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Daily Digest - March 10

Tuesday, March 10, 2009, 11:05 AM
  • Wall Street on the Tundra
  • Over 15,000 descend on Fullerton to protest higher taxes
  • Global Financial Assets Lost $50 Trillion Last Year, ADB Says (Hat Tip Terry)
  • Even for Market Veterans, It's Uncharted Territory (Hat Tip Zombie210)
  • Are Germans giving up on the euro
  • Is Buffett getting margin calls?
  • Chris's Crash Course Quoted in the Washington Post (H/T Steve S)
  • What's Dead (H/T C.P.)
  • AIG: Is the Risk Systemic?
  • Bank and Broker Default Risk (Table on Page)
  • Summers calls for boost to demand
  • Guest Post: More Debt Won't Rescue the Great American Ponzi
  • Forget Confidence - Fix What's Broken First
  • Too big has failed
  • The 5 Stages of Grief
  • Pressure building on Geithner 

Economy

Wall Street on the Tundra

Iceland's de facto bankruptcy-its currency (the krona) is kaput, its debt is 850 percent of G.D.P., its people are hoarding food and cash and blowing up their new Range Rovers for the insurance-resulted from a stunning collective madness. What led a tiny fishing nation, population 300,000, to decide, around 2003, to re-invent itself as a global financial power? In Reykjavík, where men are men, and the women seem to have completely given up on them, the author follows the peculiarly Icelandic logic behind the meltdown. 

Over 15,000 descend on Fullerton to protest higher taxes 

Shouting "Off with their heads!" and "Heads on a stick!" over 15,000 people from all over California descended on downtown Fullerton for the Revolt, Recall, Repeal rally to protest over $50 billion in tax increases in the state of California and to begin a recall effort against the governor and many state legislators. Freeway off ramps heading into Fullerton had to be shut down because so many people were heading to the event and police services were stretched thin, according to a sergeant handling traffic duty at the event. 

Global Financial Assets Lost $50 Trillion Last Year, ADB Says (Hat Tip Terry) 

March 9 (Bloomberg) -- The value of global financial assets including stocks, bonds and currencies probably fell by more than $50 trillion in 2008, equivalent to a year of world gross domestic product, according to an Asian Development Bank report. 

Asia excluding Japan probably lost about $9.6 trillion, while the Latin American region saw the value of financial assets drop by about $2.1 trillion, said Claudio Loser, a former International Monetary Fund director and the author of the report that was commissioned by the ADB. The report didn't give a breakdown of asset declines in other regions.

"The loss of financial wealth is enormous, and the consequences for the economies of the world will unfortunately commensurate," said Loser, now the Latin American president of strategic advisory firm Centennial Group Inc.. "There are serious economic and political stumbling blocks that may well cause the recovery to be costly and slow to consolidate."

Even for Market Veterans, It's Uncharted Territory (Hat Tip Zombie210) 

Byron Wien, chief investment strategist at Pequot Capital Management, says he is an optimist. Yet he advises small investors to buy gold and corporate bonds, not equities, which, he said, may be too risky right now. 

Barton M. Biggs, managing partner at Traxis Partners, a hedge fund, places himself in the optimists' camp, too. Yet he advises well-to-do investors to arm themselves - with shotguns, if need be - against the possibility of a deepening downturn and accompanying "social unrest."

Are Germans giving up on the euro 

Mr Fischer now thinks monetary union is beyond saving. A massive rescue will be needed. It will not be forthcoming. German-French relations are the worst since the war, he said. The European insitutions have lost virtually all authority in this crisis. The half-century Project is collapsing. .. or words to that effect, from what I hear. 

As regards Prof's Pohl's comments, they are revealing. Why should the currencies fall 60pc unless they are massively overvalued? If they are massively overvalued by anything like this amount - or even half - how can they possibly rectify this within the eurozone? Is Germany going to inflate at 10pc to let them claw back competitiveness? Of course not. This is pure madness.

Is Buffett getting margin calls?

Rumors are popping up on the Street that Warren Buffett may have received margin calls related to derivative/option investments. Yes, these are the same type of investment that Buffett has termed "financial weapons of mass destruction." 

As crazy as this may sound, there is obviously something going badly wrong since Buffett's Berkshire Hathaway (BRK.A) is down over 20% in 2009 and many of the individual positions within the portfolio have been outright devastated.

Chris's Crash Course Quoted in the Washington Post (H/T Steve S)

"Chris Martenson's online "Crash Course" in economics explains a trillion this way: First, picture a million dollars as a four-inch stack of thousand-dollar bills. A comparable billion-dollar stack is 358 feet tall. A trillion-dollar stack of thousand-dollar bills stands 67.9 miles high."

What's Dead (H/T C.P.) 

Just so you have a short list of what's at stake if Washington DC doesn't change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent.) 

