Daily Digest

Daily Digest - September 21

Monday, September 21, 2009, 10:27 AM
  • Tax the Dogs: State plots dog surcharge
  • Irene Aldridge Gets Death Threats Over Her Views On HFT, Pitches Book Again
  • OUTRAGE: TYING IT ALL TOGETHER
  • 95% Of Your Savings, IRA, Checking Account and Retirement will be Gone (Video from http://thecomingdepression.blogspot.com)
  • Elderly Bank Bandit: I Robbed to Pay Off My Mortgage
  • Faux capitalists look for the free lunch
  • ‘We still have the same disease' (H/T xRayMike79)
  • "Bailout" Money & Bankers: Corruption: Banks Lending UNSECURED To Terrorists?

Economy

Tax the Dogs: State plots dog surcharge

“The number of abandoned animals has gone through the roof over the past few years,” Jehlen said. “Shelters are euthanizing animals because they have too many.”

Jehlen pointed out that the MSPCA and several dog kennels and purebred pooch clubs throughout the state support the bill.

Irene Aldridge Gets Death Threats Over Her Views On HFT, Pitches Book Again

Click to play

OUTRAGE: TYING IT ALL TOGETHER (Strong language, don't watch if offended)

95% Of Your Savings, IRA, Checking Account and Retirement will be Gone (Video from http://thecomingdepression.blogspot.com)

I started at the 2:20 minute point...

Elderly Bank Bandit: I Robbed to Pay Off My Mortgage

"I had to get us out of this," the elderly man said Friday from the other side of the glass at San Diego central jail. "I've never done a bad thing in my life. But when you get desperate, I guess you throw all that sh-- out the window."

Listening to how Michael Casey Wilson of Santee tells it, a 17 percent mortgage, the threat of homelessness and a terminal health condition will turn a man to crime.

Faux capitalists look for the free lunch

The book has a chapter titled ‘Casino capitalism,’ which suggests that a simple solution to banks’ problems is to identify the banks that are insolvent and temporarily nationalise them. “Appoint new management, and give them six months to spin out 10 per cent of each of the separate viable pieces, with the taxpayer retaining the rest as passive investors. Bank of America can spin out five major pieces: BoA, Merrill, Countrywide, a toxic holding company, and the rest of its holdings,” Ritholtz recommends.

‘We still have the same disease' (H/T xRayMike79)

MT: They're all still here. Today we still have the same amount of debt, but it belongs to governments. Normally debt would get destroyed and turn to air. Debt is a mistake between lender and borrower, and both should suffer. But the government is socializing all these losses by transforming them into liabilities for your children and grandchildren and great-grandchildren. What is the effect? The doctor has shown up and relieved the patient's symptoms – and transformed the tumour into a metastatic tumour. We still have the same disease. We still have too much debt, too many big banks, too much state sponsorship of risk-taking. And now we have six million more Americans who are unemployed – a lot more than that if you count hidden unemployment.

"Bailout" Money & Bankers: Corruption: Banks Lending UNSECURED To Terrorists?

Can someone answer this question:

HOW IN THE HELL DO OUR BANKING REGULATORS ALLOW THIS SORT OF OUTRIGHT FRAUDULENT GRANTING OF CREDIT? $50,000 IN UNSECURED CREDIT LINES TO A FREAKING DELIVERY DRIVER WHO APPEARS TO BE A FOREIGN NATIONAL WITH NO ASSETS IN THE UNITED STATES AGAINST WHICH TO SECURE THE LOAN?

22 Comments

britinbe's picture
britinbe
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LogansRun's picture
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Re: Daily Digest - September 21

Denninger is on fire!  Good for him and he's right.  Where is the outrage?  I've sent out and spoken to so many people concerning this and more often than not, I get blank stares.  It always comes back to partisan politics and L vs R.  Tptb have done an outstanding job of making this a two party/one gov't system to keep the people from coming together.  Sad.

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Steve Keen on Max Keiser: Fed Can't Inflate

Mish Commentary: Is Pent-Up Inflation From Fed Printing Waiting On Deck?

Consumers and banks both are suffering from a massive hangover. Their willingness and ability to drink is gone. No matter how many pints of whiskey Bernanke sets in front of someone passed out on the floor, liquor sales will not rise.

In a debt-based economy, it is extremely difficult to produce inflation if consumers will not participate. And as noted above, demographics and attitudes strongly suggest consumers have had enough of debt and spending sprees.

Those pointing to flawed measures of money supply as proof of inflation just don't get it, and likely never will.

I'm starting to entertain the idea that we will never see inflation again in our lifetimes, as crazy as that sounds....Jeff

(edit: forgot to add 2nd video)

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Re: Daily Digest - September 21

Yep. Same thing here Logan.

