Daily Digest

Daily Digest - June 7

Sunday, June 7, 2009, 10:07 AM
  • Fed Hires Former Enron Lobbyist to Burnish Its Image
  • Rosy Predictions during the Great Depression: Repeated
  • Times 8 of these (Graphick 8 Stacks would be debt, off balance obligations and stimulus and misc)
  • Solvency: Approximate GDP less imputations (Graphics)
  • Daily Show: The BiG Mess (Video)
  • Housing recovery? (Chart)
  • Stunning, Job loss map dynamic date
  • Mish Speaks at Google (Video) Big Inflation Coming 2
  • Employment Measures and Recessions (Chart)

Economy

Fed Hires Former Enron Lobbyist to Burnish Its Image

This development, that the Federal Reserve has hired one Linda Robertson, former Enron lobbyist and Summers/Rubin protege, to manage relations with the Hill, strikes me as a tacit admission that the Fed thinks it has an Enron scale problem brewing....

Rosy Predictions during the Great Depression: Repeated

As you may have heard, people were making humorously rosy predictions during those bear market rallies:

“The Government’s business is in sound condition.”
Andrew W. Mellon, Secretary of the Treasury
-December 5, 1929

RESERVE BANK AREAS FORECAST NEW YEAR
Despite the obvious slackening of the pace of business at the close of the year, leaders in banking and industry throughout the country maintain an optimistic attitude toward the prospects for 1930.
-January 1, 1930

“The worst is over without a doubt.”
James J. Davis, Secretary of Labor.
- June 1930

‘BUSINESS CYCLE’ SEEN AT NEW PHASE; Bankers Hold Downward Trend in Markets Indicates Recovery Is Near. DENY ANALOGY TO 1920-21 Economists Point to Superior Credit Conditions Now, Holding Easy Money Points to Revival.
-July 6, 1930

BIG BANKERS PUT UP $100,000 SAFEGUARD; House of Morgan Among Those Required to Provide Protection for Investors. -August 3, 1930
“We have hit bottom and are on the upswing.”
James J. Davis, Secretary of Labor.
-September 12, 1930

“30% OF STOCKS SELL UNDER BOOK VALUES; Capital Is Above Market Price.”
-December 14, 1930

“The depression has ended.”
Dr. Julius Klein, Assistant Secretary of Commerce.
- June 9, 1931 (Stock market did bottom one year and 50% later)

Times 8 of these (8 Stacks of debt, off balance obligations and stimulus and misc)

Solvency: Approximate GDP less imputations (Graphics)

Daily Show: The BiG Mess (Video)

Housing recovery? (Chart)

Stunning, Job loss map dynamic date

Mish Speaks at Google (Video) Big Inflation Coming 2

Sadly inflation is woefully misunderstood in popular culture. People tend to think it is simply “rising prices”, but this is incorrect. The formal dictionary definition of this word is “a persistent, substantial rise in the general level of prices related to an increase in the volume of money and resulting in the loss of value of currency”. The key is the rising prices have to be driven by an increasing money supply.

Mish Speaks at Google

Employment Measures and Recessions (Chart)

15 Comments

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - June 7

 I really enjoyed watching Mish, Marsh and I watched him on the Mac the other night before turning in.

I felt I could relate to the guy. I have to be quite honest, and I have shared this with him, I like his analogy of burying money in the ground is akin to giving it to the banks and it won't get out into the system. That said, I think the debt servicing on that money will devalue the dollar and cause quote hyperinflation unquote. That and the rest of the 8- trillion of debt. The US is broke. Developing nations are more solvent, their citizens have stronger balance sheets than our citizens.

Sad but reality.

Other than that I think he is focused like a laser. I also think they could massively have bubbled up the economy one last time if they went solar, wind, geothermal, rail etc.. But they went roads, and at 8,900 miles per gallon gallons per mile. . . 

investorzzo's picture
investorzzo
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Posts: 1182
Re: Daily Digest - June 7

I find Mish's comments to be well in line with mine and the others on this board. I do find that his thoughts on Gold quite interesting. I find that his comments about stress in the markets as a reason to hold gold over inflationary times fascinating. So deflation and stress in the markets are reasons to own gold over inflation. My feeling, is stress in the markets are here for many years to come. Uncertainty and fear of hyperinflation may or may not show up in the next few years, but continued stresses from financial, wars, government, energy are enough to keep Gold from collapsing anytime soon. Housing bubble continues to implode. Jobs that will continue to leave and lower paying jobs will take their place.

