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Daily Digest - Mar 25

Wednesday, March 25, 2009, 12:21 PM
  • Geithner's Five Big Misconceptions (H/T Kelvinator)
  • Bachmann: Geithner & Bernanke (Video: Constitution??? H/T Mike Pilat)
  • Geithner: There is NO plan B (Video, H/T Mike Pilat)
  • When America Ruled the World (Sites Chris's Historic Level of Debt Chart)
  • Krugman & Marron Discuss Geithner's Money Laundering Plan
  • Volcker on Inflation, the Dollar and China
  • Bernanke Bombshell: AIG Insurer Exposed to FP
  • U.S. Seeks Expanded Power to Seize Firms
  • Obama Defends his Budget (Video)
  • The new toxic and bad legacy assets programs of the US Treasury: surreptiously squeezing the tax payer and the Fed until the PPIPs squeak
  • Car dealers face extinction 

Economy

Geithner's Five Big Misconceptions (H/T Kelvinator)

Tim Geithner has finally revealed his plan to fix the banking system and economy. Paul Krugman, James Galbraith, and others have already trashed it. Why?

In short, because the plan is yet another massive, ineffective gift to banks and Wall Street. Taxpayers, of course, will take the hit.

Why does Tim Geithner keep repackaging the same trash-asset-removal plan that he has been trying to get approved since last fall?

In our opinion, because Tim Geithner formed his view of this crisis last fall, while sitting across the table from his constituents at the New York Fed: The CEOs of the big Wall Street firms. He views the crisis the same way Wall Street does--as a temporary liquidity problem--and his plans to fix it are designed with the best interests of Wall Street in mind.

If Geithner's plan to fix the banks would also fix the economy, this would be tolerable. But no smart economist we know of thinks that it will.

We think Geithner is suffering from five fundamental misconceptions about what is wrong with the economy. Here they are:

The trouble with the economy is that the banks aren't lending. The reality: The economy is in trouble because American consumers and businesses took on way too much debt and are now collapsing under the weight of it. As consumers retrench, companies that sell to them are retrenching, thus exacerbating the problem. The banks, meanwhile, are lending. They just aren't lending as much as they used to. Also the shadow banking system (securitization markets), which actually provided more funding to the economy than the banks, has collapsed.

The banks aren't lending because their balance sheets are loaded with "bad assets" that the market has temporarily mispriced. The reality: The banks aren't lending (much) because they have decided to stop making loans to people and companies who can't pay them back. And because the banks are scared that future writedowns on their old loans will lead to future losses that will wipe out their equity.

Bad assets are "bad" because the market doesn't understand how much they are really worth. The reality: The bad assets are bad because they are worth less than the banks say they are. House prices have dropped by nearly 30% nationwide. That has created something in the neighborhood of $5+ trillion of losses in residential real estate alone (off a peak market value of housing about $20+ trillion). The banks don't want to take their share of those losses because doing so will wipe them out. So they, and Geithner, are doing everything they can to pawn the losses off on the taxpayer.

Once we get the "bad assets" off bank balance sheets, the banks will start lending again. The reality: The banks will remain cautious about lending, because the housing market and economy are still deteriorating. So they'll sit there and say they are lending while waiting for the economy to bottom.

Once the banks start lending, the economy will recover. The reality: American consumers still have debt coming out of their ears, and they'll be working it off for years. House prices are still falling. Retirement savings have been crushed. Americans need to increase their savings rate from today's 5% (a vast improvement from the 0% rate of two years ago) to the 10% long-term average. Consumers don't have room to take on more debt, even if the banks are willing to give it to them.

The two charts below from Ned Davis illustrate the real problem: An explosion of debt relative to GDP. The first is Nonfinancial Debt To GDP. The second is Total Debt To GDP.

In Geithner's plan, this debt won't disappear. It will just be passed from banks to taxpayers, where it will sit until the government finally admits that a major portion of it will never be paid back.

Bachmann Geithner & Bernanke (Video Constitution??? H/T Mike Pilat)

Geithner: There is NO plan B (Video, H/T Mike Pilat)

When America Ruled the World (Sites Chris's Historic Level of Debt Chart)

The last and most dramatic bubble is total U.S. debt. There is no doubt that it is unsustainable. It currently amounts to 340% of GDP. It would need to go back to 200% of GDP or below to retrace its bubble path. This would require $20 trillion of debt to be paid off or written off. The implications of this are staggering. The Federal Reserve and politicians running the country will fight the deflation of this bubble with all of their might. It won't work. Bubbles always burst. This bubble bursting will change America forever. The American standard of living will decline significantly. Not many people are prepared for this wrenching future. The mantle of ruling the world will be passed to some other lucky country. The government is trying to keep all three bubbles from popping. Their solutions are dangerous and could result in a collapse of our economic system. 