* All pension funds, private and public, are done. If you are receiving one, you won't be. If you think you will in the future, you won't be. PBGC will fail as well. Pension funds will be forced to start eating their "seed corn" within the next 12 months and once that begins there is no way to recover.

* All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can't earn anything off investments, and if you have a claim in process at the time it happens, it won't get paid. The probability of you getting "boned" on any transaction with an insurance company is extremely high - I rate this risk in excess of 90%.

* The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they're doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.

* Government debt costs will ramp. This warning has already been issued and is being ignored by President Obama. When (not if) it happens debt-based Federal Funding will disappear. This leads to....

* Tax receipts are cratering and will continue to. I expect total tax receipts to fall to under $1 trillion within the next 12 months. Combined with the impossibility of continued debt issue (rollover will only remain possible at the short duration Treasury has committed to over the last ten years if they cease new issue) a 66% cut in the Federal Budget will become necessary. This will require a complete repudiation of Social Security, Medicare and Medicaid, a 50% cut in the military budget and a 50% across-the-board cut in all other federal programs. That will likely get close.

* Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest). If you have a 401k, or what's left of it, or an IRA, consider it locked up in Treasuries; it's not yours any more. Count on this happening - it is essentially a certainty.

* Any firm with debt outstanding is currently presumed dead as the street presumption is that they have lied in some way. Expect at least 20% of the S&P 500 to fail within 12 months as a consequence of the complete and total lockup of all credit markets which The Fed will be unable to unlock or backstop. This will in turn lead to....

* The unemployed will have 5-10 million in direct layoffs added within the next 12 months. Collateral damage (suppliers, customers, etc) will add at least another 5-10 million workers to that, perhaps double that many. U-3 (official unemployment rate) will go beyond 15%, U-6 (broad form) will reach 30%.

* Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won't be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go "feral"; witness New Orleans after Katrina for how fast, and how bad, it can get.

The good news is that this process will clear The Bezzle out of the system.

The bad news is that you won't have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life.

It really is that bleak folks, and it all goes back to Washington DC being unwilling to lock up the crooks, putting the market in the role it has always played - that of truth-finder, no matter how destructive that process is.

Only immediate action from Washington DC, taking the market's place, can stop this, and as I get ready to hit "send" I see the market rolling over again, now down more than 3% and flashing "crash imminent" warnings. You may be reading this too late for it to matter. 

AIG: Is the Risk Systemic? 

Troubled U.S. insurance company AIG is seeking another bailout and warns that if the government abandons the company it may cause a "catastrophic" collapse. 

Bloomberg News said it acquired a 21-page presentation that outlined the consequences of allowing AIG to fail. The report said money-market funds -- seen as the safest investments -- could lose money, European banks would be forced to raise capital and AIG's competitors could be crippled. 

"What happens to AIG has the potential to trigger a cascading set of further failures which cannot be stopped except by extraordinary means," Bloomberg quoted the presentation.

The presentation was reportedly circulated among U.S. regulators and labeled as "strictly confidential."

AIG has already been rescued three times. In September, the Federal Reserve gave AIG an $85 billion credit line, then later increased it to $150 billion. Last week, the package was overhauled at more generous terms to AIG and increased by $30 billion.

Bank and Broker Default Risk (Table on Page)

At Bespoke Premium, we created an index that measures default risk for the global financial sector based on CDS prices for a number of banks and brokers. We highlight this index on a regular basis so members can keep a close eye on the numbers, which are very important to follow in the current market environment.

Below we highlight a table of the current CDS prices for a number of global banks and brokers along with the recent change in their stock prices. The CDS prices represent the cost per year to insure $10,000 worth of debt for five years (or 10,000 euros for European firms). As shown, default risk for Citi and Bank of America are up by far the most year to date at +200%. Not surprisingly, their stock prices are also down the most. American Express and Wells Fargo have had the 3rd and 4th biggest spikes in default risk at around 140%. However, AXP is down much less than Citi, BAC, and WFC this year.

On the positive side (if you can call it that), Deutsche Bank (DB), Goldman Sachs (GS), and Morgan Stanley (MS) have seen the smallest rise in default risk in 2009, with Morgan Stanley rising the least at 14.57%. Morgan Stanley is also the only company on the list whose stock price is up this year (7.11%).

Summers calls for boost to demand

Barack Obama's top economic adviser has urged world leaders to pump more public money into the economy in a co-ordinated effort to boost demand and lift the world out of recession.

In an interview with the Financial Times, Lawrence Summers said the urgent need for a short-term increase in spending by governments temporarily overrode the longer-term goal of tackling the global imbalances many economists believe caused the financial crisis.

The US administration had no choice but to take strong public action to "save the market system from its own excesses", he said.

His comments, ahead of next month's crunch G20 summit in London, make it clear that the US administration wants industrialised nations to share responsibility for engineering a global demand-led recovery and does not believe this burden should fall on China alone.

