, then is this time worse or better?  Bernake doesn't make this clear.

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Re: Daily Digest - Feb 3

leo0648 wrote:

"Well, you hear a lot of loose talk, but let me just ... say, as a scholar of the Great Depression - and I've written books about the Depression and been very interested in this since I was in graduate school, there's no comparison," Bernanke said in a question period after an address in Austin, Texas 

So if it doesn't compare, then is this time worse or better?  Bernake doesn't make this clear.

Stephen Leeb: "Bernanke spent his entire life studying the Great Depression!"

Peter Schiff: "He clearly wasted his time."

Tongue out

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Re: Daily Digest - Feb 3

Bernanke's right, this time around there is no comparison to the first depression. It's much worse. I forget where so forgive the tease but Damnthematrix posted a link to a fascinating article a while back comparing today to the depression of the 1870's, which of course no one ever mentions. I'll have to get the link later for people. Or if you, Mike, have it kickn' around, fire it up.

Truth be told I find Bernanke's comments frightening because either the man is truly clueless and is living in some kind of compartmentalized delusion regarding this topic or he's simply lying through his teeth and playing the role of naked state propagandist. I assume it's a bit of both.

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Re: Daily Digest - Feb 3

TheRemnant wrote:

Stephen Leeb: "Bernanke spent his entire life studying the Great Depression!"

Peter Schiff: "He clearly wasted his time."

 

Thank you for making my day, I'll smile for a week now. Take care 

 

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Re: Daily Digest - Feb 3

Two of Obama's appointees drop out in one day over taxes. He sure can pick'em. Sticking with the same personnel who got us into this mess is really working out so far.

Now I wonder which Republicans he'll replace them with.

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Re: Daily Digest - Feb 3

@TheRemnant:  Look up Transition Town.  Many of us are already in progressing.  ... Don

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Re: "Like A 'See' That Denies No River..."

Davos,

some of the fabric and 'remnant' of your Digests are like a strange dream you can't wake from; interesting folk and all. I mean, so much meaning and then - So Much Meaning - I often wonder where half of these threads are going to end up; like lemmings, we run from one to the other with new and improved better ideas to share - ever wonder if there's a master plan?

Yeah, me too;

StumpedWink.

Naa, I haven't a clue...maybe this'll help?

Now, Where did I put my...russell...click...inhale...mmm...better still...

Paul

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Damnthematrix
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Re: Daily Digest - Feb 3

Bernanke says crisis ‘no comparison' to Great Depression 

"Well, you hear a lot of loose talk, but let me just ...
say, as a scholar of the Great Depression - and I've written books
about the Depression and been very interested in this since I was in
graduate school, there's no comparison," Bernanke said in a question
period after an address in Austin, Texas 

DEAD right.....  it'll be a lot worse!

Mike 

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Re: Daily Digest - Feb 3

Who said the devaluation of the US currency is bad for future of the USA.

Slow down of countires growing in the double digits-Accomplished
Bring Russia back to earth and Terrorist oil profits to zilch-Accomplished
Send the entire US bad loans to around the world-Accomplished
Lower the US dept by cushing the dollar-to be done
Reflation to increase home prices by factor of 3.-to be done
Control over the Gold supplies to redominate the world-to be done
Rich home owners to with over 70 percent equity to start refinincing-to be done......

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Re: Daily Digest - Feb 3

dps wrote:
@TheRemnant:  Look up Transition Town.  Many of us are already in progressing.  ... Don

I love the concept.  Now if only I could find something like that in Ontario, Canada. 

The idea of agorism is easier to sell to rural and "transition town" type mindsets, as these folks tend produce...well something.  They are familiar with the concept of production as opposed to consumption.  It is harder idea to sell to those who occupy urban areas as they more likely produce nothing themselves and obtain everything through the red market.

However, it is doable.

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Damnthematrix
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Re: Daily Digest - Feb 3

Hi Cooncat

Steve Keen actually wrote a great essay about Bernanke and the gread depression on his blog at  http://www.debtdeflation.com/blogs/2009/01/11/bernanke-an-expert-on-the-...

That other post of mine you mention is also from Steve Keen's blog..........

