Daily Digest

Daily Digest - September 4

Friday, September 4, 2009, 11:00 AM
  • MSN Money: Bank analysts see 'implosion' ahead (H/T Dogs)
  • Michael Hudson Interview (4.15.09) on Iceland 1/5 (Video)
  • Retail Theft Skyrockets – Greenshoots, Meet Reality…
  • Lack of Confidence, Meet Capital Flight… Farewell America
  • Now that we know the Federal Reserve is a privately owned, for-profit corporation, a natural question would be: who OWNS this company? (This link goes to TheComingDepression.Blogspot.com)
  • Why Our Economy Is Utterly Screwed (H/T FarmerBrown)
  • Hotel: More than Half Off
  • Wilbur Ross: 500 More Banks to Fail by End of 2010
  • Bailout Recipients by State (H/T Turbo)

Economy

MSN Money: Bank analysts see 'implosion' ahead (H/T Dogs)

Hold tight folks, it’s not over yet. Bank failures heated up this summer, but expect an “implosion” next year.

That’s the key takeaway from a deep dive into second-quarter bank results by sector experts at Institutional Risk Analytics, now that all the numbers are all in.

Michael Hudson Interview (4.15.09) on Iceland 1/5 (Video)

Retail Theft Skyrockets – Greenshoots, Meet Reality…

This is one of those “events” that tends to follow economic events such as collapses of credit. I have been predicting this as a symptom for several years.

We’ve now created a vicious cycle, do you see it? Bigger government spending money they don’t have becomes a bankrupt government... yet, they take from the people to give to the central bankers. Then those who fall by the wayside turn to crime to make ends meet, not to mention that they now have lawless role models. More crime means more government spending on police, prisons, and “national defense.” That again leads to more government debt and the cycle has begun…

Lack of Confidence, Meet Capital Flight… Farewell America

"This will be painful, for the USA was once the most vital market economy in the world. But for now, it’s time to say goodbye.”

Must read document, read it all and think about the ramifications. Then read the prior article on gold, then read Armstrong’s latest article on Gold… (Props to Zerohedge and CWB).

Now that we know the Federal Reserve is a privately owned, for-profit corporation, a natural question would be: who OWNS this company? (This link goes to TheComingDepression.Blogspot.com)

Now that we know the Federal Reserve is a privately owned, for-profit corporation, a natural question would be: who OWNS this company? Peter Kershaw provides the answer in "Economic Solutions" where he lists the ten primary shareholders in the Federal Reserve banking system.

1) The Rothschild Family - London 2) The Rothschild Family - Berlin 3) The Lazard Brothers - Paris 4) Israel Seiff - Italy 5) Kuhn-Loeb Company - Germany 6) The Warburgs - Amsterdam 7) The Warburgs - Hamburg 8) Lehman Brothers - New York 9) Goldman & Sachs - New York 10) The Rockefeller Family - New York

Now I don't know about you, but something is terribly wrong with this situation. Namely, don't we live in AMERICA? If so, why are seven of the top ten stockholders located in FOREIGN countries? That's 70%! To further convey how screwed-up this system is, Jim Marrs provides the following data in his phenomenal book, "Rule By Secrecy." He says that the Federal Reserve Bank of New York, which undeniably controls the other eleven Federal Reserve branches, is essentially controlled by two financial institutions:

1) Chase-Manhattan (controlled by the Rockefellers) - 6,389,445 shares - 32.3%

2) Citbank - 4,051,851 shares - 20.5%

Thus, these two entities control nearly 53% of the New York Federal Reserve Bank. Doesn't that boggle your mind? Now, considering how many trillions of dollars are involved here, and how the bankers are WAY above our "selected" officials in Washington, D.C., do you think the above-listed banks and families have an inordinate amount of say-so in how our country is being run? The answer is blindingly apparent.

Where does the money come from?

Why Our Economy Is Utterly Screwed (H/T FarmerBrown)

Steve Liesman once again stunned me with his lack of understanding of matters economic today, when he commented that "in all recessions since 1970 at least the original part of it (recovery) has been jobless."

Yes, Steve, but why is any of this a surprise? What part of this graph isn't instantly obvious to anyone with more than two firing neurons in their head?