Often when I debate about economics I get labeled a conspirisy theorist.

I don't think most people are very interested in economics in the first place and those that have a mild interest get their info from CNBC or CNN. Perhaps most people are so caught up in their day to day lives they just don't really think about it. And I suspect most people have an intuitive feeling that major economic collapse just can't happen here in the US. I think these are the major reasons for the lack of outrage.

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Re: Steve Keen on Max Keiser: Fed Can't Inflate

Hey Jeff.

I just read this article too and asked CM to comment on it. The flaws I see it the argument that there won't be hperinflation are:

Debt involves a lender and a borrower. Just because the borrower hoards the money (for a while at least) doesnt mean the lender isn't out any money. In other words its all about time. A bank isn't a bank unless it loans money so the money that was lent to the bank will have to find its way into the larger system at some point.

The lender (the government) has its own problems. If the economy doesn't grow its debt then the government won't see it's loan paid off which means default. Some would say that this proves deflation and it may if the dollar was backed by something other than a promise. I think large defaults will result in less faith in the dollar and more money printing to cover the loss which will mean hyperinflation.

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Re: Daily Digest - September 21

Not to beat this note over and over again:

What if the dollar collapses, or loses more value? Wouldn't there be "Hyperinflation" then?

We are monetizing 50% of our deficit, I suspect more. But we take in 2 trillion and we SPEND 4 trillion. Between that and our insane debt and obligations and our citizens being taxed to death (we work from Jan1 to Aug 16th to pay the government) I don't see how we can or will maintain the reserve currency.

Just my 2 cents. Links below.

Take care

Much like the fine report CM did, the 50% thing is a shocker.

Federal Reserve Accounts For 50% Of Q2 Treasury Purchases

The degree of intermediation by the Federal Reserve in the issuance of US Treasuries hit a record in Q2, accounting for just under 50% of all net UST issuance absorption. This is a startling number, as the Fed's $164 billion in Q2 Treasury purchases dwarfs the combined foreign/household UST purchases of $101 billion and $29 billion, respectively, over the same time period. In fact, the Fed was a greater factor in UST demand than all three traditional players combined: Foreigners, Households and Primary Dealers, which amounted to a $158 billion in net Q2 purchases.

This dramatic imbalance puts a lot of question marks over how the upcoming hundreds of billions in incremental Treasury purchases will be soaked up, now that QE only has $15 billion of capacity for USTs: with Households lapping up risky assets it is unlikely they will look at Treasuries absent some dramatic downward move in equities, while Foreign purchasers, which many speculate are in a game of Mutual Assured Destruction regarding UST purchases, have in fact been aggressively lowering their purchases of Treasuries (from $159 billion in Q1 to $101 billion in Q2, an almost 40% decline in appetite!). Will the US make these purchases much more attractive come October when QE for USTs ends? And if so, what kind of rates are we talking about? One thing is certain: in terms of priorities of the Federal Reserve, keeping the equity market buoyant, is a distant second to ensuring successful auction after auction well into 2010. After all there is near $9 trillion in budget deficits that need financing over the next 10 years.

From Morgan Stanley:

Flow of funds: The Fed also released its flow of funds data for Q2 on September 17. The main points are that:

Households reduced Q2 Treasury purchases from their blistering pace in Q1

Foreign accounts reduced Q2 UST purchases as the Fed ramped up Q/E ops

Bank Q2 purchases remained anemic despite the fall in other lending options

Broker/dealer purchases were high but not sustainable, expect Q3 moderation

JAG's picture
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Amerman Video

FYI: If your interested in the Daniel Amerman video posted in todays DD, know that it is marketing for his $350 Turning Inflation into Wealth DVD Course.

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Re: Daily Digest - September 21

1) U.S. mortgage delinquencies set record: Equifax

2) Commercial Real-Estate Price Drop Quickens In July -Moody's

"Commercial real-estate prices steepened their dive again as transaction volume dried up in July, falling 5.1% month-to-month after only a 1% decline in June.

"The market has averaged about 375 sales per month for the seven months in 2009," said Moody's managing director Nick Levidy. "Over the same time period in 2008, sales were averaging nearly 1,100 a month.""

3)  Obama may back 'newspaper revitalization act' media bailout

4) State budget deal may bankrupt Detroit:

5) Reposting this quote from yesterday

"China, India and Russia, eager to reduce their position in dollar-denominated securities, have expressed interest in buying IMF gold."

6) The Fed buys more Treasuries, government to sell $112 billion in notes this week.

