If it walks, quacks and ducks like a recession duck it is a RECESSION now: the current W-shaped double-dip recession may have started in Q4 of 2007 rather than Q1 of 2008
This forum has argued for a while that the US recession started in Q1 of 2008 and that this long and protracted U-shaped recession (lasting 12 to 18 months as opposed to the consensus for a short and shallow 6 months V-shaped recession) could turn into a double-dip recession because $100 billion of tax rebates would be a temporary drug that would boost consumption in Q2. Indeed, the figures published today – a 1.9% GDP growth in Q2 – confirm this W-shaped path.
More importantly the revisions of 2005-2008 GDP figures now show that the economic recession may have started in Q4 of 2007 – rather than Q1 of 2008 – as GDP contracted at the annualized rate of 0.2% in that quarter. While Q1 of 2008 was positive (+0.9%) it is clear that the economy was already into a recession in Q1. The reason why the recession started in Q4 of 2007 or – at the latest in Q1 of 2008 – are clear. Let me elaborate them…
First, the NBER does not use the popular press definition of a recession as two consecutive quarters of negative GDP growth. Thus, the fact that Q1 GDP was positive does not prevent the NBER from eventually finding that a recession did start in Q1.
Second, monthly GDP figures (from MacroAdvisers) show that GDP contracted in the February-April period; thus on monthly basis the economy started to contract as late as Q1 while the quarter-over-quarter comparison between Q4 and Q1 was still marginally positive.
Third, further revisions of GDP figures may lead the BEA to find that GDP fell not only in Q4 of 2007 but also in Q1 of 2008. After all, the most recent revision turned the initial +0.6% of Q4/2007 into a -0.2%. And in 2001 the first estimate of GDP growth in Q1 was positive while eventually the BEA revised it to a negative figure and the NBER officially dated the beginning of the 2001 recession to March of 2001. The reason why the Q1 of 2008 may be eventually likely revised downward into negative territory is that the already negative figures of employment growth in Q1 may be further revised downward once the BLS does its re-benchmarking of the birth/death model (a model that has created fake 200k per month jobs via an overestimate of jobs created by new firms). So you can be quite certain that, in due time, the BEA will revise Q1 of 2008 into a negative figure giving two consecutive quarters of negative growth.
Fourth, the NBER definition of a recession emphasizes a variety of variables in addition to GDP whose contraction is a signal of a recession. According the NBER you get a recession when you have a “significant” decrease in activity over a sustained period of time. The declines would be visible in GDP, payrolls, production, sales and incomes.
All these four indicators of a recession – in addition to GDP – peaked and started to contract between October 2007 and February of 2008. For example employment in the private sector has fallen for seven months in a row (since January) and total NFP employment has fallen for six month in a row (since February). The other three variables have also started to contract as late as Q1 of 2008. So, based on these criteria the economy entered a recession possibly as early as Q4 of 2007 or, more likely and certainly, no later than Q1 of 2008.
In summary, if it walks, quacks and ducks like a recession duck it is a recession duck. We are in a recession now! At this point it is fully clear that the economy entered a recession in Q1 of 2008 and that the Q2 growth recovery is totally artificial and totally driven by the massive tax rebates that artificially propped consumption –that was on a falling path – in Q2 (recent academic research confirmed the sharp boost in Q2 consumption as due to the tax rebates). But the headwinds hitting consumption are massive and stronger than the tax rebates whose temporary effect will fizzle out at the latest by August. Already in June retail sales were flat in nominal terms (+0.1%) and falling in real terms. So if desperate consumers have already stopped consuming at the peak of the tax rebate drug boost what will happen when this fix will fizzle out by August?
Severe persistent headwinds to consumption include: falling home prices, falling stock prices, falling home equity withdrawal, high debt ratios, rising debt servicing ratios as reset of mortgage, credit cards, auto loans, student loans interest rates are squeezing disposable income, rising inflation eroding real incomes, sluggish nominal wage/income growth (real income growth was negative in Q2 based on the latest figures), collapsing consumer confidence, high oil prices and gasoline above $4 dollars a gallon, falling employment, falling labor market conditions and rising unemployment claims (up to a scary 440k that is a five year high in the last reporting week) and a sense of general economic and financial malaise and insecurity.
So there is no doubt that consumption will fall – in quarterly GDP figures – as early as Q3 or Q4 at the latest. Durable consumption is already in total free fall since Q1; services consumption is massively decelerating in the Q2 figures and non-durable consumption that already fell in Q1 was up in Q2 only because of the tax rebates. The only question is for how long and how deep the consumption fall will be. We expect to see falling consumption and falling GDP through Q2 of 2009 leading to a long and nasty recession lasting 18 months (from January 2008 to at least June 2009 with the caveat of a double-dip W in Q2 of 2008).
Thus, this recession – and we are in a recession NOW – will be long, ugly, painful and deep. And the credit losses associated with it will be at least $1 trillion and more likely closer to $2 trillion leading to the most severe systemic financial and banking crisis since the Great Depression: not as severe as the Great Depression but second only to that episode.
146 Responses to “If it walks, quacks and ducks like a recession duck it is a RECESSION now: the current W-shaped double-dip recession may have started in Q4 of 2007 rather than Q1 of 2008”
More independent and chain restaurants in the suburbs are likely to close, following the lead set when some Bennigan’s eateries locked their doors this week. Higher labor, food and energy costs are souring profit margins for many restaurateurs, who also face stiffer competition and whipsawed consumers, analysts said Wednesday…."There was a 45 percent increase in the number of restaurants in the top 20 chains in the last five years, which is way above the increase in the demand," said Ron Paul, president of Chicago-based restaurant consultancy Technomic Inc…."We’re finding there has been no increase in traffic in restaurants nationwide and the worst hit areas are in Florida and California," Paul said. "That’s because there are more foreclosures in those states and those consumers are really being squeezed."http://www.dailyherald.com/story/?id=224647
News from California – more signs of recessionThe City of Oakland, California (approx pop 350,000) announced that it would be cutting all departments except fire and police by up to 10% due to revenue not meeting expectations. The shortfall of $50,000,000 is about 10% of the overall city budget. The police dept was already undermanned and not spending its allocated budget.Given that the biggest fall ($17,000,000) was in real estate transfer tax, you would think that somebody would have noticed the shortfall earlier. However, the chief city administrator (Deboarah Edgerly) had other things on her mind – she was just fired for tipping off her gang member nephew that a police raid was coming.Frankly, I don’t think her level of morality was much different than what we see at the highest levels of government or Wall Street – protect your own and the public be damned.Showing that this is more than a real estate decline, sales tax revenue was $8,000,000 below projections.
JOHN WILLIAMS’ SHADOW GOVERNMENT STATISTICS – FLASH UPDATE – July 31, 2008GDP Report is Political Garbage – Lowest GDP Inflation in 10 Years Generates Strong Growth Report – Downward Revisions Put 4th-Quarter in Contraction – Official Line: Never Was a Recession, At Least Not Before the ElectionYou know it’s getting bad when NR starts to get grumpy in his postings. And Williams, a very reserved, soft spoken, numbers guy, is now getting angry. And as Pete would say…Ho hum
You are absolutely right. Any projections on peak unemployment rates and what industries/activities will help us and the rest of the world out of this mess?
Mentioned on CNBC this AM, that Crammer has called the bottom in the market.Whoooh,..what a relief,..I guess it is now safe to get back into the water..Sharks?,..what Sharks?,..
Cramer says bera is over, so it must be! LOLOLOL
Kramer and Kudlow – fric and frac!!!
Nouriel, it is not a "W"!! You don’t find it curious that we had the lowest GDP deflator number in like a decade while inlation is running at 20 year highs???? You know as well as I that it would be political suicide to let the data show that the stimulous rescue package was a joke and a waiste of taxpayer $$’s becuase we still had a negative quarter. SO, lets rig the deflator and balme it on a "stitistical quirk"!!! WHEN ARE THESE PEOPLE GOING TO BE HELD ACCOUNTABLE FOR THEIR FRAUD ON THE US TAXPAYER??????????
On NFP tomorrow:Jan and July historically are negative adjustment months for the births and death adjustments. If history is to be a guide of future , look for a -250k headline number tomorrow. If its on consensus (-62k) check the B/D adjustments, they’ll be 200k positive jobs added for new businesss births (ie total fiction), and you’ll know the books are well and truelly on fire.
1:00 p.m. Paulson: Housing woes will last only months, not years
1:01 p.m. Paulson: Stimulus impact not over, will last rest of yearI can’t take listening/reading these IDIOTS anymore! All these pearls of wisdom from a guy who couldn’t even see it coming in teh first place!!!
The employment number should be horrible just because of all the small business bankruptcy’s reported so far in 2008!http://bigpicture.typepad.com/photos/uncategorized/2008/07/21/98520080718_bankruptciessmallprod_a.jpg
1:12 p.m.Paulson rejects pessimism on economic outlook
Stocks staging another one of their miracuolous recoveries…must be Cramer…
@ Nouriel Roubini: “Severe persistent headwinds to consumption include: falling home prices, falling stock prices, falling home equity withdrawal, high debt ratios, rising debt servicing ratios as reset of mortgage, credit cards, auto loans, student loans interest rates are squeezing disposable income, rising inflation eroding real incomes, sluggish nominal wage/income growth (real income growth was negative in Q2 based on the latest figures), collapsing consumer confidence, high oil prices and gasoline above $4 dollars a gallon, falling employment, falling labor market conditions and rising unemployment claims (up to a scary 440k that is a five year high in the last reporting week) and a sense of general economic and financial malaise and insecurity.”And this is the man, the middle class producer, whom the government intends to tap further for its trillion dollar bailouts of rich bankers and mortgage graft artists and packagers such as Goldman’s Paulson – already a known billionaire. Remember that man? from a November RGE blog who wrote as Guest:"ALL I know is that I am 53, earn between my wife and myself approx 125k after tax, have to now spend approx. 200,000 that we saved for my sons college education…Our cars have over 100k miles on them. . . I am not the only one out there in this scenario. I am facing homelesness at this rate. How many others are in my position? It feels like I am in prison."
Nouriel, you must make us a promise that if you do any TV interviews in coming days, you expose the GDP fraud for what it is! I have heard no mention of this GDP deflator issue by any analysts on TV today, not one word!
@Guest: "1:01 p.m. Paulson: Stimulus impact not over, will last rest of year… I can’t take listening/reading these IDIOTS anymore! All these pearls of wisdom from a guy who couldn’t even see it coming in teh first place!!!"I always thought TPTB put Paulson in the treasury because he knew where all the explosives are buried and where to steal the money. He’s the guy who was CEO of Goldman Sachs while it engineered the biggest packaging of MBS toxic waste known to the investment world and then jumped off the train by shorting just before it hit the wall.
From the previous thread, posted by Guest, may I have the privilege of reposting a terrific message. The context is as follows:“There are many other mechanisms to achieve the "prepare paperwork and syndicate the initial subscription" of securities.”Guest says:Here is how they do it in China, by auction!Rather than have an IB sell – sell – sell the issue and reap a huge spread for their special access to the market, the way it’s done in Hong Kong and China is that subscriptions are taken from the general public, at a very low price that’s sure to sell. Everyone has to send cash or cash equivalent along with their order. The issue is typically 10 times oversubscribed! Then if it’s 10 times oversubscribed, in about 2 months everyone gets 1/10 of what they ordered of the new issue at the offered price, paying 1/10 of their money and getting 9/10 back. But the issuer keeps the interest (for the 2 months) on all the money that was deposited. The interest income compensates for the cheap price; the actual price in this example is offered price) * (1 + 10r/6): the 10 because it was 10 times oversubscribed, and r/6 is two months’ interest (at annual rate r) on that money.This way the market adjusts the oversubscription amount to balance the underpricing, and no IB salesforce or syndicate is needed (and none is paid =============Now, let that be an object lesson in the advantages of building an economy after one learns from the mistakes of others. On behalf of those of us that are thinking about how we’ll get capital to the small U.S.-based businesses which will be the engine of our economic recovery.. I say "Thank you, Guest! Please visit us early and often!"