Hotel: More than Half Off

And in Hawaii: Maui Prince Hotel Faces Foreclosure

Mortgage-holders led by Wells Fargo Bank sued last week to foreclose on the 310-room [Maui Prince Hotel], following the owners' failure to pay the resort's $192.5 million mortgage when it came due in July. The foreclosure threatens to wipe out the $227.5 million in mezzanine debt held by a UBS fund and the $250 million in equity that Morgan Stanley and its partners put into the property.

When the occupancy rates fall far enough, forget about paying the debt - worry about meeting payroll. A quote from the article:

"We do not have funding for payroll, but we are getting some funding for our accounts payable and basic operating expenses," said Donn Takahashi, president of Prince Resorts Hawaii ... "We cannot operate a top-notch resort in this fashion."

I suspect we will see many more stories like these two.

Wilbur Ross: 500 More Banks to Fail by End of 2010

“Yesterday, the FDIC held an auction for $1.3 billion of Alt-A loans, or liars loans, coming out of the failed Franklin Bank,” he said. “So that’s the first time FDIC has had an auction with them providing leverage to distressed investors. So we were bidders on it...I think it’s a good system that they’ve developed for getting rid of these assets.”

Bailout Recipients by State (H/T Turbo)

37 Comments

gregroberts's picture
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Re: Daily Digest - September 4

In the piece, who owns the fed, the author says:

1) The Rothschild Family - London 2) The Rothschild Family - Berlin 3) The Lazard Brothers - Paris 4) Israel Seiff - Italy 5) Kuhn-Loeb Company - Germany 6) The Warburgs - Amsterdam 7) The Warburgs - Hamburg 8) Lehman Brothers - New York 9) Goldman & Sachs - New York 10) The Rockefeller Family - New York

Gee, didn't  #8 -- Lehman go bust a while ago? I duuno, but this claim smells fishy to me. Can some one please explain how a dead company has partial ownership in the Federal Reserve? I wonder what source the author uses for his/her information.

 

 

 

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Re: Daily Digest - September 4

What is this?

Note that no increase in either cases or mortality were observed:

AUGUSTA, Maine — Gov. John Baldacci on Tuesday declared a statewide civil emergency because of the H1N1 influenza virus, paving the way for mass immunization of Maine schoolchildren and other residents.

The emergency designation protects schools and health care providers against liability claims related to their participation in school-based vaccine clinics this fall for both the seasonal flu and the H1N1 flu. “Maine has been proactive in its response to this new flu,” Baldacci said in announcing the proclamation. “But as the school year begins, we must continue our vigilance, which will require a responsible and aggressive vaccination and public education campaign. It’s our goal that every person in the state has access to vaccines for the seasonal and H1N1 flu.”

(Bangor Daily News)

I realize that in order to enact the "no liability" clause a statewide civil emergency had to be declared, but I think this degrades the notion of what constitutes an "emergency."

What's next?  A "retail emergency" requiring everyone to spend 50% of their chcceking account over the next 24 hours?

Also, if the state believes so strongly in these vaccines, then I am 100% against the notion of pre-limiting any and all liability.  When the state decides to do something as serious as move towards requiring what many consider to be an invasive medical procedure using untested vaccines, then I think that removing all liability is rather bad form.

However, as it stands, as I read it, Maine has not yet made vaccination a requirement, so perhaps this is merely a means to allow doctors and nurses to participate without liability.

 

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Rate Hike Expectations Plunge to Record Low

 VISIT LINK FOR CHART

http://www.zerohedge.com/article/rate-hike-expectations-plunge-581-15-first-time-ever-some-anticipate-negative-fed-fund-rate

Rate Hike Expectations Plunge From 58.1% To 1.5%; For First Time Ever, Some Anticipate A Negative Fed Fund Rate

Market speculators have now officially written off inflation: the most recent survey of Fed Fund Rate expectations indicates that the percentage of people expecting a hike to 0.5% at the December 16, 2009 FOMC meeting has plunged from 58.1% in March to 1.5% currently. And the opposite of inflation is deflation: just ask Treasuries. Furthermore, while exactly 0% had expected the EOY rate to be at 0% in March, almost a third of the market now believes this is the case. And, most shockingly, a solid 0.1% actually sees the Fed as having a negative 0.25% rate: whether this is a misprint based on futures data is unclear, however, it would be a very amusing outcome and with QE gradually ending, this may be the very, very last bullet in Chairman Ben's gun in his ongoing duel with the currency that he so desperately wants dead.