Krugman & Marron Discuss Geithner's Money Laundering Plan

Volcker on Inflation, the Dollar and China 

On inflation (from Dow Jones): 

"One historic way of getting yourself out of this situation - or trying to - is to inflate. Either you do it deliberately or you allow it to happen," [Vlocker] said. "And if we permit that to happen then I think all these dollars will come tumbling down on us." ...

"I get a little nervous when I see the Federal Reserve announcements that they want have the amount of inflation that's conducive to recovery," Volcker said. "I don't know what ‘the amount of inflation that's conducive to recovery' would be appropriate. I'd much rather they say that they want to maintain stability in the currency, which is conducive to confidence and recovery."

And on China:

"I think the Chinese are a little disingenuous to say, ‘Now isn't it so bad that we hold all these dollars.' They hold all these dollars because they chose to buy the dollars, and they didn't want to sell the dollars because they didn't want to depreciate their currency. It was a very simple calculation on their part, so they shouldn't come around blaming it all on us."

Bernanke Bombshell: AIG Insurer Exposed to FP

In researching and think about AIG, I have been writing about them as if it were two separate companies: A well regulated Insurer, and a rogue derivatives products firm (FP).

The working assumption has been that the regulated insurer was run fairly conservatively, and the structured financial product side run like a giant hedge fund. The 32% net profit retention on the FP side is actually better than what most hedge funds see.

This dichotomy is mostly true, but with now has an interesting twist to it. In congressional testimony today, Ben Bernanke implied that had the Fed allowed AIG too fall, he detailed what might have happened had AIG been allowed to fail:

The Federal Reserve and the Treasury agreed that AIG's failure under the conditions then prevailing would have posed unacceptable risks for the global financial system and for our economy. Some of AIG's insurance subsidiaries, which are among the largest in the United States and the world, would have likely been put into rehabilitation by their regulators, leaving policyholders facing considerable uncertainty about the status of their claims. State and local government entities that had lent more than $10 billion to AIG would have suffered losses. Workers whose 401(k) plans had purchased $40 billion of insurance from AIG against the risk that their stable value funds would decline in value would have seen that insurance disappear. In addition, AIG's insurance subsidiaries had substantial derivatives exposures to AIG-FP that could have weakened them in the event of the parent company's failure.

If we are to take Bernanke at face value, he is saying that AIGFP had buried their own firm with junk paper. BB does not define what "substantial derivative exposure" meant - but given the $2.7 trillion dollars in derivatives exposure that FP had, even a tiny percentage might amount to an enormous sum.

That the collapse of AIG Financial Products would have damaged the other Insurance half of the firm is a frightening development.

Even more fascinating is this "lesson learned."

To conclude, I would note that AIG offers two clear lessons for the upcoming discussion in the Congress and elsewhere on regulatory reform. First, AIG highlights the urgent need for new resolution procedures for systemically important nonbank financial firms. If a federal agency had had such tools on September 16, they could have been used to put AIG into conservatorship or receivership, unwind it slowly, protect policyholders, and impose haircuts on creditors and counterparties as appropriate. That outcome would have been far preferable to the situation we find ourselves in now.

In other words, we should have nationalized them from the beginning...

U.S. Seeks Expanded Power to Seize Firms 

The Obama administration is considering asking Congress to give the Treasury secretary unprecedented powers to initiate the seizure of non-bank financial companies, such as large insurers, investment firms and hedge funds, whose collapse would damage the broader economy, according to an administration document. 

The government at present has the authority to seize only banks.

Giving the Treasury secretary authority over a broader range of companies would mark a significant shift from the existing model of financial regulation, which relies on independent agencies that are shielded from the political process. The Treasury secretary, a member of the president's Cabinet, would exercise the new powers in consultation with the White House, the Federal Reserve and other regulators, according to the document.

The administration plans to send legislation to Capitol Hill this week. Sources cautioned that the details, including the Treasury's role, are still in flux.

Treasury Secretary Timothy F. Geithner is set to argue for the new powers at a hearing today on Capitol Hill about the furor over bonuses paid to executives at American International Group, which the government has propped up with about $180 billion in federal aid. Administration officials have said that the proposed authority would have allowed them to seize AIG last fall and wind down its operations at less cost to taxpayers.

The administration's proposal contains two pieces. First, it would empower a government agency to take on the new role of systemic risk regulator with broad oversight of any and all financial firms whose failure could disrupt the broader economy. The Federal Reserve is widely considered to be the leading candidate for this assignment. But some critics warn that this could conflict with the Fed's other responsibilities, particularly its control over monetary policy.

The government also would assume the authority to seize such firms if they totter toward failure.

Besides seizing a company outright, the document states, the Treasury Secretary could use a range of tools to prevent its collapse, such as guaranteeing losses, buying assets or taking a partial ownership stake. Such authority also would allow the government to break contracts, such as the agreements to pay $165 million in bonuses to employees of AIG's most troubled unit.