"ALL I know is that I am 53, earn between my wife and myself approx 125k after tax, have to now spend approx. 200,000 that we saved for my sons college education…Our cars have over 100k miles on them. . . I am not the only one out there in this scenario. I am facing homelesness at this rate. How many others are in my position? It feels like I am in prison."Written by Guest on 2008-07-31 12:18:47Oh my, I felt that I wrote it. I am 54 and basically in the same position. How can we contact each other? I do not have a uahoo or hotmail account?
Please, Nouriel, do expose the pervasive fraud that is CNBC reporting. The people need to know the truth, regardless of how painful, uncomfortable, and hard-to-swallow it may be. It pains me immensly to see Dennis Kneale super-glued to positive sentiment, despite the powerful headwinds blowing in from the ocean of financial hurricanes nigh ready to breach the dykes of Wall-street complacency, and unleash upon its shores, the economic storm-surge from hell. It irks me to see the arrogance and hand-waving of Don Luskin and Jerry Boyer, and this in light of the fact that those two have been proved time and again. Please put a sock in Larry Kudlows mouth, as I cannot bear his mantra of "non recession recession" much longer without voilently spewing up-chuck on my TV. These guys should all be fired, their networks cosed down, and the people who have been consistently correct on this unfolding financial crises, hired in their places. We need people who are forecasters, not nowcasters. I commend you Dr Roubini for your acute perception, and deep insight of the gathering storm. What seperates you between the rest( and a small minority like you) is that you do not rely on now, or coincident indicators to assess future prospects, rather you asess future prospects by extrapolating nowcasting into beneficial and useful forecasting. It’s only a dismal science for the nowcasters, but for those gifted with prescient, insightful, and penetrating economic analysis, it’s looking rather bright.
U.S. Mall Vacancies Rise to 13-Year Highhttp://www.bloomberg.com/apps/news?pid=20601103&sid=aECMqm6YtkgQ&refer=us
People that are 100K+ income earners with some substantial savings may wish to consider tax & quality-of-life arbitrage within the nation. Moving from the coasts or the pockets where cost of living is very high to smaller towns in the heartland will allow you to weather out the downturn. Consider this, if you are a six-figure income earner (1) progressive taxation cuts you harder as you pay multiples higher for same food, services, RE available elsewhere for pennies on the dollar (2) You compete with the herd to purchase, driving costs (3) Congestion–commuting, crowd crush, violence are all higher in metros (4) Metros more likely to have expansive gov’t and drawdown will excite them into sponsoring innovative means to increase their tax receipts. You WILL pay more just as you’re taking in less. Heartland areas were more fiscally prudential. (5) Necessity supply line less vulnerable to shocks in countryside. (6) Sometimes in an economic cycle doing NOTHING is better than exposing yourself to the significant downside risk of doing SOMETHING in a systemic crash. In turndowns, the HIGH value added service sector will shrink disproportionately more than in basics. Belt tightening will whack the high income earners much harder than necessity providers.Might consider sitting this inning out.
I just saw the Reuters piece on the Architecture for the OVER THE COUNTER MARKET CREDIT DEFAULT SWAP CLEARINGHOUSE. It seems 17 banks will backstop this clearinghouse. Could this be the 17 banks you can’t naked short? Huhmmm! I remember the list of these banks to include the major international investment banks. THIS CLEARINGHOUSE is a mechanism by which UNREGULATED OTC, can land on a manufactured entity with access to central bank money through the 17 Investment Banks. Think of it as the OTC that was floating above the regulated exchanges landing on earth to pick up Central Bank money and Taxpayer money. THIS IS THE GLOBAL BAILOUT OF THE CREDIT DEFAULT SWAPS. THE EAGLE HAS LANDED!Obviously the Architecture had to be prepped with all the access of investment banks to central bank lending. THE BANKING MARTIANS HAVE LANDED! THEY COME IN PEACE!
US stocks getting ready to bust to the upside!!!
@OuterBeltway: thanks for the kind words, and it is my pleasure to hang around and reflect on these exciting times with y’all. I think you didn’t get my name quite right, I’m sure it’s "Anonymous" rather than "Guest". Although that one wasn’t very nasty and could have been posted under a more typical pseudonym.
@MaunderminWhat would be rating of CNBC if they report ugly truth to people? See, CNBC and the likes have strong bias/interest to show rosy pictures otherwise their advertising revenues would plummet. Networks are not in the business of reporting truth, they are in the business of making money.
Oller: sounds like you’ve nailed it. Now that we understand it, let’s figure out what to do about it. People should not pay to bail out broker/dealers and banks that rely on such operations.Let’s get to work!
To those who are hurting: I’ve been hurt too. When I say these "exciting" economic times, it doesn’t mean I can watch them just like a football game. But seriously, don’t drown in debt. Liquid assets can buy a lot in places where you could start over. Remember, this system will not help you, you have all choices but you have to think about and consider them.
Tax revenues go missing.http://www.prudentbear.com/index.php/GuestCommentaryHome
I do not understand why everyone hates CNBC, especially Kudlow because he generally puts both sides out there, Cramer, god bless him, he gave RIMM quite a pop today, all the better for a short opportunity. I say the more lies the better, if you do your home work, profits are much easier to come by based on the psychological impact the lies produce which can be gamed. Anyone who loses money based on the lies deserves it, time over time the pundits, politicians and execs have been proven liars and everyone knows the markets are rigged through phony accounting gimmicks (which are relatively easy to discern if you follow the cash), front running and IB designations…….. Einstein said something to the effect that when you do something over and over and expect a result different than the one that consistently obtains, that is insanity. Embrace the lies, things will never change, but profit can be obtained.
Stocks going green instead of being down huge like they should be. The obfuscation continues…
Here comes Crammer again,..Buy the financials! Bottom is in! RaRaRa!! Um hmmm. I smell something foul,..They tell you to SELL when they are BUYing, and BUY when they are selling. I sense a great disturbance in the force..
2:37 p.m.[WM] WaMu shares soar after Toscafund takes 6% stake2:37 p.m.[WM] WaMu shares up 18.8% to $5.63 in recent trading
This is 2 days in a row where the Dow is not being allowed to stay below 11,500…hmmmm, I wonder shy not….Hmmmmmmm.
Rumor has it Tosca, which may have its own problems, has been averaging down on WAMU due to its participation in the $7 billion recapitalization of WAMU which put Tosca over the threshold and its current average holding price is a multiple of what WAMU is currently trading at. Perhaps, a short opportunity but I would wait, maybe Cramer will talk the stock up, then short it if the climate is right.
WAWAWA, I’m very aware that telling the truth is not in the best interest of CNBC and the others. That doesn’t change the fact that the shenanigans and lies being inculcated into the minds of the innocent and naive should be tolerated, rather such bold-faced omissions, and ostensible obfuscation of what lies beneath the ‘Letter’ should be met with grand reproach and scrutiny. Toleration in the face of a long train of usurpations, only serves to empower tyrants and destroy the independence of an increasingly servile and deprived people."You can fool some of the people some of the time, but you cannot fool all of the people all of the time" — Abraham lincoln
Crash helmet? Check. Mouth Guard? Check. First Aid Kit? Check. Ride of a Lifetime? Priceless.http://yellowroad.wallstreetexaminer.com/blogs/2008/07/28/crash-or-not-crash/
I don’t understand why CNBC airs interview of Greenspan. After all, he is the one responsible for much of the economic mess we are in.
Say It. Just Say It!Everybody’s favorite analyst on CNBC talking about financials. All things we know so well: more write-down are coming, more capital to be raised, etc. But around 8:10 you get this:"Bartiromo: CAN LEHMAN SURVIVE THIS?Whitney: I — I THINK — I — I DON’T KNOW. I DON’T KNOW."http://www.cnbc.com/id/15840232?video=808357964&play=1 via http://dealbreaker.com/2008/07/say_it_just_say_it.php
3:30 p.m. U.S. banks primary borrowings from Fed hits new record high
@Anonymous:Right you are, you posted as "Anonymous" and not as "Guest". Interesting that you care enough about the distinction to point it out. Hmmm. What’s up with that?Say, are you here as one of them "thought instigators"?Jeez, never a dull moment around here
BTW: in her CNBC interview Meredith Whitney predicted more write-down to be announced shortly due to the Merrill Lynch 22% "sale", because most of the banks still carry higher fanatasy valuations.As one year ago, when it started the August 2007 rout by seizing and attempting to sell the CDOs of the two infamous Bear Stearns hedge funds, mother Merrill is the one who panic first. Now thye others need to follow.
No hope through elections for the US:Obama and McCain Suck Up to the Bankershttp://www.alternet.org/election08/93318/I think that it’s time to just step back and let the lot of them hang themselves. A lynching is just around the corner…Mark
do desire and dread ever decouple?
Guest wrote:". . . have to now spend approx. 200,000 that we saved for my sons college education…"The bottom tranch of the upper-middle-class will have to send their to children to state universities.
@ Alessandro"Say It. Just Say It!"Bartiromo: CAN LEHMAN SURVIVE THIS?Whitney: I — I THINK — I — I DON’T KNOW. I DON’T KNOW.""I guess she saw Paulson’s Basooka in Cox’s pocket (First degree humour only)
Deep Economic Analysishttp://www.youtube.com/watch?v=nOyXY5egVvk&feature=related
Obama and McCain Suck Up to the BankersBoth candidates are scrambling to enlist the expertise of the geniuses who helped spur our economic meltdown This is a time to condemn the bankers, not to embrace them. They are the scoundrels who got us into the biggest economic mess since the Great Depression, lining their own pockets while destroying the life savings of those who trusted them. Yet both of our leading presidential candidates are scrambling to enlist not only the big-dollar contributions but, more frighteningly, the "expertise" of the very folks who advocated the financial industry deregulations at the heart of this meltdown. Republican candidate John McCain even appointed as his campaign co-chairman Phil Gramm, who went from being chairman of the Senate Banking Committee, where he sponsored disastrous legislation that empowered the banking bandits, to becoming one of them at UBS Warburg. Gramm was forced to resign from McCain’s campaign only after he went public with his contempt for the financial concerns of ordinary Americans, calling them "whiners" and perpetrators of a "mental recession." But Gramm and the Republicans couldn’t have done it without the support of leading Democrats. The most egregious of Gramm’s legislative favors to the financiers took the form of legislation named in part after him — the Gramm-Leach-Bliley Act, which became law only after then-Treasury Secretary Robert Rubin prevailed upon President Clinton to sign the bill. The bill’s immediate major effect was to legitimize the long-sought merger between Citibank and insurance giant Travelers. Rubin’s critical support for the bill was rewarded with an appointment, within days of its passage, to a top job at Citibank (later Citigroup) paying more than $15 million a year. That is the same Rubin with whom Democratic candidate Barack Obama met, along with other influential advisers, on Tuesday to figure out what to do about the sorry state of our economy. But what in the world did he expect to learn from Rubin? And why did he appoint Rubin’s protégé, Jason Furman, who ran the Rubin-funded Hamilton Project, to be the Obama campaign’s economic director? Hopefully, during their encounter Tuesday, Rubin offered himself as a contrite model of everything that the candidate of change needs to change. After all, Goldman Sachs, where Rubin spent 25 years of his business career before entering the Clinton administration, has been one of the prime corporate villains in the financial shenanigans that led to the subprime mortgage scandal. As co-chairman of the firm, surely he had knowledge of the financial hanky-panky that would prove so disastrous down the road. Indeed, as Treasury secretary, he favored an extension of the deregulation that enabled this explosion of banking avarice. Not surprisingly, the current Treasury secretary, Henry Paulson, also previously headed Goldman. When Rubin assumed a top position at Citibank after his stint at the Treasury, he was not above influencing his former employees in the government. In one notorious instance during the fall of 2001, when Enron was going down the tubes Rubin telephoned a Treasury undersecretary and asked him to consider intervening with credit-rating agencies to hold off downgrading Enron’s ratings. When the story was leaked, some media accounts noted the possibility of a conflict of interest because Enron owed Citibank $750 million, which it could not pay if bankrupt. Despite his skills and his vaunted position as Citibank’s chairman, Rubin was not spared the disastrous consequences of Citibank’s own wild financial manipulations, which, if anything, exceeded those of Enron. Tens of billions in bad mortgage and credit card debt placed the bank at the forefront of the current economic crisis, and so it is weird that Obama would now turn to Rubin for advice. It’s even weirder that the presumptive Democratic nominee would pick Rubin’s man Furman as his campaign economic director at a time when cleaning up the mess left by the bankers is the highest priority. Furman hardly distinguished himself four years ago in that role in John Kerry’s failed presidential campaign, with its muffled economic message that could not be blamed on the candidate’s stiff style alone. The bigger problem is that folks such as Rubin and Furman, perhaps best known as an economist for his bold but woefully misguided defense of the Wal-Mart business model, clearly do not feel the pain of the voters who are losing their homes. But then again, why should Rubin, or Gramm on the Republican side, be expected to care when he has made so many millions off the suffering of those voters? Not good at a time when we need a presidential candidate who sticks it to the bankers instead of sucking up to them. http://www.alternet.org/election08/93318/
@ Mark,I know that you asked about Canada’s economy and how exposed it is to global slowdown. I am currently pursuing an MBA degree across the border (do not throw things at me people, it is not my fault). And I am seriously thinking about continuing my career in Canada. The overall business and economic environment is still holding for now, but I am not sure about the near future (relatively speaking).