Of course, deflation is bad for stocks, but good for computer prices. Soon HFTs will be able to purchase many more HAL9000 who will be the only one left to trade the S&P House of 500 Cards

 

PS - we give our new, most fervent readers-cum-GE subsidiaries about one hour before this is made into a major piece, interspersed with Mighty Mend-It commercials.

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Maui Prince Hotel Faces Foreclosure

Davos,

It seems like this week your daily digest is totally focused on my personal interests! Thank you for the personal news service.Cool

Every week my wife and I check the Maui real estate market to see how it is fairing in the real estate downturn. For the most part, what biased news we get is supplied by the local realtors. We stayed in this hotel for a few nights back in 2001, and thought it was grossly overpriced then. As such, my wife and I have had a running bet for years about "just wait until the Maui Prince goes under..." She never thought it would happen and needless to say....I just won that bet. Now, its time to collect my winnings! ....thanks again, Jeff

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Re: Rate Hike Expectations Plunge to Record Low

Not sure what to think about that FB.

Are these "market speculators" considered to be the smart money or the dumb money?

 

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Re: Rate Hike Expectations Plunge to Record Low

I don't know what to make of it either, JAG.  A sentiment swing of that magnitude is bound to have real effects.  I was actually hoping you could tell me what they are!

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Re: Daily Digest - September 4

Haaaaaa Choooooo.

Ugh oh, if Virginia hears that they might declare an emergency. Utter and absolute BS. That guy should be removed from office - yesturday.

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Maui Wowee

quote=Davos]

[Maui] Hotel, More than Half Off

Go ahead, rub it in . . . . I keep trying not to think about the great values that can be had in Hawaii, just now . . . . Though I prefer to camp on the beach or stay in a cabin, myself . . . . We spent many months there, all told, over the years, and we'll miss it terribly, now that petrol is going bye-bye . . . . It's so tempting to take that farewell tour, but we're just so busy with gardening and other preparatory efforts . . . . Cry But, on the other hand, life is pretty good here, too.   Cool

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Re: Daily Digest - September 4

Have a super trip Jeff. Hope you don't get sold a room in the Hyatt, I think that is the chain that is mothballing hotels over the winter, forget what local it was...

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Re: Daily Digest - September 4
Davos wrote:

Have a super trip Jeff. Hope you don't get sold a room in the Hyatt, I think that is the chain that is mothballing hotels over the winter, forget what local it was...

Sorry for the misunderstanding, the only trip that I'm going on is to the compost bin! I figure I will get more out of my USD if I compost it rather than spend it on a vacation.Cry

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Re: Daily Digest - September 4
Again, just a few news items that caught my attention today:
Commercial Real Estate May Kill "Well-Capitalized" Capmark Bank
"huge default rates"
 

Sept. 4 (Bloomberg) -- Capmark Financial Group Inc.’s possible collapse may signal a new wave of real estate losses for banks -- this one tied to business property -- that could push the year’s tally of failures past 100.

http://www.bloomberg.com/apps/news?pid=20601103&sid=axgxp_5lG2eE

 

Problem CMBS Loans Up 7% in Two Months

http://www.globest.com/news/1489_1489/newyork/180853-1.html

 

It could take a generation for the US commerical property market to return to the kinds of deals seen during the boom years of 2005 to 2007, according to analysts.

The prediction comes from real estate services company Jones Lang LaSalle whose latest analysis also shows that US commercial real estate sales fell 80% in the first half of 2009 compared with the same period a year earlier, and down an astonishing 93% from the peak in the first half of 2007.

