Futures are on fire, up 300 points (as if all is fine and dandy today). I smell a rat (PPT). I think they are squeezing the shorts again.

first

Excellent article by Jim Willie, which mirrors Nouriel’s point on Deflation.A major challenge looms large on the immediate horizon. The US Economy must be reflated in order to avoid collapse. Debts have become a crippling factor. Liquidation of speculative trades coincides with economic retreat, and hedge funds are under attack by their creditors (largely Wall Street firms) while major companies shed workers by the tens of thousands. When asked about economic prospects, a standard answer lately of mine has been to observe important signals not of recession but of potential disintegration. Almost all of the economic data, almost all of the Fed regional reports, almost all of the consumer sentiment indexes, almost all of the jobs data, almost all of the housing foreclosure data, is negative. The most dangerous and disgusting aspect of the current rescue initiatives is that almost all Dept Treasury and USFed actions are not revealed via any disclosure at all, nothing. Despite demands for transparency, nothing is shared on detail. Corruption and fraud usually thrive in such an environment.Many clownish elite economists seem to miss the point, when they overlook how bank insolvency is much more the issue than liquidity. Big banks not only have doubts as to their own solvency, but they dislike the credit standing of many of their borrowers. So the challenge will be to reflate the economy even as desired, to proceed with money flowing into its credit centers, and to exploit how current loans can be paid back with cheaper future money. Gold will thrive in this environment, since a climax of a disaster, or a climax of produced price inflation will benefit gold enormously. Both scenarios are very favorable to gold and silver prices. Besides, a default at the COMEX for both gold and silver seem highly likely, with cracks forming in December, and outright highly publicized defaults suffered in 1Q2008.Full article:http://www.financialsense.com/fsu/editorials/willie/2008/1119.html

Professor, I completely disagree with your proposed solutions. Or more precisely I’m in shock.I have really hard times seeing you proposing delusional Keynesian solutions for the current crisis. You could see so clearly what the problem was and still is: too much debt, too much credit, too low risk price, too obscure financial instruments. How is it possible that your solution is just plain more of the same: more debt, more credit, lower risk price and more obscure financial instruments (people lend to Treasury, that lends to the FED, that lends to AmEx, that lend to a consumer to buy his last mean on credit, WOW!)?What it is needed is transparency, just that and the consequent massive debt default. Yes, this means that a huge part of the pension balances will disappear in puff of smoke. But your delusional Keynesian “solutions” practiced to the bitter end would reach the exact same effect via the collapse of the fiat monetary regime, taking the real economy with it.I just can’t understand.

Ooops, in your last sentence (that I, to my shame, had not read before posting) you get closer my plea, but still fiscal stimulus and recapitalization is just another way to say: let the ones that produce work for the ones in debt. This is not how free markets and sound financial systems work.

Today is the Option Expiration day, anything you see in the market has nothing to do with sentiment, fundamentals or even reality.

Ooops – “questionalbe” is “questionable”, pre-coffee typing.

Tales from the ApocalypseOne deflation-fighting attempt: Provide unexpected customer service rather than lower prices.My wife was browsing for winter clothing at Patagonia’s website, and all of a sudden someone at Patagonia initiates “Live Chat” with her! “Hello, is there anything you’d like to ask about?”I have never, ever, ever heard (or imagined) a retailer paying someone to approach me as I enter their website.My wife was too surprised and polite to answer with the reason she was there in the first place: investigating the timing of significant Christmas price drops: Before or after Thanksgiving? Before or After Christmas?

Turning to consumption, as the grand end which justifies the evil of modern labor, we find that we have been deceived. We have more time in which to consume, and many more products to be consumed. But the tempo of our labors communicates itself to our satisfactions, and these also become brutal and hurried. The constitution of the natural man probably does not permit him to shorten his labor-time and enlarge his consuming-time indefinitely. He has to pay the penalty in satiety and aimlessness. The modern man has lost his sense of vocation….The tempo of the industrial life is fast, but that is not the worst of it; it is accelerating. The ideal is not merely some set form of industrialism, with so many stable industries, but industrial progress, or an incessant extension of industrialization. It never proposes a specific goal; it initiates the infinite series. We have not merely capitalized certain industries; we have capitalized the laboratories and inventors, and undertaken to employ all the labor-saving devices that come out of them. But a fresh labor-saving device introduced into an industry does not emancipate the laborers in that industry so much as it evicts them. Applied at the expense of agriculture, for example, the new processes have reduced the part of the population supporting itself upon the soil to a smaller and smaller fraction. Of course no single labor-saving process is fatal; it brings on a period of unemployed labor and unemployed capital, but soon a new industry is devised which will put them both to work again, and a new commodity is thrown upon the market. The laborers were sufficiently embarrassed in the meantime, but, according to the theory, they will eventually be taken care of. It is now the public which is embarrassed; it feels obligated to purchase a commodity for which it had expressed no desire, but it is invited to make its budget equal to the strain. All might yet be well, and stability and comfort might again obtain, but for this: partly because of industrial ambitions and partly because the repressed creative impulse must break out somewhere, there will be a stream of further labor-saving devices in all industries, and the cycle will have to be repeated over and over. The result is an increasing disadjustment and instability.It is an inevitable consequence of industrial progress that production greatly outruns the rate of natural consumption. To overcome the disparity, the producers, disguised as the pure idealists of progress, must coerce and wheedle the public into being loyal and steady consumers, in order to keep the machines running. So the rise of modern advertising-along with its twin, personal salesmanship-is the most significant development of our industrialism. Advertising means to persuade the consumers to want exactly what the applied sciences are able to furnish them. It consults the happiness of the consumer no more than it consulted the happiness of the laborer. It is the great effort of a false economy of life to approve itself. But its task grows more difficult even day.- http://xroads.virginia.edu/~MA01/White/anthology/agrarian.html

Guest, we are on a similar wave length. Forcing transparency means that people will know to whom is really safe to lend to. This might very well bankrupt half of the world companies forcing a massive debt default. Doing it overnight is crazy, but the question to me is how do you organize the orderly liquidation of a sizable part of the financial and economic system? Either someone will answer that question or the liquidation will be disorderly, whatever the FED and the Treasury do.

The banking cartel, a/k/a Federal Reserve, actually prints money and printing money is one of many possible solutions. It has its own set of worrisome issues as it relates to currency “value” and diminished likelihood of future foreign financing of the US deficits.

be very careful today volatility will likely continue at record levels – e.g. buy and hold will need to be measured in minutes if not seconds.

The Professor’s deflation post in terms that are easy for all to understand (and shorter)Professor, to put in in simple terms, what we are seeing is the failure of capitalism. The top capitalists grabbed to much of the pie, they own the commodity providers, they own the manufacturers, they own the land where houses are build, they own the services (including banks, hospitals etc.), they own the banks that lend the money so that consumers can consume and they can even make more money.The system created a huge production apparatus that needs affluent consumers buying all the junk capitalists produce, from ipods, to blackberries, to the latest laptop, car, McMansion etc. But the problem is that as they were expanding instead of letting their employees share on the bonanza capitalists cornered them. Your workers are my consumers and even the consumer of the stuff you make and vice-versa. So consumers are not just people living on savings like me; consumers are people who work for a capitalist. These workers have been cornered more and more in terms of salary reductions, layoff, that result from moving jobs overseas, technological improvements,etc.So the net result is that consumers don’t have enough income to buy all the junk they watch on TV. So what do the smart capitalists banksters did? They lent they money at high interest so that the little guy could spend future consumption upfront and they could make even more money on top of that (think the profit on a GM car plus the profit from the financing).For a while Diz worked like a charm. AG provided the cheap source of funds so that consumers got reasonably low rates and banks made a killing on the spread. But eventually debt levels got too high, conscious people stopped leveraging to the extreme so they started targeting the bottom of the heap: sub-prime folk. SO most folk, sub-prime and most others, reached a point in which they mortgaged their lives since their debt surpassed the present value of their lifetime earnings (i.e., they became insolvent and now they cannot neither consume nor pay all their debts – but they can and should pay some).The recession cycle is making matters worse since people who were living close to the edge but doing well in good times also start becoming insolvent.An economy in which a huge chunk of the population is insolvent cannot consume. In order to consume you have to produce. You can only consume what you can produce. You can consume a portion of your future income up-front but that has got to have a limit.People cannot go on mortgaging their lives to banks like they have in the past. Situations in which the paycheck is gone by the time you service your debt are unacceptable, is this a way to live?, there has to be money left even for rainy day savings. This is the way people who have been through hardship (WWI &II, holocaust for Jews and Armenians) learn to live; they are smart, they have learned the lesson.People have to learn not to be tricked by the TV lady with the cute face and nice bare ass that tells them: “buy this car” “drink this beer”, “wear this hat” and “this watch” “go to this place”; “and only them you will be cool”. You can be who you are even if you only own two pairs of jeans, a set of snickers, four T shirts, a salvation army coat, and some underwear. It is what is inside your brain that REALLY matters.Let me give you an example, the Great Houbini: He became cool just using the gray stuff is his brain. He doesn’t wear extravagant outfits, till recently his hair was a mess, he probably doesn’t even drive a fancy car, and look at all the CNBC and Bloomberg babes chasing him!:-) SO you see a boring, absentminded, unfashionable (until recently) economics professor has now become a good candidate to be a trophy husband or for him to get a trophy wife!The little guy overseas cannot pickup the slack for the until recently “rich” McMansion-Hummer-gold-chain amerikan consumer. He makes very little money and even though the banks are starting to lend to him to play the same game they did in the US they cannot make up the US decline in consumption.SO here they are capitalists with their huge factories, car, houses, electronics, etc. which people cannot afford to buy. Diz is the deflation the Prof. is talking about. Just basic supply and demand stuff they probably even teach in HS economics.The solution to the problem is to train the workers in industries that have a future and more or less equalize workers salaries and rights across the world so that they make enough money to buy a decent house, (car if possible and really needed), health insurance, and eventually a 1-2 vacation somewhere without having to jump on debt except for a conservative mortgage. Banning CCs would not be all that bad. Business will slow initially but then it will stabilize.I don’t like it but the idea of some king of “system reset” like when your computer freezes is need. I hate it as it will involve debt forgiveness for irresponsible people who, if uncontrolled, will do it again. It will involve debt forgiveness to banks owned by vary rich people who took lots of money out and are now wealthy even at the billonare level, and where the ones that created this mess. Their fortunes should be confiscated.Drastic changes and lots of hand, even face slaps, will be needed. I hope Obi will be up to the task in a way that minimizes the free rides for the sinners because guess what? When you throw so much money on the streets. You know what happens? the 10% of the people who already own 90% of the assets are the ones that are smart enough, and have the resources to corner 90% of the money the government puts in. This is the way life is folks; the rich get richer.The cornering of the US consumer by capitalists-bankster complex and the eventual demise of the pyramid scheme is something I saw around the irrational exuberance AG speech and thus pulled out of the market in the fall of 1997

Thankyou for repeating the truth so that the American public understands that what the lenders say to Congress under oath is simply a pack of lies: I own multiple properties and am experiencing exactly what you describe above and I, unlike the auto execs, don’t fly around the country in a private jet while asking for a bailout!!!

I would expect that this is an automated chat greeting. If she were to respond, there would be a long wait while the question was relayed to a chat representative in a center in Hyderabad.

It is too late. Expect the ‘crazy monetary policies’ listed above to be tried.The compounding problem will be lack of foreign purchasers for treasuries. It is clear that the US has no way to pay off its debts or meet future obligations. Foreigners are pulling the wool off thier eyes. China is in terrible shape already as far as unemployment goes. We stopped purchasing from them. Now they are investing in domestic infrastructure. Their money will not be going to Treasuries.The value of oil has fallen by $100/ bbl. That money is not going from the US, the largest consumer of oil, to the Saudis. In addition, auto miles travelled is decreasing rapidly. On top of that, the US DoD, the largest single consumer of oil in the world, will soon be pulling out of Iraq. The saudis have and will continue to have much less money to invest in treasuries.Japan is being hammered by the ‘toyota crash’. As an exporting nation, they are getting killed by the retrenchment of the US consumer. They will be investing much less in treasuries.We will not be able to sell enough treasuries to fund the US deficit in 2009. Period.

JP Morgan at work, no doubt

A good interview from earlier this AM with James Galbraith.James Galbraith, University of Texas (video)

El Erian of Pimco – crisis has morphed – liquidity not safety is reason for bond action.

If there is a lesson about how this crisis has evolved – things are happening at a much faster speed than any of the experts including NR have predicted. Deflation / inflation – dollar collapse – whatever it will be count on it coming sooner and sharper rather than later and gradual.

Regressive countdown avaliable here !http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtmlToday with record lows…

If you syncretize the professor’s comments with the prior postings, we have an inherent problem in the structure of present capitalism. The labor wages are not enough to sustain global consumption without debt. Debt is no longer easily available. The elite are not dealing with the debt overhang of the american consumer and will probably target the fiscal stimulus to profit them and not the general public. Octavio is right. The flaws of the economic software are coming to light. The elite will persist in running this software until the whole thing cracks from lack of global total aggregate demand as John M.K. stated. The professor stresses at the end of the piece the importance of Fiscal Stimulus and reduction of debt overhang. The banks will refuseto modify loans to fair market value to reduce debt overhang and the crony lobbyists will squander the efficiency of the fiscal stimulus. Either we vociforously participate in the democratic process to bring to fore the great defects of our present situation, or we are in for a very serious situation.