This news article breaks down how much the Fed has bought so far (bottom paragraph)

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Re: Daily Digest - September 21

Logan and Johnny Ox,

I know exactly how you guys feel. I think the whole world of finance and economics is just too abstract and confusing for most people to grab onto. Most of us have no personal experience with collateralized debt obligations or SDRs. Also, fewer of us than you may think know the first thing about basic accounting, mergers and acquisitions, shell companies, subsidiaries, money creation, inflation, deflation the constitution etc. etc.

Apart from the constitution, I didn't know much about the world above until just about 6 months ago. I was actually an Obama supporter until a good friend of mine had me watch the Obama Deception. He also lent me Robert Kiyosaki's Rich Dad Poor Dad, and that's where it all started for me.

Kiyosaki is brilliant because he explains things in a way that even a 7 year old can understand. "Buy assets." What's an asset? "An asset is something that puts money in your pocket." It doesn't get much simpler than that. From there I watched Paul Grignon's Money as Debt and Dr. Alfred Bartlett's presentation on the exponential function and it was no turning back after that.

That was my red pill and having taken it, I'll never be the same again.

In my experience, a good place to start with a lot of people is to just ask them where money comes from. Take out a dollar bill and put it on the table. Ask; "where does this come from and why does it have value?" Point out the Federal Reserve emblem on the bill and ask; "what is this?" Ask them who decides how much of this get's printed out?

I used to work in sales and we called this "planting the seed." As cheesy as it sounds, it really works. Nobody likes to be sold crap, but people love to buy value. Digging a gigantic hole in somebody's front yard and planting an oak tree is sure to evoke a different reaction from casually kicking an acorn into their front yard.

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Neither inflation nor deflation

Here's a post which argues for neither inflation nor deflation but argues very simply that at some point -- "perhaps weeks" -- many will come to the realization -- as most folks at this site have come to --  that getting rid of dollars and getting into other things, mostly gold, will be the prudent thing to do.   From this perspective the inflation-deflation debate is way too complicated and almost totally useless. 

"As we wait for the next shoe to drop, be it an unexpected collapse of the banking system, an organized bank holiday, an over-expected collapse of the stock market, an overdue collapse of the bond market, a collapse of the paper gold market, a collapse of the currency exchange markets, a planned devaluation, or something else entirely, we must use this time given us to prepare for the worst. What comes at us is the extreme end of the high impact, low frequency end of the Martenson spectrum. It is an event of the rarest possible nature, certainly once in a lifetime, probably once in a century, and perhaps even a one of a kind."

http://fofoa.blogspot.com/2009/09/shake-disease.html

Comments?

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Re: FOFOA

It's good to see folks are discovering FOFOA

It's good to see FOFOA is discovering Chris

The $ is nothing more than a

abstract declaration of faith

in the US economy

How can any of our printing, products or polices

strengthen that religion?

 

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Re: Daily Digest - September 21

Peter Schiff Economic Analysis of Cash for Clunkers

mainecooncat's picture
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Re: Neither inflation nor deflation
hucklejohn wrote:

Here's a post which argues for neither inflation nor deflation but argues very simply that at some point -- "perhaps weeks" -- many will come to the realization -- as most folks at this site have come to --  that getting rid of dollars and getting into other things, mostly gold, will be the prudent thing to do.   From this perspective the inflation-deflation debate is way too complicated and almost totally useless. 

Don't have time to extensively comment now, but this sums up what I've been feeling -- and I think Davos too -- for months now. The inflation/deflation debate is a red herring, a false paradigm, just like left/right in politics.

Thank you for pointing this out!

The economy, like the wider world of which it is only a tiny part, is an organic process (that means it's a verb, not a noun) that can move in multiple directions simultaneously. So money supply and credit can experince "deflation" while prices can experience "inflation" because, after all, far more than the money supply influences how many federal reserve notes you remove from your wallet to purchase something.

And isn't that what this is all about: prices? The money/credit supply issue is at best a secondary issue, interesting to economic wonks (of which I'm one) and a curiosity for others. I mean, if this data didn't tell us something about prices why else would we care about it?

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Re: Neither inflation nor deflation
mainecooncat wrote:

So money supply and credit can experince "deflation" while prices can experience "inflation" because, after all, far more than the money supply influences how many federal reserve notes you remove from your wallet to purchase something.

And isn't that what this is all about: prices? The money/credit supply issue is at best a secondary issue, interesting to economic wonks (of which I'm one) and a curiosity for others. I mean, if this data didn't tell us something about prices why else would we care about it?

+1 

My business, like every other business, is reacting to decreasing demand by trying to boost profit margins on the business we do have to make up the difference. In a lot of cases, this actually translates to higher prices for everyday goods and services.

