Look who’s uno, again!

Over the 4th holiday weekend, I talked to several people who were either lower, middle or upper middle class. Every one of them were quite worried about the upcoming heating season as we live in the northern US. Most were cutting back on spending now in order to save enough cash to help with the higher heating costs. A few thought they would not be able to save enough by the time the first oil deliveries arrive in late October. One family said that they may not be able to help with their son’s return to college in September. I found that surprising as both parents were employed in the professional class. Another, whose business is related to the trucking industry, said his business was off by 60%An electrician, who expanded his business ridiculously during the housing boom, is now being hunted down by creditors.The Bush WH can deny stagflation exists till their blue in the face, but I see this stagflation eroding family’s abilities to maintain. Yes, the ride will be bumpy, I just wonder how many people will be thrown off the wagon.

Professor,You make a good argument and in theory you’re right. The problem is economics isn’t physics. I wouldn’t underestimate what lengths governements will go to prevent what you predict. Cleary, the US gov’t doesn’t care about the USD and I wouldn’t be surprised if they go to great lengths to covertly put money in places to prevent a lot of pain. As long as Asia and OPEC accept dollars, there’s no penalty for the US gov’t doing so.

I nust read something that said July 4th weekend yr. over yr. oil consumption in the US was DOWN 4.3%! Demand destruction proceeding apace! Almost all US airlines cutting back capacity 10-15% on Sept. 1, 2008. Remember that after 9/11 airlines did not fly for 3 whole days and that led to a glut in oil supplies.

The Apple Iphone 3G will be launched in the US at 199$(8giga) or 299$(16giga). In Belgium(Europe) it is launched through the telecom company Mobistar in an exclusive agreement with Apple. The launch price in Belgium is…825$(8giga) or 965$(16giga) Even if you deduct the 21%VAT(sales tax)included in the Belgian price, this smells as a ripp off…And you can bet that the launch price in Belgium is fixed by Apple.http://ptech.allthingsd.com/20080708/newer-faster-cheaper-iphone-3g/http://www.tijd.be/nieuws/ondernemingen_media_telecom/iPhone_aan_525_euro_in_de_rekken.7859776-435.artMaybe Apple uses a different usd/eur exchange rate?Or is this a creative way of subsidies to the US consumer trough the European consumer?Won’t help European inflation numbers though…

@ tutterfrut 09:34:28It all evens out. The Mexicans are only going to be paying 773 Pesos, or about $75 USD.SWK

@ tutterfrut 09:34:28It all evens out. The Mexicans are only going to be paying 773 Pesos, or about $75 USD.SWK

Anybody have anything from ECRI this week?

Amazing that CNBC believes 62000 jobs lost isn’t that bad. Notice the level of compassion.

@Yankee (previous thread 08–21:16:50) “Fed to curb shady home-lending practices; may give Wall Street more time to tap emergency fund… The Federal Reserve will issue new rules next week..”This week, former cabinet officials James Baker and Warren Christopher proposed a statute better defining the war powers role of the Congress and the President, implying that the Congress needs more authority to sign off on declarations of war.What a waste. Why not have the authority given to Bernanke and clear up all this fuzzy thinking about who’s in charge. Didn’t Bernanke just now announce that the Fed would take care of those problem mortgages? Remember when a member of Congress said a couple of years ago that Greenspan was so involved in every aspect of the country’s government that before long he would be picking the targets in Iraq?This ultimate power resting with a private cartel acting through its spokesman, Chairman Bernanke, is not some comical situation; if this isn’t solved, what hope do Americans have for representative government?

@KilgoresThat’s the price with a 2 year contract and monthly fees of almost 60 USD.Here in Mexico, all gadgets are more expensive (~30%) than in the US.

Merrill needs a little bit of money.Nothin about it in Lalaland media.http://uk.reuters.com/article/mediaNews/idUKN0938041920080709 If current analysts’ estimates of up to $6 billion of write-downs were accurate, Merrill could need to raise roughly $5 billion of capital, the person said.That level could be reached by selling the 20 percent stake in Bloomberg, which Merrill Chief Executive John Thain said last month could be worth about $5 billion to $6 billion.

Breaking News >> Turkish Police Suspect Al Qaeda Behind Attack at U.S. Consulate in Istanbul

IT REMINDS ME OF THE BEETLE AND THE GRASSHOPPER FABLE IN REVERSEThe grasshopper didn’t save a thing and lived like there was no tomorrow, but the beetle lived within his means and saved for the future. With bank bailout, the beetle must dig into his hard earned stash to save the grasshopper from starvation?

@ NR:I just listened to your CNBC interview this afternoon. Great discussion.I have one question:Don’t you think precious metals are a good investment in this environment? So ar, they have been great for me since 1/07 I’m up about 50% and I "hear" that the upside could be as high as $2000 for gold.Your thoughts?

randy on 2008-07-09 12:26:01My concern with precious metals is that the institutions and hedge funds have holding in that arena using mainly the etfs. When we have the next *event* and there is a run on the house, selling something that actually has value will prevail. This probably means their PM holding. This will then drive that market down. How far and for how long is a question I haven’t an answer for. Of course, this would then be a great buying opportunity as the government will then monetize more debt and devaluing the dollar further. If there isn’t some *event* (which seems highly unlikely given the conditions that prevail), then PMs will most likely slowly go up over time as they are a hedge against inflation and in effect real money that is not easily leveraged. In the bigger picture, precious metals should continue to rise in value against most all fiat currencies as the cost to mine and transport has risen dramatically in recent years. Labor isn’t getting any cheaper either.

do you think all of the 401k sucker investors in this chirade of an equity market read their statements in slow motion like the PPT is engineering this decline in slow motion. leeetttt mmmeee reeaaadddd my baaalaaanncceee… hmmmm lllooookkkk at the boootttommmm lliiinneee – DOWN 20% ! the month end and YTD returns read the same gosh darn numbers either way. this is good though. this may give them all a chance to get the f out of this train wreck. july options are baking away like a puddle drying in the desert. the joke is on this gosh darn moron of an option buyer. all peanuts are about to be allocated to men’s college basketball – this game is way too hard for this shmuck to play especially on the long option side of the fence… oohhh gggeeee llloookkkk a retest of of 1,260 in super slow motion…

Betting on anything going up in the current environment including PMs is a risk. The safest bet is to go with the current trend of deflating housing and stock markets. I leave to your imagination how best to do that. Think Soros, Paulson………….

don’t forget the Republicans were pushing a bill through Congress a long time ago giving another entity the power to take over their operations in the event either of the GSEs went into receivership – they have known for a long time this was coming. not sure how to interpret this related to whether US takes on guarantee or defaults… does not either alternative lead to hyperinflation – either hyperinflate the debt away or take on the debt and incur massive systemic currency destroying losses – either path leads to hyperinflation (basic items food, fuel) ultimately ?…

Hmmmm…..where is the PPT?

@KJ Foehr: “ Another excellent interview: clear, concise, and substantive, as usual…”Yes, and whatever you do, don’t miss the exclusive CNBC video link interview with Mohamed El-Erian (for CNBC customers) at the end of Roubini’s post if you’re looking for “savvy “ investment advice – both for big capital investors and the small investor.Says El-Erian, regarding Trichet’s inflation move, commodities may be getting to the tipping point where they overshoot and break the real economy.He said we are in economic times of great tumult and great opportunity; where the credit crisis has morphed into an economic crisis, where policy makers don’t have any easy economic solutions and where economies everywhere are slowing, and where we are trying to recapitalize a financial system that is so interconnected there will be a tremendous amount of disruption. He said there are hard-to-access investment opportunities for those who can underwrite volatility in things high up in the capital structure such as high quality mortgages and high quality bank debt. But you’ve got to be very careful.If you go to stocks, he said, you start going lower down where there is much more vulnerability; you’ll need support through capital structure or something else because things are going to be very volatile on a very bumpy ride, he said. This is not a linear journey.Small investors, he said, need two things: to be able to access opportunity and to be able to hold on when things get bumpy. Have a long-term vision and capital. Otherwise, he said, stay on the sidelines.For the retail investor, he said, remain diversified, keep a cash cushion; there will be an opportunity to get in.All agreed that some existing shareholders are going to take it on the chin. The point is, El-Erian said, the financial system has to be recapitalized and to recapitalize the system, you’re going to dilute someone – the shareholders.The big issue for all of us, El-Erian said, is what happens when capital can’t be raised. The more shares go down, he said, the harder it will be for companies to raise capital. The result, he said, will be more mergers and more consolidations, a change in what the financial system looks like.This is not a one-month, a two-month issue, he said, this is a multi-quarter issue; it takes time to recapitalize a financial system.

http://www.cnbc.com/id/25592285 watch the video. I am no fan of cramer, but this time he makes sense

It’s official, in case you had any doubt; the S&P500 is now a bear. It closed at 1244.64 and will certainly settle several points below its 20% decline level of 1252.15.Congrats to all the shorts (and Roubini too) who hung in there believing the bottom had not been reached. It appears you were wiser than Brian Wesbury, Larry Kudlow, Vince Farrell, Don Luskin, and a plethora of other so called experts.It’s the thrill of victory and the agony of defeat! The human drama of equity trading! (To paraphrase Jim Mckay, 1921 – 2008)

Wow, Mr. Evans-Pritchard is the one who can quantify the world oil reserves 5-6 trillion.He must be a clairvoyant.(nice word)

thank god we have only 1 trillion used so far,( he said)So we can go on drive SUVs.There is plenty of oil out there,Mr. Evans-Pritchard says.What an Idiot.

@ptmWhat are they wining about. Their sector is soon to be flying on algae, or could that be part of speculation also…:)

@ AfAThey have quite an extensive list of supporters besides the airline industry.Check the site http://www.StopOilSpeculationNow.com

Yes Professor show us a way to recapialise the gangsters so they can f… everybody again and again and again…………..

From ‘Calculatedrisk’ comments on GSE’sunit472 writes:…"we’ve come to the point where the financials have become not ‘too big to fail’ but ‘too big to save’!"

This whole up 150 points on Tuesday then down 236 points on Wednesday has a familiar feel to it, don’t you think? It’s like those other weeks, at the beginning of March. Right before Bear collapsed. Yup. Feelin’ is mighty familiar. The sideline is a nice place to be right now.