The only other nation's debt/GDP ratio I'm aware of is ours in
Australia.  We have this great Professor of Economicss, Steve Keen, who
runs a blog called debtwatch where you can find the info below (and a
whole lot more - much of it relevant to you guys)  http://www.debtdeflation.com/blogs/2008/...

In recent history, there have been two depressions.....  and
there are no prizes for guessing when they occured!  Whilst our
situation is not as dire as yours, there is no way we are going to
escape the mire...  and neither will the rest of the world.

Mike 

This was more than confirmed when RBA Deputy Governor Ric Battellino
published a graph showing Australia’s long term debt to GDP ratio
during a speech in September 2007 (see Figure 8, which is augmented to
include estimates of non-bank credit prior to 1953). 

Figure Eight

The model I’ve outlined above is extremely simple, and would need to
be substantially embellished to capture the main dynamics of a market
economy. But it is already streets ahead of neoclassical models by not
making an artificial distinction between the short and long term. To
paraphrase Keynes, “in the long run we are still in the short run”.

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Re: Daily Digest - Feb 3

As to whether this is better or worse than the Great Depression, consider that at the time of the Great Depression, the USA was awash in so much oil we didn't know what to do with it. As of last summer, no place in the world was not under strain to produce oil to meet demand.

In the 1930s we were just about to shoot up Hubbert's peak. Now, we're about to start cruising down. The financial system is at the mercy of the energy system, not the other way around. We can print money and speculate prices every which way, but we can't print oil.

Until Mr. Bernanke gets this, he has most definitely misdiagnosed our malaise.

-Mike

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Re: Daily Digest - Feb 3

I think Bernanke perspective is Momo, if owing 70 trillion and making 6 trillion isn't insolvent then I don't know what is. Greenspan had it right, how he then went to do it wrong is beyond my comprehension.

Re-post:

http://www.scribd.com/doc/192230/GOLD-AND-ECONOMIC-FREEDOM-Alan-Greenspan

But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline-argued economic interventionists -- why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely -- it was claimed -- there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks ("paper reserves") could serve as legal tender to pay depositors.

 

When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates.

The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market -- triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930's.

 

 

 

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Re: Daily Digest - Feb 3

Downturn causes 20m job losses in China  

Well what did everyone think? That we could go on forever putting millions and millions thru college to learn how to make money from behind a desk but, how could we forget, WHO was actually going to be left to do the actual work?

Now we have zillions of finacial grads selling everything under the sun, but no one to do the dirty work.

Classic ! Now maybe there will be more college kids studying to be doctors again instead of materialistic marketing majors and finacial experts.

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Re: Daily Digest - Feb 3

TheRemnant wrote:
leo0648 wrote:

"Well, you hear a lot of loose talk, but let me just ... say, as a scholar of the Great Depression - and I've written books about the Depression and been very interested in this since I was in graduate school, there's no comparison," Bernanke said in a question period after an address in Austin, Texas 

 

So if it doesn't compare, then is this time worse or better?  Bernake doesn't make this clear.

Stephen Leeb: "Bernanke spent his entire life studying the Great Depression!"

Peter Schiff: "He clearly wasted his time."

Tongue out

My only question is, "If Bernake is such a finacial genious then why didn't he see this coming?"

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Re: Daily Digest - Feb 3

I read the entire article and comment (45 min. worth) between Eric and Mish, and I've gotta say, Mish was pulling his punches.  Eric just doesn't "get" it that the U.S. is both the largest customer in the world, but also the largest wealth accumulation in the world.

That is fundamental in my mind - reinforced every time I fly into Dulles after a week somewhere else on the planet.  The miles and miles of wealth on display, all bolstered by significant capital (not everyone has an unsupportable ninja loan, y'know) can take the breath away, especially after a journey to Russia, China, and most of Europe.

The simple truth, as expressed by Karl Denninger over and over: "We are Fooked; they are fooked worse."

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Re: "Like A 'See' That Denies No River..."

Hello Paul:

I never thought I would live through something as bizare as this. For me, the freakiest thing is the departure from common sense. It is like a strange dream in the sense that wrong has replaced right.

Take care 

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Re: Daily Digest - Feb 3

Need to hurry up & get those printing presses runningSmile.

http://www.cnbc.com/id/28999741

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NH considers HCR 6

Hey Davos,

I'm not sure if you've covered this in any of your digests.  It looks to be some pretty pertinent news considering the state of America.