Will the powers that be do the “right” thing? I suspect not as any fix or deal will be slanted to those who win the negotiation of “what to do about this mess.”Human nature changes at a snail’s pace over the eons. I wonder if any fix can be crafted to fix the problem vs. benefiting those who are crafting it.

The answer from our predecessors:”The budget should be balanced, the Treasury should berefilled, public debt should be reduced, the arrogance of officialdom should betempered and controlled, and the assistance to foreign lands should be curtailedlest Rome become bankrupt. People must again learn to work, instead of living onpublic assistance.”Marcus Tullius Cicero – 55 BC

El-Erian interview

Free Markets are a fallacy. A quick pain ¨solution¨would lead the world close to or to a large scale wars. Just look at the rising tide of ultra right wing in Europe, Iran, and even the Taliban. Economics, politics and societies are all part of a single body, seemingly independents but interconnected and dependent on each other. Pragmatism, and a holistic view of the system,gentlemen , of the sort proposed by Mr. Roubini, is what is needed to stear the ship around this tsunami.

Japan tried massive fiscal stimulus too and it failed. So, maybe fiscal policy is also ‘pathetically ineffective’.Jeremy

London Banker asks the million dollar question. When is the deleveraging going to stop? The initial paragraphs of his post is very intriguing!!! Did theprime brokers find a profit opportunity in the deleveraging hedge funds? Was the deleveraging a convenient way to create a dollar surge to counterbalance the liquidity infusions? I got thisintuitive feeling when I read it, that maybe theprime brokers may have seen a profit opportunity in the Lehman BK and that would be the only way that this was allowed to happen! London Banker always makes us think, even though sometimes I personally go off the deep end. If the Masters of the Universe thought it would be fun to profit from a downdraft and pick up fire sale assets atthe end, they deserve french haircuts for Christmas!! Have there been unintended consequences to what they saw as profit opportunities, and now they can’t control thedowndraft as they thought they might? Whoevermay have played this high stakes game withoutconsidering the consequences to the expandablemasses, would be responsible for much pain tothe people that don’t live in the Financial Clouds.

WHY NO ROUBENI comment on Citi?—(The Gov’t is scared of N.R. and he has been silenced?)biggest story of credit crisis so far…FED or FDIC must take it over immediately.

Look at CITIC 3.76 -0.95 (-20.17%)it’s doing a Merrill/Lehman/Bear

Central Alabama, Neighborhood in which my son lives. A house behind his with 2000sq ft. went into foreclosure in Jan. 08 the price to purchase was 150,000 June 08 the price was 90,000 he called me yesterday and told me the house could be purchased at 50,000. His house is 2200 sq ft. was purchased for 154,000 in 07 with this house and others in the area in the same situation he as well as the rest of the home owners are in negative equity of 104,000 on average.This price decline is in everything I see from used cars to ATV’s. Do not buy anything today, is very true.

I ROFL at CITI’s request for the reinstatement of the uptick rule and the banning of short selling. That would be the naked shorting that is trashing their share price. I wonder how many FTD’s there are on CITI stock right now?

@NR:”It will not be easy to prevent this toxic vicious circle unless the process of recapitalizing financial institutions via temporary partial nationalization of them is accelerated and performed in a consistent and credible way”BWAHAHAHA! Seriously, when was the last time anything got temporarily, partially nationalized. Your recommendation is delusional (in the literal sense of the word; not as a derogatory one) – if (and probably when) this happens, it will be the death knell for democracy and capitalism. Temporary partial nationalization, indeed. ROTFLWCU (Rolling on the floor laughing while crying uncontrollably).

Citigroup Dec $2.50 options

The talking heads on CNBC are already writing the obituary for C … Also was Paulson’s speech yesterday a throwing in of the towel as in “this is your problem now Mr. Obama”

Marc Faber expects a strong rebound within 3 months:http://www.cnbc.com/id/27834889Statistically a rebound should happen, but if it doesn’t “the air is out” and the world faces an economy “worse than the depression of ’29 to ’32,” he said.What does he mean ‘should happen’ but doesn’t happen?

I’m not an economic person and had never paid any attention until this happen, especially listened Professor Nouriel Roubini on TV.So now the whole economy is being sold on force closure price. So the good people with cash can buy it cheaply and come out of this many many times filthy richer. Damn I could be one of them had I sold my condo few years ago and sitting on my $400,000 and retired soundly by now.

Marc Faber is predicting a rebound for quite some time now.

Corruption and fraud associated with government and big business?Highly improbable, you surely jest?

@ Michelle: “The Fed has been too conservative with its liquidity injections and worries about future inflation and foreign financing. I think this is not a real threat and the Fed needs to understand that the world depends on our endless supply of dollars to maintain the global economic engine. … In my opinion, I think too little has been done and it’s too late to save us from the demoralizing effects of deflation.”The policies you advocate actually will destroy the modern “global economic engine.” America’s fiat currency system is dead – from abuse. Bernanke can print paper and create credit, stimulate and monetize, blow bubbles and bail out, expand and contract, spend and tax…But it’s too late. The resultant crack-up boom has thundered its final explosion: The breakdown of the whole monetary system has begun.“Keynes is Dead,” killed by stubborn economic facts. The last rites were pronounced by the once-arch Keynesian London “Economist” in 1969. He’s dead and all the resuscitation efforts by President-elect Obama and some of the policies being advanced by Professor Roubini won’t bring the economy back again. The only way for sound economic recovery to ensue is for the government to keep absolute hands off the economy, confine itself to stopping inflation, and cutting its own budget.Ron Paul on the End of the Fiat-Dollar System ~http://www.lewrockwell.com/blog/lewrw/archives/024086.html

there is enough gold to back a new global monetary system. It would just have to be valued as it should at $3000/oz.

Just more unpatriotic negativism from liberals who hate American, and the troops.

Yes, under the Constitution they have that right. They still have to get it into circulation.But the preferred method has been using the fractional reserve banking system to create money out of thin air by lowering the reserve requirements and loaning the banks money thru the federal reserve at cheap rates. This way the fed makes money and the banks make money.Yet, where that money goes makes all the difference. If it goes to consumption vs. value added production, then there is just more debt and less ability to service it.

Professor,Deflation is not primarily a monetary problem, it is primarily demand/supply problem. As such it will not have a monetary solution, which is why Mr. Keynes said simply put people to work.It’s amazing how the idiocy of monetarism has infected all thought, not for much longer however.

Have the Fed send unsterilized, freshly printed $1000 to each taxpayer. If the trick doen’t work, try $10,000 two months later. Monetize the federal deficit till you drop, have the Treasury spend like there is no tomorrow… just looking at Latin America’s experience since the eighties, keeping deflation at bay is a much easier task than taming inflation. The problem here is that ‘printing money’ that ‘monetization ‘and ‘unsterilization’ are dirty words in the orthodox central banker lexicon. The term ‘quantitative easing’ is typical of such misplaced pudity and scruples. Maybe it’s time to realize we are on board the Titanic, and unorthodox measures are perfectly appropriate in desperate times.

You are right. If the government owns everything, no one needs money. The state will allocate.

The world only needs so many ‘ditches’.Put people to work doing what? The ‘what’ is determinedby the way money is allocated in the economy.Hence it is a monetary problem.

So if you get rid of the Federal Reserve and Fiat Currency and back currency solely by precious metals now, wouldn’t that be extremely deflationary by contracting the money supply?

not a bad idea. maybe the fed and treasury should do nothing and let the chips fall where they may……

I have more to say: quantitative easing didn’t work in Japan for a simple reason; it was done too timidly, as if they were commiting a deadly sin.Anyone agrees?

“Trying to use gold in the long run cause wars.”Kind of like oil?

I heard on another site that Citi was preparing to merge with Goldman Sachs. The new entity will be called……”Sachs and the Citi”………..Sorry. this is the best one I’ve heard in a while.

The current administration has obviously decided to flip us the bird on the way out the door. They better watch it, because if this gets any worse, they will be the ones the lynch mobs come looking for. If Citi and GM go …. well. I think it will be bad.FWIW, I think fiscal stimulus directed at productivity enhancing, energy efficient infrastructure must be tried. Things like water systems, sewage treatment, pollution clean-up projects are never really a waste.The energy crisis is only on hiatus due to demand destruction, and we are obvious all a lot poorer than we thought. So, I wouldn’t want to see much extra money spent on roads; the ascendancy of the car is coming to an end. To ease the transition it would be smart to rebuild the US rail system, and re-activate the inland waterways for commerce. Also start rebuilding livable mixed income urban areas where people can live without cars. The suburbs are not sustainable. It’s a waste to pay for all those roads, sewers, and other services in abandoned subdivisions. And people will not have money for cars anyway. The economic refugees from the suburbs are going to need somewhere to live, or we risk massive social dislocations. It’s going to happen anyway, so we might as well be deliberate about it and end-up with something worth having, rather than a hodge-podge of shanty towns.To encourage hiring, the gov’t could extend at least basic health coverage to *all* American’s regardless of income (yes, everyone – that way you don’t deny the benefit to those who pay for it!). Reducing payroll taxes, and maybe possibly eliminating them on a temporary basis might be worth thinking about.I also think transparency is key for restoring confidence. Until we know for sure who is insolvent and who is not, nobody is going to extend credit or buy debt. Ultimately, that may mean radical action to unscramble the CDO/CMO/etc egg and reconstitute the original, understandable, priceable, plain old boring mortgages.Similarly, CDS’s desperately need an exchange, sellers need to be regulated like insurance companies (e.g. capital requirements), and some though needs to be given to limiting CDS buyers to parties with economic interest in the underlying asset/financial instrument to limit ‘contagion’ and the possibility of massive blow-outs caused by a large failure.

He simply follows trends and can not think and use common sense. If it rebounded after so big a drop in 87 then that’s what it will do this time. People like him do no actual analyzation of the root problems. Thank God for NR who does exactly that, he’s getting to the root.

“We will not be able to sell enough treasuries to fund the US deficit in 2009. Period.”Ok, lets take this view a step further. So if the US can’t borrow enough to operate and make payments on it’s debt, then it will both default and stop some government operations. So the government would contract, cutting off all unnecessary spending first. Maybe this is not such a bad thing?

I agree the only way out of this deflationary cycle is to print and give it directly to taxpayers. Nothing else has worked, nor will it until the assets are written down to market and regulation and transparency are restored. Citi is proof the current banking/IB model of debt,leverage,and cheap money is dead. Let them all fail. It’s time to save what’s left of the real economy.

The concepts of stimulus, rescue, bridge loan, and “troubled asset relief” are really weasel words for government intervention. We are miles past a free market economy already, and the problems of the economy are landing on the desks of legislators. The hearings about the automakers’ problems not only give us a clue as to where we’re headed but they are proof of the money- and power-polluted route that we have taken to arrive at this point.Oh, yes, Pelosi and her little friends need a business plan before they will part with…our money. Not being a carmaker herself, at least she’ll know how to make money when the plan arrives. That financial whiz will know it when she sees it!As P.J.O’Rourke observed: “When buying and selling are controlled by legislation, the first things to be bought and sold are legislators.

The economic system is the result of how we value ‘things’ — both material and non-material.The monetary system is how we ‘rate’ or arrange inimportance the various ‘things’. Assigning valueto each. The value of money should reflect sometypical aggregate collection of typical ‘things’.Trade and profit result from different views of thevalue of the aggregates that people or groups have.Trying to artificially separate this components –or ignoring some in favor of others is impractical.

CDS and other ‘slice and dice’ securities should be banned.Only safe way to handle them.

You can ballast the money with labor.

You neglected to mention the liberals hatred of apple pie, baseball and the bible. Now is not the time to pull punches.

Hey good to hear from you again, Strat. Sounds like you have a wife like mine, looking to beat the system.

Strangely, yes, at least from the parking lot view point. Maybe they are just browsing or buy much less? But so are restuarants, they aren’t jam packed, but still decent lines.

Obama Team Said to Explore `Prepack’ Auto Bankruptcy (Update2)Link

Will you idiots give it a ****ing rest.LOOK UP THE MEANING OF SOCIALISMHOW DOES IT COVER THE CURRENT SITUATION?NOW LOOK UP FASCISM AND/OR CORPORATISMSEE THE SIMILARITIES WITH OUR CURRENT SITUATION?Do us all a favor and get an education before posting.

Hi all, i was reading the LB post and found this at the end.I’m not going to make any recommendations, but I predict we haven’t seen the end of volatility. The rapid rise of the dollar, the massive demand for Treasuries, are hugely convenient for the US Treasury as it finances the expansion of the Fed balance sheet and the giveaways to the corporate welfare queens on Wall Street and elsewhere in the last days of the Bush administration. It seems unlikely, however, that the conditions can be long sustained.When they reverse, we may see a fair sized bounce in global equity markets, a loosening of credit conditions in global debt markets, a revaluation of commodities, and a revaluation of the mighty dollar. Many will call the bottom and pile back in.Should we, with deleveraging , expect the dollar to fail ? And not revaluate ?

Don’t forget the pinkos. I don’t really know what a pinko is, but I’d probably know one if I saw one.

No as there is a massive flight to the “safety” of treasuries. Also, forced liquidations by foreign investors often require settlement in dollars. The dollar will devalue when the deleveraging ends.