@Guest 2008-07-09 08:49:35America cannot truly revive unless she returns to a free market where the only viable way to growth is through increased savings and investments in value, not speculation. To do this, she cannot survive on a negative interest rate. Interest rates must rise as an inducement to saving.A free market with 300+ million who are addicted to oil, which is rising faster than a rocket? Not sure how you can see this happening. Ultimately everything except oil and food are worthless; trying to revive a virtual concept in the face of crushing realities is like trying to swat down a cruise missile with a string.Any time ANYONE mentions growth, viable or otherwise, I’m going to call them on what that means. Growth is unsustainable. Until we get this point we’re all going to be running around looking like a bunch of damn fools! GROWTH _IS_ THE PROBLEM, not the solution! For a full understanding of this concept/fact look up Dr. Albert Barlett’s presentation "Arithmetic, Population and Energy," it’s an eye opener, life changing event… Go ahead, take the Red Pill!Mark

Mark: "GROWTH _IS_ THE PROBLEM, not the solution!"I totally agree with you that bad growth is the problem. By bad growth I mean things like excessive population growth, sprawl, and growth in consumption of non-renewable resources.But isn’t it possible to at least imagine a good kind of economic growth without a bad kind of growth along with it?I just finished rereading Tolkien’s Lord of the Rings for the third or fourth time. This time I paid particular attention to the appendixes. After Frodo, Sam, Merry and Pippin returned to the Shire, drove out the sharks who were skimming the output of the Shire and intimidating its inhabitants, and started the process of fixing what had been destroyed, there followed the "Great Year of Plenty," shire year 1420. Everyone rolled up their sleeves and worked together. They were extremely productive. The rain fell at the right times and in the right measure. The beer that year was remembered for years thereafter. They did not exploit the resources of the Shire. Rather, they made it fertile and rebuilt its infrastructure. They enhanced the long-term productivity of the Shire rather than exploiting it for today mindless of tomorrow.Unlikely though it may be, it seems to me not impossible that an economy could support growth in the general prosperity, if it is truly productive, if it husbands renewable resources rather than exploiting finite resources, if it minds its infrastructure, and if it is fair and just in how in manages everything. Idealistic, isn’t it?I’m an American, but I have long been a fan of the Danish culture and economy. They do a pretty darn good job of this right now. Does the Danish model scale up to something that would work in the U.S.? In theory I think it could. But the American masses are too dumb and passive, and the elites are too corrupt and greedy.

Very well Nouriel (next Secretary of the Treasury)

@ 4822: do not forget horse shoes !!

McCain promises to balance the budget by getting everything else except the billions of dollars in military spending. What a good reflection of the U.S. mentality.

Mark, I would tend to agree with you that continuous quarter-to-quarter GDP growth is a very stupid idea to measure growth in welfare and is based on even a "stupider" assumption that we can get an infinite output by using finite inputs. The world is a closed system with limited (although sometimes big) resources and energy. As we get closer to the maximum capacity weird things start to happen. Uncorrelated things start to become correlated, negative cause-to-effect becomes positive, relationships gets inversed, chaos reigns and value is detroyed. At that time, it doesn’t really matter if what we created was of real value or not. It all needs to be destroyed and washed away before we can start over. No government program or human technology can stop the destruction from running its course until it creates enough spare space for new growth. And this is where I disagree with you about free markets. They are just like gatekeepers, impartial, not inherently good nor bad, it is just their duty to keep, or when necessary bring, things into equilibrium. And bringing things into equilibrium means also destroying when exceeded. The markets are free not because a government or a policy gave them that freedom, but because they are not subject to our manipulation, we are. This is why growth cannot be continuous or eternal. If we don’t manage our economy close to equilibrium in the short term, Hermes will do it for us. If we don’t keep or recycle our energy consumption below the possible energy stock, Gaia would take matter on her own hands. We cannot have protracted GDP growth without experiencing recessions, as we cannot run prolonged inflationary policies without experiencing deflation at some point. And once we make the gods angry they will make our task even more complicated. They would condemn us that we have make more effort creating than destroying, from now on, it will take us double (100% more) effort to come back to the same point after a mere half (50%) drop.

@AfAI think that we’re in total agreement. The Free Market, sadly, doesn’t exist (it’s one of those ideological things; as it exists it cannot scale [too many externalizations; could it ever take these into account without placing us in overshoot is the question]).Mark

@ Anonymous 10:47:24>That’s the price with a 2 year contract and monthly fees of almost 60 USD.>Here in Mexico, all gadgets are more expensive (~30%) than in the US.Thanks for that clarification. The monthly fees also sound somewhat lower than what one would pay here with AT&T, but of course, if one is paying in Mexican Pesos, it actually is more expensive relative to median income levels. I did not mean to suggest that Mexicans are getting a deal on cheap iPhones or any other electronic gadgets, either. If one is living off the Mexican economy, there is no question that a 75 USD iPhone costs a lot more in real terms than a 199 USD iPhone does for a U.S. national earning an income in the U.S.SWK

@ tutterfrut 16:41:08>…"we’ve come to the point where the financials have become not ‘too big to fail’ but ‘too big to save’!"That’s a scary thought. Of course, it seems to me that is exactly the point that Messrs. Bernanke and Paulson have been trying to make in the last couple of days…SWK

Ok, this is my pet pony and great to see it had some time to run; but what’s the disaggregated picture here? I’m interested in an assessment of materiality, risk, vulnerability, and impact – these clearly differ across asset classes, as they do across debt classes, so what’s the picture, or movie going forward going to look like?? (In my opinion, the cross-conditionality of household debt has not been sufficiently analysed, but that’s just a perspective and I don’t have learned works to support it). NR : Those credit losses are now mounting and spreading from subprime to near prime to prime mortgages, to commercial real estate, unsecured consumer credit (credit cards, auto loans, student loans), leveraged loans financing reckless LBOs, muni bonds as many insolvent local government will go bankrupt, industrial and commercial loans, corporate bonds (as a tsunami of corporate defaults are ahead of us) and CDS.

Saks Tailspin Signals Hurdles for Neiman, Nordstrom (Update3)By Cotten TimberlakeMore Photos/DetailsJuly 8 (Bloomberg) — Neither Mary Beth Gonzalez nor Saks Inc. could be happy about the 60 percent discount that the company’s Fifth Avenue store in New York was offering last week on such luxury items as a $1,995 Dolce & Gabbana messenger bag.The reduced prices are eroding Saks’s profitability, with its operating margin shrinking from 5.3 percent in the fourth quarter to 4.7 percent in the first — less than half of margins at Nordstrom Inc. and Neiman Marcus Group Inc. The cuts also aren’t sufficient to get Gonzalez, a media executive, to buy.“I’m being more conscious of my spending,” said Gonzalez, 42, who left the store empty-handed July 2 and resolved to cut non-essential purchases in half. “With the economy being uncertain, I feel like I need to have more savings.”One of the last holdouts in consumer spending — luxury- goods purchases — may be collapsing under the weight of a sluggish and potentially contracting U.S. economy.Sales at U.S. luxury stores open at least a year may decline as much as 2 percent in 2008, as wealthy consumers suffer “angst” over financial-industry job cuts and falling stock and housing values, Michael Niemira, chief economist at the International Council of Shopping Centers, projected July 1 for Bloomberg News.None of this has been welcome news for Saks shares. They have fallen 19 percent in the past two weeks and 52 percent since the start of the year. Today they advanced 35 cents to $10 at 4 p.m. in New York Stock Exchange composite trading.By comparison, Nordstrom’s stock dropped 3.7 percent in the past two weeks and 11 percent year-to-date; the Standard & Poor’s 500 Index fell 3.4 percent and 13 percent, respectively.`Point of Warning’“Part of what Saks has is personal problems, but, as an analyst, I would be remiss if I didn’t take it as a point of warning about other luxury retailers,” said Patricia Edwards, a portfolio manager with Wentworth Hauser & Violich. “The Saks situation is certainly something that gives one pause.”Neiman and Nordstrom, with better operating margins, are also showing signs of strain. Short sales as a percentage of trading volume on Nordstrom stock are the highest in almost three years. The yield on Neiman’s most-traded bond is at the highest since mid-March.Not everyone is pessimistic. Lazard Capital Markets’ Todd Slater recommends buying Saks’s shares, now at a five-year low, saying the chain is “well-positioned to reaccelerate.” Citigroup Inc. analyst Deborah Weinswig said June 13 that she is more confident a buyout may occur.Resistant to WeaknessAt the beginning of 2008, Niemira said he had expected luxury same-store sales to gain as much as 2 percent this year. That would have been below last year’s 6.3 percent, yet still an increase. Instead, luxury sales have dropped 0.6 percent in the four months through May versus a 6.7 percent rise in the same 2007 period.“The upper-end discretionary segment was once thought to be resistant to a softening,” said David Abella, a portfolio manager at Rochdale Investment Management LLC in New York.Retailers are competing for “an increasingly scarce luxury dollar,” said Pam Danziger, founder of Stevens, Pennsylvania- based luxury marketing firm Unity Marketing Inc. The affluent are holding back on spending because of “declining optimism about personal and national fortunes.”In the latest luxury consumer confidence survey by Unity Marketing, the index dropped 9.1 points in the first quarter of 2008 to a four-year low of 54.4 points. The survey was conducted from April 7 to 11 among 1,258 consumers with incomes of $100,000 or more.Asset Values FallingAny spending pullback by the affluent is usually closely tied to declines in asset values — in this case, falling prices for both stocks and property, Niemira said. The last global luxury slump, in 2003, followed sustained stock market declines.The S&P 500 Index’s 13 percent year-to-date decline compares with a 7.9 percent increase in the same 2007 period. Luxury-home prices also fell, with the average net contract signed in the three months ended April 30 down 26 percent to $534,000 from a year earlier, Toll Brothers Inc., the largest U.S. luxury-home builder, reported June 3.Lower-income shoppers hold back when rising gasoline or food prices push up the cost of living, Niemira says.Price-Estimate CutIf the economy worsens, New York-based Saks’s shares may drop about 20 percent more this year, Rochdale’s Abella predicted. Investors have also been disappointed that a long- rumored buyout of the retailer hasn’t occurred, he said.Haverford, Pennsylvania-based Egan-Jones Ratings Co. today predicted Saks shares would sink to $4.43 in 6 to 12 months. Its previous share-price estimate, on May 20, was $8.24.Icelandic investment company Baugur Group Hf, owning an 8.5 percent stake as of April, disclosed in October that it might make an offer for more. None has materialized, and Saks repeatedly has declined to comment on any takeover.“To quote Carly Simon, `I haven’t got time for the pain,” said Wentworth Hauser’s Edwards, who sold her 25,000 Saks shares in late May at a “very painful” loss. She declined to specify.The chain faces “a very difficult” retail environment, Chief Executive Officer Stephen Sadove, 56, told shareholders at the annual meeting June 4. Spokeswoman Julia Bentley declined to comment for this article.Neiman spokeswoman Ginger Reeder and Michael Boyd, a spokesman at Nordstrom, said executives were unavailable for comment.“Even places like Saks that you don’t think would need to have sales — because people will come no matter what — they are,” said Amy Yglesias, a 19-year-old college student who bought jeans at a 60 percent discount at the Manhattan store. “Everywhere is hurting.”To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

mkts are turning green

Why This Housing Bust Is Worst Ever: The American Dream EndsPosted Jul 09, 2008 11:23am EDT by Aaron Task in Investing, Newsmakers, RecessionRelated: PHM, KBH, LEN, TOL, XLBThe current housing downturn isn’t over and is "much much worse" than past downturns, says Barbara Corcoran, who built The Corcoran Group into a multi-billion firm during the real estate busts of the mid-1970s, 1980s and early 1990s.This downturn is "grossly different" than those past cycles because homeowners are much more willing to "walk away" from homes, says Corcoran, who sold her namesake firm in 2001 for a reported $66 million and is now an author and widely cited real estate guru.Just a few foreclosures – which Treasury Secretary Paulson says are unavoidable – can "put a pall on an entire neighborhood" by putting downward pressure on all local prices, she says.The good news is that there’s a "Macy’s Day sale" in housing right now and buyers are starting to step in. But there aren’t enough "brave souls" to stem the decline which Corcoran says will take prices down another 5%-to-10% nationally and end next Spring – in a best case scenarioCHECK THE VIDEO LINK BELOWhttp://finance.yahoo.com/tech-ticker/article/37383/Why-This-Housing-Bust-Is-Worst-Ever-The-American-Dream-Ends

In the above post, I meant to ask is it going to be deflation or hyperinflation/inflation? Or as someone said it will be a hyper-inflationary depression.