Guest Post: More Debt Won't Rescue the Great American Ponzi

Policy-makers not only misunderstand the economic crisis, they continue to underestimate it. Consequently, solutions to date have not only failed to "fix" anything, they have made the problem worse. The problem isn't falling asset prices, it's not rising foreclosures, it's too much debt. With an assist from mark-to-market accounting,* too much debt inflated the asset bubble in the first place. Yves has it exactly right that the only "solution" to this crisis is price discovery, to allow asset prices to fall to whatever level they need to in order for markets to clear. This is bad news for over-levered balance sheets, but there's nothing else to be done.

And yet American policy-makers appear convinced that more debt can rescue an economy already drowning in it. If we can just keep the leverage party going, all will be well. $787 billion to fund "stimulus," another $9 trillion committed to guarantee bad debts, 0% interest rates and quantitative easing to drive more lending, new off balance sheet vehicles to hide from the public the toxic assets they've absorbed. All of it to be funded with debt, most of it the responsibility of taxpayers.

If I may offer just one reason this will all fail: rising interest rates. Interest rates need only revert to their historical median in order to hammer asset values, and balance sheets, into oblivion.

A simple present value calculation suggests that house prices could fall another 30% if mortgage rates get back to 8%.** Enough to wipe out a 20% downpayment made today and still leave the buyer upside down on his mortgage. Given the pile of Treasurys the Obama administration plans to dump on the market, it seems logical to assume interest rates are headed up.

Forget Confidence - Fix What's Broken First

Imagine you discover you have a termite problem in your home. The main beams show serious signs of infestation, to the point that their load bearing capabilities have been compromised.

You call in an expert, a professional exterminator. He reviews the homes structure, and gives you the following 3 step advice:

Paint the outside of the house white with black shutters.
Curtains. Pretty ones.
Fresh flowers in the entrance way.

As ridiculous as this sounds, it is essentially what many economists are prescribing as a cure for the financial crisis. It is ridiculous in so many ways, we can barely begin to count them. Even worse, it points out that the field of economics can be dangerously into absurdity at time. If you want to understand how 95% of economists missed the warning signs about the recession, housing crisis, derivatives threat, and credit crunch, look no further than the misguided obsession with Confidence, and the misunderstanding it reveals of Human nature.

Now, confidence is an important factor in influencing consumer and corporate behavior. When companies are confident about the future, they hire people, give raises, and invest in CapEx. When consumers are confident, they buy homes, durable goods, invest in the stock market, spend discretionary money.

But understand that confidence does not occur in a vacuum. It takes place within the context of a economic environment. People are not so stupid that painting the outside of the house that is rotting from within will solve those problems.You need to fix the fundamentals problems first, and improving confidence will come along naturally.

In this Sunday New York Times, Princeton Economist Alan Blinder wrote: "Because nationalization runs counter to deeply ingrained American traditions and attitudes, there is a danger that it might undermine rather than bolster confidence."

Too big has failed

This is the name of a speech made by Kansas City Fed CEO Thomas Hoenig which is creating quite a stir. He makes the following points in his speech:

Turning to the current crisis, there are several lessons we can draw from these past experiences.

First, the losses in the financial system won't go away - they will only fester and increase while impeding our chances for a recovery.

Second, we must take a consistent, timely, and specific approach to major institutions and their problems if we are to reduce market uncertainty and bring in private investors and market funding.

Third, if institutions - no matter what their size - have lost market confidence and can't survive on their own, we must be willing to write down their losses, bring in capable management, sell off and reorganize misaligned activities and businesses, and begin the process of restoring them to private ownership.

There are varying explanations as to why the Obama Administration has not gone this route. I believe it is because of cognitive regulatory capture. Read another viewpoint here:

Do Americans Want to Nationalize the Banks? - Five Thirty Eight

Read the full text of Hoenig's speech in pdf form below. One thing you will note in his speech is a reference to

"The Treasury Department, the Federal Reserve and other regulators have also arranged bailouts and mergers for large struggling or insolvent institutions, including Fannie Mae and Freddie Mac, Bear Stearns, WaMu, Wachovia, AIG, Countrywide, and Merrill Lynch. But other firms, such as Lehman Brothers, have been allowed to fail."

This is the first time I have heard a Fed official confirm that the Countrywide and Merrill deals were both facilitated by government.

The 5 Stages of Grief

Pressure building on Geithner

Henry Blodget articulates what's becoming a popular opinion -- Goldman Sachs alum/Larry Summers protege/Treasury Secretary Tim Geithner was a terrible mistake of a nomination and should be fired. Others, including Chris Whalen, have pinned Geithner as little more than a cipher for Goldman Sachs -- and given the government proposals under his influence, first at the New York Fed under Bush and now in the Obama cabinet, the charge is sticky. Felix Salmon speculates that he could be named to head CI.