The firm’s US Mid-Year Capital Markets bulletin shows that sales totalled $16 billion in the first half of this year compared with a peak of $231.4 billion in the first half of 2007. It also revealed that sales in the second quarter of $5.2 billion were the lowest on record.

http://tinyurl.com/lxtdbh

  

CalSTRS' real estate, private equity investments take hits

http://www.pionline.com/apps/pbcs.dll/article?AID=/20090903/DAILYREG/909039983/1034/PIDailyUpdate&issuedate=20090903

 

The Five Financial Shockwaves to Expect When China’s Yuan Swaps Places with the U.S. Dollar

http://www.moneymorning.com/2009/09/04/yuan-replaces-us-dollar/

 

States Shut Down to Save Cash. Maine, Maryland, Michigan Slash Service; 'Nightmare' at California Vehicle Registry

http://online.wsj.com/article/SB125202235182685075.html

 

 

Insurance Commissioner Sues California To Stop $1 Billion Raid on Workers Comp

http://www.courthousenews.com/2009/09/03/Insurance_Commissioner_Sues_California_To_Stop_$1_Billion_Raid_on_Workers_Comp.htm

 

This guy blogs in U.S. News & World Report that 94% of pensions are underfunded

http://www.usnews.com/blogs/the-best-life/2009/09/04/4-questions-to-ask-about-private-pensions.html

 

Kern County's pension system lost more than one-fifth of its value in the last fiscal year

http://www.bakersfield.com/news/local/x616725378/County-pension-plan-takes-huge-hit

 

Once again Nathan's Economic Edge takes apart the unemployment info:

http://economicedge.blogspot.com/2009/09/morning-update-market-thread-94.html

 

 

 

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Re: Rate Hike Expectations Plunge to Record Low

FB, I asked Jason Goepfert, my sentiment sensei, what he made of this zerohedge article, and he replied with the following:

Fed funds futures traders have a mixed record, but from experience I've found that they are extremely accurate in the weeks leading up to an official FOMC meeting.  The rate hike odds can change dramatically in a very short period of time depending on how incoming data looks, so if we looked at those odds next week they could be markedly different than right now.  But the closer we get to the meeting, the more accurate they become.  Right now, I'm not reading a whole lot into it, just because we're so far away from the Dec meeting, but what weight I do place on it I consider it a negative for stocks.

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Re: Daily Digest - September 4

I posted this here rather than the WP thread because I think it is very timely:

 

 

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Re: Daily Digest - September 4

With the unemployment numbers so high I was just doing a search on the unemployment

trust funds. The Google news search results put results from multiple states

into the same group:

http://tinyurl.com/nxyerq

 

 

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Re: Daily Digest - September 4

Regarding the unemployment funds...I found this listing and thought I'd share. 

http://www.propublica.org/special/is-your-states-unemployment-system-in-...

As part of our investigation into unemployment insurance, here's a look at how individual state systems compare. Thanks to a historical compromise, each state has its own unemployment insurance system, and they come in 51 different flavors -- one for each state and Washington, D.C. (Puerto Rice and the Virgin Islands technically make it 53.)

How does your state's unemployment insurance system stack up? Is it about to go bankrupt? Is it bankrupt already? States with negative balances are in redPink states may have to borrow soon. Read about the states' policies that fed the current crisis.

Are your benefits below average? Roll over a state to see information on its benefits.

 

 

 

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Re: Daily Digest - September 4

Peter Schiff 9-3-09

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Re: Daily Digest - September 4

Max Keiser's latest, and it is quite good!

Link

http://embedr.com/playlist/on-the-edge-with-max-keiser-mike-morgan-04-se...

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Re: Daily Digest - September 4

Max Keiser's latest

1.

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Weekend Chart to Ponder - Deninger

http://market-ticker.org/archives/1411-Weekend-Chart-To-Ponder-Macro-Eco...

I have been challenged repeatedly on the chart of credit and population that I put forward; for those who want to review it, here it is:

The argument is that (1) there is no axis (although its relative graph so I find that argument rather lacking) and (2) it is not adjusted for "inflation."

The latter is troubling.  See, what inflation number do you use if you want to measure stress on the consumer?  After all, the point of the chart is to measure consumer debt load and stress, right?  I think so.

So on went my thinking cap and after a bit the light went on - the measurement of stress would be best defined by per-capita income compared to per-capita consumer debt.