The Treasury secretary could act only after consulting with the president and getting a recommendation from two-thirds of the Federal Reserve Board, according to the plan.

Geithner plans to lay out the administration's broader strategy for overhauling financial regulation at another hearing on Thursday.

The authority to seize non-bank financial firms has emerged as a priority for the administration after the failure of investment house Lehman Brothers, which was not a traditional bank, and the troubled rescue of AIG.

"We're very late in doing this, but we've got to move quickly to try and do this because, again, it's a necessary thing for any government to have a broader range of tools for dealing with these kinds of things, so you can protect the economy from the kind of risks posed by institutions that get to the point where they're systemic," Geithner said last night at a forum held by the Wall Street Journal.

The powers would parallel the government's existing authority over banks, which are exercised by banking regulatory agencies in conjunction with the Federal Deposit Insurance Corp. Geithner has cited that structure as the model for the government's plans.

Obama Defends his Budget (Video)

The
new toxic and bad legacy assets programs of the US Treasury:
surreptiously squeezing the tax payer and the Fed until the PPIPs squeak

There is very little Treasury money in it.

The first thing that struck me is how little money the Treasury appears to be putting in. On reflection, this is not surprising. The government simply has no money in the kitty to recapitalise banks or purchase toxic or bad assets on any scale. Of the $700bn TARP money, no more than $300 bn is left. The Congress is in one of its more infantilist phases and will not, unless and until the threat of utter financial collapse becomes even more apparent, appropriate new money for saving US banking.

Car dealers face extinction 

WESTFIELD, N.J. (CNNMoney.com) -- New Norris Chevrolet in Westfield, N.J., is gone now. Along with hundreds of other small dealers across the country, it was forced to shut down -- swept under by mounting debts, dwindling car sales and industry consolidation. 

"I'm here all the time!" says owner Larry Friedman, on a video on the Web site of his now defunct dealership.

And he was there on a recent Wednesday afternoon, helping someone load a few chairs into a van as he sold the dealerships' remaining furniture and office equipment.

The father of two grew up in the business. Norris Chevrolet was founded in the 1920s, making it one of the oldest Chevrolet dealerships in the nation. His father, Mitchell, bought it in 1981, adding "New" to the name.

To hear Friedman tell it, his dealership had been doing a pretty good business before the economy turned sour. He sold maybe 50 cars a month in a normal year, about average for a dealer like New Norris, located far from an interstate highway.

"We were just a small, little dealer in town," Friedman said. "I'm not a highway dealer, selling a lot of cars."

But in late 2008 gas prices rocketed up, leaving him stuck with lots of big trucks nobody wanted. Then, in the fall, the banking system went into a skid. New Norris's customers couldn't get car loans and GMAC, which financed his own inventory as well as his customers' purchases, started demanding big payments on all those unsold trucks and SUVs.

GMAC would not comment on Friedman's case, specifically. In a statement released recently in response to concerns over dealership closures, the finance company said, "We work with dealerships facing financial difficulty that have GMAC loans, but cannot extend credit indefinitely if there is a default or a significant risk of loss."

A disappearing business model

In 2008, New Jersey lost about 60 car dealerships, or roughly 10% of its total dealership population, said Jim Appleton, president of New Jersey Coalition of Automotive Retailers. "We'll probably lose another 50 dealers this year," he said.

Nationally, the United States lost about 900 car dealerships last year, according the National Automobile Dealers Association. About 66% percent of the dealers that closed last year were single-brand dealers.

The losses are greatest among dealers selling Detroit brands, said Appleton.

"They're all suffering the same way. The problem is that it's much worse for domestic dealers," he said. "Volumes have dropped more substantially and access to capital as been curtailed more dramatically."

Friedman's loyalty to Chevrolet may have left him especially vulnerable. He sold nothing else. He had tried selling more popular foreign cars off his used car lot, he said, but his GM-trained technicians didn't know the cars well. So, even though used car buyers were paying more for high mileage Japanese cars, his used car sales were few, he said.

"Used car sales are the salvation for a lot of these franchise dealers," said industry analyst Art Spinella of CNW Market research.

Many new car dealers today sell about as many used cars as new and they sell them at much higher profit margins. Meanwhile, the new car showroom has become a source of used cars - as trade-ins - and of customers for service rather than a source of profit itself.

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32 Comments

Davos's picture
Davos
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Re: Daily Digest - Mar 25

Marron doesn't get it, Obama doesn't get it - there is no economy without the consumer.

"Get banks loaning again," (Krugman) "Real buyers" (Marron).

"Ultimatly the banks will lend again." (Obama).

"New loans, bound to stimulate the economy. Houses are the center," "There is building demand..."