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56 Comments

Davos's picture
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Re: Daily Digest - March 10

barrons-splat1.png

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Re: Daily Digest - March 10

Hooray that the Crash Course has penetrated the herd mentality of MSM (and I say this as a former part of that herd), how frustrating that all that seemed to catch her attention was the illustration of what a trillion dollars is...

I almost want to shiver reading the quotes from the market traders and fund managers in the NY Times -- if they're becoming aware of the precipice we're teetering on, we can't be far from it's edge now.

 I get the sense from reading your digests in the last few weeks, Davos, that the trajectory is inescapable, and though more of us are waking up to the derailment ahead, the policy setters will apparently be the last ones to get it. Sigh. At least we all can prepare to the best of our abilities.

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Re: Daily Digest - March 10

This is pretty apocalyptic stuff, particularly the Survival Acres piece.  Does it resonate out there? 

Part of me wants to collect the supplies I still can, drain all my accounts, drag the kids home and hunker down.  Another part of me says we have baseball practice today,  and I'm the hitting coach for a very good team.  Meanwhile, I still have a job.  Talk about cognitive dissonance. 

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Re: Daily Digest - March 10

Doug,

I couldn't agree more. Then the DOW is trading at +328 today. People are saying we have found the bottom. What do you do except keep preparing and playing the game for now...

Best,

Rog

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Re: Daily Digest - March 10

The news about Citi Groups two months of profits smells a little fishy to me.  It sounds like some definite manipulation.

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Re: Daily Digest - March 10
Doug wrote:

This is pretty apocalyptic stuff, particularly the Survival Acres piece.  Does it resonate out there? 

Part of me wants to collect the supplies I still can, drain all my accounts, drag the kids home and hunker down.  Another part of me says we have baseball practice today,  and I'm the hitting coach for a very good team.  Meanwhile, I still have a job.  Talk about cognitive dissonance. 

Doug,

I understand exactly what you are feeling! I have a steady job, my wife and I own (and can afford) a comfortable home, and our three sons continue with school, sports, sleepovers, etc. At the same time, I keep wondering when the world will fall around us, and how much more we should do to prepare. If we were young and without children, or retired with children grown, I suspect the dissonance would be decidedly less.

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Re: Daily Digest - March 10

Is this whole derivative market thing going to equal the end times. I've heard claims that the collapse of AIG means the collapse of all banking due to the derivative market of 700 trillion dollars but I can't find any article making a good case for this. If were on the verge of a complete financial collapse im going to go all out and spend everything I got to prepare but of course it would be nice to have a good convincing article first.

 

Here is a good GIF of the derivative market from wiki:

 

Total world derivatives from 1998-2007 compared to total world wealth in the year 2000

 

 

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Re: Daily Digest - March 10

Roger and Others,

Does this DOW Surge really indicate the end of the losses?
I can't imagine that we've found the "bottom", while so many other companies are failing and/or struggling.
That said, I'm not much of an authority on this stuff - so what's happening?

Just another Rally based on lows that will be short lived, or is this the beginning of the stimulus taking effect?
What's the deal?

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Re: Daily Digest - March 10

"The critrerion of truth is that it works even if nobody is prepared to acknowledge it"~Ludwig von Mises

 

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Re: Daily Digest - March 10

I believe they call it "a dead cat bounce"
Greg

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Mike Pilat
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Re: Daily Digest - March 10

A lot of what I've found in these articles as well as many others is starting to point towards our policy makers' partial acknowledgement that our actions are not sustainable and perhaps even ill-advised. Hearing what some are saying on this makes it blatantly obvious that the stimulation we are conducting is nothing more than a political solution. The leaders are afraid of shotguns, they say it directly, and the FEMA camps and domestic deployment of our own military confirm this fact. (Hyper)inflation tends to maintain employment that will keep the public occupied and off of the streets. As long as the public is too concerned with working frantically to keep up with the inflation, they won't be able to criticize the lawmakers . Our leaders have resorted to pure political cowardice, while they knowlingly neglect the root causes.

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Re: Daily Digest - March 10

Doug, couple of things to note about that article. 1) It was written by Karl Denninger, who in my opinion produces very sound analysis. 2) He wrote it last Thursday.

Martin Weiss was also sounding the imminent collapse alarm bells over the weekend.

I don't know.I do know that when it happens, it will be quick and it will be accompanied by a lot of confusion, like a 300 point run up in the Dow, for instance. Keep your powder dry and your escape plan close at hand and ready to execute. Other than that... teach the kids to knock them out of the park.

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Re: Daily Digest - March 10

Mike,

That said, are you involved in the Campaign for Liberty?

My wife and I were planning on going to the Rally in STL on the 26th, but orders came up, and I'm not out of town.

I think it may be the last, best hope of civic minded people who demand accountability and will not sacrifice their liberty for it.

That said, I haven't been involved with it apart from supporting Ron Pauls bid for presidency.

Aaron

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Re: Daily Digest - March 10

Botchmen - They came for the economy...