This excludes, of course, government debt, which has been rising at an astronomical rate as well, but the impact of that rise can be delayed, because (at least so far) we can borrow instead of tax.

Anyway, the modified graph is here, and it revealed some very interesting things.

 

The last two lines are per-capita - both income and credit.  Gross credit in the system is taken from the credit number, and per-capita credit is simply credit out divided by population.  Since none of these are inflation adjusted - that is, they're all in raw dollars - the income and per-cap credit numbers provide an excellent relationship measurement between income and credit outstanding.

Notice that through roughly 1993 credit growth per-capita roughly correlated with income growth per-capita.  That is, while credit growth expanded pretty dramatically, so did per-capita income.  The early 1990s recession actually brought debt levels down and they corrected to a normed level - coinciding with the end of the recession!

But starting in 1993 this behavior changed.  That is, the level of stress imposed by increasing credit - Americans living beyond their means and pulling forward their income with credit (ab)use - accelerated and never looked back.

Worse, from 2001 onward the gap has exploded as the government's policies to "go out and shop", coupled with insanely low interest rates, made pulling forward demand an American pastime.

With the recession of 2000-01 instead of allowing the economic forces to drive credit down (or hold it constant until per-capita income caught up) government and Federal Reserve polices encouraged even more pulled-forward earnings power and consumption, placing us on the path to ruin.

Note too that these credit numbers do not reflect mortgages - at all.  I don't have a clean data series for those that's immediately obvious or I'd add it (if someone has one, drop me a link to a referenced Excel file and I'll add it) and I suspect that would make the chart look really ugly.  I also don't have per-capita income numbers from the Census for 2008 as of yet, so that series is missing the last value - but the ominous change in 2007, where income flattened while credit outstanding continued to soar - is apparent.  This graph also does not include the impact of increased government debt, yet it is invalid to ignore that, since eventually government borrowing must be paid back via higher taxes.

So in fact the situation for the American consumer is significantly worse than depicted here.

But this is a fairly clean representation, however, of the "pulled forward" demand that we have shoved into the economy since 1993 through ridiculously-loose consumer credit.

I have often been asked what it would take to bring the consumer credit picture back into balance with incomes.  My "off the cuff" estimate was that we had to take a 10% adjustment to GDP in 2000, a 20% adjustment now, and that credit would have had to contract by about 20% in 2000.

This graph makes it clear - as of 2006 the answer is "roughly a 40% decrease in credit outstanding, a 40% increase in per-capita income, or any combination of the two."

Of note the "correction" required was 25% in 2000. 

It was 40% in 2007. 

It is likely better than 50% now.

Not bad for my "back of the envelope" computations when one puts hard numbers to the question, eh?

This graph, more than any other, illustrates the folly of "kick the can" when it comes to recessions.  We are in this recession and facing an economic depression due to consumers "hitting the wall" - the spread between per-capita income and per-capita debt became impossible to service, and the defaults started to snowball.

To fix our economy consumer incomes must be brought back in line with per-capita debt - period.

There is no path out of this mess that involves taking on more debt, as is clear from the above, as doing so will simply cause the divergence between income and debt to widen further.

Wake up America. 

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Re: Daily Digest - September 4
idoctor wrote:

Peter Schiff 9-3-09

Good watch, thanks. Schiff, IMHO is smart. 5:20 point excellent, at 5:45 I'm ONFLMAO!!!! He really has this thing wired.

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Re: Daily Digest - September 4

Thanks Davos for the heads up on MaxSmile.

Max Keiser's latest

1.

2.

3.

4. 

Funny what Peter Schiff says about the Chinese Govt advising their people to buy gold.....at least they care about their own people which is more than you can say about ours LOL. Davos it could be that the Chinese are not like the insane asylum that runs our country.

Jezzzzzzzz grill the Automotive Corp Executives on flying Corp Jets to Washington to make a public diplay for all of us only to turn around & order up a bunch of new jets for themselves.....WOW & they thought that would fly???LOL

Right now I think we are in the brown eye of a very bad storm....not going to be pretty....buckle up with helmet....

