First!

neither one of you was first, hahahahahah

Russia, again?Perhaps the good professor, feeling discouraged by not being invited to join President Obama’s economic team, is vying for a job with the opposition, he said ironically.Don’t let him get away, Barack!

I’ve been trying my best to keep my distance (intellectually) from this issue of “define the core problem of the economy”. It’s tough to resist the tendency to start grouping and characterizing the similarities among the problems that have made it into the debate so far.But maybe we’re getting to the point where it’s worth doing a “straw-man” version of “what’s the same about these stated problems”.I’ll have a go at it. I’m going to propose that we sort these problems into one of these piles:* <Flaws of “human nature”. Situations that have a lot of complexity and/or ambiguity and require “eternal diligence” stretch humans where we’re weak. Are we too flawed as individuals, or additively as a society to effectively run a complex economy?* Design flaws. An economy has a design, and it has foundational precepts. The design can be bad, or the environment the economy was designed for can change over time, causing a formerly “good” design to function badly as conditions change.* Operator Error. Do we have a great economic system, but too few people know how to actually work it?Those are my groupings, and they’re just a suggestion. I’m hoping you’re not going to like the “bins” I made up to sort the problems into, and that you’ve got better ones.For those pattern-matching, abstract-thinkers of the group, can you detect any recurrent themes or cross-cutting aspects to the problem-set offered above?And before we get too far into the pattern-matching work yet, is there some other core problem that exists that we haven’t considered yet? Any last “problems” that need to get into the hopper before we turn the ore-crusher on?

It’s a metaphor…

The statisticians over at Shadowstats.com updated their charts yesterday and it shows that dramatic changes are taking place in the money supply.http://www.shadowstats.com/alternate_data/money-supplyThe rate-of-growth in M3 has precipitously dropped in half (from 17% to 8%) over the last eight months to levels not seen since 2003 and 2006. During the same time period M1 has jumped from 0% to 11% annualized growth. M2 has also accelerated from 6% close to 8% annualized growth.Does this mean the money supply is shrinking? Nope, as the graph shows it’s still accelerating. From Nov 2007 to Nov 2008 the money supply has grown from $12.8 trillion to almost $14 trillion or 8.7%I remember last year, comments were made by several posters that M3 did not predict inflation while changes in M1 and M2 did suggest inflation. Well, now we have decreasing M3 and increasing M1 & M2 and calls for deflation! As you probably know, my bet is a lot more inflation with the Obama Administration busting new money all over the place.As an interesting experiment, go over to Shadowstats inflation calculator page. http://www.shadowstats.com/inflation_calculator and select the last year you got a raise or made a big capital gain and then see how you did compared to inflation. Warning: This exercise is hazardous to individuals with pensions or savings.Let’s say your last salary raise was 13% in 2006, but you can see from the calculator that inflation has risen 24.57% from Sept 2006 to Sept 2007! What will it be next year? Deflation like NR predicts or 25% inflation in one year as opposed to two years?Money Supply – Annual Growth Year-to-Year Percent Change2006 Feb 0.58% 4.92% 7.98%2006 Mar 0.86% 4.99% 8.21%2006 Apr 1.63% 5.21% 8.25%2006 May 1.44% 5.10% 8.47%2006 Jun -0.33% 5.05% 8.52%2006 Jul 0.25% 5.04% 9.06%2006 Aug -0.49% 4.84% 8.72%2006 Sep -1.17% 4.62% 8.71%2006 Oct -0.47% 4.96% 9.11%2006 Nov -0.39% 5.12% 9.74%2006 Dec -0.58% 5.29% 10.27%2007 Jan -0.51% 5.25% 10.34%2007 Feb -0.97% 5.13% 10.71%2007 Mar -1.10% 5.38% 11.39%2007 Apr -0.19% 5.78% 12.22%2007 May -0.64% 5.93% 12.82%2007 Jun -0.69% 5.73% 12.81%2007 Jul -0.16% 5.70% 12.80%2007 Aug -0.01% 6.16% 13.86%2007 Sep 0.40% 6.22% 14.53%2007 Oct 0.12% 5.79% 15.13%2007 Nov -0.39% 5.74% 15.56%2007 Dec 0.00% 5.59% 15.18%2008 Jan -0.39% 5.53% 15.66%2008 Feb 0.39% 6.52% 17.03%2008 Mar 0.40% 6.93% 17.40%2008 Apr -0.46% 6.38% 16.39%2008 May -0.52% 6.21% 15.91%2008 Jun 1.49% 5.94% 15.74%2008 May -0.52% 6.21% 15.91%2008 Jun 1.49% 5.94% 15.74%2008 Jul 2.54% 6.16% 15.41%2008 Aug 1.76% 5.27% 13.91%2008 Sep 6.40% 6.22% 13.06%2008 Oct 7.56% 7.37% 10.76%2008 Nov (e) 11.38% 7.56% 8.70%http://en.wikipedia.org/wiki/Money_Supply* M0: currency (notes and coins) in circulation and in bank vaults, as well as cash (reserves) owned by banks that is held at the central bank. M0 is usually called the monetary base–the base from which other forms of money (like checking deposits, listed below) are created–and is traditionally the most liquid measure of the money supply. [7]* M1: currency in circulation + checkable deposits (checking deposits, officially called demand deposits, and other deposits that work like checking deposits) + traveler’s checks. M1 represents the assets that strictly conform to the definition of money: assets that can be used to pay for a good or service or to repay debt. Although checks linked to checking deposits are gradually becoming less popular, debit cards linked to these deposits are becoming more popular. Like checks, debit cards, as a means to complete a transaction through their links to checkable deposits, can also be considered as a form of money.[8]* M2: M1 + savings deposits, time deposits less than $100,000 and money market deposit accounts for individuals. M2 represents money and “close substitutes” for money. [9] M2 is a key economic indicator used to forecast inflation.[10]* M3: M2 + large time deposits, institutional money-market funds, short-term repurchase agreements, along with other larger liquid assets. M3 is no longer measured by the US central bank.[11]