Sports and Entertainment Revenues will slide dramtically the next few years… Watch attendance next year as another indicator of consumer confidence and where we are at…http://www.bloomberg.com/apps/news?pid=20601079&sid=an9I3Q5TERQg&refer=home

Nov. 21 (Bloomberg) — Surging demand for the safety of U.S. Treasuries is triggering concern among futures traders whether they’ll be able to meet commitments to deliver securities when contracts expire next month.http://www.bloomberg.com/apps/news?pid=20601087&sid=a8koj6NxRrOk&refer=home

What is needed is a global standard (not a currency as we know it) tied to a basket of commodities – grains metals energy etc. All international trade should be denominated this way and settled in these standard units . Real honest and beyond the corruption of central banks. The current system is past its use by date.Cheers,David.

You mean the same Belgium that carries a national debt of over 300 billion euros(around 100% of GDP) for 10 million rapidly aging people (40,000$ per living head) and that besides that, has to secure that 8% (official) unemployment and all those existing and coming pensions and pre-pensions? I’m sure they’ve been living in a bubble for some time now and have also been very creative in lending towards its active generations. And it’s true that there is still lots of savings although someof it has recently evaporated in nicely packaged ‘safe’ investments, secondary homes and other mutual funds.With what’s left of industrial production cutting hard in jobs and a far too big banking business maybe up for the same, I think Belgium will not be one to lead any recovery.

um, you just printed “Teddy Bear’s Picnic” and substituted “socialists” for “Teddy Bears”. Was that supposed to be creative or something? Keep your day job.

Well, honey. Rather than scream and call names using expletives, why don’t you simply look it up and explain it to us?

Maybe we should change to a planned economy, my dear professor? Once the government is the clearing house for everything, problems are all solved? You are on the wrong track. There is no way to stop from returning to normal from excess, everything reverts to mean, and the mean is a much lower living standard.

@ Nice Guy: “People seem to be making the inference that the appropriate policy here is to dump money (Krugman is saying that for example) and that this was a lesson learned from the depression. But this inference assumes the cause of the current situation is the same as the cause of the depression. Is that the case?”Here is the view of an expert on the Depression:During the nine years before the crash of 1929, the Federal Reserve was responsible for a massive expansion of the money supply. A primary motive for that policy was to assist the government of Great Britain to pay for its socialist programs which, by then, had drained its treasury. By devaluing the dollar and depressing interest rates in America, investors would move their money to England where rates and values were higher. That strategy succeeded in helping Great Britain for a while, but it set in motion the forces that made the stock-market crash inevitable.The money supply expanded throughout this period, but the trend was interspersed with short spasms of contraction which were the result of attempts to halt the expansion. Each resolve to use restraint was broken by the higher political agenda of helping the governments of Europe. In the long view, the result of plentiful money and easy credit was a wave of speculation in the stock market and urban real estate that intensified with each passing monthOn August 9, the Federal Reserve applied the pin to the bubble. It increased the bank-loan rate and began to sell securities in the open market. Both actions have the effect of reducing the money supply. Rates on brokers’ loans jumped to 20%. On October 29, the stock market crashed. Thousands of investors were wiped out in a single day. The insiders [Warburg and other financiers had issued an advisory in February to preferred customers –wealthy industrialists, prominent politicians, and high officials in foreign governments-- to get out of the stock market] who were forewarned had converted their stocks into cash while prices were still high. They now became the buyers. Some of the greatest fortunes in America were made in that fashion. J. Edward GriffinIMO, rather than the Fed pricking the bubble with a pin this time around, the economy itself — beaten down and over burdened by the biggest and longest financial heist in world history, and abetted by lack of congressional financial law enforcement–has collapsed from shear dislocation exhaustion brought on by repeated creep strain.

When speaking about the Great Depression of the 30s, FDR’s Fed Chairman, Marriner Eccles said: ” As in a poker game where the chips are concentrated in fewer and fewer hands, the other fellows could stay in the game only by borrowing. When the credit ran out, the game stopped.”Is there any difference today? This is capitalism, where the capitalists make the rules and write the tax, labor and consumer laws. This wealth concentration is inevitable, just like a monopoly game.There is only one way out of this, without dismantling the economic system. A wealth tax, funneled into higher wages, as well as state and local governments. Make them give back some of their ill-gotten gains. Give the wage slaves a fairer share of the pie.But I’ve been around long enough to know that this is not an option. They stole the money fair and square.

The last paragraph referring to CDS’s points to the next massive bomb that will be ravaging the financial system. As bond defaults begin to surface, the effects of CDS’s will be like a nuclear bomb going off over NYC.

Looks like my call on gold is proving right so far.So, no need almost to say this … with gold now diverging from the US dollar and moving upwards, gold stocks are a very good buy at present. These stocks have been dragged down by general pressure of selling and short positions. There is a very big extreme pricing difference between gold and gold stocks. This has to resolve soon.PeteCA

Another set of interesting charts from Chris Puplava …http://www.financialsense.com/Market/daily/wednesday.htmBefore commenting, I must say that Mr Puplava has got to be drinking a lot of coffee these days. This man is clearly working very hard! These comprehensive charts that he is turning out take a lot of work to prepare. Quite frankly, readers who don’t subscribe (incl. myself) are getting spoiled by getting free access to quality data like this. I kid you not. So you shouldn’t take his articles for granted. A lot of people paying good moneyt for subscriber services are not seeing the analysis quality that is coming from Chris Puplava (exception to that comment would be Contrary Investor – which has excellent charts and is well worth the subscription).But moving on …the most noticeable thing about the new Puplava charts is that we are starting to see some economic indicators that are going to extreme negative positions. Meaning that over the wide range of data plotted (from 1970-to-current or 1990-to-current) the indicator is now at an all-time low. This does set the stage for the argument that the current downturn is not necessarily a standard recession. But it is not yet a conclusive argument.I would add, from reviewing the data from Contrary Investor, that their plots are also starting to show some economic indicators taking extreme negative (downwards) positions. And they look at different trends and charts from Mr Puplava. So we’ve got a wider range of economic variables that are pointing to warning signs are present. The message is certainly one of clear caution, given the current market conditions.PerteCA

I agree. He does give pretty good sound REAL SOLUTIONS at least.

I live in Belgium and by all means, deflations is possible (of course our government – a patchwork of talent – could raise taxes on all and everything).Many people , not “people” an sich, have a lot of savings just because they did not spend it. And the money-wiser they are, the more they wait for opportunities now. And yes it could take long, some think further than the latest flatscreen, opportunities could be houses or appartments for the next generation, so they too don’t have to rent/pay into their pension.Furthermore, you can’t just compare US and Europe (Belgium).With 500€ (where did you get that number?)I tell you, you won’t “spend”, at least not in Belgium.I personally invest in my kids as far as possible and if it must be I’ll kick em out of the country to escape the national debt, that’s another Belgian thing, low on chauvinism And if indeed demographics don’t improve fast, slowdown/collapse in the long term is inevitable. Just look at regions with long gone industries/wealth and an impoverished population, it could happen on a larger scale as well.continental Eu is not immune. No place is.

The 1929 crash was not caused by “massive expansion of the money supply” followed by the Fed pricking the bubble.From my college economic history, still on my shelf at work -1920 M1 $23,700,000,0001929 M1 $26,200,000,000That is an increase of about 1% per year – hardly a “massive expansion of the money supply”. CPI actually fell over the same period.The depression was not caused by the stock market crash; the stock market boom and bust was not caused by the fed; and the roaring ’20s were not roaring in much of the country.Britain in the ’20s was running deflationary policies to attempt to pay back its debts in gold. The Conservatives ran the UK for most of the ’20s. They were not socialist.There is apparently a meme going around that the fed is evil and all the dislocations of the past are due to it. Stupid, yes; evil, no; all powerfull, certainly not.

On the heels of the Geitner announcement just now, Obama to name the rest of his economic team on Monday. Question why the pre announcement of Geitner? Santelli suggests action this weekend regarding CITI.

LOLOL Looks like Obama has already been instructed WHEN and WITH WHAT to hit the markets with for a key reversal! Ya think his last hour of the day Guitner announcment was planned????

Geithner has been involved at every step in Hank & Ben’s excellent adventure.

Geithner is the continuation of Goldman Sachs. What honeymoon? We didn’t even get a divorce.

maybe a stupid idea, but let me any way expose it.what if rates became actually negative.if a bank deposit 100 with fed they get back 99;banks will be obliged to lend to each others and to clients?the only thing is that money will then flow to banks/clients perceived solvent;the others may collapse

This is it. The Obama reign has been bought and paid for! The banksters on WS have continuity of leadership with the US government with Tim Geithner. I knows he’s smart. He wouldn’t be where he is if he wasn’t. I just question his loyalties. The US or the WS banksters? A sad day.

Call this the Obama rally — as the dim wit from CNBC asks a trader “with this news it the rally here to stay?” The problem now is that the media (who by their own admission were in the tank for Obama) will likely continue that style of “reporting” on everything Obama including economics. Bad reporting on the financials is about to get a whole lot worse.

Pete,A salient point is that the price of gold is on the rise while the main cost of mining (energy) is falling. Gold miners will be reporting huge earnings.PKB

Nourielok – reduce the mortgages via lower rate refinancesnot just for “deadbeats” but for every homeowner with a mortgageGovt pays all of the closing costs to the banksthus recapitalizing the banks30 million mortgages refinance$3,000 per refinance3,000 x 30,000,000 = 90,000,000,000 = $90 billion————everybody gets on board because all benefitand it would help to reduce debt, consumption and stablize the housing market

re-read Nourielthe USA’s “desperate Treasury” will buy its own debt+ here is a new New Deal idea:the Govt will set up a “Guaranteed Pension Fund” which all of the private pensions channeltheir monies to and it will buy USA Debt (just like the Social Security Trust)———nourielhow soon do you expect the US to quickly weaken the dollar?this would presumably be to:strenthen our export industryraise prices (prevent deflation) by making import more expensive

I must admit that I never expected that the banker, finance and slick community would ever dare to blatantly declare openly their outright ownership of World politics, and governmen, as they have just in these past few minutes have done – but here you have it for all to see; finally; Thank God, it is now all but over as the final collapse is now guaranteed, and it will be bigger an mightier than imagined – even by me.It is fitting and yea, poetic, that this done group of incompetent and arrogant irresponsible fools and wasters’ of the World’s resources, rule over their own demise. The days of Big Banks are now over.Good riddance,Ho diddly hum

Let’s also not forget that they all hate babies, puppies, and like to set flowers on fire!…;^)

@ Forensic economist: “The 1929 crash was not caused by “massive expansion of the money supply” followed by the Fed pricking the bubble. … From my college economic history, still on my shelf at work -1920 M1 $23,700,000,0001929 M1 $26,200,000,000”M1 is “a measure of the money supply reported by the Federal Reserve System that includes currency, traveler’s checks, and checkable deposits.”In his book, “Money and Man,” Elgin Groseclose says, “By 1929 the United States was overwhelmed by a flood of credit. It had covered the land. It was pouring into every nook and cranny of the national economy.”From 1921 through June of 1929, the quantity of dollars increased by 61.8%, substantially more than the increase in national product. During that same time, the amount of CURRENCY in circulation remained virtually unchanged. That means the expansion was comprised entirely of money substitutes, such as bonds and loan contracts.THE ROLLER COASTER“Between 1920 and 1929, there were three distinct business cycles with several minor ones within them. For the average American, it was confusing and destructive. For the investor, it was a roller-coaster ride to oblivion.” Says Edward Griffin:UP! The Fed had inflated the money supply to pay for World War I. The resulting boom caused prices to rise.DOWN! In 1920, the Fed raised interest rates to cool off the inflations. That caused a recession, and prices tumbled. Farmers were hit the hardest, and hundreds of country banks were closed.UP! In 1921, the Fed lowered interest rates to stop the recession and to help the governments of Europe. Inflation and expanding debt resulted.DOWN! In1923, the Fed tightened credit to put the brakes on inflation.UP! But that was offset by its simultaneous policy of lowering the rate at the discount window, thus encouraging banks to borrow new reserves to expand the money supply.DOWN! In 1924,, the Fed suddenly created $500 million dollars in new money. Within one year the commercial banks parlayed that into more than $4 billion, an expansion of eight-to-one. The boom that followed took on the character of speculation rather than investment. Prices in the stock market rose drastically.DOWN! In1926, the Florida land boom collapsed, and the economy began to contract once again.UP! In 1927, Montagu Norman of the Bank of England visited the United States to visit with Benjamin Strong. Shortly after his visit, the Fed pumped new money into the system, and the boom returned. [Strong controlled the New York Reserve Bank: his name was synonymous with the Wall Street money trust.]DOWN! In the spring of 1928, the Fed contracted credit to halt the boom.UP! But the banks shifted their reserves into time deposits (where customers agree to wait before withdrawing their money). Since time deposits require a smaller reserve ratio than demand deposits, the banks were ale to issue more loans than before. That offset the Fed’s contraction of credit.UP! By that time, the British government had consumed its previous subsidy which was used to maintain its welfare state. In the spring of 1928, the pound sterling was again sagging on the international market, and gold began to flow back into the United States…The Fed bought a huge volume of banker’s acceptances to depress interest rates and halt the flow of gold. The money supply suddenly increased by almost $2 billion.DOWN! In August, the Fed reversed its expansionist policy by selling Treasury Bonds in the open market and raising interest rates. The money supply began to contract.It was the final bubble…

With Geithner’s appointment, looks like business as usual, snowballing to Zimbabwe.

He is not, as you say, “the young man from Illinois,” He is “The One,” as has long been predicted in The Ten Commandments. Thank God, at long last, the sayings in the holy books are coming true.