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Re: Daily Digest - September 4

In China, the only legal currency for citizens is the Renminbi.    There is a "blood/brain" barrier (sorry, I'm a biologist), between the outside world and the internal economy when it comes to dollars.  At least that is the way I understand it.  

If you are a multinational corp in China, dollars received are confiscated by the government and what you actually receive are RNB at the official, pegged, mandated exchange rate.  Again, at least that is the way I understand it.  If I am wrong, someone please correct me because this is what I have really been led to believe.  I assume multinational corps based outside of China but with factories in China get around this by having purchases deposited in off-shore subsidiaries.  

If the above is true, then what does it mean for Chinese citizens to be encouraged to buy PMs?  

It seems to me that, from the point of view of the Chinese government, this would be a way of soaking up RMB in exchange for gold purchased with government-accumulated dollars.  What good does that do?  Of course it helps the individual Chinese citizen, if you believe holding gold is good.

But why would the Chinese government promote this? What good does it do them?  Why do they feel a need to sell gold to their own citizens, especially in exchange for RMB, which is as worthless as the dollar in that it's just another fiat currency that can be produced at any time? And, we know the Chinese government does what is best for the Chinese government, or whatever they deem to be in the best long-term interests of China, regardless of what the actual near or long term consequences upon the Chinese people may be. 

I do not have any answers to any of these questions.  I am merely pointing out that there is something we do not know because this does not appear to make any sense.   

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Re: Daily Digest - September 4

Myspacesecrets is always a fun listen....

http://www.youtube.com/user/myspacesecrets?blend=1&ob=4

Farmer B I don't have any answers but so many things are becoming "strange" of late.....Oil to Natural Gas ratio.....Gold to oil ratio....Dollar & market going up along with PM.....etc....????

More Peter Schiff

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Re: Daily Digest - September 4

OK you all.  Why go to Maui when you can come to Kauai?  I was at a local group meeting at a Kauai hotel Thursday where we met for breakfast.  This is a lower-end hotel but nice.  Meeting started at 0730, ended at 1030.  Total guests in the restaurant besides our group- 6!  Which sucks for the wait staff (2 only! and we left a large tip....) but means that as a visitor you will have a trip blessed with much less traffic and fewer lines and probaly better deals on anything you care to spend your $$ on.  And the weather this summer has been fantastic!  Keep this in mind this winter!!!  I think our hotel occupancy rates have been about 65-75%. Full Disclosure- I'm not in the tourism business, but we're all just a few steps removed....Aloha, Steve.

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Re: Daily Digest - September 4

FT.com / US / Economy & Fed - US families turn to food stamps as wages drop

The number of working Americans turning to free government food stamps has surged as their hours and wages erode, in a stark sign that the recession is inflicting pain on the employed as well as the newly jobless.

While the increase in take-up is often attributed to the sharp rise in unemployment – which on Friday hit 9.7 per cent – the Financial Times has learnt that some 40 per cent of the families now on food stamps have “earned income”, up from 25 per cent two years ago.

...

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Re: Daily Digest - September 4

http://www.market-ticker.org/archives/1406-Kneale-Abuse.html

This got me.  If you can't beat them by rational debate and examination of the facts, call into question their motives and their patriotism............ This kind of "your with us or against us" stuff from MSM suck big style!!

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LA Times story on Vegas' boom and bust

http://www.latimes.com/news/nationworld/nation/la-na-vegas-dream6-2009sep06,0,2293950.story

A well-written story, anectdotal for the most part. I was struck by the reference to "The Secret" -- for a few years I was in a business networking group in SoCal, building up my practice, and The Secret was all the rage, based on the Abraham-Hicks story that what you think you manifest, we create our own realities, and we just need to keep negative thoughts at bay and we'll have anything we want.

I think that story, and the related, evangelical Christian belief, as I understand it, that God rewards those who show their devotion to him in this world with material wealth, will be one of the underlying delusions of this last great bubble....

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Re: Daily Digest - September 4

Davos and all,

It is a bit hard to beleive those claims regarding the ownership of the Fed as  1) The Rothschild Family - London 2) The Rothschild Family - Berlin 3) The Lazard Brothers - Paris 4) Israel Seiff - Italy 5) Kuhn-Loeb Company - Germany 6) The Warburgs - Amsterdam 7) The Warburgs - Hamburg 8) Lehman Brothers - New York 9) Goldman & Sachs - New York 10) The Rockefeller Family - New York.