"Embrace the lies, things will never change, but profit can be obtained."@ Kafka on 2008-07-31 13:41:00Maxim 1 (fundamental 1): Man cannot be trusted.Physics: Opportunity and possibility are infinite, subject only to circumstances – time and position.Ancient Maxim (non canonical) : All is of ‘motion and rest’.Ho humPeterJB
On Bloomberg Video today “Cox Says SEC Short-Sale Rule Helped Curb Trading Abuses.”We are the “abusers”? They accuse us of what THEY do! Everything TPTBs do is to preserve their “system.” We’re up against a paid propaganda campaign – paid columnists, paid economists, paid consultants, paid news reporters, paid-off congressmen – they are paid what to say, what to write. (As for Cox, they probably don’t even have to pay him: once a congressman, they never want to go home to Podunk, they always want to stay near the trough.)I ask, does anyone think that Exxon, a company that made more than $1,500 per second in 2Q as I heard on radio, wouldn’t have a few bucks left over to pay somebody to put in a good word? Its profit 2Q of $11,680,000,000 was the largest quarterly profit for a US-based corporation in history (short of Wall Street’s “expectations” of course). Royal Dutch Shell, Europe’s largest oil company, made $11.56 billion for the quarter, a 33 percent increase in second-quarter profit.Highway robbery?
Thank you for that post, Sam. If Obama goes with the Rubin team then his whole campaign from the beginning for a change in Washington is a willful, perjurious and damnable lie. By now, the McCain team is a well-known continuation of financial dictatorship.If not these two, who?
Political dudes, all politicians are the same and can only be counted on to maximize their own self interests, the only differnce between Obamanation and McNasty is Obama is a smart dude and McNasty graduated 5th from the bottom and so far McNasty has personally benfited far more from special interest profits but give Obama time. Oh yeah and Obama will probably cause less death (which may be good or bad depending on your perspective). The only political dude who tells a remote version of the truth is my boy Ron Paul but sadly, most think he is nuts.
" Networks are not in the business of reporting truth, they are in the business of making money."I couldn’t agree more. Does anyone realize that the major media is owned by the Defense Industry? what sort of ‘bias’ would that portend? Can they really call themselves ‘news’ or identify themselves as ‘journalists’? If the average American gets their news from tv, we are indeed in big trouble. the masters of war not only are controlling our budget, but our fellow country men and women’s minds. Kucinich had nailed it. We need a Department of Peace.No wonder he was ‘blacklisted’ from the debate on TV.
Fidel Castro wasn’t kidding when he said capitalism will eventually fail.
Oh people, whither would you flee? The sea is behind you and the enemy is in front of you. And there is no escape for you, save in savor and determination. Remember that in this country you are more unfortunate than the orphan seated at the table of the avaricious masters. Your enemy has met you with his innumerable army and arms and his provisions are abundant while you have no defense but your swords and no food other than what you snatch from your enemy’s hands. And if the absolute want to which you are reduced is prolonged ever so little, if you delay to seize immediate success, your good fortune will vanish, and your enemies, whose hearts have been filled with fear by your very presence, will take courage. Put far from you the disgrace from which you flee in dreams, and attack this monarch who has left his strongly fortified city to meet you. Here is a splendid opportunity to defeat him.Accomplish your patriotic duty, because he is not patriotic he who does not stand ready to defend his country against itself. And your country has been attacked. I am not asking you courage. I am asking you patience. Do not be discouraged by your small number or the enormousness of your enemies but your victory is surer than that of David. Study and polish your offense and counter-attack strategies. Hold on to your positions and do not remove your swords until you make sure your enemy is dead or surrenders to the truth. Cover your back and if needed retreat. You may lose a battle but certainly not the war. If you kill, it should be with a pain in your heart. But if you can, take as many hostages as you can, and be kind to them. Teach them the Truth and open their eyes. If they concede, it is as if you won the war, because this is the only path to real victory. If these monarchs are ever allowed to rule and prevail, it is on the detriment of all. Do not be blurred by the ravishing beauty of their Greek princesses or the white of the marble of their towers.Remember that if you suffer a few moments in patience, you will afterward enjoy supreme delight. Do not imagine that your fate can be separated from mine or the rest of us all and rest assured that if we fall, everyone will perish with us. This is why you cannot and should not fail. Line up and hold on to your short positions, and if you strike, strike with strength and speed. Strike where it is more painful to your enemy and don’t be taken by their crocodile tears or satanic swearing, if they could retaliate you would not still be around here. Buy as much protection as you needed against back-stabbers. Always protect your back and expose your front. And attack from whatever angle or with whichever arm you can handle. And if your courage wanes, then walk away, but never join the enemy.
Looking on from Australia it seems that the US has the world’s dumbest investors. The rest of the world’s markets have generally taken a much bigger beating while the cause of the problem is still hovering around the -20% mark. Can only be another week before another big financial institution announces the next huge writedown to improve their share price. Admitting you stuffed up big time and writing off a few BILLION, then getting suckers to replace that with a capital raising that significantly dilutes existing shareholdings results in a share rally.In addition you even listen to the media commentators which is almost a dumb as listening to politicians.No doubt you are all waiting for the next president to print more money in February next year that will end the W and start another U. What will this be called ?
FWIW…Tomorrow is the solar eclipse and the jobs report. My elliott wave analysis still has the SPX in a three wave down and a target of around $906. It’s very possible that this could happen as soon as tomorrow. The charts are very similar prior to the 1987 crash.
Re:Obama in the bankers’ pocketMy favorite candidate never gets nominated, but for awhile I was hopeful that Obama wasn’t so bad as an also ran. Had Clinton figured as the corporate sell out. I actually participated in my local and county caucus to support him. I still believe that he is the lesser evil since he seems intelligent, and as said above, seems likely to be the "less death" candidate.When I saw that Volcker had endorsed him that didn’t seem necessarily bad, since Volcker had raised interest rates to tame inflation. Then there was the "secret meeting" of Clinton and Obama allegedly at Bilderberg.http://wonkette.com/400268/hillary-baracks-very-special-bilderberg-date-nightPresto, Rubin who had been part of Clinton’s campaign now is in bed with Obama. Hate to buy into a "conspiracy theory" but is certainly seems plausible that when it became clear Clinton couldn’t be given the nomination without tearing up the Democratic party TPTB had a sit down with Obama and told him how it was going to be.http://news.yahoo.com/s/bloomberg/20080727/pl_bloomberg/abkpolapztx4
AfA, you are a poet; beautifully said. I am with you – all the way.
Obama isn’t all that book smart. He gives good speeches but seems only average in thinking on his feet. He was a B student in college, where he surely benefited from a racial preference in admission. Heck, anyone who could benefit from such a preference would do so, so I don’t blame him for it. Romney was the star student, not Obama.
It’s going to be an ugly day for the markets tomorrow-real ugly.
@ Guest on 2008-07-31 13:09:23You make some very good points about rural living. Would that it were so. I have "people" who do live in rural America. They pay the same gasoline prices (in fact, more, since it costs more to ship up to those wide-open spaces) and the same grocery prices, whilst living on minimum wage. Shopping is limited to the local ubiquitous Wal Mart. And forget about getting decent health care. There is nowhere to hide. My heart goes out to all. But dear, dear Afa–"never join the enemy." Yes.
@Roubini: “The NBER definition of a recession emphasizes a variety of variables in addition to GDP whose contraction is a signal of a recession. According to the NBER you get a recession when you have a “significant” decrease in activity over a sustained period of time. The declines would be visible in GDP, payrolls, production, sales and incomes.”This is not scientific, but I have a friend in Sunnyvale, California, who is a consultant engineer in the biomedical field. Over these past few years when I’ve asked how things are going in his field in the San Jose/Palo Alto area, he’s said great. This week, when I asked, he said sales have hit a brick wall. And Silicon Valley traffic’s uncannily light, he said. Just a quirk? I don’t know…
Read about the flood? Babel tower? Get to heaven? Get to high ground? Which to choose?
Basooka–pocket. Classy, AfA, Classy. You are one silver plate, supremely refined individual. A mark for all to follow.
@Average Jane: “I have "people" who do live in rural America. They pay the same gasoline prices (in fact, more, since it costs more to ship up to those wide-open spaces) and the same grocery prices, whilst living on minimum wage.”Yes, I have a house in a small out-of-the-way “resort” town. It is a 100-year-old farmhouse under renovation. I just learned the carpenter doing the finish work is “earning” $12.00 an hour from his contractor employer after 13 years as a professional carpenter, lives in a trailer, is 52 years old – once a Navy Seal. He drives an old truck and is badly in need of dental care. He has nothing. I have seen young men already following down the same hopeless path, in this land of opportunity. This is a state where the federal government has destroyed its timber and fishing industries: America’s “forgotten country” –forgotten by its representatives who hobnob with Wall Street bankers, forgotten by the media as disposable constituencies…He is the Forgotten Man of William Graham Sumner’s essay that appeared in 1883:As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X… What I want to do is to look up C… I call him the Forgotten Man… He is the man who never is thought of. He is the victim of the reformer, social speculator and philanthropist, and I hope to show you before I get through that he deserves your notice both for his character and for the many burdens which are laid upon him…“It is C, the Forgotten Man, who is always called upon to stanch the politician’s bleeding heart by paying for his vicarious generosity.” (Hazlitt)
"Obama … was a B student in college, where he surely benefited from a racial preference in admission."so can we say that his IQ is little above George Bush? Gee, where American people dig up these losers for presidency?
@Guest: “4) Metros more likely to have expansive gov’t and drawdown will excite them into sponsoring innovative means to increase their tax receipts. You WILL pay more just as you’re taking in less…”How right you are. I just had my business license fee increased, retroactively! – to pay for more police because the city is out of money.If you ever have time, I would like to have you expound on Point (6) — “Sometimes in an economic cycle doing NOTHING is better than exposing yourself to the significant downside risk of doing SOMETHING in a systemic crash. In turndowns, the HIGH value added service sector will shrink disproportionately more than in basics. Belt tightening will whack the high income earners much harder than necessity providers.”I understand why high cost service sectors suffer most in a turndown, but what does doing NOTHING entail? Are you talking about holding cash instead of investing anew in stocks or real estate, taking on a new job, relocating? It is hard to do nothing during turbulence when one’s money is losing value, but I can understand its dangers.