With selecting Geithner, and all his Fed and Wall Street cronies to his cabinet, is Obama showing his true colors? Will he be remembered as the Black Bush?

It’s not an option now, but 18 months hence with no end in sight, the pitch fork crowd might win the day.I doubt it, but it could happen if things got bad enough.

Maybe the “burning bush”?

Sean Hannity is an ass clown. He is part of the right wing conservative media that used to be serious and to seriously consider the key issues of the day. They are now reduced to name calling, racism, and whatever other means further their agenda. All intelligent thought has disappeared from that sphere.

Polls before the election showed that 80% of Americans thought the country was going in the wrong direction. Obama ran on “change” But Obama turned out to be no change. He’s changing the names, but his appointments are continuing the continuity of past failure.There’s an old saying in the South, “If Momma ain’t happy, ain’t nobody happy!” There’s usually always some truth in the world’s maxims and prejudices. Well, Momma ain’t happy.” And if Momma ain’t happy, Obama ain’t gonna be happy.In my family, when Momma ain’t happy, big changes are on the way no matter who professes to be in charge.Perhaps it’s just Momma’s broom, but I feel movement in the air and anybody in the way-—even Goldman Sachs–better look out and…move!Look for a gathering storm and the beginnings of a resistance movement, perhaps a middle-class coalition or third party,

o.r., that was beautiful. you have a gift and i enjoyed reading every word.

Follow the money and it all leads to the New York Fed – even worse we have Fed Chair Ben and now Treasury Sec/NY Fed Tim running the whole show, while Citibank’s Rubin lurks in the background. Nice…

“All intelligent thought has disappeared from that sphere.”If you mean the MSM I completely agree, they are bought and paid for left right and center.

Donald Coxe proposed that today in his weekly webcast. A modern version of what Roosevelt did, but at $1,000/oz. Listen athttp://events.startcast.com/events/199/B0003/code/eventframe.aspAlso,on deflation, bank credit analysts see a slow grind down for a while.http://www.bcaresearch.com/public/story.asp?pre=PRE-20081117.GIF

News that the Perth Mint in Australia has dropped new orders for gold – due to rapid increase in orders …”FEARS of the unknown long-term effects from the global financial crisis have sparked a new gold rush.With retail and wholesale clients around the world stocking up on the precious metal, the Perth Mint has been forced to suspend orders.As the World Gold Council reported that the dollar demand for gold reached a quarterly record of $US32 billion ($50.73 billion) in the third quarter, industry insiders said the race to secure physical gold had reached an intensity that had never been witnessed before. “I have 2 comments.First, I find it sickening that ordinary people around the world cannot go out and buy gold or silver coins, to protect themselves from crisis or the risk of long-term monetary inflation. While I do understand that mints cannot always cope with surges in demand, I still find the current situation with precious metals INEXPLICABLE according to any kind of normal demand-supply economics. It sure looks like someone did a very good job of trying to depress gold prices for a while, and keeping gold coins out of circulation. Why? Because if investors buy gold, it takes money out of the US banking system. It’s that simple. Everything about this is sickening.Second … I’ve said it before. Other financial commentators have said it too. We are just around the corner from some kind of major hiccup in the futures markets for precious metals. When we reach the stage where the gold supply in Australia can’t meet new orders – guess what? Sooner or later COMEX is not going to have those gold bars to deliver to customers with LONG positions. At that point, the gold price leaps upwards, or we kiss goodbye to the credibility of a sector of the US futures markets.PeteCA

a., i think you are too right. notice the title of the piece. The Deadly Dirty D-Words: “Deflation”, “Debt Deflation” and “Defaults”. And How Central Banks Will Have to Resort to “Crazy” Policies as We Have Reached Such Bermuda Triangle of a “Liquidity Trap”lots of d’s in there but not the one you suggest. hmmm? i see trap, b. triangle, deadly, but not depr…., not before christmas.no way.

Onion, turn in your voter registration card and try and leave the house as little as possible. This way you can do the least harm to society as you live out your fruitless, pointless, anti-intellectual years. Is this the sum total of what you know? Parroting back Sarah Palinesque right-wing mindless ideological diatribes? Scared of someone who can write sentences like that? Good — you should be — shows you have some semblance of intelligence rumbling around that big empty attic of a skull of yours. Roubini is so right on the mark, it’s amazing. He’s our modern-day Keynes. Bow down and pay homage you unholy cretin. And yes, I have a Ph.D. in economics and practice what I preach, professionally and lucratively. Class dismissed, Onion.

Well now come on, there is change we all are coming to believe in,

America, welcome to your very own Blair moment.

You can say that again! The same monopolies, debating themselves.

COME ON PEOPE. When Obama said Change we can believe in, it was CHANGING BACK. You believe in it now eh!

If the climate doesn’t get better soon, I’m quietly going to tip toe away while no one’s paying any attention, and move bag and baggage to Ireland or Scotland, if they’ll have me. There may come a day in the new USA when it will be too late to leave.

I just read in Yahoo news the US is asking 4 Arab Gulf states for 300 billion dlrs. Does that mean we are so broke that we need to get more broke?

Geithner was born in Brooklyn, New York City, to Mr. and Mrs. Peter F. Geithner of Larchmont, New York. He completed high school at International School Bangkok, Thailand,[1] and then attended Dartmouth College, graduating with a B.A. in government and Asian studies in 1983. After, he obtained an M.A. in International Economics and East Asian Studies from Johns Hopkins University’s School of Advanced International Studies in 1985. He has studied Japanese and Chinese and has lived in East Africa, India, Thailand, China, and Japan.He is married to Carole M. Sonnenfeld, a Dartmouth classmate, and with her has two children, Elise and Benjamin.[2] In spare time he fly-fishes, plays tennis and surfs.[3] Geithner is Jewish.[4]After completing his studies, Geithner worked for Kissinger and Associates in Washington, D.C., for three years and then joined the International Affairs division of the U.S. Treasury Department in 1988.In 1999 he was promoted to Under Secretary of the Treasury for International Affairs and served under Treasury Secretaries Robert Rubin and Lawrence Summers.In 2002 he left the Treasury to join the Council on Foreign Relations as a Senior Fellow in the International Economics department. He then worked for the International Monetary Fund as the director of the Policy Development and Review Department until moving to the Federal Reserve in October 2003.[5] In 2006 he became a member of the influential Washington-based financial advisory body, the Group of Thirty.http://en.wikipedia.org/wiki/Timothy_F._GeithnerI suppose you guys would prefer another former CEO from GS?I think Geithner is smart, very smart and is an excellent choice. And in case you haven’t heard, Obama is considering Summers to replace Ben in 2010. Summers is another very smart guy and, IMO, we will be better off with him and Tim running the show instead of Hank and Ben.

I agree with CR:http://calculatedrisk.blogspot.com/2008/11/geither-picked-as-treasury-secretary.html

Looks like Clinton won the presidency after all. All recycled Clinton deregulators or their cohorts in key posts so far. Don’t quite get Napolitano for Homeland Security tho. Obama’s just the front man. How could someone so green(not the environmental kind) be otherwise?And as far as Citi goes, something brewing this weekend, I suspect. “Hell hath no wrath like Goldman scorned.”

The people granted certain enumerated powers to the US. They also enumerated specific prohibitions to the States. Those not granted to the US, or prohibited to the States, were specifically reserved to the States or the people, respectively.The US was granted the power to coin money, nothing more or less.

yes, and i hear dr. d is turkish.

g, are you implying that the bankers have not mastered money and u.s. long ago? 1913. they will tell you that they have, to your face, if you ask them. and then smile and say it is horrible, give me more money. “demand” is the word they use for crap you don’t need, doesn’t work and should collapse. don’t buy crap.

k, this is the deal. but then there are the side deals. the inside deals and the off book deals and the other deals. and then the illegal deals and the shadow deals. and others i never could even think of or understand. call me lost.

g, i think you have a real good point and live in a good place. i also like the rhythm of your writing. relaxing. i have the same questions. the problem is the deficits are real at the same time throughout the different sectors of the economy. the federal government, the states, the municipalities, the cities, the companies, the banks, the transportation authorities are all in decline or deficit or debt. where is the future earning to pay the deficits off.? the liquidity? where is the stone you can squeeze for blood? it used to be labor and it’s reward that was squeezed. then they stopped rewarding labor with money and gave them credit or debt. and now they are desperately seeking another bloodstone. the debate about whether fiat or precious metals currencies comes in every time reserve requirements are viciously violated by speculators. this time it’s global.i wish i could relax again, but not too much.there are other ways to violate reserve requirements and make money. fraud works as does usury. if you distribute the mess around enough it looks like systemic failure in the financial papers.ps. i wrote this mostly in response to a different entry but thought you might appreciate it? i’ve been wrong before.

If only CR would provide a reason why Hank Geithner is such “great choice”. I am almost positive CR is non-partisan but perhaps I am incorrect afterall the NY Times article that is cited quotes Robert Rubin.

As somone posted above, Obama is the Manchurian candidate, a creation of special interests and elected by the media.

One thing is clear, you guys don’t like Obi but why aren’t you giving him a chance? Bet you gave GWB more than one, voting for him twice and followed up voting for senile Mcky.

The root of this crisis is that, because of easy money, millions of homeowners bought houses that were one or more income levels above what they actually could afford. Keeping these people in their homes will just extend the inevitable and give us that Japan L-shaped recession.

The encouragement of mere consumption is no benefit to commerce because the difficulty lies in supplying the means, not in stimulating the desire for consumption; and production alone furnishes those means. Thus, it is the aim of good government to stimulate production, of bad government to encourage consumption.- Jean-Baptiste Say, A Treatise on Political Economy, 1803

g, oh my god that is f.in hillary ous.

Yes, we’re really in a pickle now! I have no optimism either. I don’t think anyone really knows what to do about this mess. Its all a crapshoot. Oh well, I have shelter and food and money…at least for now!

And what value do you see for us all in massive foreclosures? We’re already in an L-shaped recession. If you read Dr. Roubini a little closer, you’ll notice the problem is not with the puppets but in the souls of the puppeteers.

I’m still holding out hope that our meltdown was engineered, not by evil people who want to horde and enslave, but by a secret society that knew we needed to level the playing field on a global scale. We talk about taxing the wealthy here in the states as part of a long term solution, but everyone knows they will just move their business and assets elsewhere. Well, what if there was no elsewhere? What if we seize this opportunity (however neo-con that might sound) and actually create a true global economy? No more parasites manipulating prices of stocks, bonds, and commodities. No more opportunity to make money arbitraging money and interest rates. Forget G-20. Forget the group of 30. Bypass the moribund UN and World Bank and get the nations of the world together to agree on a common currency and standards. Idiot nations who chose to opt out can do whatever they want, but they will not be permitted to trade with everyone else. If the majority of the population wants in, but psychotic rulers won’t let them, plan for their absorption in participating countries and liberate them by force if necessary.

Hilarious! I bet poor Onion won’t get an apology!

I was in Roanoke this summer and 50% of the mall storefronts were empty. It was a shock coming from Metro DC. Even in Bethesda malls are very unbusy. Also more college educated (seeming) white store clerks actually offering customer service as opposed to immigrants reluctant to practice limited english skills by speak to customers. Also, restaurants out in the country not doing so well. And the Honda Dealer seemed full to the brim of cars. 4 Green CRVs on the lot in a row. That’s last year’s best ranked or 2nd best ranked mini-suv. A year ago when I bought my element at the same dealer you had to special order to get certain colors.

The DOW dramatic rise is in response to bankers getting influence in the new administration; in fact it appears that while Citibank was going to where it belongs, there is a desperate push to reach quickly to the buttons and to ensure they get pushed no matter what…Geithner’s appointment epitomizes this with Summers and Rubin being now mainstream and front line policy makers with the FedRes and SEC.The DOW rise celebrates the moment that the Bankers now take the global controls from the puppets; it will be short lived as really, bankers not really being evil, but they do certainly excel at incompetence when they need to act independently. And they excel in cowardice and arrogance.These bankers will make the “neocons” look like schoolgirls when it comes to creating global chaos and destruction.And, this is the first real move where I have seen the Bankers take the leading political role on so openly and brazenly: thank Citibank for that. This move is a declaration of war!SO Citibank’s plan is to milk the works; their way; make new rules for the big banks collective interests, have Pope Ben take the institutional capacity and for the SEC to enforce that which is necessary. As I have said before, Congress is irrelevant as they voted themselves so during the Paulson Bailout Program. They are done! but the Bankers are taking no more chances now!Central power has been transferred to the FedRes Temple!Problem: Too late and the Bankers are in panic mode; a state of desperation; “extremis”. The whole economic, financial, monetary system is widely vibrating as the imbalances throughout the whole system are shaking and shuddering in disparate terms; out of of synchronicity to the whole dynamic and at differing velocities, pitch and frequencies.IOW “The free-market-cow is kicking the s%$t out of the bankers milking shed.Chaos is like that. And, the investors cheer!Ho hum

It’s not good OR bad. Without growth it’s inevitable… (one could say that inflating our way out would be growth too).

What uncorked all of this was the fact that we couldn’t sustain the levels of growth that we were experiencing. Energy is the bottle neck, and will only be more increasingly so as time marches forward.

Pretty much right on!I’d been advocating for some time that transportation expansion be curtailed and that the bulk of this money (that would have otherwise been appropriate for expansion) would be returned as tax credits to local businesses hiring local people: incentive to keep commmutes short. This would be investing in local economies, which is where we will end up one way or another anyway.

sorry for the single response

Housing will revert back to the mean and will become more affordable. Do you think it’s fair to new homebuyers to have to pay artifically inflated prices?