A quick Google search reveals all sorts of stuff about this question including MSNBC suggesting "Technically, the Federal Reserve System is -- more or less -- owned by itself. This has given rise to numerous rumors, urban myths and conspiracy theories about how and where the Fed derives its unique powers."

Does anyone have a credible definitive source for actual ownership of this beast? It sure must be time for Ron Paul's audit the fed bill if we can't even get a quick simple answer to this basic question on Google or Wikipedia.

Thanks for any clarity anyone can offer on this.

Fred

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Fred Unger
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Re: Daily Digest - September 4

Davos and all,

It is a bit hard to beleive those claims regarding the ownership of the Fed as  1) The Rothschild Family - London 2) The Rothschild Family - Berlin 3) The Lazard Brothers - Paris 4) Israel Seiff - Italy 5) Kuhn-Loeb Company - Germany 6) The Warburgs - Amsterdam 7) The Warburgs - Hamburg 8) Lehman Brothers - New York 9) Goldman & Sachs - New York 10) The Rockefeller Family - New York.

A quick Google search reveals all sorts of stuff about this question including MSNBC suggesting "Technically, the Federal Reserve System is -- more or less -- owned by itself. This has given rise to numerous rumors, urban myths and conspiracy theories about how and where the Fed derives its unique powers."

Does anyone have a credible definitive source for actual ownership of this beast? It sure must be time for Ron Paul's audit the fed bill if we can't even get a quick simple answer to this basic question on Google or Wikipedia.

Thanks for any clarity anyone can offer on this.

Fred

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JAG
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A Dissenting View of Peter Schiff

I'm responding to a Schiff video that Davos posted in the MTA thread, and I assume its the same one that is linked to above.

For Schiff to call the crash in 08 a "headfake" demonstrates how incompetent he is as a money manager. Do you think his clients losing 50% of their capital consider that just a "headfake"?

There is a distinction between a credibility-based currency crisis and inflation-based currency devaluation. Debt is deflationary by definition. Given the debt load of our country, all the Fed can do is create the fear of inflation in this situation, and Schiff is playing the role of Fed puppet with his rantings. The FRB inflation-creation machine is broke and the Fed is powerless because of this.

Schiff is married to his theories because that is where his "bread is buttered" and not because they have been demonstrated to be the correct views by the markets. I don't understand how anyone can take him seriously, given his track record of losing money where his mouth is. 

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Re: A Dissenting View of Peter Schiff
JAG wrote:

I'm responding to a Schiff video that Davos posted in the MTA thread, and I assume its the same one that is linked to above.

For Schiff to call the crash in 08 a "headfake" demonstrates how incompetent he is as a money manager. Do you think his clients losing 50% of their capital consider that just a "headfake"?

There is a distinction between a credibility-based currency crisis and inflation-based currency devaluation. Debt is deflationary by definition. Given the debt load of our country, all the Fed can do is create the fear of inflation in this situation, and Schiff is playing the role of Fed puppet with his rantings. The FRB inflation-creation machine is broke and the Fed is powerless because of this.

Schiff is married to his theories because that is where his "bread is buttered" and not because they have been demonstrated to be the correct views by the markets. I don't understand how anyone can take him seriously, given his track record of losing money where his mouth is. 

Hello Jag:

Time will tell. I don't think Schiff is a fool. I respect him, as I do Mish. But my take, and time will disprove, or prove, is that: 

  1. Inflation is more Fiat money
  2. More Fiat money debases/devalues the dollar
  3. Thus more dollars are needed to purchase goods/assets

IMHO Mish is right when he said asset prices would tank. IMHO Mish isn't watching all asset prices, becuase not all assets are falling in price - just the ones there is no demand for (Houses, cars, CRE etc, etc.)