Further to SWK/Kilgores’ request, my post on Irving Fisher’s Debt-Deflation Theory of Great Depressions is now up.http://www.rgemonitor.com/financemarkets-monitor/253222/fishers_debt-deflation_theory_of_great_depressions_and_a_possible_revision
bwahahabwaahahahalook whos talking!!(ssssshhhhhh noo noo there’s nothing wrong bailing out F&F…just focus the sheeples attention on someone else)LOOOK AT THOSE KINKY CHAVEZ EYES, he’s the devil, such shamefull act nationalizing companies, SHAME ON CHAVEZ, come on guys lets say it together, SHAME ON CHAVEZ…http://www.bloomberg.com/apps/news?pid=20601068&sid=a4C9n3kQr.5Q&refer=economyChavez Tightens Hold on Venezuela Economy With Nationalization By Matthew Walter and Daniel Cancel Aug. 1 (Bloomberg) — Venezuelan President Hugo Chavez is set to tighten his government’s grip on the economy by taking over his first bank, the local unit of Spain’s Banco Santander SA. Plans to nationalize the country’s third-largest bank, announced yesterday, will give the state access to Banco de Venezuela SA Grupo Universal’s 285 offices and $9.46 billion in deposits. It follows nationalizations in the oil, steel, cement, electricity and telecommunications industries.
Ha! We criticize Chavez for nationalising corporations. Chavez criticizes us for letting the corporations take over the government. I’m not sure which is worse really. Maybe it’s a distinction without a difference.
My guess is that Banco de Venezuela SA will be bankrupt within a year or two due to bad loans in the local real state market.There’s no difference between Chavez and US politicians other than the speed at which they can sell themselves to their masters in the banking cartel.
LEAP2020 predictionshttp://www.leap2020.eu/As a subscriber to LEAP2020, I said to AfA that I would post some of their predictions. Here are some of them, from their latest summer report.- 1 EURO = 1.75 US dollar by the end of 2008.- Very Great US depression.- Collapse of the real US economy, beginning in September 08.- The periphery of Europe (UK, Spain, Ireland, Italy, Greece) sinks into recession; the real blow for these economies will come in 2009.- Asia will be hit by high inflation and a collapse in exports.- Implosion of the CDS bubble.- Collapse of the global financial system if a number of measures (mentioned in their reports) are not taken by the end of this summer.Among other predictions.
How does a duck duck? Just like a recession! You better duck too because it’s coming your way soon. lol
Has anyone read Michael Hudson’s article on Counterpunch. He feels the next bailout will be Pension funds, both Private & Public. What are the ramifications for the Pension & Insurance funds who must be holding trillions in RMBS, CMBS and derivatives thereof. Some excerpts:This problem has been growing beneath the view of most public media. Private-sector pensions are insured by the federal Pension Benefit Guarantee Corporation (PBGC), which is substantially undercapitalized. A much larger problem is state and local pension programs. not only are underfunded; they have no insurance at all. The expectation was that public-sector pensions would be paid out of rising property tax revenues and capital gains. But taxing property now threatens to cause defaults on mortgage payments. This is the corner into which the economy has painted itself by trying to preserve the exponential growth of mortgage debt.To cap matters, this threatens to push state and local budgets into deficit at a time when their pension and medical insurance payments are soaring. On the expense side of their balance sheet, localities must spend more money to cope with the consequences of empty houses being stripped of building materials, occupied by squatters, burned down and generally becoming a source of blight. On the fiscal income side, states and localities are facing populist political pressure crafted by large real estate interests and promoted with the usual flow of crocodile tears on behalf of retirees and other homeowners whose debt squeeze prompts them to support politicians promising to reduce property taxes. Hudson goes on:Meanwhile, property taxes continue to be phased out as the basis for state and local finance. The tax burden is being shifted onto income and sales levies that fall on consumers, not on the preferred tax status of high finance and property. For many years now, the political drive to un-tax real estate led cities such as San Diego and entire states such as New Jersey to pay their work force in the form of retirement and health care obligations rather than current wages, while borrowing from the rich rather than taxing them. The income hitherto paid as property tax was available either to pledge to bankers for loans to buy property rising in price as it was untaxed.All this was fiscal and economic madness from a long-term vantage point – not the madness of crowds, but that of self-serving lobbying by the financial sector. The result has been a trend that cannot go on for long. But having managed to free themselves from progressive wealth and income taxation, the vested financial and property interests evidently believe that they can pull the same trick again and free themselves from the obligation to live up to the pension and health care promises that corporate and public-sector employers have made to their work force.Further:The claim is being made that paying business and public-sector commitments to labor will bankrupt both. There is no mention of debt payments to bondholders for funds borrowed to cut progressive taxes on the rich. Nor is the burden of high housing and other real estate prices that the July 30 bailout of mortgage lenders aims to create.Something has to give, but it is this old worldview. No doubt when the next financial crisis hits we will see all the usual journalistic adjectives: “unexpected,” “surprising everyone by the depth of the problem,” etc. Give me a break! Can no major media see the obvious trends at work?http://www.counterpunch.org/hudson07312008.html
FUTURES MARKET EXPECTS HOUSING PRICES TO DROP BY 45% I think this number is likely correct. Now imagine the carnage this drop will produce on the economy and banks! http://globaleconomicanalysis.blogspot.com/2008/07/record-declines-in-case-shiller-home.html
"We criticize Chavez for nationalising corporations. Chavez criticizes us for letting the corporations take over the government."USA is definitely worst. in USA, wall-street firms control over government, privatize profit, and socialize loss with tax-payer money with help of government politician and credit-worthless Treasury Paulson and FED.
The Labor Department said 51,000 non-farm jobs were eliminated in July, bringing losses for the year to 463,000. Analysts polled by Reuters had expected the 75,000 jobs to be cut last month.well done!no recession in the usa.NFPR will be +50000 in Aug.Again, this is just a matter of money. The printing machine is ready…
Our favorite village idiot was on the NBC Today show and he got everything perfect, perfectly backwards! Cramer said or agreed that:The oil companies just happen to be in a "lucky" business!?!Glass is half full, not half empty.Housing is probably as low as it will go.That his fist banging rant on "Mad Money" last March got the Fed’s attention, and now they are doing the right thing!Congress is doing careful, good, legislation!All-in-all things should start to get better!With these kind of predictions, I afraid even NBC will have to fire him before the end of the year.
Nouriel Roubini – this recession … leading to the most severe systemic financial and banking crisis since the Great Depression: not as severe as the Great Depression but second only to that episode.Did I miss something? I believe this is NR’s first re-positioning on the depth of the recession. He seems to say that it could be bery, bery close to the last Great Depression? Yes?
stupid Fed, Treasury, and NR who supported low interest rate and bailout. let the market correct itself. you guys just make harder for market to readjust. Let the market do its job.—————————-Hedge Funds Buying Bad Mortgages – Better Able to Modify LoansPosted: 31 Jul 2008 09:24 AM CDTNero-fiddlesWe all bitch and moan about the housing issues and expect the government to do it’s thing to protect us. But if you look at the private sector and how capital markets work, things tend to figure themselves out.Take the capital markets. The big boys blew it by writing very profitable in the short term subprime and Alt-A loans that are now a complete mess. While the Feds try to figure this out, look how the markets are repairing themselves.Hedge funds are getting the bad loans off the big banks books. These loans are selling at a deep discount. And what does the deep discount provide the hedge funds?It provides the flexibility to re-work the loans so the borrowers may not have to default. The banks were too rigid to work with individual borrowers to fix the issues, but the hedge funds have the mechanism in place to make bad loans workable for borrowers and themselves. Plus by buying at a discount they also have a profit opportunity when all the banks saw was a loss.Meanwhile Nero fiddles in Washington trying to build a new bureaucracy to save the American taxpayers (and line the pockets of their cronies).This is why Capitalism (with a capital C) rules. Dozens of hedge funds, private equity groups and other investors have plunged into the beaten-down mortgage market in recent months, buying tens of thousands of distressed loans and foreclosed properties around the country. They hope to profit from the woes of banks and other investors holding mortgages that have plummeted in value as home values sink and defaults soar. via msnbc.com.Thanks for reading this post. If you would like to see more articles like this, please come visit The Real Estate Bloggers. where it was originally published.Hedge Funds Buying Bad Mortgages – Better Able to Modify Loans
@ Guest "AfA, you are a poet; beautifully said. I am with you – all the way."@ AfA "Oh people, whither would you flee? The sea is behind you and the enemy is in front of you."This is a great quote, but one from a waxing, rather than a waning power. See Tariq ibn Ziyad (Taric the one-eyed), Arabic: طارق بن زياد, d. 720. Much later, the Nasrids were one of those many great fallen civilizations to which Roubini referred in a previous post.
"It provides the flexibility to re-work the loans so the borrowers may not have to default. The banks were too rigid to work with individual borrowers to fix the issues, but the hedge funds have the mechanism in place to make bad loans workable for borrowers and themselves. Plus by buying at a discount they also have a profit opportunity when all the banks saw was a loss."A double edged sword IMHO. They will also be free to aggressively foreclose when beneficial, bypassing the FRE guidelines. Do these hedge funds really want to perform the function of servicer to these homeowners, or like everything else they do want to make a quick killing?
Stocks going to rally green!
"Ha! We criticize Chavez for nationalising corporations. Chavez criticizes us for letting the corporations take over the government. I’m not sure which is worse really. Maybe it’s a distinction without a difference."The US government is effectively nationalizing corporations- subversively, bit by bit-by bailing them out, and buying up their stocks or by watching them go bankrupt- eventually the big corporations will be nationalized- one way or another.
Oil now approaching $128 but hey, who gives a crap, certainly not US fraud markets!
Obama proposes $1,000 energy rebates for consumershttp://news.yahoo.com/s/ap/obamathat will just discourage oil industry to produce any oil that economy needs. it is official, Obama’s IQ is at same level as George Bush. Or may be lower. And McCain is just another George Bush. With these two clowns and loser as presidential candidates. USA is absolutely doomed.
Confiramtion the global growth story is coming to an abrupt end!Commodity investors were probably just as happy to see July end as equity investors were to see the end of June. During the month, the CRB Commodities Index recorded a decline of 10.0% which is the worst monthly decline since March 1980 (10.5%) and the second worst decline ever! Below we highlight a long term chart of the CRB commodity index since 1960 with each of the red dots indicating the only two monthly declines of 10% or more.
"Confiramtion the global growth story is coming to an abrupt end!"Gee, dont write out global growth story just yet. until uptrend in commodity rally is broken, global growth story is still intact.
@ ptm on 2008-08-01 07:51:28Mr. Cramer is, and will always be, a financial entertainer, never to be mistaken for a serious source of credible information about the economy and investment.SWK
As it was a global bubble, it is and will be a global bust. Write it down.