I will continue to monitor this man for his insights. I admire his determination to forge out an area in this economy. Well done Mish.......

Denny Johnson's picture
Denny Johnson
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Posts: 348
Re: Daily Digest - June 7

The highlight of Mish's talk, for me, was his thought that the abolishment of the Fed is possible.

When I first started connecting w this site, about a year ago, reckon I thought the "Abolish the Fed" posters were a ways out there. After a very educational year and only 66 pages into The Creature from Jekyll Island: A Second Look at the Federal Reserve by G. Edward Griffin [top of the list at Chris's Essential Books], I'll be doing what I can to support that cause.

WARNING: Reading this book and viewing the food/Monsanto videos from yesterday's digest during the same week may be hazardous to your health. Side effects may include depressive overload.

Davos's picture
Davos
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Re: Daily Digest - June 7

 

WARNING: Reading this book and viewing the food/Monsanto videos from yesterday's digest during the same week may be hazardous to your health. Side effects may include depressive overload.

 

Hysterical!

We should post them both and then a paypal link to Denise's therapy business. Insane asylum of a world! No wonder meds sell.

investorzzo's picture
investorzzo
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Posts: 1182
Re: Daily Digest - June 7

Upon further reflection, I think that Mish seems to have missed the fact that we are in a super-cycle for commodities. Meaning, even thou commodities got hit, they bounced back quickly and that Gold is part of that cycle and will rise accordingly. Seems to me there has never been a better time to own gold. Although, I do believe we are headed for a pull back.

Denny Johnson's picture
Denny Johnson
Status: Gold Member (Offline)
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Posts: 348
Re: Daily Digest - June 7

investorzzo.............I'm not so sure that Mish missed that, one of his four funds is the Commodities Focus I. Click here for a detailed portfolio summary

davos..........there's actually a good bit of seriousness to that warning. I've been in a bit of a funk since yesterday's videos. Had to stop halfway thru the second and let the book be for a while. Interesting to observe the temporary negative mind states that arise wishing things to other than they are. Increased awareness of the magnitude of the greed and it's harmful consequences is probably prudent, but not joyful. Seems that the Definitive Humor Thread has been kinda slo lately.

Davos's picture
Davos
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Posts: 3620
Re: Daily Digest - June 7

 Hello Denny:

Sorry to hear about your funk, I know the feeling, I remember putting down the book, "Body of Secrets" years ago and thinking "man, am I better off NOT knowing."

On the bright side, this will swing the pendulem back to the good side. Reading about this and this makes me smile. I don't think it would have come about if not for the mess.

Out of bad will come good and a lot of it.

Take care.

PS One guy I respect a lot on this blog emailed me earlier and said that he has spent thousands of hours in Latin America and the folks there have less money and less more corruption but a lot more happiness...

PPS, and I'm not pushing advocacy or sites but sites like this do enact positive chage with respect to food and the Fed from calls and letter writing and that will help.

Me, I wonder what the exec's at Monsanto and the politicians feed their kids?

SagerXX's picture
SagerXX
Status: Diamond Member (Offline)
Joined: Feb 11 2009
Posts: 2252
Re: Daily Digest - June 7
Denny Johnson wrote:

WARNING: Reading this book and viewing the food/Monsanto videos from yesterday's digest during the same week may be hazardous to your health. Side effects may include depressive overload.

Don't worry, Denny -- Big Pharma has a drug for that....

 

Viva -- Sager

mesaboogieman's picture
mesaboogieman
Status: Bronze Member (Offline)
Joined: Jan 16 2009
Posts: 42
Re: Daily Digest - June 7

   I now have a new found respect for Mish, what he said about gold especially was very interesting and made a lot of sense.  I find myself coming round to the view that stagflation is likely inn the medium term, simply because the money being generated is going into paying off and servicing massive debt, it has no way to get into peoples pockets and circulate, thus generating hyperinflation.