  • 19 million vacant homes
  • About 4.5 homes on the market
  • Wave 2 of alt-a's and option arms should be at shore soon
  • 20,000,000 Under and unemployed workers
  • 1,000,000 loosing their jobs each month

Who are you going to loan to?

Who?

The sub-prime borrower who lost his house, or the guy who lost his job, or the guy who is working 3 jobs to make ends meet or the guy who is afraid he is going to lose his job, or the guy who knows his home won't go up in value and he won't be able to sell it and pay off debt?

About the only thing I agreed with is Krugman is correct - it isn't a fix.

 

 

 

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Re: Daily Digest - Mar 25

In the latest The Market Ticker article The End Game Approaches Denninger brings back the idea that the Fed will buy up all the treasuries and eventually force the U.S. government to only be able to spend as much as its tax base allows. Is this a likely scenario now? Denninger gives the U.S. 6 months at most. 

 

treasury rate

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Re: Daily Digest - Mar 25 / PLAN B

Is this what Geithner meant when he said "there is no plan B"?

Geithner Open to China Proposal - Politico.com

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Re: Daily Digest - Mar 25

"Get banks loaning again," (Krugman) "Real buyers" (Marron).

"Ultimately the banks will lend again." (Obama).

"New loans, bound to stimulate the economy. Houses are the center," "There is building demand..."

~~~~~~~~~~~~~~~~~~~~Green Curtain~~~~~~~~~~~~~~~~~~~~~~~~

  • 19 million vacant homes
  • About 4.5 homes on the market
  • Wave 2 of alt-a's and option arms should be at shore soon
  • 20,000,000 Under and unemployed workers
  • 1,000,000 loosing their jobs each month

This seems to be Obama and his gang's MO. They say one thing knowing it is not the truth while doing something else. But there are so many people trusting every word.

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Re: Daily Digest - Mar 25

 

Very good article today at TheOilDrum.com relating the economic crash and Peak Oil, suggesting the peak in supply of cheap energy caused the economy to tumble.

http://www.theoildrum.com/node/5230

I think the relationship between oil and the economy is more complex than I can understand, but certainly peak oil is one of several important factors.

Tom

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Re: Daily Digest - Mar 25 / PLAN B
turbo wrote:

Is this what Geithner meant when he said "there is no plan B"?

Geithner Open to China Proposal - Politico.com

This alternate reserve currency is picking up speed, and fast. Just a few months ago only few and pretty radical people were proposing dropping the dollar, now it's becoming more and more "mainstream".

The probability of the dollar being dropped is becoming pretty high. Geithner better be open to it, I don't think he has any choices...

"The continued use of the dollar as a reserve currency, he (Geithner) added, "depends..on how effective we are in the United States...at getting our fiscal system back to the point where people judge it as sustainable over time.""

Is he joking? Well, I guess other countries aren't finding it very sustainable, eh? See the article below...

http://ca.news.yahoo.com/s/afp/090325/business/finance_economy_imf_us_china_forex_dollar

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Re: Daily Digest - Mar 25

Spot on Davos! Also, great article by Denninger.

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Re: Daily Digest - Mar 25

A great listen here:

http://www.npr.org/templates/story/story.php?storyId=102325715

Quote:

Fresh Air from WHYY, March 25, 2009 · Years before the current economic crisis, law professor and former Wall Street trader Frank Partnoy was warning about the dangers of risky financial practices.

In his 1997 book FIASCO: Blood in the Water on Wall Street, Partnoy detailed how derivatives — financial instruments whose value is determined by another security — were being used and abused by big financial firms. Partnoy used his experiences as a derivatives trader at Morgan Stanley to give the book an insider's perspective. In the preface to FIASCO, Partnoy wrote about the growing influence of derivatives:

"Derivatives have become the largest market in the world. The size of the derivatives market, estimated at $55 trillion in 1996, is double the value of all U.S. stocks and more than 10 times the entire U.S. national debt. Meanwhile, derivatives losses continue to multiply."

Partnoy is a professor at the University of San Diego law school. In addition to FIASCO, he's the author of Infectious Greed: How Deceit and Risk Corrupted the Financial Markets.

 

I might add that Partnoy is still a believer (e.g. things aren't catostrophic and will get better) in the system - despite his damming analysis of the derivitives and CDS markets. He doesn't grapple with how the mountain of ficticious wealth and financial expectation will be unwound from the system and his story suggests that the banking system is indeed generally insolvent and is afloat now only with massive government guarantees.

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Re: Daily Digest - Mar 25

RE: Geitner video...

He said:
"It just requires will, it's not about ability." Then he said "We just need to keep at it."

What is he talking about? Printing trillions of dollars?
I know the limits of my intelligence, and I can't grasp some of these concepts.
This just seems like a "no brains, no headaches" approach to a very serious problem.

Does anyone really know what the hyperinflationary threshold ratio between "dollars" vs "goods and services" is?

It seems to me that freeing up lending institutions to keep lending is an idea that is more in the interest of the lending institutions - not the general health of the economic system.