Thank you very much for your comments AfA. I like the statement"Most people fail to see that inflation is deflational and that deflation cannot exist without inflation."Can I seek further clarification if you don’t mind.Since assets (read real estate and other important but non essential assets) seem to be undergoing deflation (which many have argued is the reason why inflation techniques of the FED may not succeed; that deflation is occurring faster than the FED can inflate) coupled with stagnated wages, with some even going down, will result in deflation overall, while on the other side of the coin, are SWF’s and FCB’s that may not be willing or able to hold Dollars any longer. If they choose not holding new dollars any more or horror, dumping some or all of their dollar holdings, will this not lead to inflation even hyperinflation?So I am looking at the process and the eventual end result. SWF’s and FCB’s may not be able to continue to hold Dollars (is this a plausible statement?) If true, then will not what is written by the guys at international forecaster be true?

Price inflation vs monetary inflation?Prices are inflating now on some goods due to higher commodity costs, while I would argue that money destruction (deflation) is taking place. Before the housing bust we had monetary inflation but price deflation due to BWII and cheap asian imports.

Breaking NEWS! Fannie, Freddie insolvent, Poole tells Bloomberg With this headline, I thought we should expect like 1,000 points plunge in Dow Jones today, but the future seem up a little. Did everyone on wall street already price in the bankruptcy of Fannie and Freddie??? http://biz.yahoo.com/rb/080710/fanniemae_freediemac_poole.html (Reuters) – Mortgage lenders Fannie Mae (NYSE:FNM – News) and Freddie Mac (NYSE:FRE – News) are "insolvent" and may need a U.S. government bailout, former St. Louis Federal Reserve President William Poole was quoted as saying in an interview with Bloomberg. "Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer," Poole was quoted as saying in an interview held on Wednesday. Chances are increasing that the government may need to bail out the two mortgage companies, Poole was quoted as saying. Shares of the two companies have taken a beating recently on worries about whether they can withstand more losses and support housing as well as concerns that they may need to raise massive amounts of new capital. Freddie Mac shares tumbled 23.8 percent to $10.26 on the New York Stock Exchange on Wednesday, while Fannie Mae shares sank 13.1 percent to $15.31. Poole could not be immediately reached for comment. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Mike Miller)

Here comes the orchestrated power grab!!!10:00 a.m.Paulson, Bernanke ask for new powers to watch over markets 10:00 a.m. [FNM] Paulson: Fannie and Freddie are adequately capitalized10:00 a.m. [FNM] Paulson: Rules governing financial markets are ‘outdated’9:59 a.m. [FNM] Bernanke asks Congress for new powers over payment system9:59 a.m. [FNM] Bernanke: Investment firms need stronger federal oversight9:59 a.m. [FNM] Bernanke: Market crisis ‘ongoing,’makes no prediction on end9:59 a.m. [FNM] Bernanke asks for new law to help close troubled brokerages

Time for me to eat my words. It now appears there will be no sizable rally on the DOW this week. My apologies for taking up space.@ Guest on 2008-07-09 21:55:00It would take at least a 75 % majority for anything other than a republican to be appointed POTUS

LEH in vritual freefall now, down 16% to new 52 week low. Watch the mutual fund selling take over when she drops below $10!

Re : CNBC interview.My how things have changed. From all the doubting Thomas’s over a year ago, it appears on this interview that everyone is hanging on Dr Roubini’s every word, and no one appears to be questioning his views now. A very straight forward matter of fact interview.Very interesting comments from posters above re whether the strategy of the Financials to allow or even collaborate with theFed to inflate, even at risk of diluting out their assets, vs the last survivor strategy whereby they buy up all the assets at firesale prices and extend their control. If their debts are based on adjustable interest rates, inflation may not work, but if the Financials have offloaded most of the toxic waste to others, then they indeed might survive an hyper inflationary scenario quite nicely.

In my dreams(nightmares) I see the images of a Sadam- like trial with Bernanke, Paulson, Greenspan and other bankers in the box of accused…

11:37 a.m.Paulson says U.S. wants a strong dollarLOLOL, they are trying hard to rally stocks on all these Paulson lies but it is just not working!

World war 3 coming ot a global theatre near you…Iran test-fires a second round of missiles with "special capabilities" in Persian Gulf- Secretary of State warns Tehran

To those who doubt market manipulation, think about this:Fannie and Freddie are the 2 largest mortage holders in the US and both have now been called "insolvent" by a former Fed official. The market, despite this horrifying news, is still not reacting much. Why? How is it that Fannie and Freddie going bust – right in the open, mind you – is not causing a serious decline in the market?I think we see, as soon as tomorrow or Monday some serious intervention from the Fed and perhaps Congress to save and restructure these 2 GSE’s as their fate is now sealed. These are the 2 real entities who are too big to fail. That knot in my gut keeps twisting. I am not liking the thought of the next several years. The only thing that makes me feel a little better is that at least Bush / Cheney won’t be at the wheel.

Rumors that Pimco was pulling money from the bank helped send shares of Lehman as low as $15.40 on Thursday amid fresh credit fears in the market, but the stock recovered somewhat and was off about 10% to $17.78 at last check. Pimco spokesman Mark Porterfield declined to provide any additional information. A spokesman for Lehman declined to comment.

By AMY TEIBEL, Associated Press Writer 24 minutes agoJERUSALEM – Israel’s defense minister hinted Thursday that Israel was ready to attack Iran’s nuclear program, saying it didn’t balk before "when its vital security interests" were at stake.

Stocks off to the highs of the day-see, ya’ll worry about nothing!

So when do Phonie and Fraudy become national archives?

when they’re completely capital-iced…

Faced with soaring inflation, Cambodian authorities have stopped publishing its CPI figures. San Sithan, Director General of the National Institute of Statistics, recently told The Phnom Penh Post that publication of the CPI has been halted to avert the possibility of "disorder and turmoil."

@Medic 10:52:14>…at least Bush / Cheney won’t be at the wheel.Three cheers and a hip-hip hurray for that! SWK

Fannie, Freddie `Insolvent’ After Losses, Poole Sayshttp://www.bloomberg.com/apps/news?pid=20601103&sid=a7NPAG.LEjHQ&refer=us…"I worry about those institutions," retired Richmond Fed President Alfred Broaddus said. "They are huge. They dwarf the Bear Stearns issue. In the very worst case scenario, I don’t know how you do it other than extend money and the public takes the loss."…hmmm…looks like U.S. may well be in the sort of du-du from where the only outlet is to nationalize the banks. And their sister country (or mother country, if you will) might end up in the same. So would theny nationalize? Hardly likely, unless every other western country does the same. It would simply look too bad otherwise.U.S. is in this trouble because of 3 issues that happen to exist simultaneously:-the emergence of China as a major industrial power-the introduction of the Euro-the so-called "subprime" crisisPerhaps the constant drainage of funds to war and so-called defense should be added to this.In any case, because of these factors, the problem will likely continue only to one direction. Which means that US will eventually face nationalization as the only option. And since they are unlikely to nationalize alone, they will push for some sort of global "nationalization solution".

Markets going verticle….

who is Bernanke having lunch with today ? Whoever is going to buy Lehman over the weekend. Will that be a BULLISH story Monday. Another investment bank going the way of the dinosaur via acquisition. Give me an f ing break already. The sheeple actually have brains that are capable of processing information. They are not monkeys. Perhaps, TBTB shall try their spin on monkeys at the zoo to get their confidence back…

I am very astonished about the fact that in the last 10 month or so the "sheeple" were not also the most Pension fund, SIV and hedge fund managers.Seems that even a real Sheep can run these funds (maybe better)Are they realy so dumb to believe in Bernanke&co?

2:43 p.m. Fannie, Freddie shares plunge as bailout talks intensify

Capone: "you won’t even let me give credit to people thinking above the4 level of monkeys ?"As far as economics is concerned mokeys might very well think better than most people. Ever heard a monkey buying a CDO? BTW: your stock crash PUTs look increasingly promising, no?

outside of the pins shaking loose on the pillars of the US housing and banking/ financial system – FRE and FNM, LEH down 18%, oil up 4%, Iran potentially lobbing missiles around like baseballs, all while major indices are already at new lows, the overall market is healthy DOW down 27 points. for one minute there this picture was looking a little scary… i am such a fool

2:58 p.m.Crude jumps to above $141 on concerns over Nigeria, Iran

PPT! PPT! PPT! All green again! this is criminal!

July 10, 2010: Crude jumps to above $541 on concerns over Nigeria, Iran

headed back to the highs of the day…

Nice 100 point rally in th elast 15 minutes of trade ;^)

@CaponeI feel your pain. I posinioned my peanuts way too early in april, and sat tight all the april/may rally with only two positions blowing away. With hindsight, almost all positions would have been great and I could have enjoyed a wild ride all the way down, but… I sold most of the stuff way too early expecting a bounce and didn’t roll over some some puts that I knew I should have.I’m playing this rigged market because I want to learn, so well, I learned to sit tight when the market goes against me.

Yesterday’s rise in oil drilled stocks. Today’s $5.60 rise to back above $141/brl did nothing to stocks. In fact, they rallied to close near the high of the day. What the hell gives?

just an fyi if everything goes nuts herehttp://www.google.com/search?sourceid=navclient&ie=UTF-8&rls=GGIC,GGIC:2006-46,GGIC:en&q=rex+84

"It’s called the American Dream becauseyou have to be asleep to believe in it".George Carlin (1937 – 2008)

LEH, C, FNM, FREWhat’s the big deal?Why can’t the brokers just use the window to buy agency paper and hold it until the deal is done? Simple, it’s free money, right?No problem, the taxpayers will take care of itWhat’s on T.V. tonight?

@ AnonymousWe’re number one!

Who is going to save us?Last night I had a strange dream. In my dream, there was a military coup in Washington DC.It was a fuzzy dream, and as I pondered it throughout the day I realized that while my initial reaction was fear and repulsion, what other entity is capable of throwing the pig-men out of office and ridding our institutions of the poison of corporatocracy and the money cartel?I’ve heard lots of reports that top generals are disgusted with the politicians, disgusted with the endless wars that they did not sign up for. At some point they will be pushed to far. It pains me to say this, but perhaps what we need in this country is a good old fashioned military coup, reclaiming the American government for the people. Coup – purge – elections – military steps down. What greater service could a group of true patriots possibly provide?Nobody else can pull it off, and I don’t see the American people getting off their asses anytime soon . . .

@Derrick: “From what I experience in Asia, I can tell you how terrible is the globalization. In China, they are facing a lot of pressure, housing market slumped at least 40% from the peak and the equity market fell more than 50% from the peak in the last 6 months. People are panic and market is really bad, but I believe the worst is in front of us… I think the US economy will come to the worst in 1H09… Asia will experience all the effect in 2H09 due to the delay effect. After that…global recession.”Here it is, folks: first-hand, ongoing confirmation that Roubini’s economic storm warnings for a “severe recession in the US and other advanced economies,” has hit – hard – with “serious global growth slowdown and a systemic financial crisis…” Good luck to you, Derrick. All: “Fasten your seat belts.” As Roubini says, we’re on “a bumpy ride for the US and the global economy and for financial markets,” and “the worst is ahead of us rather than behind…”

OK. Now I’m starting to get a bit more concerned. I would welcome thoughts and input from the others here, as LB puts it, in our "sandbox". In the past 2 years, I have come to feel as though I trust and rely on all of your thoughts about what is next. Time for another round of "Here’s what I think". LB, Rich H., OR, Pete CA, Capone, Gloomy, Giraf: I want to know what’s going through your heads tonight.Medic

tutterfrut on 2008-07-10 11:20:43FOFLMAO

@ Guest: “Paulson: Fannie and Freddie are adequately capitalized.”Mission accomplished!