Sorry pal, but the most you can say is that I wrote an idiotic comment. But I don’t think I did. The most I can say about your comment is that you are a sociopath. Oh lookathat… the very type of person that caused our meltdown.

Pete,I’m afraid of a fake-out in a gold rally before another plunge to $630. A CitiCorp and/or a GM failure with their massive derivatives could lead to sale of gold assets.Al

Glen Beck was frequently starting to criticize the federal reserve and its reason for existence was frequently having Ron Paul and Peter Schiff on his show and low and behold he disappears from television. Now they say he’s coming back on FOX news in a couple of months but is that after his illuminist masters give him strong warnings and new levels of guidance?

LOL…you cannot even read dude..no wonder economics is the “dismal science”

Well that too but his shows were starting to become pretty radical with the criticism for the federal reserve to the point of suggesting conspiracy talking about Jekyll Island having radical guest on etc., plus he was doing it every night and sure enough he goes off the air. I’ll bet if he gets back on the air he tones it down. Criticism of the corrupt system is only tolerated to the point of making it appear as if we have choices.

http://www.businessweek.com/bwdaily/dnflash/content/nov2008/db20081121_876842.htmCitigroup Shares Keep SinkingThe bank’s board meets as Wall Street wonders whether CEO Pandit can withstand the pressure, or if he’ll be forced into a deal or U.S. rescueBy Mara Der HovanesianCitigroup’s shares continued their breathtaking decline on Friday, Nov. 21, despite a broader market rally, indicating that time is quickly running out for Chief Executive Officer Vikram Pandit.Pandit continues to fight mightily to restore confidence in the market. He pronounced that he has no intention to break up the global bank and that he has enough capital to withstand a tough consumer recession. But with the stock finishing down another 20%, to 3.77, from its 4.71 close on Nov. 20, speculation continued to mount that he will have little choice but to cede the bank to government control.A dwindling market cap means Citi (C) faces extreme difficulty in either its ability to raise capital or to market itself in a sale. “When you have a decline in the share prices of this magnitude and depth, it is a signal that the company is going under,” says Martin Weiss, founder of Weiss Research. “The share price is providing the clearest canary in the coal mine.”Weiss says it is now up to the Treasury Dept. and the Federal Reserve to figure out if they want to nationalize Citigroup, à la Fannie Mae and Freddie Mac. “Someone is going to have to step up and say ‘enough.’”If Citi were to require a government rescue, it would be by far the largest bank failure in history. Citi has $2 trillion in assets, or approximately six times more than Washington Mutual’s and three times more than Wachovia’s.Derivatives DramaMoreover, the prospect of a failure by Citi poses far greater challenges to regulators, due to its massive derivatives holdings. Those derivatives are essentially side bets on interest rates, currencies, and other markets, as well as bets on the probability of defaults by other large corporations (credit default swaps). At midyear—June 30, 2008—the Office of the Comptroller of the Currency says, Citi’s primary banking unit, Citibank NA, held $37.1 trillion in total notional value derivatives, including $3.6 trillion in credit default swaps. Those swaps in recent months have proven to be the most dangerous category. In contrast, Wachovia bank, bought out by JPMorgan Chase (JPM) in a deal brokered by the regulators, had only $4.4 trillion in total notional value derivatives, among which $404 billion were in credit default swaps. Although the notional value overstates the true market risk of derivatives, another oft-underestimated risk is a bank’s exposure to the possibility that some of its trading partners might default on their side of the transaction. For each dollar of risk-based capital, Citibank was exposed to $2.58 in such credit risk on June 30, according to the OCC. In contrast, Wachovia’s exposure was 52.7¢ on the dollar, or only about one-fifth of Citi’s in proportion to capital.Not everyone has given up hope. Mike Mayo, bank analyst at Deutsche Bank (DB), issued a note early on Nov. 21 saying there is still fundamental value at Citigroup that justifies a $9 price target. He estimates that Citi has $100 billion of cushion to cover an estimated $50 billion on losses.In a town hall meeting on Nov. 17, Pandit warned the market that losses in the bank’s consumer loan portfolio could rise between $1 billion and $2 billion each quarter from now through the first half of next year—far less than Mayo’s figure. But the market was struck more by what Pandit did not say: The bank classified some $80 billion of distressed assets into “held for investment,” a subjective accounting category that allows the bank to set aside risky and hard-to-value assets in hopes for a recovery.Eleventh-Hour Partner?Many doubt those assets will recover and assume they will eventually be another hit to the bank’s balance sheet. Stuart Plesser, an equity analyst with Standard & Poor’s, says investors “looked suspiciously at those assets [and figured] they were not priced sufficiently.”Some Wall Street analysts are still floating the idea that Citi may find an 11th-hour business partner. Goldman Sachs (GS), Morgan Stanley (MS), and even American Express (AXP)—Citi founder Sanford Weill’s dream acquisition in the old days—have been raised as potential suitors. Still others are circumspect about the timing: “I don’t believe there is any other financial institution in the world today that has the capital or is crazy enough to take on Citigroup,” says Weiss.Pandit, the board, and other Citi executives were huddled in meetings since early Friday morning. But with the headwinds of the market, their choices are dwindling.”This is a different ball game we’re in; this is moving into a lack-of-confidence game,” says Plesser. “We’re talking about the fear of institutional trading partners taking deposits and wealth management clients fleeing, which would remove the value of that business. If that is occurring, we have to have a plan to sell before it loses its value. At these levels, it’s out of their hands.”Der Hovanesian is Banking editor for BusinessWeek in New York. Take a look at the bold paragraph above, The new treasurer is gonna have to solve a tough problem this weekend! Perhaps, I can help as I just figured out a two-tier solution to the financial crisis:1. a JRKP original: “BAN HOUSING EVICTIONS”2. And now mine: “BAN CDS CONTRACTS”I hold several thousand shares of citi with an average cost basis of $4.53/share bought over last Th and Friday, which I must admit I bought mainly to have an acting role, a piece of the action, even if only as an extra, in the soap-opera that will unfold starting Monday:Will the FED and treasury do the right thing, bail citi out but wipe me out?There is no question citi will be bailed out. But there is no easy answer to the question of whether stockholders will be wiped-out. This is because so far, the US has resisted nationalizing banks. citi as a hybrid that resulted from Clinton’s repeal of the Glass-Steagall Act.Why do you think WFC, JPM, BAC shares came down hard with citi last week?If citi equity holders are wiped out, the daisy chain of falling dominoes may be such that the US stock market will crater along with citi.This is why:Citi is not the only bank with gazillions of dollars in CDSs. If citi is nationalized, the WHOLE US banking system will have to be nationalized. This meaning that most of the equity in the S&P500 financials will be wiped out. Even though financials are no longer 25% of the index, they are still a good chunk of the pie (15.86% as of 9/30/08 http://www2.standardandpoors.com/spf/pdf/index/SP_500_Factsheet.pdf). Start getting the picture?So what do I think will happen? Hanky will defrost TARP and give citi a big wad of cash in exchange for preferred stock. Will the dilution be so huge that I will never make money on my investment? Highly likely…Want to read an couple of interesting memos?http://www.federalreserve.gov/pubs/bulletin/2008/legal/q407/order5.htmhttp://www.federalreserve.gov/boarddocs/legalint/federalreserveact/2005/20051025/default.pdfLet’s see how I fare Monday morning:-)

Ups! Lets re-post my writing without italics:Take a look at the bold paragraph above, The new treasurer is gonna have to solve a tough problem this weekend! Perhaps, I can help as I just figured out a two-tier solution to the financial crisis:1. a JRKP original: “BAN HOUSING EVICTIONS”2. And now mine: “BAN CDS CONTRACTS”I hold several thousand shares of citi with an average cost basis of $4.53/share bought over last Th and Friday, which I must admit I bought mainly to have an acting role, a piece of the action, even if only as an extra, in the soap-opera that will unfold starting Monday:Will the FED and treasury do the right thing, bail citi out but wipe me out?There is no question citi will be bailed out. But there is no easy answer to the question of whether stockholders will be wiped-out. This is because so far, the US has resisted nationalizing banks. citi as a hybrid that resulted from Clinton’s repeal of the Glass-Steagall Act.Why do you think WFC, JPM, BAC shares came down hard with citi last week?If citi equity holders are wiped out, the daisy chain of falling dominoes may be such that the US stock market will crater along with citi.This is why:Citi is not the only bank with gazillions of dollars in CDSs. If citi is nationalized, the WHOLE US banking system will have to be nationalized. This meaning that most of the equity in the S&P500 financials will be wiped out. Even though financials are no longer 25% of the index, they are still a good chunk of the pie (15.86% as of 9/30/08 http://www2.standardandpoors.com/spf/pdf/index/SP_500_Factsheet.pdf). Start getting the picture?So what do I think will happen? Hanky will defrost TARP and give citi a big wad of cash in exchange for preferred stock. Will the dilution be so huge that I will never make money on my investment? Highly likely…Want to read an couple of interesting memos?http://www.federalreserve.gov/pubs/bulletin/2008/legal/q407/order5.htmhttp://www.federalreserve.gov/boarddocs/legalint/federalreserveact/2005/20051025/default.pdfLet’s see how I fare Monday morning:-)

and that no anyone may be able to buy or sell except the one having the emblem of the wild beast, or its name, or the number of its name

I must say that I do believe in Revelation. It was of course represented in signs (symbols) as is stated in the first chapter of the book. So just as the fiery lake mentioned in it is not a real fiery lake (but symbolises something), so do the wild beast and other stuff. But I do think we will see something like above happening soon. In that UN (or some other worldwide body) will end up controlling commerce more than they do currently. All in the name of economical security.People should just note that Revelation also mentions the wild beast attacking and destroying something called Babylon the Great. And that an angel warns that people should “get out of her”. So it would be good for people to know who Babylon the Great is, ’cause they could find themselves as being ‘inside’ her.On another hand I do not think there is that much in that number of the wild beast. I mean, even if one would know what it exactly means, it would not provide particularly much information.

and also send more $$$ to our friends overseas so they will buy US debtJason B: excellent focus in your posting

Credit Markets Innovations and Their ImplicationsMarch 23, 2007 (the eve of the credit crisis)Timothy Geithner, President and Chief Executive Officer

The past few years have seen remarkable changes in credit markets, and this is a good time to take stock of what we know about those developments and their implications.The latest wave of credit market innovations has elicited some concerns about their implications for the stability of the financial system, concerns similar to those associated with earlier periods of rapid change in financial markets. Will the most recent credit market innovations amplify credit cycles, contributing to “excessive” lending in times of relative stability, and then magnify the contraction in credit that follows? Will they introduce greater volatility in financial markets? Will they create greater risk of systemic financial crisis?These concerns have been heightened in some quarters by the problems currently being experienced in the subprime mortgage sector. It will take some time before the full implications are understood and the full impact can be assessed. As of now, though, there are few signs that the disruptions in this one sector of the credit markets will have a lasting impact on credit markets as a whole.Indeed, economic theory and recent practical experience offer some reassurance against both these specific concerns and more general worries about the implications of credit market innovations for the performance of the financial system.The rapid growth in these new types of credit instruments is, of course, a sign of their value to market participants. For borrowers, credit market innovation offers the prospect of increased credit supply; better pricing; and a relaxation of financial constraints. For investors, new credit instruments bring the prospect of broader risk and return opportunities; the ability to diversify portfolios; and increased flexibility. And for lenders, innovations can help free up funding and capital for other uses; they can help improve credit risk and asset/liability management; and they can improve the return on capital and provide new and cheaper funding sources…

Full Text of Guithner’s speech in March of 2007

You are 100% correct.

OR: Great Post!confidence is the key + short selling accerlerates the Humpty Dumpties Falldeja vu: lehman…bear stearns…etcciti…band of america…etc.

The perception is well entrenched that this crisis is 100% the result of GWB and his policies; by association any connected with the Bush administration including Paulson and Bernanke are culpable.The facts do not matter, this is an emotional response centered on the idea of change regardless of who or what. After two weeks of virtual silence the leaked announcement of Guithner with the markets at the depth of despair was a calcuated move designed to reinforce Obama’s choice. This mornings address is similar; it would appear he and his handlers have tried to time the market allowing him to enter at the darkest hour to save the day.Make no mistake Friday at 3pm was the beginning of the Obama rally that will see the Dow go to 11,000 in the next few days and weeks.

g, anything is possible, except that? an obama rally should take place sometime around jan. 22. 2009.

Subprime woes not impacting credit market: GeithnerBy Greg Robb, MarketWatchLast update: 12:22 p.m. EDT March 23, 2007 WASHINGTON (MarketWatch) — There is no evidence that problems being experienced in the subprime mortgage sector are spilling over into other credit markets, said Timothy Geithner, the president of the New York Federal Reserve on Friday.(that’s a relief and just when I was starting to get worried)

I love how bankers use the word innovation in place of the word leverage.

My favorite part”The rapid growth in these new types of credit instruments is, of course, a sign of their value to market participants”huh!

Very.

There is one big “D” missing from the equation, and I think you all know which big “D” I mean.

Alessandro, you are absolutely correct.