I came across the following link while looking through Karl Dennigner's stuff at market-ticker.org

http://jessescrossroadscafe.blogspot.com/2009/02/new-hampshire-throws-do...

The full text of NH HCR6 can be found at the following link:

http://www.gencourt.state.nh.us/legislation/2009/HCR0006.html

It says, in part:

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Nine

A RESOLUTION affirming States’ rights based on Jeffersonian principles...

...That any Act by the Congress of the United States, Executive
Order of the President of the United States of America or Judicial
Order by the Judicatories of the United States of America which assumes
a power not delegated to the government of United States of America by
the Constitution for the United States of America and which serves to
diminish the liberty of the any of the several States or their citizens
shall constitute a nullification of the Constitution for the United
States of America by the government of the United States of America.
Acts which would cause such a nullification include, but are not
limited to:

I. Establishing martial law or a state of emergency within one of
the States comprising the United States of America without the consent
of the legislature of that State.

II. Requiring involuntary servitude, or governmental service other
than a draft during a declared war, or pursuant to, or as an
alternative to, incarceration after due process of law.

III. Requiring involuntary servitude or governmental service of
persons under the age of 18 other than pursuant to, or as an
alternative to, incarceration after due process of law.

IV. Surrendering any power delegated or not delegated to any corporation or foreign government.

V. Any act regarding religion; further limitations on freedom of
political speech; or further limitations on freedom of the press.

VI. Further infringements on the right to keep and bear arms
including prohibitions of type or quantity of arms or ammunition; and

That should any such act of Congress become law or Executive Order
or Judicial Order be put into force, all powers previously delegated to
the United States of America by the Constitution for the United States
shall revert to the several States individually. Any future government
of the United States of America shall require ratification of three
quarters of the States seeking to form a government of the United
States of America and shall not be binding upon any State not seeking
to form such a government...

There is also a notice of public meeting for this resolution at:

http://www.meetup.com/nhseacoastliberty/calendar/9588523

This proposal is the very first publically announced document where I've seen a State has acknowleded the likely collapse of the US Federal Governement.

TS

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Re: NH considers HCR 6

Hello TS:

I'd ask that you send that to Chris, I think that may be more political (though if we melt down financially I can't say that) then fitting into the three E's. After 9/11 I did read about what they can do, and I know a lot of it is vague (with respect to what event they need to enact martial law...

Take care

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Re: Daily Digest - Feb 3

mainecooncat - here you go (I think this is the link you were referencing)

The Real Great Depression (1873)

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Re: "Like A 'See' That Denies No River..."

Davos wrote:

Hello Paul:

I never thought I would live through something as bizare as this. For me, the freakiest thing is the departure from common sense. It is like a strange dream in the sense that wrong has replaced right.

Take care 

Perfect statement Davos.

Now I see that Wells Fargo has just canceled there extravegant holiday in Vegas

The company initially defended the trip after The Associated Press reported it had booked 12 nights beginning Friday at the Wynn Las Vegas and the Encore Las Vegas. But within hours, investigators and lawmakers on Capitol Hill had scorned the bank, and the company canceled.

The conference is a Wells Fargo tradition. Previous all-expense-paid trips have included helicopter rides, wine tasting, horseback riding in Puerto Rico and a private Jimmy Buffett concert in the Bahamas for more than 1,000 of the company's top employees and guests.

http://www.msnbc.msn.com/id/28999671

I wonder if they still would have canceled if tax payers didn't complain. After all, we just bailed them out and still after tax payers gave them billions they planned this party. Wrong has replaced right you say?  "Only if you get caught" say's Wells Fargo

 

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Re: Daily Digest - Feb 3

Trad wrote:
TheRemnant wrote:
leo0648 wrote:

"Well, you hear a lot of loose talk, but let me just ... say, as a scholar of the Great Depression - and I've written books about the Depression and been very interested in this since I was in graduate school, there's no comparison," Bernanke said in a question period after an address in Austin, Texas 

So if it doesn't compare, then is this time worse or better?  Bernake doesn't make this clear.

Stephen Leeb: "Bernanke spent his entire life studying the Great Depression!"

Peter Schiff: "He clearly wasted his time."

Tongue out

My only question is, "If Bernake is such a finacial genious then why didn't he see this coming?"