@ London Banker on 2008-08-01 00:39:21Quite an excellent summary of Fisher’s theory. I appreciate your incorporation of the link to his paper, too.While Fisher lost a fortune in the Crash and took a while to catch on to what was happening in the economy in the 1930s, I note that you, London Banker, caught on to the current crisis far earlier, relatively speaking.SWK
What the heck is going on here? What sort of carry-trade play is it? I see the IB borrowing in GBP as that is expected to fall, but are these guys betting on the collapse of the Euro or what?We still have a 2.25% base rate differential and 12 months euribor is above 5.3%."Goldman, JPMorgan Sell Bonds in Europe as U.S. Yields SoarBy Bryan Keogh and Shelley Smith – Aug. 1 (Bloomberg) — The biggest firms on Wall Street are turning to Europe for cheaper financing as bondholders demand the highest yields over government debt on record.Of the largest banks and brokers, only Bank of America Corp. sold bonds in dollars in July, raising $72.5 million, Bloomberg data show. That compares with the equivalent $5.1 billion issued in euros and pounds by firms led by JPMorgan Chase & Co., Bank of America and Goldman Sachs Group Inc."http://www.bloomberg.com/apps/news?pid=20601087&sid=a3SILzapdoCw&refer=home
Watch the video but promise me not to get angry, OK.http://www.alternet.org/blogs/video/93043/mayer%3A_justice_department_lawyer_says_lunatics_running_the_country/
Do you have a Plan B for your life? We are building a community. A solution for peak oil, financial and economic meltdown, climate change and happiness. http://www.relocatenow.eu
@AlessandroStrangely my wife had a phonecall yesterday from friends in UK who can’t sell their house(on the market since may 07) because prices are "down the drain", but they are thinking of changing their UK mortgage in euros!!???He pays now in GBP over 8%, in euros he could get under 6%…
1:47 p.m.[HMC] Honda U.S. sales down 1.6% in July to 138,744 vehicles 1:46 p.m.[GM] GM U.S. July light vehicle sales drop 26.1% to 233,340 units
If Chavez were to nationalize Citi it might save me a couple of bucks.
did i wake up today younger and it is 1981
@ Flanders "LEAP2020 predictions"Thanks. That indeed looks like apocalyptic Nostradamusian previsions.@ Stratonovich calculus: “Oh people, whither would you flee? The sea is behind you and the enemy is in front of you.”That "entry scene" is indeed the one from Tarik Ibn Ziad (after who Gibraltar is named) that I forget to quote, the rest is mine. Thanks for the correction. However, I thought that the implicit message fits in today’s circumstances.Written by Guest on 2008-07-31 21:32:08What? My first compliment? But all is due to Paulson et al. With some imagination they are funnier than Woody Alan.Senator Bunning: The treasury Secretary is asking for a blank check … Where does it all stop?Hank Paulson: Senator Bunning, if I had a Bazooka in my pocket. REMEMBER? BAZOOKA… The BAZOOKA that I showed you before the session. Senator Shelby, please remind your friend! … Jim, do not be mistaken by my squirt gun I am showing now. Jimmy, do you know what KFC stands for?
PROTOCOL OF ELDERS OF ZIONhttp://www.youtube.com/watch?v=7XrRyqses5U&feature=related
Bad News Friday right on time.FLORIDA’S 1ST PRIORITY BANK SEIZED BY FDIC; SUNTRUST TO ACQUIRE DEPOSITS
The unemployment rate is at least double what the mass media is reporting; see U-6 on the following graph: http://www.bls.gov/news.release/empsit.t12.htm
"Obama is a smart dude"???LOL, he is a freaking retard. he support more bailout. he support tax on oil industry and give to consumer. how is that gonna fix problem. he support tax and more government spending on social program -> more national deficit. he is no better than Bush or McCain. In fact, Bush, McCain, and Obabma are freaking retards. everyone vote for them are retards too. but America are left with no alternatives other than voting for these retards.
and countries around the world buying dollars, dollars denominated asset (equity or bond) are all retards too. LOL, this world is full of retards. may be i am retard by posting comment here too, cuz no one gonna care.
if anyone think we don’t need to pay for these bailouts, tax on oil industry and transfer money to clueless consumer, expanding social program which are proposed by Obama and democrats are retard. read my lips, we will pay by higher future tax or further debasing dollars and increasing inflation. anyone believe otherwise are retard.
Chavez nationalizes the corporation and the shareholders are wiped out (or given incomplete compensation) therefore his government benefits. Not sure what happens to the bondholders.US subsidizes the corporation until it’s healthy again, bailing out the shareholders and bondholders. It’s the taxpayers who are wiped out.I think I prefer the former.
CNBC’s own flip-floppin’ Jim "Grasso" Cramer will need a legal team bigger than OJ’s before this bear market comes to an end…and you can throw in CNBC-TV and more importantly, deep pocketed parent company GE as well…Spinning by Cramer’s liability disclosures on TV faster than an Evelyn Wood speed reading class will prove to be easy pickin’s for today’s savvy lawyers representing unsuspecting retail investing victims…especially in an evolving hostile bear market environment when "Wall Street TV" is taking center stage as the main object of public disgorgement. IMHO
this world is full of retardsWell said!
One more Friday, one more failed bank: First Priority Bank, Bradenton, FL. Nothing really relevant, under $230 million in deposits and the FDIC cost is supposed to be only $72 million or a mere 25% of the total (!!).http://www.fdic.gov/bank/individual/failed/banklist.htmlFirst National Bank of Nevada, Reno, NVFirst Heritage Bank, NA, Newport Beach, CAFirst Priority Bank, Bradenton, FLJudging from latest FDIC moves I’d guess they started to shut down banks in a kind of perverse order: "All banks starting with ‘First’ please proceed to seizure gate one, all banks starting with ‘Second’ please be prepared for the next round…"
"US subsidizes the corporation until it’s healthy again, bailing out the shareholders and bondholders. It’s the taxpayers who are wiped out."Like I said, USA is worst. After receiving the stupid rebate check. I have federal and state slap me with tax payment due saying i omit something on tax return and the state one doesn’t even bother to explain why i owe them tax. trust me, federal and state will come and slap you all with higher tax payment and penalty. oh yeah, tax-payer will be wipe out. and Obama retard wants more bailouts more rebat checks. oh yeah, rob from middle-class and give to people who don’t work. Is he communist?
Everybody favorite evil investment bank has just announced they are done setting up short positions. Somehow the U/W shaped recession meme is spreading."Goldman: "Second Half Slowdown Ahead"by CalculatedRisk. Goldman Sachs put out a research note late today lowering their projections for the second half. "[W]e are on the cusp of a renewed deceleration in growth."I think others will follow and the 2nd half recovery will be cancelled."http://calculatedrisk.blogspot.com/2008/08/goldman-second-half-slowdown-ahead.htmlBTW: does it looks increasingly like Miss America picked one more top?
Prof. Roubini gets final recognition from Barron’s:Yes, That’s $2 Trillion of Debt-Related Losses By Robin Goldwyn Blumenthal LIKE THE EXHORTATIONS OF JEREMIAH TO THE NATION OF Israel before the first temple’s destruction, the warnings of economist Nouriel Roubini fell on deaf ears. For the past two years Roubini, a professor at New York University, has cautioned about a huge housing bubble whose bursting would lead to a 20% drop in home prices; a collapse in subprime mortgages; a severe banking crisis and credit crunch; the near-failure of Fannie Mae and Freddie Mac, and a U.S. recession of a magnitude not seen since the Great Depression. So far, this latter-day prophet of doom has been on the mark, …http://online.barrons.com/article/SB121763156934206007.html?mod=yahoobarrons&ru=yahoo
Very thin bloggin here right now.If anybody have problems, try firefox.There are a lot of messages in other blogs Intertnet Explorer make problems(ore maybe the NSA)
All politicians are liars but that is not the point. Obama b smarter than McCain, it is all relative and if any of you do not think it takes brains to do what he has done in a dirty corrupt world, I guess that is why you have time to blog. Taxes Taxes Taxes, it is all BS, the top 1% pay 40% of income taxes and the top 10% pay 70% of the income taxes, how much more do all the free loaders want? The U.S. already has one of the highest tax rates on the planet if you include the double corporate tax. Whether it is Obama or McCain, taxes are going up or inflation is going up and inflation may be the cruelest tax of all. The question is, what is better for the economy, free loader socialist policies which arguably spur the economy or endless Wars which benefit mainly the special interest and scumbag oil dudes. Deficit spending for any purpose is not the answer and massive deficit neocon spending for the benefit of a few will be the end.
How to make a grown man cry…“Less Stringent Ethics” by Mish ShedlockAugust 2, 2008 –The one thing we do not need is the one thing we are most likely to get: Less Stringent Ethics.I touched on that subject in Not Practical To Tell The Truth, but what the hell, why not just come right out and promote it?It now seems we are. Inquiring minds may wish to consider Treasury adviser likely to get special status.Ken Wilson, the Goldman Sachs banker who is joining the US Treasury to help the country through the financial crisis, is expected to take a temporary post that will subject him to less stringent ethics rules than many other high-level officials.Mr Wilson was likely to be treated as a “special government employee”, making it unlikely he would have to sell assets or produce the detailed disclosure reports required of officials appointed by the president and confirmed by the Senate, legal experts said.Mr Wilson revealed his decision to leave Goldman and join the Treasury as a consultant and “trouble shooter” for Mr Paulson in an interview with the Wall Street Journal published on July 22. The Treasury has declined to comment on Mr Wilson’s appointment or the scope and length of his assignment.According to the report, Mr Wilson received a personal telephone call from Mr Bush, who, calling him by the name he used when both attended Harvard Business School together, said: “Kenny, your country needs you.”The decision by the White to call on Mr Wilson reflects the pragmatic approach of Mr Paulson, whom Democratic lawmakers have credited with persuading Mr Bush to support a fiscal stimulus package and housing legislation that has been unpopular among some Republicans.Mr Wilson has made political contributions of $23,900 (€15,300, £12,000) in this election cycle, mostly to Democrats such as Barack Obama and Hillary Clinton. He made one donation to a Republican – $2,300 to John McCain in 2007. He had given $3,000 to Mr Bush and large donations to the Republican National Committee.Pragmatism DefinedPragmatism: The act of donating money to both political parties in hopes of securing a lucrative contract no matter who wins.http://globaleconomicanalysis.blogspot.com
There’s lots of numbers and websites out there folks that can show you anything you want to see. We can blame the poor, social programs, farm subsidies, the wars, etc. until the end, but the reality will still be that we have accumulated a nearly 10 TRILLION dollar deficit in this country. We stand at the edge of a horrifying economic disaster and things have to change. Taxes will go up for most of us – deal with it. Cutbacks will be made to some social programs – ditto. The government must stop privatizing everything – it simply costs too much. There is little evidence that will prove the US has saved any money by privitization. You want to blame someone for our mess – take a good look in the mirror. We are the ones who lived beyond our means, did not pay attention to what our government was doing in our name and then decided we could blame one segment of the population – well forget it. There’s plenty of blame to go around – let’s start with ourselves for falling short in our own oversight.Vote however you wish. Then go forward and start putting your own house in order and watch over those who supposedly represent us – turn off American Idol and read a few newspapers and books. It couldn’t hurt.As for our new friend and their repeated "retard" comments – well, how about composing a complete sentence, coming close to spelling most words correctly and being a bit more informed before trying to insult everyone – your points may be better made if you sounded as if your IQ approached tripple digits.