 

 

Davos's picture
Davos
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Re: Daily Digest - June 7

 Hello MesaBoogieMan: Stagflation - good point. But I personally do believe the debt will cause devaluation - or other countries to say basket of currencies for the reserve. Once that happens I do see hyperinflation. Take care.

PS Just one persons opinion BTW

Farmer Brown's picture
Farmer Brown
Status: Martenson Brigade Member (Offline)
Joined: Nov 23 2008
Posts: 1503
Re: Daily Digest - June 7

I understand what Mish is saying about the bank-bailout money not necessarily making it into circulation.  It certainly seems to be the case.

However, there is a lot of other money that is making it into circulation.  Take, for instance, unemployment insurance benefits.  This is supposed to be funded by unemployment insurance, paid out by employers with each paycheck.  However, I have a suspicion that this money just goes into the Treasury's general coffer and an IOU is left in place of this money after it's spent on something else.  Anyway, the point is that these paychecks are entering the economy, but no goods and services are being produced in exchange for them, which is practically the definition of inflation.

On top of that, we have or will soon have the "stimulus" money entering the economy, also paid out for the most part for jobs that are not adding goods and services to the economy.  As Mish points out, if roads get paved or a needed bridge gets built, that might lead to an increase in goods and services, but if they just use this money for things like bridges to nowhere, or to re-sod the national mall, no new goods and services are created, but a lot of money does get added to the economy.

These two sources of money supply probably do not amount to enough of an injection to cause hyperinflation, which is what Mish is saying won't happen, but they do seem to point to severe inflation no matter what.  Where I fear the train possibly coming off the rails is when government, unsatisfied with the results of Stimulus I, comes up with Stimulus II, then III, etc, injecting more and more money each time, without producing any complementary goods and services, or if foreign lenders push our borrowing costs way up, encouraging the Fed the print more money, leading lenders to demand higher rates, in an ongoing spiral of devaluations.

Thanks for the link Davos - I'd never seen Mish speak before.

 

 

investorzzo's picture
investorzzo
Status: Diamond Member (Offline)
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Posts: 1182
Re: Daily Digest - June 7
Denny Johnson wrote:

investorzzo.............I'm not so sure that Mish missed that, one of his four funds is the Commodities Focus I. Click here for a detailed portfolio summary

davos..........there's actually a good bit of seriousness to that warning. I've been in a bit of a funk since yesterday's videos. Had to stop halfway thru the second and let the book be for a while. Interesting to observe the temporary negative mind states that arise wishing things to other than they are. Increased awareness of the magnitude of the greed and it's harmful consequences is probably prudent, but not joyful. Seems that the Definitive Humor Thread has been kinda slo lately.

Denny,

 Looks to me as if there are two visions of his portfolio. One with cash over commodities. I realize that when your speaking, there are many details one may miss. Overall, I like it when someone like Mish makes me rethink my positions. I would like to know what his core stocks are. My guess is high dividend stocks, with core holdings in areas of needed consumer goods.

  I also forgot the basket of currencies mentioned. When the dollar finally falls from all or one of the previous scenario, I'm sure gold will benifit.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - June 7

 Hello Patrick:

I do agree.

Sorry for not posting him before. This was one of the better 'all about Mish' pieces. I don't frequent his site after the summer of 2008, I wrote him off as a deflationist, and that was my bad, because after watching him I did realize he had some really super points. A while back there was a big to do with him and another good guy, they got into it on the inflation deflation thing. It was pretty ugly. Take care.

PS: Hope I don't sound pompous with my being adamant about deflation...I am this way a lot because of gas/oil prices. I believe in Peak Oil after watching a Crude Awakening and reading Hubert's book. I also believe that what Jim Puplava says about them needing to have oil at the 85 price point to pay for more expensive ways to get shale and deep oil - that these two things alone will never permit deflation.

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Daily Digest - June 7

 Dedicated to anyone in a funk:

Nate's Sunday funnies---cheers

plantguy90's picture
plantguy90
Status: Gold Member (Offline)
Joined: Jan 26 2009
Posts: 271
Re: Daily Digest - June 7

Maybe the money printed for the banks isn't geetting out there, but newly printed money is being released.   Look at M0 chart - M0 is pure "currency in circulation."

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