My question to you is, if the Federal Reserve's mission statement on their website is:

"The Federal Reserve, the central bank of the United States, provides the nation with a safe, flexible, and stable monetary and financial system."

How's that all worked out?  Since 1913?

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Re: Daily Digest - Feb 3

Toucan: This is starting to make some waves and I've heard about it from other circles now. When you read the things that it mentions, it is essentially predicting potential avenues a collapsing central government will take and reaffirming its independence in that event. I am somewhat gratified to see that some of the concerns I myself have had regarding martial law, firearms, etc. are now being acknowledged by a state. Hopefully more states will catch on and defend their sovereignty and self determination. Large government programs that treat every state uniformly cannot succeed in a world where solutions must be more localized. Hopefully the Federal Government figures this out soon and adjusts...

I've also heard there's a bit of an "independence" movement going on at the grass roots level in Texas. I wonder if anyone else has anymore information.

Cheers,
Mike 

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Re: Daily Digest - Feb 3

Team Martenson's on the ball tonight. Three seperate references to this New Hampshire action in the last hour or so.

You're right, Mike, it's starting to make some waves. I love the dimension this adds to the whole "situation."

Seems like it sends a pretty strong message to Uncle Sam -- get your house in order and don't try any funny stuff.

Or as a certain Radiohead song goes: "Don't get any big ideas. They're not gonna happen."

Because you know the good ol' Feds have plenty of big ideas.

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Re: Daily Digest - Feb 3

For two years now Ben Bernanke has repeatedly said after each bailout or mini-crisis, that in one form or another, that the financial problems were now "contained." I did not believe him then & I don't believe him now.  After one failure after another it is beyond me why he remains as Chairman of the Federal Reserve.      

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Re: "Like A 'See' That Denies No River..."

Hi Davos,

" I never thought I would live through something as bizare as this. For me, the freakiest thing is the departure from common sense. It is like a strange dream in the sense that wrong has replaced right. "

I think thats the closest summation of what it feels like reading this digest every day and exactly my point...Wink

 

Paul

 

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Re: "Like A 'See' That Denies No River..."

Vanityfox451 wrote:

Davos,

some of the fabric and 'remnant' of your Digests are like a strange dream you can't wake from; interesting folk and all. I mean, so much meaning and then - So Much Meaning - I often wonder where half of these threads are going to end up; like lemmings, we run from one to the other with new and improved better ideas to share - ever wonder if there's a master plan?

Yeah, me too;

StumpedWink.

Naa, I haven't a clue...maybe this'll help?

Now, Where did I put my...russell...click...inhale...mmm...better still...

Paul

As my 3-year old grandson would say, "Dat weird!"  Tongue out

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sarcasm anyone...?

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Re: Daily Digest - Feb 3

References to New Hampshire are timely.  The changes some of the above comments reflect on are largely are result of freestateproject.org

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Re:Davos' Digest : "The Window On The World..."

Sam,

Your three year old gandson would be right. The post I made was designed to provoke and it did just that.There is no measure of horror that you don't face when you first scroll down from the Home Page on this site and find Davos's Daily Digest. This one is no different from any other. It's an unfolding 'Nightmare' every day. Scroll up and my case is confirmed with DamnTheMatrix chart on post #23. Its a red line going skyward off the chart. In what respect then are 'All' 22 million Australians going to feed themselves with when the shit really hits the fan? When the last blog to this site is posted and the power that runs it pops out not too long from now, how many of the 6.7 billion on this planet will actually survive? I'm starting to feel as though I'd prefer being as ignorant and as unknowing as the 99.999% of the planet that isn't clued up to the 'Three E's', but I'm not. I know this site is doing a neccessary service and I've read it from its very beginings right up to the present.

You can't tell me that I haven't made my own sacrifices from all of this information Sam, you've read my understanding of this emerging crisis on a thread you put up yourself not so long ago. I've bought my farm, bolted solar and water heating panels up. I have back-up generator and 10 marine batteries and the house runs 12 volt power throughout. I have corn and wheat in the ground and two 70 metre poly tunnels all planted out and with piped water supply. I have cattle, pigs, hens and chickens plus 6 months of tinned and dried food supply plus endless paraphernalia including a rifle and shells. All of this from a person who was working up the ladder of media and film; a far cry wouldn't you say?