I wrote the post above beofre reading this:http://www.reuters.com/article/innovationNewsFinancialServicesAndRealEstate/idUSTRE4AK4XS20081121By Dan WilchinsNEW YORK (Reuters) – As Citigroup Inc’s share price sinks, investors are wondering if the U.S. government will have to help the bank. How is an open question. Four investors that spoke to Reuters proposed some scenarios.MORE PREFERREDSThe U.S. Treasury Department bought $25 billion of preferred shares and warrants from Citigroup in October when it injected capital into banks under the $700 billion Troubled Assets Relief Program.It could buy more, boosting Citigroup’s capital and a renewed government willingness to support the bank, which could soothe investors. Citigroup bonds, which have been sinking because of concern that a bailout would harm bondholders, would rally. That could lift prices for other bank bonds, reducing borrowing costs for lenders that rely on bond markets to fund themselves.Preferred shares do not have voting rights, so a preferred stock investment would not provide new U.S. oversight over Citigroup’s management or board, which some taxpayers and government officials may want. But the government could require the bank to add new management or directors as part of a deal.A LOAN, OWNERSHIP STAKEAnother possibility is a bailout similar to the original $85 billion package for American International Group Inc. The government made a loan that would be first to be repaid if the insurer went bankrupt, and took an 80 percent ownership stake.The loan’s terms were so onerous that AIG trading partners demanded even more collateral, making the insurer’s position more precarious. But a more lenient loan for Citigroup plus shares would ensure ample say for the government in how the bank is run, and would leave taxpayers with minimal risk compared to other investors.But such an arrangement would erase much of Treasury’s earlier $25 billion investment in Citigroup preferred shares. Plus, it would hurt investors in Citigroup’s bonds, and bank bonds in general, making it harder for some banks to fund themselves.LIQUIDATIONThe Federal Deposit Insurance Corp has considerable leeway in how it sells a bank it seizes. It can, as with Washington Mutual Inc, protect deposits and leave bondholders and stockholders in the cold.This could shelter the financial system from some of Citigroup’s toxic assets, but at tremendous cost. No longer would any bank, or perhaps any company, be deemed “too big to fail.” Investors could dump stocks of and corporate credits of all stripes, turning what could already be a deep recession into a punishing one.”The too big to fail doctrine is being tested. Maybe the solution is to break these companies up like Ma Bell,” said James Ellman, president of hedge fund Seacliff Capital in San Francisco. “Ma Bell” was a nickname for AT&T, which was broken up into smaller regional telephone companies in the 1980s.GUARANTEESThe government could guarantee all of Citigroup’s debt and derivative obligations. This could be a low-cost solution if investor confidence in Citigroup returns. But even a government guarantee does not necessarily ensure restoration of investor confidence, as Fannie Mae and Freddie Mac learned earlier this year.A government guarantee of Citigroup derivatives could create significant questions about how to manage them. Would they wind the derivatives books down, reducing the capacity of trillions of dollars of over-the-counter derivatives markets globally? Making markets in derivatives typically involves taking some risk. Would the government be willing to expose taxpayers to such risk?BUYING THE WORST ASSETSThe government could buy Citigroup’s worst assets, perhaps at a discount, and allow an asset manager such as BlackRock Inc to manage them for taxpayers. The government’s $700 billion rescue package was supposed to do that, but deciding on fair prices for the government to buy assets proved difficult. If the price is too high, taxpayers risk big losses. If the price is too low, the bank could be hobbled, and the asset values implied by the transactions could hurt other banks.REGULATORY CHANGESInstituting a new short-selling ban, loosening mark-to-market accounting rules for bank assets, or halting trading in credit default swaps could provide a temporary boost to banks in general, and Citigroup in particular.”If you banned all short selling, not just new short selling, but all short selling on every company, stocks would really rally. It would force the mother of all short-covering rallies,” said Seacliff’s Ellman, referring to rallies where investors buy shares to cover short positions.But such moves could fail. A recent short-selling ban did not halt declines in bank shares, and created market distortions that may have forced hedge funds to liquidate more assets. Loosening mark-to-market rules could reduce transparency in the banking system, making investors even more reluctant to sink capital into it. And halting credit default swap trading would eliminate an important source of revenue for banks, and make it harder for investors to hedge.(Reporting by Dan Wilchins)

This one is fresh:http://www.bloomberg.com/apps/news?pid=20601087&sid=acxKsnU5HOAI&refer=homeCitigroup May End Up With U.S. Government Rescue (Update1)By Christine Harper and Bradley KeounNov. 22 (Bloomberg) — The U.S. government may step in to rescue Citigroup Inc. after a crisis in confidence erased half the bank’s stock-market value in three days, according to investors and analysts.Citigroup’s $2 trillion of assets dwarfs companies such as American International Group Inc. that got support from the U.S. government this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.“Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”One option is for the Federal Reserve and U.S. Treasury to create a special vehicle to purchase bad assets from Citi. The Fed has already erected several such funds, such as the Commercial Paper Funding Facility, to provide liquidity to the financial system. Typically, the Treasury would provide some first-loss equity or insurance fee, such as $50 billion provided to the CPFF, to protect the central bank and give the fiscal authority a stake.The arrangement allows the Fed to leverage the money provided by the Treasury with loans, enabling the purchase of assets worth a multiple of the money. Funding the purchases with loans makes them less onerous to the U.S. budget.Working Relationship“That is the working relationship they have settled into with the Fed providing $1 trillion of the funding and the Treasury providing the equity tranche,” said Lou Crandall, chief economist at Wrightson ICAP LLC in Jersey City, New Jersey.Citigroup management and some board members discussed “several options” for the company in a series of phone conversations with Paulson and New York Federal Reserve Bank President Timothy Geithner yesterday, the New York Times reported today, citing unidentified people involved in the talks.Among those options were the possible replacement of Chief Executive Officer Vikram Pandit, a public endorsement of Citigroup by the government or a new financial lifeline, the Times said. No decisions had been taken as of late yesterday, it said.‘Regulatory Intervention’While Citigroup executives say the company has adequate capital and liquidity to ride out the crisis, its tumbling share price may shake the confidence of creditors, clients and rating companies. A similar scenario played out at Lehman, when Chief Executive Officer Richard Fuld declared the firm was “on the right track” five days before the firm went bankrupt.“The market may be implying some sort of regulatory intervention,” Jason Goldberg, a former Lehman analyst who now works at Barclays Capital in New York, wrote in a note to clients yesterday. “In situations where the government has stepped in, the equity holders have not fared well.”Pandit told employees yesterday that he doesn’t plan to break up the company, aiming to reassure workers as the stock resumed its skid. Citigroup shares dropped 94 cents, or 20 percent, to $3.77 in New York trading, giving the company a market value of about $21 billion. The stock pared its loss after the close of official trading, fetching $4.07 as of 4:35 p.m.Pandit, CrittendenPandit and Chief Financial Officer Gary Crittenden, speaking on a worldwide conference call yesterday, also said they don’t expect to sell the Smith Barney brokerage unit, according to two people who listened to the call and declined to be identified because it wasn’t open to the public.The call came as Citigroup’s board, led by Chairman Win Bischoff and independent director Richard Parsons, prepared to meet yesterday at the bank’s headquarters in New York, said a person familiar with the company’s plans who declined to be identified because the deliberations are private. Bischoff, interviewed at a conference in Portugal yesterday, declined to comment on any potential changes to the board.“Providing stability” and “securing the future” are the themes of a new print advertisement that Citigroup plans to start running tomorrow in major markets in the U.S. and overseas. “Now, more than ever, you can feel confident that Citi never sleeps,” the ad reads.No. 5 By ValueOnce the biggest U.S. bank, with a market value of $274 billion at the end of 2006, Citigroup has now slipped to No. 5 behind Minneapolis-based U.S. Bancorp. A plan by 51-year-old Pandit this week to cut costs by shedding 52,000 jobs and an endorsement by billionaire Saudi investor Prince Alwaleed bin Talal didn’t assuage shareholders’ concern that bad loans and securities writedowns may extend a yearlong run of net losses totaling $20 billion.“To be consistent with the last few government interventions, I don’t think Citigroup’s going to be allowed to fail,” said William Fitzpatrick, an analyst at Optique Capital Management Inc. in Milwaukee, which oversees about $1 billion and doesn’t own Citigroup shares. “This company’s too intertwined with the rest of the financial system to allow any further deterioration.”Citigroup spokesman Michael Hanretta declined to comment. On the call yesterday with employees, Pandit said the company’s capital and liquidity are strong.Including a $25 billion capital injection from the U.S. Treasury under the $700 billion Troubled Asset Relief Program, the company has at least $50 billion of capital above the amount required by regulators to qualify as “well capitalized.” Capital is the cushion banks must keep to absorb losses and protect depositors.‘Special Case’Deutsche Bank AG analyst Mike Mayo wrote in a report yesterday that the bank’s $25 billion of reserves, when combined with other resources, “should be enough to cover estimated cumulative losses of $50 billion on loans.’” Mayo rates the stock “hold” and has a $9 price target.“With Citi being as big as they are, the government will make a special case and step in and find another reason to dispose of more TARP funds,” said Matt McCormick, a portfolio manager and banking analyst at Bahl & Gaynor Investment Counsel in Cincinnati, which manages about $2.9 billion and doesn’t own Citigroup stock or debt.Pandit was appointed last December to succeed Charles O. “Chuck” Prince, who was ousted as mortgage-bond writedowns saddled the bank with a record fourth-quarter loss of almost $10 billion. Prince was the handpicked successor of former Chairman and CEO Sanford “Sandy” Weill, who built the company through a series of acquisitions over 17 years before stepping down in 2003.Deposits Said SafeBischoff, 67, was Citigroup’s top executive in Europe until he was named chairman when Pandit became CEO.Bank employees have been telling customers their deposits are safe, and so far corporate clients haven’t moved their money elsewhere, said three people familiar with the matter who declined to be identified because they weren’t authorized to speak publicly about the accounts.Crittenden, 50, has told colleagues it would be unwise to make hasty decisions to dispose of good businesses to satisfy investor demands for a show of action, one person familiar with the matter said.

No, just like the election rally took place the day of the eleciton (markets went down the next day), so too we rally now and begin the long decline after the inauguration. The euphoria of change and the pre-announcements of spending and stimulus over the next few weeks will propel the markets higher and on or about January 20 the cruel reality and irony that nothing has really changed (e.g. gotten worse) will set in. SSO will be the place to be for the next few weeks and then get ready to short the dollar and the market.

Just a small business owner here, not schooled in econimics except main street ones.but a couple questions for those that are:1) who is having problems getitng financing today?I ask this because all the local/ regional banks in this area are happily giving out local loans. In my business we just doubled our line or credit (and got a lower floating rate!) and personally my wife and I both bought new american autos with 0% financing with absoultety NO problems.Seems like the only people having problems are people/ companies that are in trouble already. But should they be adding additional debt then?2) I don’t understand why our politico’s can’t allow insolvent companies to go under/ re-structure AND approve an infrastructure rebuilding plan to put people to work in the coming year or two (to offset some of the job losses).Rebuilding our road/ bridges/ water plants/ sewer plants will give us citizens 10-20 years of use (it’s constructive), there are engineered plans waiting for funding in every country/state in the US and it keeps poeple working and paying taxes on that money.I can’t understand why so many people seem to un-willing to use BOTH approaches to help keep our nation from falling down a shithole of ruin. Are we THAT tied to our political ideals of right and left?The conservatives are CORRECT when they say, companies need to be able to FAIL.The Liberals are CORRECT when they say, we need to put people to work re-building our nation, even if it means defecit spending.Am I simply too stupid to see the “big picture” here?

OK … following comment from me.I have beaten the “gold” thing to death already. So I don’t intend to continue on that subject. But please note the comments from the above article …”Unlike other commodities, gold very rarely goes into backwardation: This only occurs when 1) The market fears a collapse in the currency, and/or 2) The market is worried about counterparties making good on their promise to deliver gold (which was briefly the case in 1999, when the Washington Agreement was announced and shorts were squeezed). “I have already spoken several times about the risk to the COMEX market if they cannot deliver physical gold.But let me repeat again about a warning on the US dollar.First, what happens if hedge funds reverse trades. They have been LONG on the dollar and short on commosities. What happens if they reverse and now go LONG on gold, and short on the dollar? No need to infer that the dollar will start dropping.Is this significant? Well, only mildly.I’m joking, of course.There are millions of foreign investors who have pourted into US T-Bills. If the dollar threatens to drop quickly, these people stand to lose a LOT of money. Guess what? You will see a mad rush for the exits.You see the risk here???A rapid drop in the US dollar, and a shock wave in the currency markets. The G20 should have been thinking about this – instead of crying in their own beer.These are not predictions, and I take no responsibility for anyone who makes transactions in currencies. Do your own diligence.PeteCA

I just posted above and I don’t disagree – but at 2:59 S&P was in decline (I think -7 or -8 and the instant CNBC announced, it reversed – I agree the added momentum that we have seen in the final hour relates to volatility and the double witch of Friday – but the announcment was clearly a major influence. It was a calculated move designed to endorse his selection and distract from the fact that he is more of the same, if not worse. At least with Hank there was some contrasting opinion. Now with Guithner we have the embodiment of Ben’s idealogy and Paulson’s morality.

Like with Krugman there may be an agenda to oversell the gloom and doom, much like a newly elected politician who informs his constituents that things were even worse than he thought, thereby making him/her look better when things improve.Having said that the irony is that what they are predicting for political purposes (and likely don’t believe) is in fact reality. It’s a no lose for the Times or Obama to go super negative on the economy. A crisis is a politicians best friend as it allows them to forward their agenda without challenge.In an earlier post someone suggested that Summers would replace Bernanake when his term is up. Krugman will be the choice – now that’s depress(ing)(ion).

i just have a serious question:why the rating of the USA is still not downgraded by the rating agents?