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Re: Daily Digest - March 10

Today's rally is just a dead cat bounce.  I agree with Jarhett, something about the news from Citi doesn't seem right...

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Re: Daily Digest - March 10
Soulmaster wrote:

Today's rally is just a dead cat bounce.  I agree with Jarhett, something about the news from Citi doesn't seem right...

You mean like the fact that they're an over-leveraged, insolvent, zombie institution about to implode at the drop of a pin whose now clearly cooking the books even more than they normally do and they're actually uttering the word "profits"?

I know from reading his past articles on Citi that Martin Weiss is tearing his hair out this afternoon at this banking propaganda.

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Ready
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Re: Daily Digest - March 10

Aaron,

It's a pickle, but I agree with Greg Roberts that this is short lived at best. As soon as Obama, Bernake, or Tubo Tax Timmy announce some new plan, bailout, or expediture, it'll drop like a stone again. 300 point daily swings seem to have become the norm lately.

Either way, I'm out of the market now so it's effects on me are indirect, but you gotta look like the rubberneckers on the highway after a bad crash, you know?

Best,

Rog

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Re: Daily Digest - March 10

Aaron: I'm in the same position as you regarding the C4L. I get the e mails and love to read the articles posted on the site, but I haven't really gotten involved in any specific C4L events yet (other than End The Fed on 11-22). I wish I could see RP talk in person...I live close enough to his office, maybe I will just swing on by sometime!

The next "big one" is the nationwide End The Fed Rally / Protest in 30+ cities on April 25th. I'm going to be at the Virginia Conference, otherwise, I would be there and bring a large posse with me. Depending on your ability to travel, I'm sure RP will be at one of the Texas Rallys that day. Here is the site: http://endthefed.us/organize.php#Anchor-Local-49575 You can explore around and learn more about the growing movement that is now rising in support of HR 833 to Abolish The Fed.

 You're right, the C4L message is perhaps the last chance America has to retain any sense of civic virtue and integrity in a way that does not destroy our liberties. As I've stated before, education is key.

Anyone that understands what is going on would respond pretty strongly. The problem is that our system of brainwashing has probably done more widespread damage to the Peoples' ability to think independtly than just about anything else.

Mike

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Re: Daily Digest - March 10

SueSullivan, I had the exact same reaction to the Washington Post article that you didl  I was so happy to see that Chris finally got recognition in a prominent newspaper, but was disappointed that it didn't say more about his work.  On the other hand, the author did get both his name and the name of the Crash Course in the Washington Post...I am hoping that in itself may attract an additional new audience to this site and the Crash Course. 

Doug, you sure captured what I'm experiencing, too!!  "Ok, tonight I'll try to learn more about what I need to do to make a garden....whoops, nope, my son has a swim class...  Ok, so after I get home from work tomorrow....or then again, should I just quit my job ('cuz my pension's probably toast anyway), cash out what retirement savings I do have and take that hit, and focus fully on preparing for whatever's coming.?!  Aah, I'll have to think about the-end-of-the-world-as-we-know-it later; time to make dinner..."

"Cognitive dissonance" captures it perfectl!!

 

Davos, I love the von Mises quote!! How true!!

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Re: Daily Digest - March 10

Cognitive Dissonance:  

Our biz just signed up 3 new clients today (will boost monthly profits approx 10%).  Dow up 330 (at 3:30 p.m....hmmm).  

And I'm readying to liquidate last investments in market, and tonight a buddy who knows his stuff is taking me shotgun-shopping...

Phew!  -- Sager

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Re: Daily Digest - March 10

53% Say It's Likely the U.S. Will Enter a Depression Similar to 1930's

xxTuesday, March 10, 2009 Email to a Friend
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MostAmericans (53%) now think the United States is at least somewhat likelyto enter a 1930's-like depression within the next few years.

The latest Rasmussen Reports national telephone survey found that 39% think this outcome is unlikely.
Nineteen percent (19%) say a Depression is Very Likely while 7% say it is not at all likely.

Thelatest results are more pessimistic than those found in early January,when 44% said a 1930's-like depression was likely in the next fewyears, and 46% disagreed.

In March 2008, only 38% of adults said the country is likely to slip into a depression, while most (55%) disagreed.

Themost recent survey also found that half of all adults (49%) say today'schildren will not be better off than their parents. Only 26% hold themore optimistic view, while another 25% are not sure. Those resultshave changed little from January, when only 27% said children will bebetter off and 47% disagreed.

Twenty-six percent (26%) were undecided at that time.

Adultsin their 30's are the most worried, with 62% who say it is likely thenation will slip into a deep depression. Less than half (47%) of thoseAmericans over 65 think the country will slip into a 1930's-likedepression.

Fifty-four percent (54%) of investors and 53% ofnon-investors say it is likely the country will slip into a seriousdepression. Forty-one percent (41%) of investors disagree, along with38% of non-investors.
A third (32%) of adults with children livingat home with them say today's children will be better off than theirparents, while only 22% of adults with no children at home agree.