So many unforseen aspects to the decline and fall. From the UK Guardian:The Vatican has blamed a weak dollar for pushing it into its first loss in four years by undermining the value of dollar-denominated donations by the faithful.Annual accounts published this week show the Holy See fell into the red last year, recording a loss of €9.1m (£7.25m).The US currency has fallen sharply against the euro since the start of last year, hitting the Holy See in the pocket as its expenses are incurred in euros. Much of the Vatican’s income comes from donations by Catholics around the world. The US was the largest single contributor to Peter’s Pence – the collection used by the Pope for charitable donations – sending almost $19m (£9.5m).But the shortfall attributed mainly to the weak dollar was mitigated by a rise of €4m in property income. The Holy See is a major owner of property all over Rome and was criticised last year for raising rents and threatening to evict tenants.Earlier this year, the Vatican released a new list of mortal sins which included "accumulating excessive wealth". ***Can this last action be sour grapes of wrath?

@ Guest 2008-07-10 17:31:20As I’ve said before (and let me repeat), yes, we’re knee deep in political problems at the moment, not the least of which puts our state military and economic control in the hands of corruptible ruling elites. But I believe these problems are fast becoming unacceptable to people of industry and goodwill who know they must be solved for our way-of-life to survive. And so THEY WILL BE SOLVED. Freedom of action, coupled with representative government rather than controlling government, and renewed emphasis on a moral, contract society can be contagious again if our self-serving rulers, who feed off the labors of the people, are pushed aside.Ironically, greater freedom not only is the solution for our political and policy problems, it’s also the fixer for our so-called “fixed” quantities of resources. Coal and oil are fixed resources, but not energy. Automobiles are becoming a fixed transportation resource, but not transportation. Because our future resources are unknown, it does not mean they don’t exist.Sigh, it’s just not sinking in… Energy IS a fixed resource! If something is not infinite then it’s fixed! Sure, energy cannot be created or destroyed, BUT, it CAN be dispersed to such an extent that rounding it back up requires increasingly more energy (decaying EROEI): one need only look at the energy density differences between oil and tar sands to see this principle/fact. ALL our existing energy is derived from concentrations of solar energy. Depletion of concentrated sources is rapidly picking up pace. Once we’ve blown the wad we’ll be faced with pushing toward a future in which daily energy use more closely resembles the incoming daily energy from the sun. And while this is happening our popluation increases; can you say decreasing per-capita energy consumption?Hope isn’t a very good management tool to use in the face of all this.I’ll once again refer folks to watch the Dr. Albert Bartlett presentation. IF you can poke holes in it then I’m willing to consider what you have to say, otherwise you’re facing a showdown with empty weapons and hope for ammo…About the problem with the horse population, the automobile was touted as being an environmental improvement! With shortages in petro-chemical based fertilizers it’s becoming quite apparent how wrong this has all turned out: horses good, automobiles bad…In the past I’ve debunked the moon shot for what it is/was, something of little benefit and of short duration. Just ask the 2/3rds of the world’s population that lives on $3 or less a day.Mark

Medic on 2008-07-10 19:16:31 – I want to know what’s going through your heads tonight.Allow me, if I may, to share my opinion through Dr. Williams:JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS, FLASH UPDATE, July 10, 2008, http://www.shadowstats.com/article/326As the severity of the current downturn has gained broader recognition, some in the deflationist camp are starting to argue that the underlying fundamentals driving the economy into the ground also will lead to lower prices, actually triggering a deflation. Quite to the contrary, despite deteriorating economic and financial conditions, my outlook remains for rising inflation into 2009 and for a situation that eventually will evolve into a hyperinflationary great depression, as outlined in the April 8th Hyperinflation Special Report.As you probably know, he opened up that report to the public: http://www.shadowstats.com/article/292 and it’s well worth a re-read.Because of fair use restrictions on copyright, I cannot post much more, but Williams goes on in detail to offer rationale that we have not seen true deflation since the Great Depression (which means to me that we will probably see, after the projected hyper-inflation, true deflation).He then reviews the the ole M x V = P x Q equation and converts it to P = (M x V)/Q to show how significant velocity is in projecting inflation. After a detailed discusson explaining how there is not enough quality data to compute inflation, he describes his "practical" inflation measure.Although M3 growth has stalled in recent week-to-week and month-to-month reporting, a similar pattern was seen last year, and year-to-year change appears to be holding at about 15.9% as of the June 2008 average. That signals a highly inflationary environment moving into early 2009.Then he warns that next week we will be presented with economic releases for the month of June which will show upside for inflation and on the downside for business activity. PPI will show monthly gain of 1.3% and the CPI show a monthly gains of 0.7%. The CPI-U for June will push the annual inflation rate to about 4.6% and, thus, the real 30-year Treasury-bond yield to negative. Such an annual inflation result would be just shy of the last near-term peak in official inflation reporting of 4.7%, seen in September 2005, and within a hair’s breadth of hitting a 17-year high.As for my thoughts, in one sense we are totally screwed with a total GDP loss of at least 25%. It will be absolute misery for some and a hardship for all. On the other hand, I think it will be a great character building experience for the whole country. For those who can adapt, there will be just as many business opportunities as before, just on a smaller scale. So all in all I have mixed feelings. I still hope that the Fed will stop before we enter hyperinflation, but if not, I will be prepared as best I can be. Meanwhile, I will be looking for other business ideas as they pop up.

ptm:Thank you. I can often get caught and forget that some smart and savvy people actually made money during the GD. As for the character building experience – while I would rather not have to go through it, I at least feel like we will survive it. Too many years in the back of an ambulance – my wife says I change gears and directions faster than anyone. I hope she’s right. Damn. This sucks.

Guys, it seems like we need to take a collective powder, and re-group. Bad as things seem to be, it’s useful for us to keep in mind what we’ve got going for us that isn’t about to change. Number one: the U.S. landmass is inundated with energy every day from the sun – to the tune of at least 100K times our entire daily energy consumption, all sources, all uses. If you doubt my math, I’ll post it for you, including sources.Yes, solar is relatively weak, dispersed energy. However, our consumption is also dispersed, and the supply/demand dispersion patterns are very …similar! Now, if humanity can’t figure out how to collect one unit out of every 100 thousand of them that goes by, I’ll eat my hat. This is *not* a physics or even an engineering problem anymore. It’s an awareness-and-will problem.Secondly, let’s review the "take care of basics" situation here in the U.S. This country is awash in food. It has too many houses. It has a fully developed road, power, and communications infrastructure. It has a fully trained workforce. A railroad train can carry a ton of food 400 miles on one gallon of gas. What the U.S. doesn’t currently have is proper resource allocation (energy, economic, foreign policy) and that will change very quickly, as soon as certain people pull their heads…out of the sand. This posture correction is now imminent.So relax. You can’t change the battleship’s vector much, no matter how much fretting you do. How about re-directing that intellectual energy toward something productive.What are the sectors of the U.S. economy that will require investment of money and effort and thinking in order to rebuild our economy, and stabilize our reducing standard of living at an acceptable, tolerable, sustainable level?"stockpiling pellets for the stove", while it’s a good idea in the short run, is not the answer I’m hoping for . I’m looking for something like "advanced thermal materials that dramatically reduce heat loss from homes" or "how to bring the work to the worker instead of bringing the worker to the work" (why? big chunk of oil goes to power commuter cars).Yes, we are near a fundamental rules change in our economic and political world. A day, a week, a quarter or a year, it’s just about here. That means there’s no time like the present to start thinking about what the new rules are going to be like, and how you plan to relate to life in the next phase of the adventure.

@Softwarengineer on 2008-07-10 12:25:20Ohhh, some blogger mentioned political choice to fix the economy. Let’s see, we have Bernanke [i.e., Greenspan] under Bush or Obama or Mccain…..what difference will it make?I would say the same thing. IMO, Americans might as well stop voting altogether, because:You get about the same options considering future warfare with Iraq and IranYou get the same end results (just different excuses) considering increased surveillanceThey will both have some non-solution to the economical situationAs far as McCain is concerned, he should be asked about who his VP is going to be. Just in case he chooses Cheney, people should be prepared.

Growth assumes continual expansion of somethingnot really. growth within capitalism contains the unstated ‘assumption’ of overproduction and overaccumulation, conditions which transform expanded reproduction of the system into stagnation and contracting reproduction from which a new phase of growth can emerge. in effect the system lives by dying and dies to live, which are not symmetries but take form as cycles within long waves within a long curve.

@J. what are your thoughts on the effect of the Fed taking in all of the garbage debt as collateral at the window ? This is debt placed in a state of limbo indefinitely and arguably has added debt by exchanging it for their required liquidity ? Garbage in to Fed with new money sent out…

Phonie and Fraudy. Can’t do any better than that!!

y 10 (Bloomberg) — U.S. officials are considering plans to take over one or both of the nation’s largest mortgage finance companies, Fannie Mae and Freddie Mac, if they continue to deteriorate, the New York Times reported.The government is discussing placing them in a conservatorship, under which the companies’ shares would be worth little or nothing and losses on mortgage holdings would be covered by taxpayers, the Times said, citing unidentified officials briefed on the matter. Their shares are plunging and their borrowing costs are rising as investors worry the companies will suffer losses larger than the $11 billion they have lost in recent months, the Times said.The Bush administration is also considering offering an explicit government guarantee on the $5 trillion debt owned or guaranteed by the companies, the Times said. Such an option is less likely because it would double the public debt, the newspaper said.Still, Fannie and Freddie aren’t considered to be in a crisis, and no action is imminent, the officials told the Times.To contact the reporter on this story: Joseph Galante in San Francisco at jgalante3@bloomberg.net INSAHALAH WASHINGTON MUTUAL WILL BE NEXT ON LINEGO BABY GO BABY GO GO DONT WORRY JUST RELIEF YOUR SELF MAJOR BOWEL MOWEMENT

@AfAThanks. Let me see if I get this straight. If there is no default, we get hyperinflation. Is there any other option other than hyperinflation? OTO, If we default, we get a depression. This direct depression due to a default, will be brought about due to the destruction of the Dollar. Is this a correct statement? Also, as a noob can I assume that this depression will be through deflationary forces. How do you see this second part playing out (minus 3 ww that is)

Medic: On the bright side … gold is looking stronger each day.On the bad side … I fully expected the counry to reach a point where the topic of nationalizing Fannie and Freddie would be openly discussed. In fact, I expected it this year. But did NOT expect this thing to fall apart so fast that it’s already a major topic in early July! By the middle of the year we’re already in a situation where more major investment banks are heading towards trouble (Lehamn, Citigroup, and maybe more), several large banks are closing in on bankruptcy (IndyMac, Wamu, Wachovia, and some banks based in Atlanta), and both GM and Ford are also teetering on bankruptcy. This situation speaks for itself. We are way past the stage of "putting lipstick on a pig".I am noticing some new trends amongst financial commentators that I have never seen before. Let’s face it – we expect to see some major pessimism in the markets. After all, both the Dow and the S&P500 have entered real bear market territory. But this is the first time I have seen the following types of financial commentary:* Some experienced (and highly respected) analysts now refuse to give predictions or trends for the next couple of years. The issue isn’t that they are incompetent, or that they’ve lost their cool. The issue that they honestly don’t KNOW where this market is heading now. That IS different. We’re talking about people who have seen downturns and recessions before.* A small – but increasing – number of commentators are calling for a completely financial different change. Not simply recession or depression per se. They’re talking about the crumbling of the American empire. These are not idle speculations – which have been around a long time. These are serious calls that it’s coming now – in the near future. Clearly we’re talking about the breakup on the US dollar as the world’s reserve currency … but this seems to also be linked to expectations for major political change as well.I don’t know how investors will react to these developments. It’s a dead certainy that any investors reading these commentaries are lilely to be pretty scared or confused. But how exactly they will react remains to be seen.PeteCA

@Capone, i see it as the fed’s internalizing of perhaps questionable assets in the attempt to buy time for those institutions taking advantage of the facilities and, more broadly, the financial system as a whole. i’m not so sure that the process has generated net creation of new credit money but do think that it weakens the fed.