Most of the solutions mentioned at ‘one shot’ activities. Theymight help for a short while but are not a ‘fix’.The root of the problem is that this imbalance has taken a long time to be ‘built-in’ and it will take some action thathas a recurring effect to counter it.The US dollar needs to be devalued. But at the world default currency and being a ‘fiat currency’, there is no simple wayof doing this very quickly.So we either suffer through a very long protracted re-balancing(which is unlikely to be acceptable by most of the world) orthe US dollar is removed as the world’s default currency.Its rather obvious what is going to happen.The questions left are:How is it going to happen?What will the basis of the new default currency?I doubt the world will want to accept a new ‘fiat’ currencyin this role — so that means it will be set relative tosomething (not gold).What that something is and how its distributed relative tothe economies of the world will have profound effects onnot only recovery but geopolitics. Its likely to lead toseveral wars.Hopefully if evenly done only a few minor ones. Historically,these situations have been used to maximum geopoliticaladvantage — meaning large global wars.

Spot on AfA

@ Guest: “Seems to me he [Geithner] would have a great understanding of this credit crisis and how we got to this point, given his tenure with the Treasury and the Fed. It may be that he even contributed to some of the policy decisions. Given his concentration on East Asian studies maybe there is something to this Manchurian thing.”Since 1933 when Eugene Meyer resigned from the Federal Reserve Board of Governors, no member of the international banking families has personally served on the Board of Governors. They have chosen to work from behind the scenes through carefully selected presidents of the Federal Reserve Bank of New York and other employees. We can assume the same for the treasury.There is no doubt Tim Geithner as president of the powerful Federal Reserve Bank of New York, has had considerable hands-on experience in the creation of the present credit crisis. Further, there probably now can be little doubt that he has been on the path from the Fed to the U.S. Treasury for a long time, just as was, say, Paul Volcker, also a past president of the Federal Reserve Bank of New York from 1975-79, on his way to chairman of the Federal Reserve Board, first under Carter and then Reagan. Volcker started at the NY Fed as an economist He was succeeded as president of the New York Federal Reserve Bank by Anthony Solomon, a Harvard Ph.D. who had a similar background to Volcker’s. There are many similarities between Geithner’s appointment for the treasury and Volcker’s for the Fed chairmanship:The New York Times, on the appointment of Volcker as Carter’s chairman of the Federal Reserve Board, wrote on July 26, 1979, that Volcker learned “the business” from Robert Roosa, a partner in Brown Brothers Harriman, and that Volcker has been part of the Roosa Brain Trust at the Federal Reserve Bank of New York, and, later, at the treasury in the Kennedy administration. “David Rockefeller, the chairman of Chase (now JPMorgan Chase), and Mr. Roosa were strong influences in the Mr. Carter decision to name Mr. Volcker for the Reserve Board chairmanship.” Robert Roosa was Carter’s secretary of the Treasury, and represented not only Brown Brothers Harriman of the London Connection, but the Trilateral Commission, the Council on Foreign Relations, the Bilderbergers, and the Royal Economic Institute. He also was a trustee of the Rockefeller Foundation and a director of Texaco and American Express companies.The Times further noted that the Dow market rose on Volcker’s nomination, registering the best gains in three weeks for a rise of 9.73 points and that the dollar rose sharply on foreign exchange at home and abroad.On December 2, 1981, the Times mentioned that when Open Market Committee meetings are held, Solomon, as NY Fed president, and Volcker, as chairman of the Board of Governors, sit together at the head of the table and relay instructions which they have received from abroad.Rockefeller and Roosa also were highly influential in Carter’s nomination as the presidential candidate of the Democrat Party.

Shades of Ben Bernanke, whose comment that the explosion in gas prices was having little effect on the national economy. Certainly eased my mind.

Oh, boy, that’s wonderful! And gave me a one-minute belly laugh!

someone told me BERKSHIRE HATHAWAY is going to lose billions USD.Can someone here tell me more?

We’ll have the answer in about 24 hours.

Her is an article I found:http://blogs.moneycentral.msn.com/topstocks/archive/2008/11/20/buffett-s-huge-derivatives-bet-proves-costly.aspx

g, i don’t know. but i think.. collapse time frames. reduce expectations, speculations. you can’t capture your own money and call it making money and promises don’t pay the bills. who will drive the market up and with who’s money, knowing it will be lost. is this the government recapitalizing the banks by other means? whatever, i wouldn’t waste the term “obama rally” just yet. i suggest you call it the “guithner grab” or something like that.

Hi Pete. Could you explain how the closing of short positions increases the market numbers? I’m just not quite catching on to how this all materializes

Or: “OK everyone, the hole is really deep, hurry up and get digging!”

You will love this one! F-? I was in the academic business all my life and never heard that one! Watch the video on the left too!http://finance.yahoo.com/tech-ticker/article/133469/All-the-Wrong-Policies-Paulson-Gets-'F-Minus'-from-Former-Regulator?tickers=GS,XLF,JPM,BAC,C,WFCAll the Wrong Policies: Paulson Gets ‘F-Minus’ from Former RegulatorPosted Nov 21, 2008 02:52pm EST by Aaron Task in Newsmakers, BankingRelated: GS, XLF, JPM, BAC, C, WFCAs bad a year as the stock market is having, Treasury Secretary Paulson is having an even worse one, according to William Black, Associate Professor of Economics and Law at the University of Missouri.The professor, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis and blew the whistle on the “Keating Five” in 1989, says Paulson deserves an “F-minus” for his role in the financial crisis.”All of his policies made [the crisis] worse,” says Black, citing Paulson’s:Pushing for more deregulation of the securities and mortgage businesses.Failure to recognize the liquidity crisis in credit markets sooner.Failure to act to stop foreclosures sooner.Opposition to the government taking equity stakes in financial institutions, until very late in the crisis.”And he gets the worst grade because as head of Treasury he’s also in charge of banking and thrift regulation,” Black continues, noting he “destroyed” rather than beefed up supervision. “I hope you like the consequences.”Black, author of “The Best Way to Rob a Bank Is to Own One,” says there’s ample reasons why the financial markets have lost confidence in the Secretary.He also notes Paulson steered Goldman Sachs into subprime and alt-A mortgage securities before becoming Treasury Secretary in 2006. Goldman began shorting those instruments shortly after Paulson’s departure, he notes.The current crisis is “not a hundred-year flood, that suggests it’s an act of God caused by random forces,” Black says. “This was one cause by bad policies, the same policies that have caused prior crises.”

We’re about to find out.

Watamess!

Rubin says the minute you meet Tim Geithner you forget how young he is, because he’s so smart.I get it, that’s why Rubin wasn’t picked, he’s too old.

Mark: resource shortages have not really bitten in yet in terms of input costs – not even oil is all that expensive yet given its impact on productivity.The main issue is that consumption has outpaced production in some economies, created an overhang of debt. Consumption has to change. The other key problem is that we are so productive that a few of us working can provide for the basic needs of the whole society…and we haven’t figured out what to do with the “rest of us”. Naturally, the foregoing applies to the “rich” societies only.The immediate problem is coping with the dislocation and harmonics as the economy re-calibrates at a suddenly lower consumption level … but this phenomena is global, and the epicenter is the U.S..Someday, you and I need to get into a debate on this whole “growth” thing. What does “growth” mean to you, BTW? Do you have a working definition?

Ask yourself how long do you think that your business can go on when everything else around you collapses.Big picture is here:Finance…the American Way

Less spending, more saving, will fuel riseThat’s an equation that needs further examination.Yes, “less spending” will happen. But, does this necessarily imply that “more saving” will happen?Who is doing the saving? Clearly not the average US citizen who is in (near) negative savings balance with huge debts.Either we’ve got the dumbest people on the planet writing these things or we are failing to pick up on the hidden meaning.Just as the Fed chairman likes to speak in hidden meaning, could it also be that the media does as well? Heck, I don’t know, but I’m asking the question and I think that it’s worth at least a couple of minutes of time.Could it be that those who are “saving” are actually the banks? And if so, what are THEY saving for? Are their savings in order to pay off THEIR debts? Who do THEY owe?I really don’t think that any saving is (or ever really has been) taking place. It’s all money sloshing around. So, I can only surmise that there’s a build up to a big event happening, that money is being collected up as a transition, much like the formation of a rogue wave.The clearest piece/explanation that I’ve yet to encounter is this:Finance…the American Way

WTF did I do?

About Prospect.org”The American Prospect was founded in 1990 as an authoritative magazine of liberal ideas, committed to a just society, an enriched democracy, and effective liberal politics. Robert Kuttner, Robert Reich, and Paul Starr launched the magazine initially as a quarterly.”

A Task Force on Rebuilding a Secure Financial SystemRawi Abdelal, Harvard Business School, author, Capital RulesPhil Angelides, former California state treasurerSheila Bair, chair, FDICRichard Blumenthal, attorney general of ConnecticutJack Bogle, founder of Vanguard Mutual fundsRichard Bookstaber, former risk manager, author of A Demon of Our Own DesignWarren Buffett, super-investorJon Corzine, governor of New Jersey, former CEO of Goldman SachsJames D Cox, Duke University law professor, expert on securities regulationEric Dinallo, New York State Insurance commissionerWilliam Donaldson, former chair, SECBarney Frank, chair, House Banking CommitteeTimothy Geithner, president, Federal Reserve Bank of New YorkHarvey Goldschmid, Columbia Law School, former commissioner, SECBill Gross, chief executive of PIMCOMartin Gruenberg, vice-chair, FDIC, former chief of staff, Senate Banking CommitteeRobert Johnson, investment banker, former staff, Senate Banking CommitteeLance Lindblom, president, Nathan Cummings Foundation, former financial executiveDavid Moss, Harvard Business School, author, When All Else Fails, and convenor of the Tobin Project on RegulationNouriel Roubini, professor, NYU Stern Business SchoolPaul Sarbanes, former chair, Senate Banking CommitteeJoel Seligman, president, University of Rochester, securities law scholar and historian, author, The Transformation of Wall StreetDavid Smith, chief economist, House Financial Services CommitteeJim Stone, former chair, Commodity Futures Trading CommissionDaniel Tarullo, Obama senior adviser on financial markets

The G20 has various ways that they could define a new currency system. It is possible for them to use gold as a reference for currency re-valuation. It’s also possible that they could define some sort of theoretical or “reference currency” based on some fractional combination of the major existing currencies. But the main point is that they really need to make substantive progress, and give people the sense that a solution is imminent. Right now there’s a complete void. They are asking for trouble in the currency markets, in my opinion.Meanwhile, think about Bretton Woods. What did the old currency arrangement do? Basically, it used gold as a reference and established the US dollar as the global currency. But later (under Nixon) the USA pulled the plug on this agreement by dropping the gold standard on the dollar. Whether intentional or not, when the USA took this step in the early 1970′s it set in motion a long-term process that would undermine the old Bretton Woods agreement.We are there now. The old currency regime is ineffective and open to serious risks. America is bankrupt and the value of the US dollar is at serious risk. Many central banks are injecting huge amounts of liquidity into the global markets, potentially causing a “race to the bottom” as currencies become devalued. A new currency regime is badly needed – or we face instability and turmoil.PeteCA

Hopefully he pulls a JFK and turns on them. Obama is a real smart guy he knows just because he’s president he can’t snap his fingers and be a president for the people he’s got to at least create an image of towing the elite’s line and hopefully he gains some compromise with the oligarchy and gives the common man a bone. We have all witnessed that most of congress is in the hands of money printers and spread earners. I hope Obama realizes this and out smarts them which he seems to have a knack of doing. We live in an ruling class of economic dictators with the illusion of political democracy, it’s all about placating the masses with religious ideology or with placating loans while starving the people of their economic freedom.

A Task Force on Rebuilding a Secure Financial SystemBy coincidence a roster of liberals including NR which is no surprise

Ack. Should read: “This might be the reason they minimize Tharman.”