RelatedRasmussen polling found that only 45% believe anyone who wants to workcan find a job, but most say it is possible for just about anyone towork their way out of poverty in America.

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Pleasesign up for the Rasmussen Reports daily e-mail update (it's free)...let us keep you up to date with the latest public opinion news.

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Posts: 1995
Re: Daily Digest - March 10

Are Germans giving up on the euro

Mr Fischer now thinks monetary union is beyond saving. A massive rescue
will be needed. It will not be forthcoming. German-French relations are
the worst since the war, he said. The European insitutions have lost
virtually all authority in this crisis. The half-century Project is
collapsing. .. or words to that effect, from what I hear. 

The Germans will take care of Germany first and will want no parts of bailing out the rest of Europe, along with the help of the French.  The German people were promised that they would never have to bail out other European nations when they signed on with the Euro.

Angela Merkel, Sarkozy and Brown (all three are NWO puppets) have been calling for a New World Order.  Hopefully the German people will be too smart to fall for that crap.  I won't be surprised if the United States offers to help fund the European Union in an attempt to keep it together - after all, we are a client state for the Federal Reserve which is owned by people who want the NWO and fear a German Nation state.

Larry

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kemosavvy
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Re: Daily Digest - March 10

Citi should post amazing profits, they borrow for free and lend at punitive interest rates! Citi is also taking advantage of a free-pass on mark-to-market accounting whereby they don't have to list their toxic assets at market value, which, ahem, is significantly low enough to declare them insolvent.

This is a suckers rally, don't buy into it. It's short lived.

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Re: Daily Digest - March 10

I am sorry to ad this link to a politician's site, but at this point we need someone with some type of "insider" access to start the revolution.  As Larry says....END THE FED BEFORE IT ENDS US!

 

http://www.ronpaul.com/on-the-issues/fiat-money-inflation-federal-reserve/

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Ed Archer
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Re: Daily Digest - March 10

Damn, I wonder if I should join the army before TSHTF. This shit is getting scarier by the day.

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Re: Daily Digest - March 10

HYPERINFLATION is Already Here! You just need to look at the last 18 months.

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Re: Daily Digest - March 10

Huffington Post mentioned Chris, too:

http://www.huffingtonpost.com/charles-shaw/the-perfect-crash-course_b_16...

Quote:

It was for all of these people and more that Chris Martenson, a
former professor, research scientist, and Fortune 300 VP, created The Crash Course,
a three-hour long internet video presentation that is a literal "crash
course" in the economic, environmental, and societal "crashes" that are
unfolding all around us. No matter who you are, you will walk away with
a complete and comprehensible picture of our economic situation, and a
strong sense of where we are headed in the coming years.

Martenson had one of those rare awakenings of consciousness (and, it
appears, conscience) that compelled him to leave his successful career,
sell his home, and move his family somewhere more sustainable. He also
dedicated himself to creating a simple and effective tool for teaching
people about the economy, being the kind of obsessive brainiac that is
perfectly suited to the task of aggregating and distilling staggering
amounts of utterly baffling information. He holds a Doctorate from Duke
and an MBA from Cornell, and is a self described "obsessive financial
observer."

The main claim of The Crash Course
is that "massive change is upon us, and and to understand the nature of
this change, we need to understand the 'three E"s -- the Economy,
Energy, and the Environment.'" He accomplishes this in twenty short,
austerely produced segments which average about seven or eight minutes
each.

Martenson possesses an uncanny ability to parlay remarkably
understandable explanations of a number of complex and arcane subjects.
He covers compounding exponential growth, inflation and the money
supply, fractional-reserve banking, fiat currency, government budgets
and accounting practices, which he then deftly ties into environmental
issues, farming practices, population demographics, cooper ore mining,
and housing bubbles. His sources are vast, and include a surprisingly
large percentage of official government data. His main tool of
persuasion is the "hockey stick" graph, a measure of exponential
growth. When Martenson overlays the graphs of all these seemingly
separate crises on top of one another a shudder will race up and down
your spine.

Perhaps the most refreshing aspect of this presentation is its
credibility and lack of pretension or perceivable agenda. Martenson
avoids the hyperbolic prognostications of the run-of-the-mill
apocalypto, opting instead to boil down his message down to three
simple points he calls his "beliefs"

 

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JAG
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Re: Daily Digest - March 10

The bounce today was far from the start of a bear market rally. The fact is that there are too many traders buying calls than there are buying puts (betting on a rally). No bear market rally has ever began with traders being this optimistic. When the market wipes its a** with these traders, and they become as pessimistic as they should be, I think we will be due for an impressive rally. My "inflation adjusted" two cents for what its worth.