@ Medic and othersThe safest bet is always with the trend as long as there is nothing big pointing to a turn in events. On this basis I expect the following:a) More of a police/surveillance state: The US already has 1 percent of its population in prison, a huge military-intelligence-police-security industry that is dominant in both manufacturing and services, and a trend of progressive erosion of those rights you get taught to cherish in civics class and encouraged to trade for security on the nightly news. These people are not and never have been over-scrupulous about creating causes for more prisons and more wars (War on Drugs, War on Terror) as needed to justify using the state against the people in America and overseas and support profit margins.b) Higher inflation for all the stuff you really need: credit, oil, utilities, media, communications, medical care – all the areas of the economy most closely controlled by the small set of elites propping up the current administration and paying off your Congressmen. America stopped being a representative democracy a while ago, and now you just get to vote as a form of marketing for an elite-owned and operated government. Everything they don’t directly control will suffer deflation as over-supply leads to slashing of prices as consumers are squeezed and increasingly unemployed. Penalties for non-payment or non-compliance or civic disobedience will create more enforcement-security opportunities for the police-security complex.c) Civil disobedience: Americans may be easily duped, but they are also easily angered and heavily armed. There will be more incidents of civil disobedience, both peaceful and confrontational. If the patterns of earlier, similar eras hold true – and indeed the patterns of the War on Terror – the FBI will infiltrate peaceful groups to encourage violence to justify state repression. It is noteworthy that every terrorist plot busted since 9/11 with great fanfare by US authorities involved an infiltrator who was a chief proponent of all organised violence and supplied materials.d) Reorganisation of government and regulation to protect elites: Bernanke and Geithner have been planning the fraud they are now pulling for years, just as illegal wiretapping, invasion of Iraq and the Patriot Act were drafted before 9/11. They have very well defined objectives that they are not sharing with you, and they plan to use the chaos and fear to exert "leadership" that favours their preferred outcomes. e) All Americans "savings" in homes and stocks are increasingly worthless: Equity will be trashed and then ownership and control will be transferred to even fewer hands. All those pension plans and 401k plans were a great fraud and Ponzi scheme, but ownership and control was never meant to be shared with mere workers.f) America will use deflation and economic chaos in the developing world to push its agenda for "open markets" and "less government" (precisely what it will not permit at home). As China and India implode, for example, watch as the US pushes for greater liberalisation as the "cure". There will likely be more engineered justifications for war in resource rich countries, with recent events in Columbia signalling to me that TPTB plan on reigniting efforts against Venezueal and reversing anti-Washington trends in the region.That all said, I am an optimist. I believe in the power of people to self-organise and promote their collective self-interest. There will be a messy, dangerous, possibly violent era while we are reminded of why our forebearers fought so hard for property rights and political rights. And then we will start improving things again. Like cockroaches and rats, TPTB thrive on darkness and clutter. As the economy slims and the middle classes realise that they have been duped, they will declutter and shine lights and fight back against the infestation.Looking at the longer trend of man’s achievements over the past century and millenium, one can only be an optimist.

the only escape is through perceptionlet the fat controllers inherit their bankrupt worldso……see you on the other sidegood luck to all

@ Ponder,Ok, take the story of Little Red Riding Hood (petit capushon rouge) for example. The wolf asked her where were she going. When she told him, the wolf took the short way there, swallowed the grandmother, put on her clothes, and climbed into her bed to wait for Capushon Rouge. When she arrived home, she thought that was her grandma and exclaimed “Grandmother, what big eyes you have!” “The better to see you with, my child,” says the wolf. “Grandmother, what big teeth you have!” remarks the girl. “The better to eat you with!” replies the wolf, who then devours Little Red Riding Hood.We may argue who is the wolf in this story. I think that the wolf is "deflation" (that is deprecession). The grandmother is (hyper)inflation and the nasty and imprudent red, hooded cloak-wearing girl who talks to strangers is us (or US). Why didn’t the wolf try to eat her while she was on her way to her grandmother’s house in the middle of the woods where nobody would have seen him? Instead, he waited. In the story, he didn’t because otherwise it would have been a boring and not funny one, but the wolf would have eaten her anyways.All cases leads to (dep)recession (that is generalized deflation), the only question is whether it will eat us straight when it meets us (default) or it will be disguised in grandmother’s clothes (stagflation) before eating us (depression).IMO, "If there is no default, we get hyperinflation" – because of monetization of debt – then depression (generalized deflation). With a default, we get get only depression (deflation) without hyperinflation (all debt will be wiped so it cannot be re-inflated).J. is technically right, debt is not the same thing as paper money, not until it is monetized, so the question about inflation is whether debt will be monetized or defaulted on (there is no way the debt can be paid back). J.’s argument is a typical one for no inflation camp. However, I still see it as inflationary from an opportunity cost point of view. If the fed did not swap half of its balance sheet to banks in exchange of treasuries. Assume the amount of exchanged $40b worth of worthless paper. If they kept them on their balance sheets, they wouldn’t have been able to lend against them and would have been obliged to write down a percentage on them (that is deflation, say 5%). Instead, now banks have $40b worth of treasuries which they can lend on margin, sell and bid up prices on commodity markets (resulting in an impossible inflation otherwise say 5%). At this point, it doesn’t matter yet if the garbage get monetized or not, the "marginal" net inflationary effect is already happening. IMHO

@J. on 2008-07-11 01:15:34Thank you for your patience and responses. A lot of what you wrote went over my head but I think I grasp the gist of it. Let me display my ignorance. It is the only way I will learn. I think that you are saying paper money is different because you can print it ad infinitum (unless you run out of paper) while OTO we have money created through debt which has to reach a limit because it depends on the real economy.I think I have also pieced some of the other stuff together because of @AfA help. That, if this debt is monetized then we have similar sort of outcome as paper money. (which is what I was alluding to albeit rather ineloquently)@AfAThank you for clarifying. We shall have a depression is what I gather you are saying. I agree. That the path taken will depend on the actions taken by the TPTB. Hyperinflation or Deflation. One last question, could you confirm to me that either way, the dollar is toast.

I am finding all this talk of hyperinflation somewhat difficult to digest. Apart from food and energy prices, which are high, the price of everything else seems to be dropping, I presume, due to depressed consumer demand. For example, since at least January of this year, I’ve been receiving (and generally ignoring) e-mails almost daily from JC Penny regarding 50%, 60%, and 70% savings on virtually everything in the store. Spending money unnecessarily makes my Scottish blood boil, but recognizing that I was beginning to wear out all of my underwear and socks, I decided to drop into JC Penny and replenish my supplies. I wound up walking out with $750 worth of clothes that originally would have cost me $2,000 or more, e.g., a sports coat originally priced at $250 marked down to $65. Now, perhaps once all of the existing stock of imported goods in stores like JC Penny has been exhausted, prices will skyrocket because of continued devaluation of the dollar relative to the currencies of the countries in which these goods are produced, but right now, deflation seems to be the overarching trend. I figure I’d better take advantage of it while I still have some ability to spend…SWK

The expansion of the money/credit supply has already happened with regards to Fed Reserve Notes – and other bank notes. It has happened for 39 years ever since the Fed had their notes achieve the status of the world’s reserve currency. It used to be that either gold, gold certificates, or Treasury debt had to be collateral. That has changed since and even more recently.If the credit was expanded without the corresponding debt – which doesn’t have to happen but did based on the system – it has to be serviced (referencing fractional reserve lending). Obviously credit implies debt, but the more dangerous factor is credit created with very little – if any – reserves. When it can’t be serviced, it defaults. A significant amount of credit has flowed to stocks, bonds, and real estate. They aren’t counted in official "inflation" numbers. That doesn’t mean the credit/money wasn’t expanded. It most cerainly was. Take a look at bond, stock, and real estate prices. Yes, I’d say there was a lot of expansion.Now what happens? Well, that credit flowed to those assets (stocks, bonds, and real estate), and now those assets are falling in price. If they were the original basis for the monetary base, that can’t be good. Even though the credit/money is leaving stocks, bonds, and real estate, that doesn’t mean that it can’t flow to other tangibles prior to defaulting. How big are commodity markets compared to stocks, bonds, and real estate? I don’t know for sure, but apparently not nearly as large. Plus, apparently not a lot of folks have seen commodities as assets in relation to stocks, bonds, or real estate. Why not? It gets back to what is money and impacts of legilative power as detailed by Adam Smith. Figure out what money is, and these events are much easier to understand. If you don’t understand the difference between money, capital, savings, investment, debt, speculation, then the comments from experts won’t make any sense. Money is a medium of exchange. Capital – in the classical sense – is a factor of future production. Savings is the difference between consumption and production. Investment is an expansion of capital. Debt is an obligation, while speculation is buying based on the expectation of future price. People today – some referred to as experts – use these terms interchangeably quite often. Whether intentional or not, it eventually leads to these dilemmas.With a debt based monetary system, you can’t let deflation take hold. However, if you’ve let the expansion run wild into assets that aren’t calculated in "inflation" numbers, at some point, there is no good option. You’ll be left with rates so low you are paying people to take money. However, they are so indebted, they can’t take any more since they have no way to pay it off. Can I raise rates to encourage savings? Not with the massive debt levels. It will crush the debtor and lead to one of the things you can’t have – deflation. There lies the dilemma of the Fed. What can they do? Talk a lot. Nothing more, nothing less. That isn’t intended to be flippant. That is all they can do, overtly at least.

Fraudy and Phony down 35% and 25% in pre-market…Good to know everybody agrees on a STRONG dollar!

@kilgores on 2008-07-11 05:31:17Your right about the retail scene. But I might do what you just did 2 or 3 times a year. Maybe $1500 total and I pick my spots to get the best value. Meanwhile I pay for food and energy every day without picking my spots. My vacation will be closer to home than usual. No chance of going to Canada or Europe: their prices are outrageous! It will be the Adirondacks, New Orleans and Vegas this year.

@Ponderread carefully Kerk comment, it states exactly the base concepts that you have to have clear in order to get a grasp of finance matters. Most of the bla bla on the MSM and on the internet is crap. Keep the focus on the fundamentals.And forget about hyper-inflation, should the Chinese dump all the US dollads tomorrow you would have a dramatic currency crisis, but not one bit of hyper-inflation. The only way to get hyper-inflation is by increase massively the state debt by means of the FED buying it with open market operations. Forget the FFR, that can only expand debt (producing mild to high inflation) and only if you find someone stupid enough to extend credit or load up in debt during the hard times!@Kerkexcellent post, thanks.