I see the inflation/deflation debate only pertaining to forecasting the equity markets, not daily living expenses or the economy per se. The way I see it, if you think we are in a new "nominal" bull market then you are an inflationist. If you think the markets will tank, your a deflationist. If you think some of the markets will rise and some will tank simultaneously, well then you having been paying attention to the markets the last 4-5 years.

Unfortunately the market never moves in a straight line, so it goes from one extreme to the other. What one is trying to establish by analyzing inflation/deflation is what is the primary trend and what is the countertrend. But if your not invested (long-term) in the equity markets, then this information is not really relative to your daily life and should be dismissed.

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Re: Daily Digest - September 21

i have to question the sensibility of repeddling denniger's latest video.  the unverified acorn bit was off-task, and raises questions about denniger.  for the first time i saw fit to wiki him (although i subscribe to his youtube vids), curious about his own motives.  it seems to me the media and right-wingers would jump at the chance to completely hobgoblinize acorn given the opportunity.  the incentive of underpaid community organizers to aid human trafficking and pedophilia inspires incredulity, whatever the possibility of a small kick back, amongst total strangers especially.

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Re: Neither inflation nor deflation
mainecooncat wrote:
hucklejohn wrote:

Here's a post which argues for neither inflation nor deflation but argues very simply that at some point -- "perhaps weeks" -- many will come to the realization -- as most folks at this site have come to --  that getting rid of dollars and getting into other things, mostly gold, will be the prudent thing to do.   From this perspective the inflation-deflation debate is way too complicated and almost totally useless. 

Don't have time to extensively comment now, but this sums up what I've been feeling -- and I think Davos too -- for months now. The inflation/deflation debate is a red herring, a false paradigm, just like left/right in politics.

Total agreement! ++++1!!!!!

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Re: Daily Digest - September 21
  • Okubow,

 

I am about 8 months ahead of you on taking the red pill.  I too have been trying to get others to take the red pill or plant giant Oaks but have been frustrated and disappointed.  It has been my observation that most people do not care or are not capable of grasping the magnitude of the problems facing all of us:

- Financial

- Energy

- Population

It is simply too much for most to grasp and or accept.  For instance, most of my inner circle at least believe and understand the issues but have not taken a single step to prepare.  It leaves me incredulous and adds to my angst. 

I guess what I am saying is this; as liberating as stepping out of the matrix is be prepared for disappointment by the reactions of those around you when you flick on the lights. 

 

I am sure Chris wanted to pull his hair out at times!

 

Cheers,

 

E

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idoctor
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Re: Daily Digest - September 21

Peter Schiff Market Outlook CNBC

Panic now and avoid the rush LOL.....

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Re: Daily Digest - September 21

Okubow,

Welcome to reality.  Great idea and "yes" a little cheesy but if it works then who gives a rats arse.  I'll give it a try.

 

Johnny Oxygen's picture
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Re: Neither inflation nor deflation

In response to Hucklejohn and Maincooncat.

I see your points and there is a lot of truth in them. What I can't see though is the government playing both sides of the deflation/inflation game. Like you say it will come down to precious metals. When our fiat currency becomes worthless no one will want it and that includes the US government. I have believed for a long time that Executive Order 6102 (making it illegal to own gold in any reasonable quantity) will be reinstated in some form and thats what concerns me about owning gold (I think silver is the better bet). While you may still be able to stash is some place out of the governments reach you won't be able to trade with it easily if its made illegal. I emailed  Egon von Greyerz at Matterhorn Asset Management AG about this very issue and his response in part was this:

"If gold becomes illegal in the US,  this is why you should store it outside the country and with a company that has no activity or assets in the US. This is what we do."

The problem I see here is that you still don't have the gold in hand and trading across the ocean would certainly attract unwanted attention. Egon suggested moving over seas with your gold for a time being. For me that is simple not economically feesible.

Back on point. When the US abandons the dollar and reaches for our gold that will cause hyperinflated prices. So I still see hyperinflation as being the most likely outcome.

 

 

 

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Re: Daily Digest - September 21

http://dailyreckoning.com/saying-goodbye-to-the-borrow-and-spend-economy/

Let’s get this straight.

Household credit is shrinking…
Profits are shrinking…
Employment is shrinking…
Housing values are shrinking…
The wage base is shrinking…

But the recession is over!

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Davos
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Re: Daily Digest - September 21
gregroberts wrote:

http://dailyreckoning.com/saying-goodbye-to-the-borrow-and-spend-economy/

Let’s get this straight.

Household credit is shrinking…
Profits are shrinking…
Employment is shrinking…
Housing values are shrinking…
The wage base is shrinking…

But the recession is over!

Defies logic, common sense and for that matter - gravity.

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