Roubini and RGEMonitor travel to LewRockwell.com by way of Panama City.“Disaster: A Day in the Life” by Phil LucasAugust 2, 2008 — One day last week:10:00 a.m. – Comrade Hank "The Knife" Paulson: Housing woes will last months, not years. (RGEmonitor.com blog entry.)10:01 a.m. – Case Shiller index: Home prices continue acceleration downward, falling 15.8 percent in May from a year earlier, a record decline. Previous record set in April. Record before that set in March. It’s a trifecta.10:02 a.m. – Comrade Paulson: Economy is sound.10:03 a.m. – Merrill Lynch CEO John Thain: "Right now we believe that we are in a very comfortable spot in terms of our capital."10:04 a.m. – Merrill dumps bonds at 22 cents on the dollar, takes $5.7 billion write-down, to issue $8.5 billion in new stock as demand for suckers matches supply of one born every minute. Merrill hailed as heroes for coming clean. Still sitting on $43.7 billion of mortgage nitro. Short sellers send out call for blasting caps.10:05 a.m. – Federales announce market price-fixing scheme to save Daddy Warbucks and banks. Marines mobilized to gun down short sellers.10:06 a.m. – Capitano Lucas, locked and loaded, hiding under Alamo bed: Worldwide write-downs now past $400 billion. Chump change. At least $1.6 trillion to go. Buy gold.10:07 a.m. – Comrade George "Bolshevik" Bush: The economy is resilient.10:08 a.m. – White House: Comrade Bush starts signing Fannie Mae, Freddie Mac bailout in smoke-filled room full of bankers. Resilient taxpayers put on hook for $5.3 trillion in toxic mortgage portfolios. Reckless lending rewarded. Home mortgage limit raised past $600,000, spurring resilience in Fannie/Freddie mortgage portfolios, as they will balloon like roadkill, turning $5.3 trillion problem into $10 trillion problem.10:09 a.m. – U.S. House of Ill Repute, between indictments, apologizes for slavery. Raises debt limit to $10.6 trillion, ensuring all citizens are enslaved to debt till hell freezes over. Low-income Americans of all races get special Tuskegee inflation treatment of hideous price rises.10:10 a.m. – Nouriel Roubini, professor of economics at New York University: We are privatizing profits and socializing losses. It is "socialism for Wall Street, the rich and the well connected."10:11 a.m. – Federales denounce Professor Roubini as enemy of the state. Marines sent in to effect arrest.10:12 a.m. – Capitano Lucas: More guns and groceries, please.10:13 a.m. – Comrade Ben Bernanke: Federal Reserve to extend loan program for gang of market manipulators: its primary Wall Street dealers. Resilient working stiffs on hook for trillions more.10:14 a.m. – State Department announces sale of Manhattan to Abu Dhabi, considers merger of Singapore and California.10:15 a.m. – Commerce Dept.: Economy grew 1.9 percent in second quarter. Credits tax stimulus checks.10:16 a.m. – White House: Deficit will explode to $482 billion next year. Blames tax stimulus checks.10:17 a.m. – Capitano Lucas: Resilient taxpayers on hook for $482 billion more. Get permit for Alamo bunker expansion.10:18 a.m. – Tampa strip club owner says more women willing to give pole dancing a try. Credits economy.10:19 a.m. – Wanted: The Alamo is now accepting applications for wenches. Lusty demeanor. Hands-on job. Will train. Ask for Dick or Pedro.10:20 a.m. – Comrade Barack Obama announces economic stimulus plan, proposes sending in Marines to loot oil companies and bribe American households with $1,000 checks. Thousands with pitchforks and torches chant, "Yes, we can!"10:21 a.m. – Comrade Obama announces energy plan. Centerpiece of platform: Drivers must put more air in tires. Thousands cheer and faint.10:22 a.m. – Comrade John McCain invades Panama. Sends in country star to whip up crowd before thousands nod off.10:23 a.m. – 51,000 lose jobs. Six-month body count now nears a half million.10:24 a.m. – Comrade Bush finishes signing bank/homeowner bailout plan. Centerpiece: A hotdog in every pot, one used bicycle and a 30-day supply of rice and beans. Sends tab to resilient American workers. Return mail: Address Unknown.10:25 a.m. –Phil Lucas is the executive editor of the Panama City News Herald.http://www.lewrockwell.com/orig9/lucas1.html
@ Medic on 2008-08-02 09:59:00>As for our new friend and their repeated "retard" comments – well, how about composing a complete sentence, coming close to spelling most words correctly and being a bit more informed before trying to insult everyone – your points may be better made if you sounded as if your IQ approached tripple digits.How can you say that, Medic? This new poster has completely won me over with his compelling wit and unique style of written communication…SWK
@ Medic on 2008-08-02 09:59:00Oh, almost forgot: SWK
Kafka: "Taxes Taxes Taxes, it is all BS, the top 1% pay 40% of income taxes and the top 10% pay 70% of the income taxes…"They must have quite a monopoly on income to pay that much tax. I guess I feel sorry for them…
Kafka: "The U.S. already has one of the highest tax rates…"Also, the official tax rate is one thing, but taxes actually paid is something else, because of the huge numbers of loopholes for corporations and the super-rich.
@Kafka: “Taxes Taxes Taxes, it is all BS, the top 1% pay 40% of income taxes and the top 10% pay 70% of the income taxes, how much more do all the free loaders want?" Kafka, Kafka, Kafka. The average Joe works nearly five months’ hard labor to pay his taxes. I contend it is the middle class that supports the bottom rung AND the top rung when all tax breaks and deferrals are taken into account. Those rolling in dough, those on the Forbes 400 tally of America’s richest people, are these past two years all billionaires. How long did these Gotbucks have to work hard labor to pay their taxes? It’s all relative. The Tax Foundation estimates how many days each year Americans must work to pay federal, state and local taxes — assuming every penny of income earned until then is used solely for that purpose. The group calls this Tax Freedom Day, which arrived this year April 29.For a more accurate assessment of the total costs of government, calculate Friedman Day (named after the late Nobel economist Milton Friedman) or the day when Americans have earned enough money to pay for everything that federal, state and local government will spend on during the current year.Friedman Day this year was Monday, May 19, says Kerry Lynch, director of research, American Institute for Economic Research:Tax Freedom Day is indeed useful to illustrate the tax burden — and has shown consistently in recent years that Americans (although individual circumstances vary widely) spend more of their time working to pay taxes than they do to pay for food, clothing and housing combined.But current taxes represent only a portion of government’s cost.Other costs are being deferred — passed on to future generations through government borrowing and the accumulation of IOUs in nonexistent “trust funds,” such as the Social Security trust fund.A more fair assessment would be what percentage of income Americans pay, according to the Congressional Budget Office, "Effective Federal Tax Rates Under Current Law , 2001 to 2014," Tables 2, 4. Here it is — Share of Total Federal Tax Burden: Lowest 20%-1.1%; Second 20%-5.2%; Middle 20%-10.5%; Fourth 20%-19.5%; Top 20%-63.5%; Top 5%-35.9%; Top 1%-20.1%.Total Effective Federal Tax Rate: Lowest 20%-5.2%; Second 20%-11.1%; Middle 20%-14.6%; Fourth 20%-18.5%; Top 20%-23.8%; Top 5%-25.6%; Top 1%-26.7%.
@ Daltoni on 2008-08-02 11:30:04>Also, the official tax rate is one thing, but taxes actually paid is something else, because of the huge numbers of loopholes for corporations and the super-rich.True enough. One minor point of correction, though. Technically speaking, loopholes are unintended gaps in the statutes or regulations that allow a taxpayer to avoid tax liability. In point of fact, there are a lot less loopholes than intended substantive grounds used by wealthy individuals and large companies for deferring, reducing, or eliminating the payment of taxes they would otherwise be obligated to pay.SWK
@ Guest on 2008-08-02 11:41:27>Share of Total Federal Tax Burden: Lowest 20%-1.1%; Second 20%-5.2%; Middle 20%-10.5%; Fourth 20%-19.5%; Top 20%-63.5%; Top 5%-35.9%; Top 1%-20.1%.>Total Effective Federal Tax Rate: Lowest 20%-5.2%; Second 20%-11.1%; Middle 20%-14.6%; Fourth 20%-18.5%; Top 20%-23.8%; Top 5%-25.6%; Top 1%-26.7%.Excellent point. There has been a rather astounding legislatively driven shift of the tax burden over the last three decades or so, effectively reversing tax policies that began in the 1930s with Roosevelt that were calculated to reduce the concentration of wealth in the hands of a few. For example, the highest marginal tax rate on earned income in the early 1970s was on the order of 70%, versus 35% currently (in fact, when Kennedy entered the presidency, the highest marginal tax rate was 95%). Moreover, the top tax on long-term capital gains dropped from 28% in 1979 to 15% in 2006, and the top tax on corporate profits fell from 48% in 1979 to 35 percent in 2006. The result has been a colossal increase in income inequality for the wealthiest among us, not seen since the late 1920s.SWK
“Good for the Blind and the Sighted” — Ron PaulStatement before the Financial Services Committee, Subcommittee on Domestic & International Monetary Policy, Hearing on Examining Issues Related to Tactilely Distinguishable Currency, July 30, 2008Mr. Chairman,We would not be here discussing this topic today if we had a truly free monetary system.It is well known that I am a proponent of sound, commodity-backed currency. Anyone who has ever felt the heft of a gold or silver coin, noticed the variation in size and design among different denominations of precious metal coins, or examined the different types of reeding, incusing, and other edge designs, recognizes that coins are far superior to paper bills in terms of their ability to be distinguishable solely by touch.Due to what many people deem the impracticality of carrying around coins, paper bills have over the course of time replaced coins in everyday commerce. However, a system of competing currencies would ensure that blind or near-blind citizens have access to currency. If we had a truly free market in currency, private currency producers could produce coins or bills that are tactilely distinguishable, with bills incorporating different sizes, shapes, raised geometric patterns, etc. It is not inconceivable to imagine that a privately issued currency incorporating such features and making itself available to all Americans might obtain a dominant position as a preferred currency.What prevents such a scenario from occurring is the US government’s attempts to maintain the monopoly of the dollar.Through a multifaceted legal barrier consisting of legal tender laws, anti-counterfeiting statutes worded to prevent the private issue of notes and coins, and punitive taxes on precious metals that would form the backing of a commodity-backed currency, the government has ensured that alternative currencies, such as the Liberty Dollar, have to face an often insurmountable legal hurdle. While nothing prevents many point-of-sale transactions today from being carried out in euros or pounds, legal tender laws ensure that Gresham’s law, that bad money drives out good, remains in effect.The recent court ruling against the Treasury Department has been advertised as having a potential cost in the hundreds of millions of dollars. It would be far more economical to eliminate the legal restrictions on private currencies and enable the market to find a solution to the problem of currency for the blind.Competitive private currencies would have the added benefit of keeping the US government honest by forcing the government to stop the limitless increase of money, which is inflation, thereby removing the government’s ability to run up large trade deficits, half trillion dollar budget deficits, and an enormous national debt.Allowing currency competition would aid in lifting burdens not only from the blind, but also from all American taxpayers.
“Early GDP report: Good news scarce” by Sam Zuckerman, SF ChronicleAugust 1, 2008 — Surging exports and consumers flush with tax rebates kept the U.S. economy growing in the second quarter, but the uptick wasn’t strong enough to squelch talk of recession.Gross domestic product – the total output of goods and services in the economy – expanded at a tepid 1.9 annual rate in the April-to-June period, the Commerce Department reported Thursday. That was more than twice as fast as the 0.9 percent rate registered in the first three months of the year.Still, the report showed an economy beset by a heap of woes, ranging from a continuing slump in home construction to a slowdown in business investment.And revised figures for the last three months of 2007 showed the economy actually shrank at a 0.2 percent rate during that period, leading some experts to conclude that a recession might have begun back then…In the second quarter, U.S. households received close to $80 billion in economic stimulus payments. That helped boost consumer spending at a 1.5 percent annual rate.Much of that was eaten up by higher prices paid for food and gasoline. Spending for nondurable goods, which include food and fuel, rose at a 4 percent rate. By contrast, consumers increased spending on services at just a 1.1 percent rate and they cut back outlays for durable goods, such as motor vehicles, at a 3 percent rate.The economy also benefited from a weak dollar, which helped make U.S. goods cheaper for foreign buyers. Exports soared at a 9.2 percent annual rate, while imports fell at a 6.6 percent rate.Thursday’s report may have overestimated economic growth by making a small 1.1 percent adjustment for inflation. That means some of the higher dollar volume in the economy may have stemmed from higher prices rather than increased output."We had more than 1.1 percent inflation, which means that economic growth was much lower," said Sung Won Sohn, an economist at California State University Channel Islands…http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/07/31/BU7B1231P1.DTL
How are new and old fed lending facilities not acting as defacto printing presses?Variously impaired securities are being traded to Fed short-term for liquidity, read cash. Cash being used to plug holes in balance sheets and to refund depositor withdrawals. Remainder–"not well accounted for"–but suspected to be routed into equities where it props financials’ share prices and speculates into basic commodities (or whatever daily target FED/Treas Ma Fia directs). Since institutions are using vicariously the FED balance sheet and taxpayer money to prop, and since money institutions are using IB and commercial banks as subordinates to carry out their will; this is unceasingly exceeding the scope of their mandate. All their overreaching puts the US citizen incrementally more into bondage. Using prior loaned (but now misfigured securitized paper) assets for pawning at Fed Window, they are engaging yet again in speculative, inefficient enterprise to "save the system". Since this is another variant of the "borrow short, lend long–or invest medium" when and how will the Fed be made whole when their call for pawn redemption occurs? Answer, they won’t. They will roll, until better times, all this garbage debt.Also, the recapitalization circus seeking funds to buttress the bungled balance sheets of our big banks is exacerbating the credit crunch. All this funny money shift-about is not being directed to prudent investment. No IPO’s, no R&D underwriting, no expansion of cutting edge industries. Instead main street is getting cold-turkey cut-off of capital as Wall Street uses it to speculate, plug gaps, "print" more stock diluting existing shareholders, and to fund borrowing for hedge funds in order that they can "buy" their distressed debt (75% funded). Can you say Enron, subprime US financial system.All capital allocation is being used to douse fires, lending is to encourage the slowing of price declines in damaged securities, the FED is exceeding mandate to direct banking into speculation and effectively "printing" money by loaning against loans against loans. Main street receives very, very little as small and regional banks struggle to survive and seek local capital by increasingly higher interest offerings on new-issue debt. Mortgage underwriting has been nationalized with FRE, FNM and lending standards have become nearly prohibitive.This portends no ultimate equity or RE bottom. No profit making means of emerging back into a growth cycle is on the horizon. IT WILL GET MUCH WORSE, BEFORE IT GETS WORSE.