@ Prt1stAskQLater 07:37:48Thanks. You may be right, but I will need not only food and shelter, but also clothes for the next few years. In any event, although I can’t eat a sports coat, I can certainly barter it for food to someone who didn’t buy clothes in advance. I think lawyers managed to get by fairly well in the 1930s, but just in case, I have a back-up plan. Several years ago, a client who was short on funds to pay his attorneys’ fees gave me a $3,500 hand-made German monkey grinder organ. As it happens, I also have three boys at home. All I need now are three red bellhop caps and three tin cups, and I’m in business! SWK

If there were to be an official announcement today of government back-up/take over of one or both of the ‘American Dream machines’, Fancy and or Schreky, they better line up a international battery of ‘analysts tobuy everyone into the ‘strong’ dollar.

@AfAdiverting energy from its original source/form is probably to be done at the expense of other forms of resources/energy or natural equilibrium.Thank you for bringing this up! This is a very important point. People must keep in mind that entropy is a very powerful force.I’ll also give Kerk a gold star for his excellent post Now, add all this up and tell me that growth is still possible. Nope. Commodities to continue to head toward the sun…Mark

Nice little 1.5% drop on DOW, S&P and NASDAQ to start this beautiful Friday morning. Just remember: Every day ABOVE GROUND is a GREAT DAY!SWK

Markets are forcing the powers that be to end all of this, one way or another, get it over and end the obfuscation! Interestingly, market intervention is already apparent this a.m., S$P 500 SHOULD be down over 46 points right now, it is down only 18…

Freddie and Fannie were down about 44% and 41%, respectively, as of 9:42 a.m., but somebody (guess who?) seems to be buying them up now and driving the loss percentage down by the second.Gee, maybe the Mr. Paulson has decided to make an early investment…SWK

Alarmed by the growing financial stress at the nation’s two largest mortgage finances companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday.The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis. Their shares are plummeting and their borrowing costs are rising as investors worry that the companies will suffer losses far larger than the $11 billion they have already lost in recent months. Now, as housing prices decline further and foreclosures grow, the markets are worried that Fannie and Freddie themselves may default on their debt.Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers.The government officials said that the administration had also considered calling for legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. But that is a far less attractive option, they said, because it would effectively double the size of the public debt."Bloomberg adds: "The government-chartered companies, which own or guarantee about half the $12 trillion of U.S. mortgages, can count on a federal lifeline, said Republican Senator John McCain, of Arizona, and Democratic Senator Charles Schumer, of New York.The remarks by the presumptive Republican presidential candidate and the head of the congressional Joint Economic Committee followed a slide in the firms’ shares to the lowest level since 1991. They indicate Congress would push the administration to use government funds to prevent the companies from failing and threatening a deeper housing recession."

Please no, we are gonna have Paulson again with a statement on Fafanie and Frefreddy…

DEAR PROFESSOR RUBINI THIS IS NOT A HARD LANDING BUT A CRASH LANDING. YOU WERE TO OPTIMISTIC

July consumer confidence 56.6. Huh?

@ Guest 08:44:01Be careful. It was Iraqi airspace, NOT Iranian airspace…SWK

I think Paulson is going to surprise with demanding the rebate checks to be paid back before the end of the 3rd quarter with a 300% interest added…

Kilgore, sorry but that is what I saw on my news ticker. I guess you are correct that if it was Iran, they would be firing missles if their airspace was violated. Thanks for the correction.

Market to Paulson: WRONG MESSAGE!

Woopee Doopee. Looks like the DOW was down 200 points just a moment ago (10:28 a.m)…SWK

WATCH OUT BELOW IF WE SEE A "10" HANDLE ON THE DOW!!!!!

@ Guest 10:01:22>WATCH OUT BELOW IF WE SEE A "10" HANDLE ON THE DOW!!!!!Only 19.94 points away from that at 11:19 a.m. E.D.T.SWK

The downfall of the US is officially here:DALLAS: What do "black hole," "angel food cake," and "devil’s food cake" have in common?They’re all racist terms, says a Dallas County, Texas, official.A county commissioners’ meeting this week over traffic tickets turned into a tense discussion over race when one commissioner said the county’s collections office was like a certain astronomical phenomenon."It sounds like Central Collections has become a black hole," Commissioner Kenneth Mayfield, who is white, said during the Monday meeting.One black official demanded an apology, and Commissioner John Wiley Price, who also is black, said that type of language is unacceptable.At the meeting, Mayfield said he intended his comments to be taken in the context of the scientific meaning, and became upset that he was being misunderstood.

Bears are trying hardd to break teh 10K level, here goes!!!!

3 point to go…

@ Guest 10:24:20Wasn’t it the Texas Board of Education that was tinkering with the science textbooks, resulting in references to evolution being removed from science textbooks used all over the U.S.?Hmmmm…no big surprise that government leaders in that state might never have heard of the term, "black hole."SWK

Do you think bernanke and paulson are on the phone ordering trading desks to retake 11K???

PROFESSOR ROUBINI THIS IS NOT A U SHAPE OR L SHAPE SITUATION THIS IS A FLAT SHAPE OR A FLAT LINE THE PATIENT IS DECLARED DEATH NO HOPE TO BE REVIVED. GOODBYE USA AND THE REST OF THE WORLD MAY YOU REST IN PEACE.

With yesterday’s retail sales figures, it pushed my Q2 GDP forcast from -.54% to +1.8%. Nice work rebate check guys! This is going to be the only time in US history where we may have an official recession without a contraction in GDP to go along with it, not even 1 negative qtr thanks to uderstated deflators and data mnaipulation.

WOW!–LOOK AT THE RALLY POLICE BUY THIS MESS!!!!!

Interesting, stocks down again with financials down the drain and… yields are up 10 bps across the curve. Where is money flying for safety? Uh! Oil above $146/brl.

Bad news Friday, right on schedule, this week featuring Paulson, oil and Iraq. Next weeks bad news. Asteroid heading for Earth, Bernanke says not to worry the whole world will print enough money to lighten the blow. All is well. go back to your tv’s and beer.

I am not an expert. But isn’t the DJIA computed using some complex weighting factors. Buying a few select stocks by the PPT rather than the entire S&P may give more bang for their buck. I wonder if IBM and MCD have better weights to buoy the market in general. Just a thought. Maybe the experts on this site could elucidate on this better.

Monetarists warn of crunch across Atlantic economieshttp://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/11/cnmoney111.xml&page=2

@ ptm: Airlines letter on oil speculation… "Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices…normal market forces are being dangerously amplified by poorly regulated market speculation…”The open letter from airlines to their customers is very significant. The spike in crude oil prices represents great hardships to truckers, commuters, small businessmen and airline passengers. Many of these people are facing bankruptcy. Scraping one’s budget to buy food is serious business. Losing money, working harder for less pay, and losing your business that you’ve struggled to build over several years is very serious indeed.Only when big business, such as these airline companies, begins to feel injustice do we get demands for reform. “Oil speculators,” the letter reveals, “purchase 66 percent of all oil futures contracts, and that’s just the transactions that are known…a barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab.”That’s serious business.Prices for rice tripled in the space of four months…beginning with India’s decision to hold back substantial tonnage for its own future use rather than put it into export as in previous years.Some economists argue that the way spot crude oil prices have spiked is not at all similar to the rice market pattern. But isn’t the purchaser of an oil futures contract buying oil for his future use? True, he doesn’t expect to take delivery of the oil. But in concert with other speculators, he does mean to make money based on ownership of this property. What’s the difference as far as market price is concerned, from hoarding rice to eat it later or hanging on to rice to sell it later for a profit?The simple concept of an ideal market contract is where buyer and seller both benefit… the buyer gets the product and the seller gets the money; no one else is involved. Not so with oil futures where so much of the world needs a product so desperately and is not involved in its production or marketing.Suppose the world’s drinking water was controlled by private companies? Would trading in water futures contracts be considered an efficient marketing vehicle to make sure water was available at a reasonable price?”If it be admitted that a man, possessing absolute power, may misuse that power by wronging his adversaries, why should a majority not be liable to the same reproach? Men are not apt to change their characters by agglomeration; nor does their patience in the presence of obstacles increase with the consciousness of their strength. And for these reasons I can never willingly invest any number of my fellow creatures with that unlimited authority which I should refuse to any one of them.” Alexis Charles Henri Maurice Clerel de Tocqueville, “Democracy in America”

woops SP 1180-1100.

question for everyone:I KNOW the PPT is intervening in the markets and have been for some time. However, my question is how long can they continue to do this? Doesn’t it take $$ to do this and where are they coming from? Are they in endless supply? If they are printing (which I’ve heard they are not) would that show up somewhere?????????If they can continue this forever, why let the market go down at all? Why not keep it up around 14k to ensure the sheeple stay in a good frame of mind.Any help with this would really be appreciated. Please LB, you seem to have your finger on the pulse and I read every word you put up in earnest.

@Capone on 2008-07-11 13:29:39I agree. If Gold/Silver, why not oil? The PPT and/or their proxies are suppressing the Gold/Silver price. See GATA (Gold Anti-Trust Action committee) for more discussion on this obscene manipulation. All with the blessing of the SEC and CFTC.

@ Capone:"Why can the PPT not influence the relatively MUCH smaller oil market to prevent a spike ?"It is simply not in their best interests. As you said, it might be a bribe for the OPEC countries to keep them buying our crap, ie. treasuries. It is also important for Goldman and co. who, if oil price is suppressed, will not find another place to make money and hide the astronomical losses on their balance sheets. Banks cannot survive once the borrow/lend food chain is broken. If demand for credit stops, they have to create new type of demand.

see the PPT in action? The DOW has climbed over 100 points in a matter for 30 minutes and fre and fnm have almost totally recovered

I might just be a bit slow, but how exactly is this supposed to help an ‘insolvent’ institution?Ah! You mean you just need to keep on pretending until November? Ah! ok then I see.

@tutterfrut: Do you live in Belgium? Where do you work?

LOL! FRE back to -10% as before the FED shot. Did the market really did 1 and 1 is 2??

I start to believe it is getting harder and harder for the PPT to hold the indexes. Before, they just needed to drive few critical stocks up to reach critical levels and let the rest of the market continue the climb alone. Now, as soon as they stop, the indexes callapse again. Nobody want to buy anymore.

@randythe PPT is mainly a propaganda machine. It is not that DOW must go up, it just need to go down in a controlled manner so that people don’t panic and pull their remaing savings out.One of the main weapon of the PPT is day trading by the FED. Whoever have a wisper about the next announcement (as tosay) can position beforeahead. Then they might give some back and losing money on the long side.BTW the PPT doesn’t always buy. They just need to buy like crazy at critical level so that bears panic and they can unload whatever they bought into the short covering rally.It’s all about sentiment, and they are good traders. Ask Capone.

i can not imagine what it is like to trade futures in this market – they are all over the place right now…

Today, at 12:51 p.m., the elitist clique of bankers who own the Federal Reserve and control the U.S. Treasury and the U.S. Congress has assumed control of the United States of America. [BRIEFING.COM] Stocks have made a sharp climb on word that Fed Chairman Bernanke stated the discount window would be open for Fannie Mae (FNM 10.17, -3.03) and Freddie Mac (FRE 8.35, +0.35), according to Reuters. The word gave investors reassurance that capital is available if the companies should need it…God help us.

http://ml-implode.com/imploded/lender_IndyMacBancorp_2008-07-07.htmlUpdate – 2008-07-11: "The FDIC is in charge" was the verbal announcement ringing through the halls of IndyMac’s Pasadena offices. "Everyone show up for work on Monday."The above information came from an inside source just minutes ago. A formal announcement will be made later today.Update – 2008-07-10: According to a source that has proved credible in the past, we were told a meeting will be held at IndyMac HQ tomorrow announcing the FDIC will put them into conservatorship.According to this source, $190 million was pulled in yesterday’s run, and $100 million today.