Aaron

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Re: Daily Digest - Mar 25

Don't know if anyone else has posted this yet, but a great 3 minutes to watch:

 

Daniel Hannan, MEP for South East England, gives a speech during Gordon Brown´s visit to the European Parliament on 24th March, 2009.  Finally, someone tells the truth.

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Re: Daily Digest - Mar 25

Whoa -- check out CM's new headshot!  He looks quite respectamable!

 

Viva -- Sager 

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Re: Daily Digest - Mar 25

According to Denninger´s article, he seems to expect that this will turn out to be a deflationaty depression.So we should hold cash. Others believe he will have inflation or even hyperinflation, meaning that you should hold gold and real assets. What is your take on this Chris, Davos, anyone??

Inflation or Deflation??? What´s it gonna be??

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Re: Daily Digest - Mar 25

FireJack - Great link - I find denninger an increasingly good read too. thanks. 

robk - excellent video. Shame he had to threaten with the voter. Otherwise a great rant.

Carlos P (this is a cut and paste of mine from the weaned thread)

My understanding of money says that it only gets real when people are
prepared to work for it. Changing the ownership or location of goods is
trivial and does almost nothing in reality. Similarly printing money
does nothing but fill computers until people work more (in the belief
that money will be of value to them). Inflation occurs when more people
do with less money to go around and deflation when less people do with
more money to go around. Therefore inflation will only come about when
people do more or more people do (for money). That does not look likely
in even the medium term as people are doing less for money. All the
rest of money seems to be a game whose rules can change at the whim of
those who believe themselves to be in control; the evidence that this
is so is mounting almost daily in our present circumstances.

Don

____________________________________________

So few then with so many ways, so many now with so few ways.

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Re: Daily Digest - Mar 25

Hello Carlos:

My take: These momos are counterfeiting money like some banana republic. History shows us, each and every-time what happens - the value of the dollar goes to zip and some group becomes a scapegoat.

These officials are hell bent on dollar destruction, by intent or stupidity is my only question. I barely made it out of HS and I can figure out that deficits this large and books this cooked has Enron written all over it. Geithner et al went to far better private schools than I did. Not to sound like a conspiracy theorist here, but I really wonder if by design they are going to just devalue and re-denominate. In the truest sense of the word "Quantitative Easing" is just a fancy smancy name for devaluing the currency, something Bernanke was bread for.

First, I hate the word deflation and inflation when applied to anything but the money supply. To me this is all supply and demand. A big supply of money means it is worthless, a small supply means it holds value.

As far as asset prices falling - initially yes. Less credit, people hunkering down. Once the value of the dollar starts falling people will run out to get hard assets, whether it be bread or meat, they will know a hundred bucks on Monday will be worth 50 on Friday. Prices go up. Way up. 

Take care 

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Re: Daily Digest - Mar 25

First of all, thanks for giving me your take on the subject.

Anyway, don´t you think it is still possible that the Fed could be overwhelmed by the massive deleveraging that needs to take place in order to re-balance the system. Isn´t that Denninger´s argument? Isn´t that a contraction on the money supply?

For example, Mike Shedlock´s presents a very complete and mathematical argument favouring deflation. Altough I think inflation is the problem in the long run if we continue in the fiat system, maybe deflation is the immediate treath for our leveraged economies. It would be interesting to see Chris tackling on the deflationists.

 

Thanks again for your work in Daily Digest, one of the few reliable sources of information nowadays

 

Cheers

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Re: Daily Digest - Mar 25

Remember that Bernanke Inserts Gun In Mouth article that Derringer wrote a few weeks ago. The scenario where the fed buys "the entire $6 trillion public Treasury float."  This is Derringers collapse scenario

The error in the hyperinflationist scenario is that
without being able to couple price increases back into wages they are
unsustainable - price increases instead collapse demand.  If gasoline goes to $20/gallon you will
buy less of it - a lot less - not because you want to, but because you
simply don't have the money.  This in turn destroys the gasoline
retailer and oil company's operating cash flow, which in turn causes
them to lay off more people.  In a debt-laden economy the debt
percentage (of GDP) continues to rise even as spending drops and a mad
dash to try to redeem what debt can be repaid soaks up all available
money.

The nightmare scenario that is staring us in the face,
right here, right now isn't hyperinflation.  It is in fact a collapse
of monetary systems driving demand for dollars through the roof in a
crescendo of attempted redemptions into collapsed ("no bid") asset
prices - a demand that Ben will not be able to meet, as the collateral
backing those dollars will have all been exchanged for toilet paper. 
Whether Bernanke holds all this trash on his balance sheet or manages