Now all the running around has stopped and I'm physically prepared, I've now to face dealing with a future and don't think I'm mentally prepared; how in hell could anyone really be...

This all sounds like an attack on the site and the people who write to it, but its not. The people that would understand this nightmare best are the 'Very People on this site. I can't place whether this is a cry or a shout from this standpoint but, looking at the bigger picture and, seeing how many are so bloody self righteous with their approval or disapproval of what denotes right or wrong here, I wonder how much running around on the spot we're really doing here? I wonder that...

 if as Thomas Malthus has stated :-

"The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. The vices of mankind are active and able ministers of depopulation. They are the precursors in the great army of destruction, and often finish the dreadful work themselves. But should they fail in this war of extermination, sickly seasons, epidemics, pestilence, and plague advance in terrific array, and sweep off their thousands and tens of thousands. Should success be still incomplete, gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world."

...I wonder how many of us are actually going to make it when we're so prepared in our minds but using the 'Arse Bone Of A Giraffe' to dig up the ground? 200 million - 300 million? How many is realistic and in what respect. The crashing of the Free Trade market is where most of us live. From my English standpoint, 48% of the food eaten in the UK is from import. Of the 6.2 million tons of food thrown away there every year, half of it is still edible!! Its a madness I don't think will be resolved before or during this third major World Depression because we're going to be argueing at fucking politicians whilst our nearest and dearest are dying; are you feeling as frustrated at the wastefulness of life as I am?

Maybe this is a twisted point of view thats directed at the worse case senario. Maybe we shouldn't assume things are going to pan out better? How long are we going to spend debating this :-

...maybe we're the last of the dreamers... :-

Paul

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Davos
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Re: Daily Digest - Feb 3

Hello Paul:

 

I'll be posting this on the 5th that I'm preparing now, but when I read the intro I thought of what you said yesturday....

This by the way is a great read. Take care 

http://www.biiwii.com/commentary/comm31.htm

"If I had a world of my own, everything would be nonsense. Nothing would be what it is because everything would be what it isn't. And contrary-wise; what it is it wouldn't be, and what it wouldn't be, it would. You see?" -- Alice 


Notes From the Rabbit Hole is so named for two main reasons.  The first is that the name implies a view from a different perspective, which I consider critical to success in manic and dysfunctional markets.  The second reason is due to my personal experience several years ago, when I fell down a figurative rabbit hole and met some of the ‘strange characters’ of Wonderland; strange characters who helped educate, enlighten and especially, motivate me.  One person in particular put a cattle prod to my hindquarters and demanded attention.  Simply demanded that I take notice and consider all possibilities with regard to the disintegrating financial system – and this was in 2003, when all seemed well to the blissfully content herd.

I had been taking note of the honest congressman from Texas, Ron Paul for a couple years prior to the galvanizing cattle prod treatment.  David Walker, then top financial cop of the United States of America was also must reading for me (right there on the government’s own GAO website this honest man told the truth to anyone willing to listen).  Biiwii.com (but it is what it is) was created in 2004 as a result of my general financial awakening, as long time readers know.

Okay, so why the preamble?  Because it is important now, more than ever, for people to at least consider the dark possibilities with a critical nature that has been bred out of the general populace by the ongoing assumptions and illusory comfort provided by the former secular bull market in paper, compliments of Paul Volker’sstrong fiscal policy and exploited to the fullest by Alan Greenspan in a career characterized by self aggrandizement at the expense of sound policy.

 

Charts in article and more in article 

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Re: Daily Digest - Feb 3

I stayed up until 1:00am reading the article linked above on China's inflation problems. Everytime I think I understand something, when I dig deeper, it turns out I do not understand anything.

My conclusion, I do not know what is going to happen, but I do know that it is not going to be good.

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Re: Erik Satie - Gymnopédie No.1...

Davos,

A little of Andre' wisdom...

...thankyou,

Paul

 

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Re: Daily Digest - Feb 3

Hello Paul:

 

Thanks! Take care 

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Re: Daily Digest - Feb 3

Hello Cedar:

 

"My conclusion, I do not know what is going to happen, but I do know that it is not going to be good."

 

IMHO, that is more than Bernanke can or does say! 

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