To those who criticize Obama’s appointment selections thus far, who are cynical of his intentions and/or ability to make change in this country, who believe he has “sold out” and who ask, “Where is the change we were promised”, I offer this evidence to the contrary:An excerpt from a recent email to Obama’s 3 million or so campaign contributors,“The Obama-Biden Transition Project is a nonpartisan entity whose purpose is to facilitate the transition to a new government and prepare for the next administration.In the past, efforts like these have often been very secretive and funded by the D.C. lobbying and corporate community.But, like in the campaign, we’ve decided to do things differently.For the first time, transition efforts won’t be financed with donations from Washington lobbyists and PACs — which means we’ll need to keep asking for your help. Your generosity during the campaign helped get us here, but building a more transparent and open government means continuing to rely on a broader group of people to do this the right way.…”David PlouffeCampaign ManagerObama for AmericaIf you can’t see significant differences between Obama’s statements and actions, including his cabinet and other selections, and those of George W. Bush, then I feel you must be in the same category of people who see no difference between the two major parties. But just because you cannot discriminate the differences does not mean they do not exist. And, IMO, if you can’t see the differences, then you will never be satisfied; you will remain carpers and cynics.When will we see the changes we were promised? Well I don’t know what changes you believe you were promised, but I think we are seeing evidence of real change already. And if you need more concrete results, then waiting until the new president assumes power on Jan. 20 is a prerequisite: to expect to see real change before he even takes office is illogical.But in assessing his performance, keep in mind he is taking over the presidency at the worst possible time since FDR during the GD and Lincoln at the brink of the Civil War. IMO, if we are rational and reasonably intelligent people, we must temper our expectations for change with the realities of the demands placed upon Obama and the entire government in this economic crisis.What he will need to do is certainly not what he would choose to do if he were inheriting a balanced budget, a nation at peace, and a much stronger economy as George W. Bush did in 2001. I.e, IMO, much of the change he really believes in, will not be possible to implement because of our bad economy. However, even with the financial constraints, I believe the changes will still be profound compared to the government policies we have seen evolving over the past 25 years. Many of these changes will be difficult to see as they will not be widely covered in the MSM, and many may seem subtle, but the cumulative effect will be profound nonetheless.“In the end, that’s what this election is about. Do we participate in a politics of cynicism or a politics of hope?”Barack Obama“We have been told we cannot do this by a chorus of cynics who will only grow louder and more dissonant in the weeks to come. We’ve been asked to pause for a reality check. We’ve been warned against offering the people of this nation false hope. But in the unlikely story that is America, there has never been anything false about hope. For when we have faced down impossible odds; when we’ve been told that we’re not ready, or that we shouldn’t try, or that we can’t, generations of Americans have responded with a simple creed that sums up the spirit of a people. Yes we can.”Barack ObamaAnd not only did our forefathers believe “yes we can”, they actually did it. They made America the greatest country, with freedom, opportunity, and equality for all; they made America the most powerful nation; they defeated communism and Fascism. Thus, to Barack Obama “Yes We Can”, is not just an empty slogan, it is the essential spirit of Americans that gives us the confidence to turn our hopes into reality; and it is because we believe that we can transform our country once again to its former glory.This is our country; he is our president, please give him a chance. And let’s all do what we can to support him, not give up and criticize him before he evens starts. He is just one man. We must all pitch in to help save ourselves. We can’t expect him to rescue our country alone, even he has said so himself – the change we seek must come from all of us not just from him.

Good points but our mindless leaders always follow the same foolhardy approach to everything: first, deny there is a problem, deny it is a large problem, deny it is a huge problem, deny it is an out of control problem, deny they have no clue how to fix it and finally, blame others for the catastrophe! Add to this the continous lying about what’s really happening every step of the way in order to not induce panic and you have a recipe for disaster!

If there were a simple (or even complicated) painless solution to the problems we face, it would have been implemented with little political fuss. But there no painless solution to the consequences of the mother of all credit booms.Once we meditate on this, the truth can set us free. There is no point looking for a painless solution, so stop looking for one. The problem is too much debt. Faced with this, what normally happens? The person/ company declares bankruptcy, his business dealings are exposed and his assets are distributed to the people he owes money too.This is what needs to happen here. Citibank by some accounts has a $1.6tn SIV that is off-balance sheet. AIG apparently wrote many CDS contracts it couldn’t honour in event of default. These are criminal actions by executives of bankrupt organisations. They need to be exposed by forensic investigators. Debts anywhere where bankruptcy looms need to be exposed. And then purged with creditors being given what’s left through a fair transparent process.This, more than ‘crazy’ monetary or fiscal policy, is what is required. Going into detail on quantitative easing, money traps and ZIRP etc shows a sort of blindness. Before all this and the kitchen sink is thrown at this problem, everything needs to be exposed. Ignoring the web of opaque possibly fraudulent financial transactions of which insolvent institutions are counterparties, while wittering on about interest rates is akin to treating a heart attack patient with an aspirin. Why have there not been more demands for Citi’s $1.6tn SIV to be subject to independent scrutiny?

What can I say? You get an A+!

Prof. Roubini:You argue that deflation sets in when aggregate supply exceeds aggregate demand.I have the impression that all monetary and fiscal actions discussed are meant to prop up aggregate demand.What about decreasing aggregate supply? Reducing rates and helicoptering money, aimed at increasing aggregate demand, might actually result in an increase of aggregate supply that exceeds the increase in aggregate demand?Apologies in advance if my question is naive…

Just be patient everybody, the check is in the mail.

Watch what he does not what he says. Indeed he is more astute, articulate, intelligent, and hands on than Bush. But who wouldn’t be? Obama voted for TARP, continuation of illegal govt spying, and is now appointing recycled Clinton/DNC deregulators in key posts. Not encouraging so far.Let’s see how quickly he is willing to give up the Presidential authorities Bush illegally grabbed and restores the Constitution.

If he wants to reduce cynics, then he can do less cynicism provoking things. That or ‘The Fairness Doctrine’.

So if we focus on rebalancing aggregate supply and demand, should we not revert to:(1) nationalize all major financial institutions (safeguard the backbone of the economy) – determine which bank needs mandatory nationalization by applying a fixed %estimated default rate to the bank’s credit books and compare that to its tier 1 equity; then move to a forced nationalization of the bank by injecting highest ranked preferred equity (effectively wiping out all current common and preferred equity holders) and give a state guarantee to all credit issued by that bank.(2) reduce aggregate supply by NOT bailing out corporates, i.e. let the auto industry restructure in Chapter 11 and come out of it healthier.

Top Business Schools do not teach people how to cheat.

By the way, much of the US automotive supply industry has been dipping in and out of Chapter 11 for years now. But I have read nothing about this in any of the financial media recently.Isn’t it only normal that this eventually be “stepped up” one level and that the automotives themselves restructure in Ch11???

m, i read your link and thought you might enjoy this.http://www.npr.org/templates/story/story.php?storyId=95567782hit listen now.

They’ve done studies in 3rd world countries and you’d be surprised at how much of people’s plight has to do with a lack of education, underdeveloped and underutilized brains. For example people in India we’re dying of dehydration from droughts simply because most of them weren’t clever enough to figure out ways of collecting water during typhoon season. This probably has more to do with a certain dependency on foreign aide in conjunction with an industrialized double agenda of serfdom. Provided the people with just barely enough to survive for a long enough period but not enough to thrive and you dumb down the culture, the way of life, the ability to survive in times of trouble. This is why a lot of people in this country would be in big trouble if there is a major collapse the ones lacking the knowledge who are too dependent on the system would suffer the most during times of upheaval. People coming to this board for example probably have a better chance of surviving this economic crisis than someone who drops out in the 9th grade.

“In the end, that’s what this election is about. Do we participate in a politics of cynicism or a politics of hope?”Barack ObamaOr put another way:“In the end, that’s what this election is about. Trust me and don’t ask questions or you will be labeled a cynic.”

BLACKTake a drive through your community for a couple of hours. Look at row after row of homes and ask yourself about the financial status of those inside . In front of you is a vista, stretching as far as you can see- households that cannot afford their homes and who soon will be bankrupt.Think of all who have retired in the last 20 years, who depend on their projected 10% annual stock market returns, and who are now mesmerized by the economic cobra, who have done nothing and will do nothing to protect themselves, as they fall prey to its venom.Think of all the young people who were going to replace a retiring workforce, a workforce which will greatly delay retirement, and will find themselves unemployed.All I see in front of me is black.

anybody here think it’s possible to have a rally to year’s end because of thr “Obama effect”? I’ve been reading a lot about it lately and want more opinions……..

Obama’s talk, PR, and supporters makes one feel good, but take a look at his personal donations, look at his voting record, his actual accomplishments while in office. There is a significant negative contradiction. But hey just ignore the facts, they are boring and may make you feel uneasy.

In any other time such a statement would be dimissed as the rant of a person gone mad. There is more to this market decline than sentiment and lack of confidence, even the most bearish of pundits appear surprised by the depth, speed and form of this crisis.

they make light bulbs

And our “intelligence” has gotten us the ability to destroy our environment. The “dummies” just manage to not keep THEMSELVES around (longer).Moral of the story: no one should think that they are so damned smart that their ideas or ways should be forced upon others.

Ah, you made my day, seeing someone else who has the same view as me Glad to have you back

NO! other than a fools rally

They teach them how to call it something else, like innovation.

kdp59, if I may add my anecdotal evidence here. And you may be right that some folks don’t have any problem getting financing. I’ve heard on this board and others that people’s credit card limits have been downgraded. As for me, I have one credit card, and every year in September my limit has been raised (without my asking for it). This past September–no limit raise. But no downgrade, either. Curious, don’t you think?

Take a look at GE stock price chart.It’s the top of the ninth. Here is the batting order:At the plate: CitiOn deck: Bank of AmericaClean up: GEThe side will be retired in order and the game will be over.

@ Octavio Richetta: I do know, Kutnner is a Democrat, and that if you are one of those persons who likes to place labels on people’s foreheads, then you can call him a liberal… Certainly Kutnner’s rationale for supporting Geithner is a lot more robust than the fearmongering “here he comes again, Obama cannot do anything right” he is picking a GS soldier for the treasury position, where is the change?; when he has not even started as a President.”@ KJ Foehr: “To those who criticize Obama’s appointment selections thus far, who are cynical of his intentions and/or ability to make change in this country, who believe he has “sold out” and who ask, “Where is the change we were promised”, I offer this evidence to the contrary: … An excerpt from a recent email to Obama’s 3 million or so campaign contributors… For the first time, transition efforts won’t be financed with donations from Washington lobbyists and PACs…”The problem so far with the Obama transition IS the transparency. Normally, one with the best interests of the nation at heart would like to wait and see what a new president will be like; and what his policies would be. But this time, it’s obvious that we don’t have to wait, because the policies are the twin policies of the Clinton administration — where most of the appointments are coming—and from the international bankers who created the mess that we’re in and who are benefiting from the mess. The bankers have obviously selected the policy that will continue the financial system in the same vein in which they have benefited.As far as categorizing people as conservatives or liberals, this nomenclature is no longer necessary when you have elites using government for their own benefit. One of the country’s major problems has been oppressive, corrupting, gargantuan government. Yes, Obama did not promise to reduce the size of government but I’m sure a large percentage of his supporters did not realize just how little appointment change there would be from the Clinton years.A question: There are those on this blog who say Geithner is a new face. Can you tell me if he is now going to open up the operations of the treasury with the kind of transparency to which Obama has alluded? I’ll be waiting for Geithner’s first day in office when he reveals how much money is really needed to bail out his friends with the investment banks

You are absolutely right, Guest. It’s the PRINCIPAL (stupid banks) that needs to come down. Reformatting these mortgages to simply longer fixed terms (40 years vs. 30 years) or slightly discounting interest rate does NOT get at the root: homes are STILL overvalued and I am sorry, but a prudent mortgage holder needs a reduction in principal. These b**tard banks want their money, come hell or high water, doesn’t matter how many years, but they still want their principal plus interest plus fees for 40 years now instead of 30. And of course the property taxes are based on the home value so if it goes down then the city/county/state are screwed.Honestly, it’s just disgusting.

I would stick with Geithner. BTW, I also admire Bill Buckley who was Republican. Your points are well taken but I hope you also agree that none of the your posts above address the content of the article. You limit yourself to attacking the messenger.

KJ, you are refreshingly optimistic. Keep the faith. You are right: “we must all pitch in to help save ourselves.” Well said.

Why are the city/country/state screwed with property values?Their should be the same government cost associated with one family if their house is $150k or $50 trillion, unless of course they miss spent the tax revenue when the houses were over valued.

Yeah, you’ve never done that with your posts…NOT!!!

You must not have gotten the memo.Our duty is to work and add value.The governments duty is to choose how to allocate our surplus.Now must get back to work.

you can not die for freedom. you can only live for freedom. John Lennon lived free and was killed by those who hate freedom

WB,So well said. Bravo!PKB

Yves Smith of NC on Timothy Guithner (circa 2007)New York Fed President Timothy Geithner’s Not-So-Reassuring Speech (March 2007)

“Compared to other Fed presidents, Timothy Geithner is straightforward and more than usually willing to talk about bad things. So when he gives a speech that is comparatively upbeat, as he did earlier this week (“Credit Markets Innovations and Their Implications”) it should be reassuring…”

i am no economist, but why can’t gov. print money to cause 20% inflation across to wipe out all this deflation stuff roubini talks about ???

lol

@JCL,Duhhh! Brilliant comment! I bet nobody ever thought of that!

An interesting article from RGE USecomonitorUnderstanding the Fed’s swap line (RGE USecomonitor Nov 22)“Why is the Fed booking the currency swap in this way, rather than more transparently? Perhaps it is a matter of appearances.The Treasury is involved because of the exchange rate risk-even though in this case the Fed is long the Euro and so gains when the dollar falls, and loses when the dollar rises-but also because it might be unseemly for the Fed to carry on its books a $558bn debt to European central banks. So it creates money to the credit of the Treasury, and the Treasury lends the money on to the ECB, which lends it to European banks.For lack of a world central bank, this is the form that international lender of last resort intervention is taking. The world money market is moving onto the balance sheets of the world central banks.”

Your fantasies are pathetic. Technology has concentrated military force as well as riches. The slaughter of the liberals is only moments away.

A couple of reasons #1 inflation undermines a fiat currency and inflation is very difficult to control if not impossible however deflation can be controlled by inflating the money supply so central banks fear inflation more than they do deflation. Secondly if your a rich person and have a lot of cash or treasuries at this point then you love deflation because you can buy up the whole world with your money but inflation wipes you out it wipes out the governments/elites ability to control the world via treasuries. Notice how the FED wants to re-inflate but only through extending more credit well that should tell you how terrified they are of inflation they feel if its done through credit then deflation can always wipe that credit out without them losing power. It’s all about maintaining the power structure their entire monetary system revolves around that single theme but they call it maintaining stability.