to scam Treasury into exchanging it for T-bills, the result is the same
- there is no collateral behind Bucky and as employment collapses no production to replace it with either.

The mad scramble will be on, and as it happens trade will
be choked off by not a collapsing dollar but other currencies
collapsing around the world. 

Paradoxically, the DX, or dollar index, will skyrocket - not go through the floor - as this plays out.

Unfortunately this shuts down virtually all exports - at a
time when we desperately need them, as we cannot borrow to consume any
more. he economy collapses, along with government funding and our
currency - but not through hyperinflation.  The mad dash to redeem and
sell anything and everything instead collapses pricing (that is, it
becomes out-of-control deflation in an exponentially-increasing
fashion) irrespective of Ben's attempt to halt it.

The "death spiral" ends in the destruction of our monetary
base - not due to hyperinflation but due to the inability to borrow any
more funds, the reduction of the currency's base to a giant circle
jerk, asset fire sales in a mad liquidation dash and ultimately, the
collapse of both the monetary and political systems in the United
States as tax revenues collapse to very close to zero.

 

Now today the Fed has actually started to buy the long end of the treasury (The end game approaches). I must admit I don't understand whats going on exactly but so far I respect Derringer's opinion. I'm guessing if we just watch how much of this treasury the fed owns we can count down the time till it hits 100% then doomsday. 

 

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Re: Daily Digest - Mar 25

Time will tell Wink 

I'm not going to discount what he says. I like to listen to all points. One thing I will mention is this: "If" gas goes to 20 bucks a gallon we will have goods that cost a fortune, since oil is in everything...that would, right there, be a lot like "hyperinflation."

If they weren't destroying the dollar, and racking up banana republic debt I'd think differently about a lot of this. Chris's "End of Money" really has, IMHO nailed it.

Take care 

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Re: Daily Digest - Mar 25

Where can I read/view "The End of Money" that Davos references above?  I didn't see it in the Crash Course index...did I miss it?

Thanks  

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Re: Daily Digest - Mar 25

Hello Dakamon: It was on the projector when Chris was on WGBY PBS in their clip. . .

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Re: Daily Digest - Mar 25

Thank you!  I found it!

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Re: Daily Digest - Mar 25

Bill Murphy, chairman of the Gold Anti-Trust Action Committee, talks
with Bloomberg's Bernard Lo about global central banks' intervention in
the gold market.

Gold should be $2,300/ounce inflation adjusted

U.S. Government says it has 30,000 tons, but Bill believes it's less than 15,000 tons. Central banks borrowing gold from from ETF's

"Central banks stand ready to lease gold in increasing quantities should the price rise."
~ Alan Greenspan, 1998, Central Banker

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FireJack
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Re: Daily Digest - Mar 25

The same pbs clib he has on youtube? Im watching now and im interested in what he has to say.

 

 

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Carlos P
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Re: Daily Digest - Mar 25

I saw that Bloomberg show. Latter at Asiaconfidential Bernie and his guest were subtly calling the GATA guy a conspiracy nut. They were also saying that they couldn´t see any motivation for the central banks to manipulate gold prices. What a bunch of idiots. What do they think is the first signal of a distressed fiat money system? Of course it is the price of gold... but they are just to stupid to get it, and Bloomberg is supposed to give good economic and financial information... what a joke.

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cybernytrix
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Re: Daily Digest - Mar 25

Timmaaaaay

Timmaaaaay

Sorry! couldn't resist :)

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RubberRims
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Posts: 145
Re: Daily Digest - Mar 25

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MarkM
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Posts: 849
Re: Daily Digest - Mar 25
RubberRims wrote:

Does the Fed school these guys on how to talk without saying anything?  Wow.  "Umm, ummm,errr.  Oh yeah, the Fed can reallly do whatever it wants.  Ya' wanna' make something of it?"

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Damnthematrix
Status: Diamond Member (Offline)
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Posts: 3998
"We're All In This Together"
"We're All In This Together"

No we are not, that's the point.

By Cindy Sheehan

March 25, 2009 "ICH" -- President
Obama basically said that we can't demonize every investor who earns a
profit, because "we are all in this together." Sorry, but I am going to
have to call a big fat "bull-shit" on this one.

When Obama said
"we" did he have a mouse in his pocket? Obama, and his family have a
very opulent, slave-built roof over their heads. He travels on the
public nickel, his children attend an exclusive Washington, DC private
school that has organic food on its menu, and has health care that
covers everyone in his family from head to toe and side to side and
inside out.

Even though he and every member of the administration,
Congress and the Supreme Court are not hurting for anything, the