Jeff 

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A. M.
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Re: Daily Digest - March 10

Jageanangel,

You said:

Quote:

I think we will be due for an impressive rally

Care to elaborate?
What do you mean by impressive?

Are you anticipating a recovery in general economic health, or just a market rally?
I'm still struggling with the connection between market rallies, and overall economic strength.

Thanks,

Aaron

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grl
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Re: Daily Digest - March 10
RubberRims wrote:

HYPERINFLATION is Already Here! You just need to look at the last 18 months.

Hey RubberRims, that video got me considering price increases. I did a quick Google search and found this really nifty site from the Bureau of Labor Statistics. You can input data and get tables and charts showing historical retail prices for a large variety of food products right up through Jan 2009. Interestingly, some food products were way up, some were way down, and some seem to fluctuate madly, even between years. My quick study of the data says it's a wash. Yes, I sort of think my food bill is up but that might be because I am feeling poorer now. But I do think clothing prices have held, and even seem a little cheaper now (but that is just my perception); movie tickets definitely up as is medical care but rents, home prices etc down. All in all, I don't think inflation is here.....yet.  In any case, take a look at the BLS site, it's kinda cool. http://data.bls.gov/PDQ/outside.jsp?survey=ap

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Re: Daily Digest - March 10

I am rolling all of my remaining self-directed IRA assets into gold.  To do so requires, per the IRS, that it be in US gov'tminted coins/bullion and must be physically stored by an IRS-approved facility, i.e. I can't have it in my hands. Does anyone out there have any knowledge about this issue?  I guess another thought would be to pull everything out of the IRA, knowing there are penalties and taxes on that, but if the financial collapse is imminent, there won't be anyone left to try to collect on it!  My main concern is having the asset/gold in my hands.  Again...any thoughts?

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Re: Daily Digest - March 10
jkibbe wrote:

Huffington Post mentioned Chris, too:

http://www.huffingtonpost.com/charles-shaw/the-perfect-crash-course_b_16...

Now that's the sort of MSM recognition the CC needs to get! Woot!

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pinecarr
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Re: Daily Digest - March 10

jkibbe, that's a great write-up about Chris and the CC on Huffington Post!  Thanks so much for shairng!!

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pir8don
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Re: More Orlov

As DTM Mike said yesterday, Dimtry Orlov has been interviewed on Australian national radio. Here is the link to the mp3. approx 20 minutes

http://mpegmedia.abc.net.au/rn/podcast/2009/03/lnl_20090310_2240.mp3

Don

________________________________________

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

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JAG
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Posts: 2492
Re: Daily Digest - March 10

Aaron,

By all means I mean a temporary bear market rally. I believe the long term prospects for the market are still very grim. But in the short term, I think we will see a very nice bounce in the stock market. I thought it might happen this week, but trader sentiment is still too bullish, as reflected by the latest put/call stats. So its probably still a few weeks off. The sheer negativity of Denninger's post (Whats Dead?), not to mention the copious amounts of bad news in the media lately, is typically seen near market lows, so I think we will see a temporary low in the market soon. I'm not invested in the market anymore myself, but I sure would like to worry about something else for a while, and I think the country probably feels the same.

As far as your question in regard to how the economy and the stock market are connected, I think in the short term they are not connected. How many times have you seen the market tank on days that there is good news about the economy, or vice-versa? Personally, I notice this happening quite often. The news media always try to connect the daily news to what the market did that day. But if you really look at, its a totally invalid connection that they are making. From a long term perspective,however, markets seem very much interconnected with the economic "health" of a nation.

Once again, this is just "my 2 cents worth". 

Jeff 

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Re: Daily Digest - March 10

http://www.rasmussenreports.com/public_content/business/general_business/53_say_it_s_likely_the_u_s_will_enter_a_depression_similar_to_1930_s

This has some very interesting statisitics inside of it.

I think that the number of folks in the market are seeing things for what they are is increasing.

Once people go from denial to anger I think the self reinforcing feedback loop will strenghten, right now it is being fed off of many dismal numbers from sales to job losses...

Once the selling starts..... 

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Re: Daily Digest - March 10
jkibbe wrote:

Huffington Post mentioned Chris, too:

Great write-up!  I'll be sending that article out to others!  Thanks so much for sharing... 

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Re: Daily Digest - March 10

Zombie,

I sincerely think this is a very bad idea.  I believe people in the service will experience horrors worse than average. 

You can't make other people's decisions...don't let others make yours.  Just my thoughts.  Take care out there.

 

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ccpetersmd
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Re: Daily Digest - March 10

And, here's the link to the Chris Martenson mention on Reality Sandwich, referenced in the Huffington Post:

http://www.realitysandwich.com/buckle_down_crash_course

Congratulations, Chris and staff! 

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Re: Daily Digest - March 10

@bikemonkey can you expand on that plz? I'm curious as to why you say that. I ask because half my family in America is in the US army.