"How are new and old fed lending facilities not acting as defacto printing presses?"It is defacto printing presses. Fed can expand balance sheet by issue more Treasury and swap with wall-street firms’ toxic waste. Fed and Treasury Paulson can issue more Treasury (or print more money), put it on Fed’s balance sheet, and Fed can swap with wall-street firms’ toxic waste, and repeat the process again and again… if this is not expanding money supply, then i don’t know what is. hear the news that Treasury is issuing more debt? It will become a major trend. Following the trend, money supply is expanding and being mis-used.
Written by Guest on 2008-08-02 13:13:14But haven’t M1 and M2 been contracting in the U.S. for the last several months? Perhaps it is just to a lag factor, but thus far, what the Fed has done doesn’t seem to be resulting in a net expansion of the money supply based on these metrics.SWK
@ Guest on 2008-08-02 13:13:14"…DUE to a lag factor…" Sorry. I keep dropping words when I type.SWK
KITCOThe Con In Central Bankers’ Confidence By Darryl Robert SchoonJul 30 2008 9:26AMwww.drschoon.comRising gold prices are a cold sore on the lip of central bankers. In the world of paper money, it’s a clear sign something’s not rightCentral bankers are the keepers of the keys to the kingdom. The kingdom, however, is on the edge of bankruptcy and in danger as never before. Comparisons are now being made to the Great Depression of the 1930s. The comparisons, however, are just that.In some ways, the situation is similar. In many ways, it is not. In a very fundamental way, the conditions are much worse. The systemic strains on the global financial system are today much more profound than even during the Great Depression.The Great Depression of the 1930s was unique in the history of capital markets built on debt-based money, sic capitalism. Until the creation of the Federal Reserve System, the US economy had been a savings-based, not debt-based, economy. The difference between the two, although rarely understood, is profoundThe price paid for credit-based expansion is debt. Increasing the debt-based money supply increases the amount of debt; and, over the naturally limited life of a debt-based economy, the constantly increasing and compounding levels of debt will grow until the economy collapses.Compounding debt, the wellspring of bankers’ profits, will eventually destroy the economy on which it lives. The time it takes to do so is dependent on the strength and productivity of the underlying economy.No economy, however, no matter how strong initially, can out run the constantly compounding debt of credit-based money—not even the United States.THE GREAT DEPRESSION, VERSION 1.0In 1913, the Federal Reserve System began feeding debt-based money into the previously savings-based US economy; and in just ten years, the newly available cheap credit poured into the stock market and drove shares prices to historic highs. In 1929, the stock market collapsed and the Great Depression began in 1933, only thirty years after the Federal Reserve Act was approved. It was the vast amounts of cheap credit from the Federal Reserve that fueled the meteoric rise of the stock market bubble in the 1920s, a bubble so large its collapse plunged the US and the world into the first Great Depression in the 1930s; and, now, today, the same is again about to happen. The amount of debt that will soon come crashing down will make the Great Depression seem exactly as it is, a prelude to something much larger and much more dangerous—a possible hyperinflationary deflationary collapse that will soon dwarf the merely deflationary collapse of the 1930s.This time around, the Federal Reserve and its government enablers, sic co-conspirators, have created far more leveraged debt than existed during the historic 1920s stock market bubble. The housing bubble of 2002-2006, created in the wake of the 2000 dot.com bubble (remember that?) is the biggest bubble in history and again we will relearn the lesson that the more that goes up, the more will come down.THE GREAT DEPRESSION, VERSION 2.0Modern economics is a shell game, a 300 year old confidence game designed to hide the fact that bankers’ credit replaced real money, credit created out of thin air by private bankers and public government that leaves compounding debt, and ultimately economic destruction, in its wake.Recently, because of the increasing collusion between bankers and government, the line between private banking and public government is gone. They are now one and the same—only the union hasn’t been publicly announced because of anticipated opposition to the now consummated marriage.Central bankers are modern day confidence men who have so embedded themselves into the fabric of everyday commerce that people are convinced they need credit in order to survive; like Elvis Presley in his final days believed he needed prescription pills to live. Just as Dr. "Nick", Elvis Presley’s pill doctor, is responsible for killing Elvis with his over-prescription of drugs, Dr. Bernanke, the current US credit provider, and his predecessor Dr. Greenspan will be remembered for their fatal over-prescribing of central bank credit to the US and world economy. Too much of a good thing is and has always been in the end, a bad thing. THE ILLUSORY SAFETY OF DENIALAmericans often tell themselves that safeguards are in place that will prevent another Great Depression; and, as we are now on the edge of another such collapse, it would do us well to take another look at those "safeguards" to see how safe we actually are—or aren’t.The daisy chain of debt defaults set in motion by the collapse of the 1920s bubble caused 15,000 banks to fail between 1929 and 1933. So in 1933, the US government responded by passing the Glass-Steagall Act to prevent another such collapse.Unfortunately, the Glass-Steagall Act was designed to deal not with the cause (debt-based Federal Reserve bank notes fueling excessive speculation) but with the results (bank failures and loss of savings). Nonetheless, the Glass-Steagall Act of 1933 is the reassurance Americans believe will insure that "it won’t happen again".Glass-Steagall prohibited investment banks from again acting as commercial banks. No longer could investment banks (which make speculative bets) own commercial banks (which accept savings deposits from customers) and thereby risk the savings of depositors.But in 1999 Glass-Steagall was repealed. Wikipedia’s recounting of the repeal, is well-worth the read:On November 12, 1999, President Bill Clinton signed into law the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act of 1933. One of the effects of the repeal was to allow commercial and investment banks to consolidate. Some economists have criticized the repeal of the Glass-Steagall Act as contributing to the 2007 subprime mortgage financial crisis.…One reason banks are losing money is the repeal nine years ago of the 1933 Glass-Steagall Act, which separated commercial and investment banking after excessive risk- taking contributed to the Great Depression…The repeal enabled commercial lenders such as Citigroup, the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities.…Citigroup played a major part in the repeal. Then called Citicorp, the company merged with Travelers Insurance company the year before utilizing loopholes in Glass-Steagall the allowed for temporary exemptions.…the "finance, insurance and real estate industries together are regularly the largest campaign contributors and biggest spenders on lobbying of all business sectors [in 1999]. They laid out more than $200 million for lobbying in 1998, according to the Center for Responsive Politics…" These industries succeeded in their two decades long effort to repeal the act. In 1999, investment banks, insurance companies, and real estate companies together gave $200 million to US politicians in order to repeal the act specifically designed to prevent another Great Depression; and, now the idea that investment bankers such as US Treasury Secretary Henry Paulson fresh from Goldman Sachs will save America’s economy is absurd—for Paulson and his cohorts are not in Washington DC to save America, they are there to profit and save themselves.The $200 million lobbying effort by investment bankers, real estate and insurance companies to repeal Glass-Steagall prevailed but their task is not yet over. Investment bankers via the privately owned Federal Reserve System are now about to complete their control over the entire US financial system.The following is excerpted from Silver, Gold, & The L
ast American Hero, JFK. Written March 2008, it was true then, it is true today and unfortunately will be true tomorrow.. FED ASKS FOR OVERSIGHT OF ALL FINANCIAL MARKETSoversight n 1: synonym, overlooking, as in government oversightPlan Would Expand Fed’s Power To Intervene In Financial CrisisMarch 29, 2008WASHINGTON (CNN) — The Federal Reserve would have the power to regulate virtually the entire financial industry under a Treasury Department proposal to be announced Monday.The proposal is part of a sweeping overhaul of the government’s regulatory structure that Treasury Secretary Henry Paulson will propose in a speech Monday, said Treasury Department spokeswoman Michele Davis."I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years," Paulson will say, according to a text of the speech obtained by The Associated Press.According to Brookly McLaughlin, another department spokeswoman, Paulson will propose these changes:Give the Federal Reserve authority to look at the financial status of any institution that could affect market stability; Merge the Securities and Exchange Commission with the Commodity Futures Trading Commission; Give stock exchanges more room for self-regulation; Consolidate bank supervision into one regulator. One of the most dramatic changes would extend the powers of the Federal Reserve — designed to regulate the commercial banking industry — to oversight of virtually the entire financial industry.THE FOX IS IN THE HENHOUSEAfter the recent collapse of Bear Stearns, the Fed announced that US funds will now be made available to international investment banks. Previous to this announcement, any loaning of US funds to investment banks was prohibited.On March 28th, the first day the funds were available, the Fed loaned the banks $75 billion dollars. These investment banks, called primary-dealers, are the inner circle of the Fed’s funding mechanism.That these primary-dealers are in need of US support is an indication of the rapidly disintegrating state of their balance sheets—and the lengths the Fed will go to protect their fellow bankers in the private sector with public money…The bailout of the richest investment banks in the world by US taxpayers is tantamount to a kidnap victim being forced to defray their kidnappers’ expenses. Someday, however, these bail-outs by the Fed will come to an end, but that end will not be pretty—for the end of central banking will be both unprecedented and brutal.Central banks and investment banks are two sides of the same coin; and, now that the coin has been debased and recast with subprime securities and other suspect forms of debt; investment banks and their enablers, the central banks, are as vulnerable as those they once exploited.Their increased vulnerability will soon be triggered by any number of events, e.g. bank insolvencies, collapsing currencies, slowing economies, money-market failures, counter-party derivative defaults etc., each one powerful enough to bring down a faltering house of cards built on a foundation of rapidly shifting sand.You need not remember the above predictions. You will remember them soon enough when they occur. Private bankers have controlled the US economy since 1913. Their success has led to our present problems. Their failures will lead to our future problems.But the bankers’ work is not yet complete, there are still a few coins on the floor they inadvertently missed and their greed will cause them to bend over to pick them up. Perhaps then they will be vulnerable to the people’s will—which brings us to another subject, the peoples’ will.THE LAST BUBBLESometimes the patrons of strip bars—influenced by alcohol and their own delusions—believe the dancers truly desire them. While at the time it is a pleasant thought (for the patrons), it is not true and does not last, at least not long after the last bill has been stuffed into the stripper’s G-string.Self-delusion, however, is not confined to strip clubs although it regularly rises and is paid for there. Self-delusion is far more common than commonly thought as the more widespread the delusion, the less the delusion is apparent to the deluded.America is unique in many ways but in some ways it is representative of other nations and other people. After all, its national character was forged by the many different nationalities that comprise it; and, in that way, it is both unique and reflective of humanity as a whole.It appears to Americans as well as to others that through democracy, the peoples’ will determines the nation’s destiny. However, this is no more true than the delusion that strippers lust for whom they dance.Delusions, whether private as in the confines of a strip club or collective in the case of nations, are just that, delusions. The repeal of the Glass-Steagall Act by the Gramm-Leach-Bliley Act in 1999 is a case in point. Since 1933, Glass-Steagall has given Americans some measure of protection. Since 1999, however, such feelings of protection have been delusional.The Gramm-Leach-Bliley Act which repealed Glass-Steagall (note: Gramm, Leach, and Bliley were all Republicans) was