bastard (sorry if your parents weren't married when you were conceived)
Wall Street banksters are receiving billions of dollars of government
welfare and are not so good about being in "this together" with us.

The
only concrete steps the Treasury and Fed have taken are to buy "toxic"
assets (if something is toxic can it still be an asset?) so companies
like Goldman Sachs (via AIG) can have the public tit rescue them from
their stupider than crap mistakes.

WE the ROBBED Class are in
this together. THEY the ROBBER Class are in it for themselves. How many
times does Obama have to demonstrate that his economic recovery is
nothing but Reaganomics wrapped in a little bit of populist rhetoric to
make it easier for the mis-informed Robbed Class to swallow. If
anything transpires to alleviate the suffering in our Class at all, it
will be because some of the prosperity got through the cracks in the
deeply cancerous system and trickled ON us. Rest assured, this is just
a mistake and the only time the Robber Class cares about us, is when
the interests of the two classes collide.

I will feel like I am
"in this" with the Obamas when I have a free house, free health care
and if my children would not have to go into lifelong debt to pay for
university.

I wonder if the wall to wall homeless population
(it's growing at an alarming rate) here in San Francisco feels "in this
together" with the Wall Street Robbers?

I wonder if the people
standing waiting for hours in municipal Emergency Rooms waiting to get
some, any medical attention feel "in this together" with Congress which
has 110% medical coverage?

I wonder if the foot soldiers for the Empire feel "in this together" with the War Profiteer Robbers?

I
wonder if the victims of the drug wars and street wars feel "in this
together" with the children of the Robbers who ride to their schools in
limos with bodyguards?

I wonder if our brothers and sisters
living in tent cities with their children feel "in this together" with
the Pelosis and Feinsteins of the world who live in their obscenely
huge mansions in exclusive neighborhoods and fly back and forth from DC
in private jets that suck down gas at an immoral rate?

I wonder
if our brothers and sisters who just cashed a final unemployment check
feels "in this together" with the Robbers who just cashed millions in
bonuses?

I, myself, feel "in this together" with the homeless,
hungry, sick, jobless, struggling, stressed, frightened, confused, yet
resilient, brave and strong.

WE are in this together. WE need to
step outside of the Robber Class system and start to build our own
systems to help each other through this Robber Class/Goldman
Sachs/Federal Reserve depression.

Please
order your copy of my new book, Myth America: The 10 Greatest Myths of
the Robber Class and the Case for Revolution, (available soon) today!
(We are having temporary problems with pay-pal) Send 10.00 to: Cindy
Sheehan's Soapbox, 55 Chumasero Dr STE 5D, San Francisco, Ca 94132
http://cindysheehanssoapbox.blogspot.com

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Damnthematrix
Status: Diamond Member (Offline)
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Posts: 3998
Re: Daily Digest - Mar 25

http://www.businessspectator.com.au/bs.nsf/Article/Aviations-rapid-descent-$pd20090325-QG2W3?OpenDocument&src=kgb

Aviation's
rapid descent

The
severity of the collapse in airline travel, and its impact on the industry, is
becoming clearer. An International Air Transport Association (IATA)
presentation overnight presented a portrait of an industry in a crisis so dire
that it will inevitably, and quite brutally, be reshaped.

IATA, after
producing a revised estimate of the industry’s 2008 losses – $US8.5
billion – has revised upwards its expectation of 2009 losses from the
$2.5 billion it forecast in December to $4.7 billion.

In the context
of what’s now occurring in the industry – which lost more than $4
billion in the fourth quarter of 2008 alone – the 2009 forecasts look
wildly optimistic.

International
aviation traffic and profitability – not that the sector has much of a
record of profitability – is highly correlated to movements in GDP. With
the globe facing its worst and most wide-spread recession since the 1930s, the
industry outlook is calamitous.

After September
11, the industry lost $37.4 billion in the years between 2001 and 2005 even
though the decline in passenger kilometres flown was relatively brief and it
experienced only about half the fall-off IATA is now anticipating. The 12 per
cent fall in revenue expected this year is about twice the level experienced
after September 11.

For an industry
that IATA says has $170 billion of debt, and which has rarely, if ever,
recovered its cost of capital, the global financial crisis and the global
recession it has spawned, is the cataclysmic event that could finally force the
radical wholesale consolidation the sector, whose economics have been corrupted
and undermined by national interest considerations, has always required.

Within the past
18 months IATA has suspended 42 airlines from its payment settlement system
because they have been unable to meet their liabilities, which IATA
Director-General Giovanni Bisignani says is often a
precursor to their collapse.

Around the
globe airlines have been cutting costs and capacity, just not fast or deeply
enough.

IATA says
demand is projected to fall sharply, with passenger traffic forecast to be down
5.7 per cent this year and cargo demand by 13 per cent. Premium travel is
expected to be hardest hit.

In the
Asia-Pacific region, which IATA expects to be worst hit, it sees a 6.8 per cent
fall in demand but capacity reductions of only 4 per cent. In Europe demand
will, it says, fall 6.5 per cent with capacity cuts of 5.3 per cent.

Only in North
America, where demand is forecast to fall 7.5 per cent, will that reduction be
