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The beginning of the end

Wednesday, December 3, 2008, 8:33 AM

I am often asked what signs I use to measure where we are in the crisis and whether it will get worse or better.

This next article posits the emergence of a new type of bond sold by the US that is not denominated in US dollars. This would be the equivalent of a road sign reading, “No bridge, 10 feet.”

Here’s the idea:

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Daily Digest - Dec 3

Wednesday, December 3, 2008, 7:17 AM

Mortgage delinquency set to double, feds to expand rescue, Chicago cuts back on snow plowing to save money, Governors may seek $100 billion, Monetizing debt, Manhattan awash in office space, and an alternative wind turbine design.

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Looting America: Treasury Secretary Paulson Threatened Senators with Martial Law

Tuesday, December 2, 2008, 8:04 AM

Some people think of Hank Paulson as our Treasury Secretary.  I think of him as a 19 year veteran of Wall Street banking.

At every turn of this entire bailout he has specifically advantaged banks over taxpayers, banks over industry, banks over homeowners, and banks over the future health and prosperity of this country.

Is this surprising for a banking veteran?  No, not really.

But the tactics he used certainly are.  Consider this:

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Daily Digest - Dec 2

Tuesday, December 2, 2008, 6:38 AM

Loss of credit viewed as America's biggest threat, bailout lacks coherency, Bernanke says "not like 1930s", banker says "worst is yet to come", manufacturing goes from bad to worse, California declares a fiscal emergency, and quantitative easing = printing like mad.

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Bernanke - Still speaking as though to children

Monday, December 1, 2008, 2:45 PM

Bernanke's remarks today did little to soothe this ruffled observer.  His remarks struck me as practically dishonest in their inability to speak directly to our actual problems. 

Bernanke says Fed still has arrows in quiver
WASHINGTON (MarketWatch) - The Federal Reserve has lowered interest rates just about as far as they can go, but the U.S. central bank still has plenty of available firepower it could deploy to restore financial markets to normal, Fed Chairman Ben Bernanke said Monday.

I wish that we could just get some straight talk about our actual condition, instead of this weird insistence on "restoring our financial markets to normal."  This ignores the fact that they were completely abnormal.  Why would we want to return there? I guess it's this strange insistence on continually repeating the mantra that things can be "restored to normal" that's got me unsettled. 

The way I see it, there's no "normal" to return to.  Things were hopelessly out of whack before, and now they will settle into some new, different level of activity.  

George Soros refers to this same process in his Theory of Reflexivity, arguing that the mainstream economic insistence that there is some sort of magic equilibrium is utterly without merit.  Instead, markets reflect the interplay between human perceptions and reality.  So there's no such thing as "equilibrium."  Everything is constantly in flux.  

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Daily Digest - Dec 1

Monday, December 1, 2008, 7:49 AM

Credit card industry may cut $2 trillion of lines, Korelin economics report, Britain joining the Euro?,  Trump busted again, durable orders down, affordable electric car, and Beverly Hillbillies keep pumping.

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Daily Digest - Nov 30

Sunday, November 30, 2008, 9:05 AM

Bank of Zimbabwe congratulates US and EU authorities' recent actions,  Citi analyst posits $2k gold, bank repo failures, Fed quantitative easing program, and a cautious Black Friday.

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New Martenson Report ready

Sunday, November 30, 2008, 8:29 AM

Executive summary:

The Fed has engaged on a path of “quantitative easing” (defined in Part II of this report), which has only been tried by Japan, where it was met with limited success. Success rests on the hopeful, but possibly flawed, assumption that cheap money will lead to renewed borrowing.

Understanding the mechanism and implications of this requires an appreciation of the credit markets, what they are, and how they operate. In Part I we will discuss the credit markets and the extent to which the government is now a credit market participant.

In Part II we will examine the Fed’s chosen strategy of fighting the collapse in lending activity with the tool of quantitative easing, and what this could mean for you.

Link to: A crisis is a terrible thing to waste

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Gold confiscation

Saturday, November 29, 2008, 8:34 PM

Here's a question I received today, and it is both quite common and legitimate.

Hi Chris,
I know you have been a strong physical gold advocate as many on this
site have been as well. I can't think of a less risky term to store wealth
over the long term.

However, although gold confiscation has been mentioned in a few
articles on the site, I have yet to see you post any comments or opinions.
The biggest risk I see with gold is the confiscation issue. Everyone will
have to decide their own course of action if this comes to pass, but my
question to you is this:

What evidence do you see for or against the reimplementation of a
gold standard and what evidence do you see for or against another round of
gold confiscation??

Hopefully you can answer. Also, I check your site multiple times a
day, but still I don't have a chance to see every forum post. Is there any
way you can notify me of a response?

Thanks so much for your time and effort. You have already made a
great positive impact on my family!

Sincerely,
Mike

All I can offer here is my opinion, as I certainly do not have any better insights than anybody else.

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Daily Digest - Nov 29

Saturday, November 29, 2008, 9:57 AM

Has the Fed mortgaged its own future?, AIG pays retention bonuses, Shiller and Davidowitz videos, formerly high paid turning to food banks, Marc Faber says "hold gold outside of US", Romer appointed to the council of economic advisers,  and bluefin tuna on the verge of collapse.