Capone on 2008-07-11 13:29:39 – There is ABSOLUTELY no reason the PPT can not get involved in the oil markets. NONE !Me confused? I see how preemptive buying supports prices for a falling stock, but I cannot see how buying oil would lower prices?Speaking as the one trick pony on this forum, please ignore the man behind the curtain. Oil prices are not the result of evil speculators. Yes, there is probably excess funds flowing into the commodities market. And yes, there are traders buying and selling futures. But the more fundamental question is where did all that money come from to begin with?As Kerk on 2008-07-11 06:17:36 pointed out, that money is a direct result of the Federal Reserve policies and the subsequent surplus generated by unregulated credit creation in the 1 quadrillion credit derivative market. Now all that money is trying to buy a relatively fixed oil supply from off shore suppliers and the result? Inflation! And it’s because the dollar has to compete with other currencies, that inflation reveals itself so clearly in the price of oil.So how can the PPT control inflation? They can’t, since they are the ones creating it! The jig is up (I think that means the music has stopped) and the market will finally decide.

@ptm, PPT can buy or sell futures. they can sell oil futures or buy them what is the difference. manipulation is manipulation – someone buys and someone sells always.

@ CaponeYour link to the St Louis Fed is for "Total Borrowings of Depository Institutions" and so won’t include the special new facilities introduced for broker-dealers and GSEs. Total lending by the Fed could be much bigger than than the numbers shown, but still whatever data they make available is worth watching.

Bernanke Told GSE Head Freddie, Fannie Eligible For Discount Windowcasinos, supermarkets and brothels also eligiblecollateral accepted* poker chips* watermelon* squash* photo ids of the last john* All of this funny **** was shamelessly stolen … if Helicopter can do it why can’t I?

@truNorthWhat does that mean? FDIC’s $100,000 deposit refund guarentee is comprimised in some fashion?

@Guest: “[BRIEFING.COM] Stocks have made a sharp climb on word that Fed Chairman Bernanke stated the discount window would be open for Fannie Mae (FNM 10.17, -3.03) and Freddie Mac (FRE 8.35, +0.35), according to Reuters. The word gave investors reassurance that capital is available if the companies should need it…”A major development in the saga of Freddie and Fannie involves the widespread connections they have with the major investment banks, Lehman Brothers and beyond. The discount window announcement (read bailout window) is Federal Reserve action to cover the highly leveraged connections the big banks used to make 60 percent profits in past years. Now, the transactions are sour and the dominos are threatening to fall. We’ll be better off when that happens. The American economy will no longer survive in the hands of a private company that makes decisions for itself and its friends, processing all major financial matters of the country for its benefit. It is absurd to turn over every penny of our money to a private corporation that consistently uses it to its advantage. Turning the creation, control, and stored value of all U.S. dollars over to private international bankers who deal in finance, the Federal Reserve, is like signing Jean-Jacques Rousseau’s described slavery covenant where the master stipulates: “I hereby make a covenant with you which is wholly at your expense and wholly to my advantage; I will respect it so long as I please and you shall respect it so long as I wish.”

I just heard on CNBC that the FED did NOT tell F&F the discount window was open for them! Could this have been done intentionally to pump the stocks to get to the weekend?also, just got a call from a friend in the banking industry who used to be high up in Wachovia. Word is from on high in Wachovia…..no loans approved for anything right now…..Get deposits up at all costs! I can only think of one thing this means!!!!!!!! collapse. She said many people in Wachovia are scared SH&^%less. I’m pulling a significant portion of my $$ right now!

From http://ml-implode.com/imploded/lender_IndyMacBancorp_2008-07-07.html:"Update – 2008-07-11: "The FDIC is in charge" was the verbal announcement ringing through the halls of IndyMac’s Pasadena offices. "Everyone show up for work on Monday."The above information came from an inside source just minutes ago. A formal announcement will be made later today."Does anybody know the time the last IndyMac branch closes today? Let’s see how clean the FIDC can handle the failure of the biggest independent mortgage lender in the US.Hope the guys at Wachovia don’t mind wating one more week in the line. You know, the FIDC should try to keep things orderly, one bank failure per week, that’s the rule.

“A Work Force Betrayed” by Paul Craig RobertsThe collapse of world socialism, the rise of the high speed Internet, a bought-and-paid-for US government, and a million dollar cap on executive pay that is not performance related are permitting greedy and disloyal corporate executives, Wall Street, and large retailers to dismantle the ladders of upward mobility that made America an "opportunity society." In the 21st century the US economy has been able to create net new jobs only in nontradable domestic services, such as waitresses, bartenders, government workers, hospital orderlies, and retail clerks. (Nontradable services are "hands on" services that cannot be sold as exports, such as haircuts, waiting a table, fixing a drink.)Corporations can boost their bottom lines, shareholder returns, and executive performance bonuses by arbitraging labor across national boundaries. High value-added jobs in manufacturing and in tradable services can be relocated from developed countries to developing countries where wages and salaries are much lower. In the United States, the high value-added jobs that remain are increasingly filled by lower paid foreigners brought in on work visas.When manufacturing jobs began leaving the US, no-think economists gave their assurances that this was a good thing. Grimy jobs that required little education would be replaced with new high tech service jobs requiring university degrees. The American work force would be elevated. The US would do the innovating, design, engineering, financing and marketing, and poor countries such as China would manufacture the goods that Americans invented. High-tech services were touted as the new source of value-added that would keep the American economy preeminent in the world.The assurances that economists gave made no sense. If it pays corporations to ship out high value-added manufacturing jobs, it pays them to ship out high value-added service jobs. And that is exactly what US corporations have done.Automobile magazine (August 2008) reports that last March Chrysler closed its Pacifica Advance Product Design Center in Southern California. Pacifica’s demise followed closings and downsizings of Southern California design studios by Italdesign, ASC, Porsche, Nissan, and Volvo. Only three of GM’s eleven design studios remain in the US.According to Eric Noble, president of The Car Lab, an automotive consultancy, "Advanced studios want to be where the new frontier is. So in China, studios are popping up like rabbits."The idea is nonsensical that the US can remain the font of research, innovation, design, and engineering while the country ceases to make things. Research and product development invariably follow manufacturing. Now even business schools that were cheerleaders for offshoring of US jobs are beginning to wise up. In a recent report, "Next Generation Offshoring: The Globalization of Innovation," [PDF]Duke University’s Fuqua School of Business finds that product development is moving to China to support the manufacturing operations that have located there.The study, reported in Manufacturing & Technology News, acknowledges that "labor arbitrage strategies continue to be key drivers of offshoring," a conclusion that I reached a number of years ago. Moreover, the study concludes, jobs offshoring is no longer mainly associated with locating IT services and call centers in low wage countries. Jobs offshoring has reached maturity, "and now the growth is centered around product and process innovation."According to the Fuqua School of Business report, in just one year, from 2005 to 2006, offshoring of product development jobs increased from an already significant base by 40 to 50 percent. Over the next one and one-half to three years, "growth in offshoring of product development projects is forecast to increase by 65 percent for R&D and by more than 80 percent for engineering services and product design-projects."More than half of US companies are now engaged in jobs offshoring, and the practice is no longer confined to large corporations. Small companies have discovered that "offshoring of innovation projects can significantly leverage limited investment dollars."It turns out that product development, which was to be America’s replacement for manufacturing jobs, is the second largest business function that is offshored. According to the report, the offshoring of finance, accounting, and human resource jobs is increasing at a 35 percent annual rate. The study observes that "the high growth rates for the offshoring of core functions of value creation is a remarkable development."In brief, the United States is losing its economy…http://www.vdare.com/asp/printPage.asp?url=http://www.vdare.com/roberts/080709_economy.htm

from what i’ve been able to tell, there’s been less net addition by fed than rollovers mistakenly believed to be additive. recently (and not), fed has been rejecting most of the mortgage backed paper offered. http://www.ny.frb.org/markets/omo/dmm/temp.cfm?SHOWMORE=TRUEeven if this were not the case, the tightening of standards and less real ability to borrow do not facilitate perpetuation of the famous credit bubble.

Everyting is owned by a few with the big wealth. Food, water, pharma, military industrial complex, media, finance, the monetary system…now there will be the remaining wealth transfer and destruction of the middle class. So we’ll have a two class socialism for the rich system with the masses descending to pauperism. This could have been prevented IF not for the fact that the wealthy few own everything and manipulate the systems especially finance and politics so take us where we are lead with deregulation and credit expansion and contraction. It’s been done before…the cycle leading to Depression!So the Constitution as an experiment for democracy or at least a republic has been defeated for a corporate fascist state or NWO universal(global)police state. This is for real folks not some wild eyed theory. It is reality. It is unfolding as planned before our computer screen eyes.

@ guest 2008-07-11 16:33:04Will there be a dinner???I’d love to go. Maybe people shouldn’t talk so loud? Maybe people should know their audience, or who is within earshot, or who’s at the next table, or who’s in the elevator with them, or next to them on the train…I listen. I learn. I hypothesize. Then I predict. And under any “surveillance” measure, I seriously doubt I’ll get in too much trouble for that. If anything… TPTB are on my “red” surveillance list.Miss America

@Guest on 2008-07-11 16:13:12,The U.S. ‘began losing its economy’ during the 1970s. If interested in details, find a copy of Bluestone & Harrison’s 1984 book: The Deindustrialization of America: Plant Closings, Community Abandonment, and the Dismantling of Basic IndustryAnyway, globalizing of production, distribution, finance had begun earlier and might be understood as the ending of national capitalisms. From which it continues to strike me as odd that unit of analysis remains the nation-state which, as someone wrote during the first globalization (later 19th-earlier 20th centuries), has had its economic rug pulled out from beneath it.

Failed Bank List -http://www.fdic.gov/bank/individual/failed/banklist.html

Guest: "Everything is owned by a few with the big wealth. Food, water, pharma, military industrial complex, media, finance, the monetary system…"Does that mean than those of us who saw this coming and who moved (alone and debtlessly) to the sticks with well water, woods, and a place to grow things can start taking applications for a spouse or a lover, even though we’re too old for that? Height-weight proportional, please. Gardening skills preferred. Own your own tools +++. Two cat limit. IQ above 99.7th percentile, no exceptions. Strict no-gun policy. Must know or be willing to learn Morse code. Must love dogs.:-)

Thank you all for all your enlightening words.@kerkI am still digesting your excellent post. And you are right I tend to mix those definitions up.More questions based on this wonderful definitions. The credit expansion based on the Fed Reserve Notes; does anyone know how much is being held by SWF’s and FCB’s in total (an average would suffice)?What about the monster from unregulated credit creation?Is it true if I say many FCB’s hold Fed Reserve Notes because the Dollar is the reserve currency. If the dollar continues to lose value will not this lead to TROW opting for something else other than the dollar. Are not most diversifying right now as we write albeit slowly. Is this not part of what @kerk is saying "A significant amount of credit has flowed to stocks, bonds, and real estate." Can I assume part could be because FCB’s and SWF’s are not expanding their dollar reserves? In short, US is no longer exporting inflation at the same rate it used to. Will this not manifest itself as inflationary forces at home? And because of defaults particularly in the real estate, we have monetary/credit destruction or deflation. My understanding is that the debate between inflation and deflation is centered around this. am I wrong?Many SWF’s, FCB’s, Hedgies etc have Invested a lot into US treasuries. The way things are looking, is it prudent to start anticipating that their confidence in ever getting any value from their investments is waning and they could do things (whatever this may be) that they might perceive as ways to preserve their wealth

896280 beers on the wall.