matched by reduced capacity. The Middle East continues to add capacity beyond
any increase in demand.

Bisignani described the
"hyper-fragmented" industry as "structurally sick" and said
that access to global capital, the ability to merge and consolidate and the
freedom to access markets were needed if the industry were to run as a normal
and profitable business. Bail-outs, he said, were not a prescription for a
return to health.

Even the
world’s better-managed airlines, Qantas and Virgin Blue among them, are
in survival mode, just trying to hang on until the downturn finds its floor and
the sector more stable settings.

The most
alarming aspect of the IATA forecasts is that it traditionally has tended to be
overly-optimistic. With premium traffic volumes down more than 15 per cent and
freight volumes down more than 20 per cent – and the global economy still
deteriorating – the only modest excuse for optimism is lower oil prices.

Even there,
hedging policies mean that the airlines tend not to get the full benefit of
lower prices immediately and the industry’s history says that its loss of
volume tends to push up its costs relative to the diminished capacity.

Even the
low-cost sector is being affected by the downturn, with flight numbers and
capacity starting to shrink for the first time since the model emerged.

The decline in
global demand has been so abrupt and precipitous that there is nowhere to hide.
With governments themselves under severe pressure from the crisis and
recession, this might be the best, and last, chance for the industry to be
restructured onto a semi-economic footing.

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ccpetersmd
Status: Martenson Brigade Member (Offline)
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Posts: 799
Re: Daily Digest - Mar 25
robk wrote:

Don't know if anyone else has posted this yet, but a great 3 minutes to watch:

 

Daniel Hannan, MEP for South East England, gives a speech during Gordon Brown´s visit to the European Parliament on 24th March, 2009.  Finally, someone tells the truth.

That is a great video. I also saw Hannan interviewed yesterday afternoon on one of the Fox news programs. Very impressive, there, too. In addition to his understanding of the economic crisis, it was interesting to hear his perspective on our politics. Very sharp young man. 

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reistr
Status: Bronze Member (Offline)
Joined: Jul 15 2008
Posts: 50
Re: Daily Digest - Mar 25
ccpetersmd wrote:
robk wrote:

Don't know if anyone else has posted this yet, but a great 3 minutes to watch:

 

Daniel Hannan, MEP for South East England, gives a speech during Gordon Brown´s visit to the European Parliament on 24th March, 2009.  Finally, someone tells the truth.

That is a great video. I also saw Hannan interviewed yesterday afternoon on one of the Fox news programs. Very impressive, there, too. In addition to his understanding of the economic crisis, it was interesting to hear his perspective on our politics. Very sharp young man. 

It is a great video.

I see a HUGE difference in the politics of US verus Britain. The british at least seem to have a group of politicians willing to fight.

Hey, even King and Darling are voicing their disagreement with Brown's continuing deficit policy - That would be unthinkable in the US!

It seems to me that there is a much larger proportion of politicians that understand the economy in England. In the US congress the level of ignorance is scary, so they are easily manipulated.

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maveri
Status: Silver Member (Offline)
Joined: Nov 20 2008
Posts: 159
Re: Daily Digest - Mar 25
reistr wrote:

...

I see a HUGE difference in the politics of US verus Britain. The british at least seem to have a group of politicians willing to fight.

It seems to me that there is a much larger proportion of politicians that understand the economy in England. In the US congress the level of ignorance is scary, so they are easily manipulated.

We in Australia are even further down the evolutionary scale then :-(

We don't even have proper debates in parilment here.

As bad as the US may seem compared to the brilliance of that young British man in the video, in Australia our political debates can't even get past the school boy tit for tat debates where to win an arguement means making the other party look foolish rather than win an argument by reason

I have been drawn lately into watching Amercian politicans direct questions to the FED idiots of late and at least there's an attempt to stick up for the voters they represent. You at least get the impression they represent the little people in their electorates (or what-ever term you use there - excuse my ignorance) - in Australia your hard pressed to get a politican to even mention their voters either as a generic class yet alone on an individual basis.

Seriously - your politics is further down the evolutionary path than the baboons we have here...

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ccpetersmd
Status: Martenson Brigade Member (Offline)
Joined: Oct 12 2008
Posts: 799
Re: Daily Digest - Mar 25

To anyone interested, I received a reply today from Daniel Hannan, the M.P. from the U.K. who roasted Gordon Brown in Parliament a month ago. I had written him to congratulate him on his speech, and to tell him that many here in the U.S. applauded his efforts. I also suggested the Crash Course, and he replied that he would check it out. He probably won't, as he's still a politician and likely can't help but try to be ingratiating, but it was certainly nice to actually receive a reply! I haven't received a reply from any of the U.S. politicians I have contacted....

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