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bikemonkey
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Re: Daily Digest - March 10

Hi Zombie,

#1...I respect servicemen and the sacrifice they give.  I meant no disrespect, and I apologize if you took my comment that way.  Some of my best friends are ex-servicemen.

My commnet is driven by the thought that our government, in a pinch, will use the military forces inside our country, and those that signed up to protect it, will be forced to police it.  And that the policies they police, may well be unconstitutional.  And possibly inhumane.

 There is a wide spectrum of thought as to how this will play out.  My thoughts, and those of others, believe the military may well be used as the police force of last resort.

I hope I am wrong, but I fear I am not.

I meant no disrespect.

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Woodman
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Posts: 1028
Re: Daily Digest - March 10

Some of the statements in Denninger's " What's Dead" don't make sense to me.

He wrote "All pension funds, private and public, are done. If you are receiving one, you won’t be. "

--->Seems you'll get something, albiet grosslyh reduced, unless the fund goes totally to zero. 

He wrote "Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest).  If you have a 401k, or what's left of it, or an IRA, consider it locked up in Treasuries; it's not yours any more."

--->If you fled to safety in Treasuries within your IRA  or 401K it's already locked up; the government doesn't have to seize it.  If you stayed in equities, how is the government going to sell everyone's equities without crashing the market?  Seems more convenient for the government to just use inflation and rule changes compared to seizing your IRA.

 

 

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Jarhett
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Posts: 132
Re: Daily Digest - March 10

All I know is last year I could buy boneless skinless chicken breast for $2.99 a pound at costco last year, and this year the same chicken cost $5.99 a pound.  Seems like inflation to me.

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grl
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Posts: 188
Re: Daily Digest - March 10

Jarhett, just for fun, thought I’d look up boneless chicken breast on the BLS site. What I found was interesting. I don’t know where you live, but just checking two regions, Northeast urban and South urban, I found that for the same time period, the price of boneless chicken breast increased in the NE and decreased in the South. Ok, I know these are govt CPI stats and therefore immediately suspect but it does remind me that our personal experience do not make for good generalizations. The guy in RubberRim's video did just that. I for one am definitely experiencing overall deflating personal costs but I don’t know if that has much meaning outside of my personal experience. Still, I think when inflation REALLY hits, we will know it!

 

Area:       Northeast urban
Item:       Chicken breast, boneless, per lb. (453.6 gm)

 

 

Area:       South urban
Item:       Chicken breast, boneless, per lb. (453.6 gm)
 

Jarhett's picture
Jarhett
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Posts: 132
Re: Daily Digest - March 10

I live in San Jose Ca, and the price of chicken is getting ridiculous out here.  I couldn't believe how expensive it is getting, I am going to have to start raising my own.

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Ed Archer
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Posts: 225
Re: Daily Digest - March 10

@bikermonkey relax dude, I wasn't thinking you were insulting anyone. :)

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gregoro
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There's nobody at the Treasury!

 

http://www.ft.com/cms/s/0/13783b6c-0db2-11de-8ea3-0000779fd2ac.html 

It also emerged that Gordon Brown, UK prime minister, was struggling to organise the summit. Britain’s most senior civil servant claimed it was hard to find anyone to speak to at the US Treasury. Sir Gus O’Donnell, cabinet secretary, blamed the “absolute madness” of the US system where a new administration had to hire new officials from scratch, leaving a decision-making vacuum.

“There is nobody there. You cannot believe how difficult it is,” he told a conference of civil servants.

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xpatUSA
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Posts: 12
Re: Daily Digest - March 10

James wrote:

"I am rolling all of my remaining self-directed IRA assets into gold. 
To do so requires, per the IRS, that it be in US gov'tminted
coins/bullion and must be physically stored by an IRS-approved
facility, i.e. I can't have it in my hands. Does anyone out there have
any knowledge about this issue?  I guess another thought would be to
pull everything out of the IRA, knowing there are penalties and taxes
on that, but if the financial collapse is imminent, there won't be
anyone left to try to collect on it!  My main concern is having the
asset/gold in my hands.  Again...any thoughts?"

Right or wrong, I've put some bucks into goldmoney.com, which does allow bullion ivestment in an IRA. Haven't done that myself, so you'll have to DYODD.

regards,

Ted

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paranoid
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Posts: 140
Re: Daily Digest - March 10

Great point Doug and Rog - just do both, go on but day by day make prep a new hobby!

R_Eddy wrote:

Doug,

I couldn't agree more. Then the DOW is trading at +328 today. People are saying we have found the bottom. What do you do except keep preparing and playing the game for now...

Best,

Rog

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Aurum Vir
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Posts: 13
Re: Daily Digest - March 10

Bikemonkey and Zombie210:

BTW, re: friends who are military veterans tell me that, when they enlisted, they signed paperwork that allows them  to be recalled back into duty up to 8 years after date of discharge.  So there's a built-in ramp up in times of crisis.

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