passed along party lines in the Senate (Republicans for, Democrats against); but it was passed in the House of Representatives with both Republican and Democrat support, and was signed into law by a Democrat, President Bill Clinton.FREE ELECTIONS MEAN NOTHING WHEN POLITICIANS ARE FREELY BOUGHT AND SOLDThe passage of the Gramm-Leach-Bliley Act was either an example of the "hands-across the aisle" sentiment that sometimes causes both parties to join in supporting a common cause; or, it was an example of the far more common "greased-palms of politicians selling out the public good for private gain" syndrome lubricated by $200 million in lobbyists money.Glass-Steagall was designed to protect America from another Great Depression, a time where one in four had been out of work, where 60 % of banks had failed, and where bread lines were as common as family misery. But in 1999 Glass-Steagall was repealed by those elected to represent the peoples’ will. The subversion of democracy did not happen overnight or by chance. It was built into the process itself. Alexis deToqueville in his seminal work, Democracy In America written in the 1830s, believed that America’s version of democracy suffered from a fatal flaw, a flaw that derived from the American character itself.DeToqueville observed that Americans had two conflicting desires: (1) The desire to be free, and (2) the desire to be led. It is America’s second desire that has now led to the undoing of the first.Irrespective of America’s truly revolutionary Declaration of Independence and extraordinary Constitution, America today has become a debased mockery of the founding fathers’ original dream and the manifestation of DeToqueville’s dire predictions; and, this November, Americans will again go to the polls to choose “their masters”.This is what DeToqueville said of the process:It is in vain to summon a people, who have been rendered so dependent on the central power to choose from time to time the representatives of that power; this rare and brief exercise of their free choice, however important it may be, will not prevent them from gradually losing the faculties of thinking, feeling, and acting for themselves, and thus gradually falling below the level of humanity.In 2008, America is now the world’s number one jailor. Its prisons hold 25 % of the world’s entire prison population and a 2002 Department of Justice ruling allowed Americans to torture prisoners as long as the torturer “in good faith” did not believe permanent harm would result (torture being defined by the US Department of
“Justice” as only those "extreme acts" that cause pain similar in intensity to that caused by death or organ failure). This is stark evidence of the devolution of the “rule of law” that has occurred in the United States of America in recent years. Perhaps America has not yet fallen below the level of humanity as DeToqueville predicted. As some might and will argue, it all depends on who sets the bar. Just recently, in June 2008 the US Congress passed a bill submitted by President Bush that allows the US government to spy on Americans and to indemnify those that already have done so, i.e.AT&T and Verizon. Both presidential candidates, John McCain and Barack Obama voted for the bill.IF YOU ASPIRE TO THE SEAT OF POWER YOU MUST FIRST DROP YOUR DRAWERSI am not saying Americans or others should not vote in elections; but, if they do, they should be cognizant of what they expect will be accomplished. Most Americans still hope their votes once every two or four years will correct the direction this once great nation has taken. They will not.Those candidates who actually challenge the corrupt system which now masquerades as a representative democracy have been marginalized. Ron Paul on the right and Dennis Kucinich on the left represent the best of the two opposing political polarities. Ron Paul’s bills to abolish the Federal Reserve System and Dennis Kucinich’s bills to impeach President Bush and Vice-President Cheney for crimes against the nation should be heard and subjected to meaningful debate. Neither will occur. Real democracy has now been silenced in our now unreal world.HOPE IS ON THE HORIZONDelusions die hard. But like the patrons in strip clubs, only when the money is gone, does reality return and so in 2008, America may now be on the verge of a reawakening. With gas above $4 a gallon, its credit cards tapped, home foreclosures rising and its telephones increasingly called by bill collectors from India, Americans, like the patrons in the strip club, are realizing their wallets are now empty—the money’s now gone, America’s last bubble may be about to pop. THE LAST FORUMS FOR LIBERTYI want to extend my deep thanks and gratitude to the sites that publish these writings and the writings of others, writings that draw attention to the crisis that now threatens the US and indeed the world. It is no coincidence that the gold and silver focused websites have become the last forums for liberty.The loss of our freedoms has been accomplished by the collusion of two powerful forces, private bankers and public government. Both those forces, however, are counterfeit. Bankers no more represent real money than governments today represent those they govern; and the power of both derives from the false money that has fueled the ambitions of each.When bankers and government first colluded in England in 1694, they replaced gold and silver with government counterfeit coupons and the world has not been the same since. It is little wonder that over the years, bankers have become more and more wealthy, governments have become more and more powerful, and we, the citizenry, have become more and more impoverished and indebted to bankers and enslaved to government.It was on the internet, on gold and silver focused websites where I first encountered the writings of others who knew well before I of the dangers unseen by those who could not then see. Because of them and because of the websites that posted their writings, I have gained some understanding and insight into the critical issues that now confront us.Professor Antal E. Fekete, see (www.professorfekete.com), was one of those writers. When I first read his articles, I didn’t understand the value of a gold standard which the professor adamantly espoused.I didn’t understand that the true value of a gold standard—apart from valuing gold and silver as real money—lay in its natural bounds on the powers of government, bounds against which governments attempt to override.Mao Zedong once proclaimed that political power comes out of the barrel of a gun. While that may be true, it is only partially true; for here in the West, since 1694, political power has increasingly come from the issuance of debt-based fiat money from central banks, money that can corrupt all who benefit from its false issuance e.g. politicians, academics, regulators, corporate officers, the military, etc.Buckminster Fuller was fond of calling our planet, Spaceship Earth. It’s a good name but it might do us well to note that, of late, our Spaceship Earth has become a bit wobbly. The icecap on the North Pole has now melted, geophysical calamities are on the rise, gold and silver have been replaced by pieces of paper, and those who purport to speak in defense of justice, liberty and democracy are lying through their teeth.Welcome to 2008. 2009 comes next. 2010 comes after that.Darryl Robert Schoon
"But haven’t M1 and M2 been contracting in the U.S"??who cares? what is difference between dollar, Treasury bond or note? what is difference between creating dollar, Treasury bond or note out of thin air? Just because M1 and M2 dont show expansion doesn’t mean there is no money supply expansion. Trust, Treasury and Fed will pump tons of liquidity by pumping alots of Treasury bond and note (to be swaped with wall-street firms’ toxic waste) out of thin air. and you are telling me there is no money supply expansion. LOL, you are delusion.
"what is difference between dollar, Treasury bond or note"they are all denominated in dollar. creating them out of thin-air is no different creating dollar out of thin-air. still no money supply expansion? you guys are retards.
Guest on 2008-08-02 13:37:22: "what is difference between dollar, Treasury bond or note?"One is (fiat) money, the other two are debt instruments.If you truly don’t see the difference I advise you to study harder. A good start has been just posted on London Banker blog:http://mises.org/story/2364OTHO, if you just want to push misguided views and harass people, you are a troll, and I advise you to think up something that looks like an argument, or people will just ignore you. It’s sad to be a troll, but, man being an ignored troll is really pathetic.
@ Kafka: "Taxes Taxes Taxes, it is all BS, the top 1% pay 40% of income taxes and the top 10% pay 70% of the income taxes"Yes that’s a scary number especially when you assume that the big differential between paid taxes translates into a big differential in income. The Low 90% is paying 30% of taxes!! It is probably due to the low income they make rather than due to the relatively low tax rate. So maybe, as you said, it is not a matter of tax rates as it is a matter of income differential and income distribution.
Guest on 2008-08-02 13:37:22: "what is difference between dollar, Treasury bond or note?"May I add that the Fed has been unloading its balance sheet off of treasuries (and swapping them against toxic paper), and the swapping is contracting the Fed’s balance sheet, if anything. The treasuries that are not bought by the Fed (to smuggle them into Fed notes = money) is bought by others, namely foreign central banks, SWF and investors.You might be right but not for the good reasons. We may argue that the Fed reliquifying illiquid and toxic paper maybe somehow inflationary (although the inflationary effect is only temporary, ie when banks swap them back or write them down). OTOH, the dollar-dominated treasuries are mainly bought by foreigners who do that because of excess saving AND balooning dollar reserves (to keep their unofficial peg to the dollar). More dollar-dominated debt is inflationary to the country who is buying them (China) but will export their inflation back to US and the ROW.
@"sam" or "Darryl Robert Schoon":You’re exactly right, they are international investment banks. Their presence in NYC doesn’t make them American any more than the French Embassy there makes it American. Their employees, even in NYC, are a United Nations, which they prefer. They vigorously protest any idea that they are American, so we should not be fooled to think that they are.OK now, why is "our" Fed bailing out international investment banks? (Heh, because those banks own it? But it’s still an embarrassing question to ask
A "dollar" Federal Reserve note is evidence of Treasury borrowing from the Fed. But other than that, it has no value, besides what value the market gives it (it does not obligate the Fed to pay the holder anything, in particular nothing higher like gold). This is the dollar system. There is nothing higher in that system — a new meaning for the phrase "the buck stops here."A "bond" is denominated in "dollars". If dollar-denominated, it is evidence of borrowing within the dollar system (see description of that system immediately above). It entitles you to a flow of dollars according to the terms of the bond. So it does obligate the borrower to pay you something higher, that higher thing being dollars.
Natural bounds on the powers of government?–they know none, short of the general uprising of the masses or imminent demise. All gov’t arises in hopes of achieving an Utopia but end in the overthrow of a police state and archipeligo of concentrated prisons. The USA has ripened in its iniquity. It has shown all the tendencies of evil prognosticated in all religious literature. It has become a law unto itself–full of hypocracy, vagary, caprice and torture. It must be remade within, or suffer its fall as its governed seize ultimate power once again. But the voyage between will be borne with blood. The darkness will weigh down even the mightiest souls.
@ Guest on 2008-08-02 20:02:23"Human sacrifice, dogs and cats living together… mass hysteria!"Ripened in its iniquity? Please! Enough with the apocalyptic predictions already! These pronouncements about the end of the United States sound ridiculous because they are. This judgment is not directed at your comment alone, but to all similar chaotic visions of the future posted to this blog. Every time this country experiences an economic downturn, all sorts of rash pronouncements begin to be bandied about from various quarters. It happened in the 1930s ("It’s the end of capitalism!") and in the 1970s and in 1987 and in the early 1990s and so on. Astoundingly, the United States political and economic system has managed to survive. It will survive this current crisis, too. The Roman Empire lasted a pretty damn long time before it met its demise, and the United States is in no danger of imminent collapse and will go on a very long time yet. All these charges about the United States as an evil "police state" amount to nothing more than kooky talk. If this were a real police state you bloody well wouldn’t be in a posture to spew such boneheaded vitriol against those in power. Moreover, while all this sort of mindless self-indulgent ranting against the government may be gratifying, it is certainly not constructive, and comes down to little more than publicly indulging in a form of mental masturbation. We have a lot of problems in this country, and comments like this are contributing nothing to explaining them or resolving them.SWK