IMHO MIsh is going to be in for one heck of a surprise if/when the dollar tanks and everything costs a fortune as a result of that. Keiser, who I also respect is judgeing Schiff by how well his money is doing now. I'm not going to jusge Schiff on that, for one he saw the train coming (as did Mish) for two his definition of inflation is old book and he (and I'm not meaning this as a bash just making it a point) unlike Mish is watching the next traind that I think is going to come like a thief in the night.

Just my 2 cents. Take care

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Re: Daily Digest - September 4

PS Not to beat this to death, because I respect your view, though different I'm not inferring that I know what will or won't happen here but: I don't know what Schiff was talking about with the headfake. My take is that he means or meant don't use reav view mirror investing, things are different.

As for the move in gold, I don't know if it is:

  1. Central banks are now net buyers
  2. Bernake's heavy hand on the print button
  3. Traingle/pendant charting investors

Or:

http://www.mybudget360.com/wp-content/uploads/2009/09/us-dollar-longer-term.png

 

What I do see is:

  1. 80 trillion in debt
  2. 2 trillion coming in the door and 4 trillion going out the door, most of that difference is Bernanke's hand on the print button
  3. The dollar is on a one way street since 2001
  4. We can never pay the debt without devaluing and redenominating the dollar
  5. Unless there is a flight from equities into perceived securities that stenghtens the dollar I see NOTHING on the horizon that would support or strentghen the dollar 
  6. The dollar is a store of value
  7. PMs are a store of value
  8. They don't turn lead into gold or silver so I suspect these 2 will hold value better
  9. I'd advocate reading where 500 trillion in (rumored) wealth held by the few elete have their value stored Wink
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Re: Daily Digest - September 4
Quote:

Inflation is more Fiat money

Amazing how academic theory leaves banks out of this simplistic belief.

Austrian theory on inflation (Schiff's basis) is based on a monetary world that no longer exists.  As we've seen, most economic theory has been revealed to be very wrong and dangerous.  And theories from the past based on a world that no longer exists are bound to be at least as dangerous.  

Inflation in today's world seems to be created by banks and the system of bank credit/debt which drives supply/demand of purchasing power.  Supply/demand for bank credit/debt appears to be in the beginning stages of a collapse--deflation for now.

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Re: Daily Digest - September 4

Heck I really don't care what these guys accounts do for their clients since I don't have any accounts with them & above all I use them for information to make my own decisions. Who knows who will be right but to me they have a common sense message that at least my little brain seems to understand.

Schiff called the general collapse way in advance as the hosts on CNBC laughed at him in 2006 to present....they are still making fun of him to this day. That means a lot to me.

It just feels like we hit a barrier of some type in this latest crash....one that seems to be real IMHO. Call it fiat or imagination but right now I feel better with something real in my hands than some imaginary promise of worth or wealth. Seems to me plucking the copper out of pennies is a sign of how truly worthless this monetary system could be.

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Re: Daily Digest - September 4
strabes wrote:
Quote:

Inflation is more Fiat money

Amazing how academic theory leaves banks out of this simplistic belief.

Austrian theory on inflation (Schiff's basis) is based on a monetary world that no longer exists.  As we've seen, most economic theory has been revealed to be very wrong and dangerous.  And theories from the past based on a world that no longer exists are bound to be at least as dangerous.  

Inflation in today's world seems to be created by banks and the system of bank credit/debt which drives supply/demand of purchasing power.  Supply/demand for bank credit/debt appears to be in the beginning stages of a collapse--deflation for now.

Hello Strabes:

I sincerely appreciate your point of view. You might be correct, I could be wrong.

Just to clarify a point or a few points:

  • I never said that banks don't create Fiat money. Banks do, the Fed does, stores do, credit cards do
  • I agree with the stages of collapse
  • I'm not certain all asset prices are loosing value
  • I think all asset classes are effected by supply and demand
  • I think that credit is a definiate contributer to that supply and demand

If food and gas, and cable bills, and clothes and everything was loosing value like housing and automobile sales I think I could be swayed into Keynesian definitions. If the dollar was gaining strenght as the result of the collapse that we both see then IMHO it would gain strenght across the board.

I'm not seeing that.

Take care

 

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Jeff Borsuk
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Re: Daily Digest - September 4

...either way, authority without responsiblity is a bad combo.

Jeff

 

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