I got what you intend, appreciate it for posting. Woh I am happy to find this website through google.

Excellent article. I was checking continuously this blog and I’m impressed! Very helpful information specifically the first part. I care for such information much. I was seeking this certain info for a long time. Thank you and best of luck.

That is the precise weblog for anybody who desires to search out out about this topic. You notice so much its almost hard to argue with you (not that I actually would want…HaHa). You positively put a brand new spin on a topic thats been written about for years. Great stuff, just nice!

I intended to send you one little bit of observation in order to thank you so much as before for the striking guidelines you have shared on this website. It has been quite extremely open-handed with people like you to supply unhampered all a number of people would have supplied as an ebook to earn some bucks on their own, chiefly considering that you could have tried it in the event you desired. Those pointers likewise worked to be the great way to fully grasp that most people have the identical zeal just like mine to see whole lot more in terms of this problem. I am certain there are numerous more fun instances in the future for individuals who see your blog post.

I simply wished to appreciate you yet again. I’m not certain the things that I would’ve taken care of in the absence of the actual solutions shared by you concerning that industry. This has been a very horrifying situation in my opinion, but understanding this skilled form you resolved it forced me to cry for gladness. Now i am thankful for your support and even believe you know what a powerful job that you’re carrying out training other individuals thru your websites. I am certain you haven’t come across all of us.

My companion and I actually enjoyed studying this blog publish, I used to be just itching to know do you trade featured posts? Im always trying to find someone to make trades with and merely thought I would ask.

i have a web page concerning gps watches.

Full Moon Party Thailand…

[...]while the sites we link to below are completely unrelated to ours, we think they are worth a read, so have a look[...]…

היי אני רוצה ךהודיע על אתר ברשת האינטרנט בתחום קידום אתרים בגוגל. באתר אפשרלצפות באינפורמציה בנושא קידום אתרים בגוגל.

Howdy! I know this is kind of off topic but I was wondering if you knew where I could find a captcha plugin for my comment form? I’m using the same blog platform as yours and I’m having problems finding one? Thanks a lot!

אני חושש שהנושא שלי במקום , אני ואישתי בדרך ללידת הבן אשמח לשמוע מאמאות המלצה לחנות המוכר מוצרי תינוקות במחירי מפעל .

I found your blog on yahoo and can bookmark it now. continue the good work.

This can be a remarkably amazing powerful resource that you’re offering and you just provide it away cost-free!! I that can compare with discovering websites of which comprehend the particular in giving you a superb learning resource for zero cost. We truly dearly loved examining this site. Be thankful!

Very enlightening post, thank you so much for taking the effort in writing this information.

Hey this is a superb write-up. I’m going to e mail this to my pals. I came on this while browsing on bing I’ll be sure to come back. thanks for sharing.

I used to be very happy to seek out this net-site.I needed to thanks to your time for this glorious read!! I positively having fun with each little bit of it and I’ve you bookmarked to check out new stuff you weblog post.

I’d have to settle with you here. Which is not something I typically do! I enjoy reading a post that will make people think. Also, thanks for allowing me to speak my mind!

I wanted to construct a quick comment to be able to say thanks to you for all the pleasant tips you are posting at this website. My rather long internet look up has finally been compensated with excellent information to go over with my best friends. I ‘d declare that many of us readers are very blessed to be in a superb community with so many special people with valuable secrets. I feel quite happy to have discovered the web site and look forward to so many more awesome moments reading here. Thank you again for everything.

One more time, you ought to tweak ones taxation repayments should you be expected a new massive refund.

My spouse and i ended up being now contented when Jordan managed to round up his reports by way of the ideas he grabbed out of your site. It is now and again perplexing just to be freely giving tactics which usually men and women might have been trying to sell. We really see we’ve got the website owner to thank because of that. The most important illustrations you have made, the easy blog menu, the friendships you will help to engender – it’s all astounding, and it is letting our son in addition to our family consider that that issue is awesome, and that is seriously fundamental. Thank you for the whole thing!

You can also put a chatbox on your blog for more interactivity among readers….–

I’m impressed, I must say. Very rarely do I come across a blog that’s both informative and entertaining, and let me tell you, you’ve hit the nail on the head. Your blog is important, the issue is something that not enough people are talking intelligently about

You’re the best, Your post is an excellent example of why I keep coming back to read your excellent quality commentary….

I think that may be a captivating element, it made me suppose a bit. Thanks for sparking my pondering cap. Infrequently I get so much in a rut that I simply really feel like a record.

Would you be all in favour of exchanging hyperlinks?

היי, רציתי להעלות לכם על אתר עם מידע שימושי בדבר קידום אתרים בגוגל ובשאר פורטלי החיפוש.

Fantastic, beautiful blog with great informational content. This is a really interesting and informative content.

Strong blog. I acquired legion great info. I?ve been keeping a watch on this technology for some time. It?utes fascinating the approach it retains totally different, however a number of of the first elements remain an equivalent. have you observed lots modification since Search engines created their own latest purchase within the field?

I think it is just about the most vital information for me. And i am glad reading your article. But should remark on few general things, Your website style is perfect, the articles is very excellent : D. Good job, cheers

Its crucial to be aware of whats going on in.

Judging by the way you write, you seem like a professional writer.’;'`-

I’m still learning from you, but I’m enhancing myself. I definitely love studying all the pieces that is written on your blog.Preserve the tales coming. I beloved it!

You are so cool man, the post on your blogs are super great.`,.:’

Very well said, your blog says it all about that particular topic.*”";’

Did you know that you can actually put an end to awful blushing? Quickly learn how to put a stop to blushing with out a surgical procedure.

There is nothing better on a hot day than a Black Cherry/Mango Water Ice from Rita’s. Ummmm yummy!|BahamaMami16|

I’ve been wondering about the similar factor myself lately. Delighted to see an individual on the same wavelength! Nice article.

Its really one of the nice blog that gives the nice info on insects and about the wild plants and animal.I am a wild life photographer and I love to see these type of pictures.I always watch National Geography channel and I really enjoy all the programs of it.Thanks a lot for this blog here.Hoping o see some more pictures like this.

Its superb as your other posts : D, regards for posting .

An impressive share, I simply given this onto a colleague who was doing a bit of analysis on this. And he in actual fact bought me breakfast as a result of I discovered it for him.. smile. So let me reword that: Thnx for the deal with! But yeah Thnkx for spending the time to discuss this, I feel strongly about it and love studying extra on this topic. If potential, as you become experience, would you thoughts updating your blog with extra particulars? It is highly helpful for me. Massive thumb up for this weblog post!

Have you ever considered creating an e-book or guest authoring on other sites? I have a blog based on the same theme if you’re interested.

I see that you are using WordPress on your blog, wordpress is the best.:~.-~

A large recently pre-configured -panel equipment and lighting as well as sets who are notably created for asking for on top regarding CARAVAN solar battery on your own boat and also vacation automotive.

Oh my goodness! a tremendous article dude. Thanks However I am experiencing situation with ur rss . Don’t know why Unable to subscribe to it. Is there anybody getting similar rss drawback? Anybody who is aware of kindly respond. Thnkx

Youre so cool! I dont suppose Ive read like this before. So nice to locate somebody with some authentic ideas on this subject. realy we appreciate you starting this up. this website is one area that’s needed on the web, somebody after a little bit originality. helpful task for bringing a new challenge on the web!

I think your blog is getting more and more visitors..”`–

I will invite all my friends to your blog, you really got a great blog.-’.;,

I would really like you to become a guest poster on my blog.;`;-,

Sometimes, blogging is a bit tiresome specially if you need to update more topics.”‘-;:

It exhausting to find educated people on this matter, however you sound like you know what you are speaking about! Thanks

I would really like you to become a guest poster on my blog..;*.’

A blog like yours should be earning much money from adsense.-`.`’

Your blog is one of a kind, i love the way you organize the topics.*’;`’

I love to visit your web-blog, the themes are nice..~–”

This really needs to be looked at a lot close if we’re ever going to find a solution.

Have you already setup a fan page on Facebook ?*”.,

I would really like you to become a guest poster on my blog.~*-~.

I just found your web web site a number of days ago and i are reading through it frequently. you have a good vary of helpful information on the site and i also really like the actual form of the location at constant time. carry on the great work!

I just put the link of your blog on my Facebook Wall. very nice blog indeed.;’*,;

Hi Today on google and enjoyed reading this very much. I’ve bookmarked your website and you will be back again.

Hiya! I just want to give an enormous thumbs up for the nice data you’ve got here on this post. I can be coming back to your weblog for extra soon.

Can I simply say what a aid to seek out somebody who truly knows what theyre talking about on the internet. You definitely know the best way to bring a problem to gentle and make it important. Extra individuals have to read this and understand this side of the story. I cant consider youre no more fashionable because you definitely have the gift.

Judging by the way you write, you seem like a professional writer.,;`-”

I really love the way you discuss this kind of topic.”*’.”

You created some nice points there. I did a research on the theme and found mainly persons can believe your blog.

The tips you provided here are extremely precious. It been found such a pleasurable surprise to get that waiting for me when I wakened today. They’re constantly to the stage and straightforward to learn. Thanks a bunch for your valuable ideas you’ve got shared here.

I respect your work , appreciate it for all the informative content .

I used to be recommended this web site by means of my cousin. I’m now not sure whether or not this post is written by him as no one else realize such distinctive about my trouble. You are amazing! Thanks!

you’re in reality a excellent webmaster. The web site loading speed is amazing. It seems that you are doing any distinctive trick. In addition, The contents are masterwork. you have done a fantastic job in this subject!

Sometimes your blog is loading slowly, better find a better host.-,-:’

This is very useful. I found the tips you mentioned very useful. Make sure you keep up the excellent work; I certainly will come returning to read more later on.

I see that you are using WordPress on your blog, wordpress is the best.~~*”.

I just added your RSS Feed on my RSS reader, it is so nice to read your blog.:`’*~

Fantastic site. Plenty of helpful info here. I’m sending it to a few buddies ans additionally sharing in delicious. And of course, thanks in your sweat!

After I initially commented I clicked the -Notify me when new comments are added- checkbox and now every time a comment is added I get 4 emails with the same comment. Is there any method you possibly can remove me from that service? Thanks!

Great blog post and nice discussion among the comments.’`.”,

Well, another blogger already posted a topic like this.*-*’~

I love blogging and i can say that you also love blogging..*.`.

I see that you are using WordPress on your blog, wordpress is the best.’*'`~

היי חשבתי להראות על אתר ברשת האינטרנט בנושא קידום אתרים בגוגל. באתר האינטרנט אפשרלראות בטיפים העוסק קידום אתרים בגוגל.