OB,My humble take: Don’t overanalyse the problem. In a word the core “problem” or its foundation was in debt. Far too much of it, easy access to it, no regulation over it’s issuance and accounting laws that enabled debt to be considered growth/assets while it and it’s debt derivatives exploded off balance sheet.That’s the core problem. However, right now the immediate “problem” is surviving the financial meltdown resulting from the massive and blindingly fast de-leveraging of that debt.We now witness the mirage of the last decades where growth was merely an outcome of horrendous ammounts of cheap and stupid levels of debt. It was considered money. What a laugh! Now that the debt cycle has turned and heaaded towards a saving’s cycle, we see plainly the facades ( corporations, households, agencies, financial systems, entire economies) that are all built on debt, coming apart at the seams.So, one could say- “Limit the debt to limit the risk and thereby limit the problem”- all to manageable proportions. But that is a problem to solve another day- albeit vitally important.And therein lies our immediate problem. The debt destruction underway is NOT of manageable proportions.The destructive values are far too big to manage.Widespread financial carnage and societal chaos will increase as the US economy re-calibrates itelf to a much lower level of GDP.So I do hope your gathering will ponder survival themes for this period ahead- say 1-3 years.There are some rays of hope. I see that gates has made plain his desire for a much cheaper Military- with emphasis shifting from horrendously expensive hi-tech systems towards low-tech train the trainer type sophistry that helps enable locals fight their own battels.There are enormous savings to be had immediately in the US military budget.There is no way around this- the ability of the US consumer to borrow has hit the wall.The only option now open is pay down debt and save and do so flat out. The sooner Govt accepts those terms and turns policy towards using that cycle instead of fighting it- then maybe we will begin seeing some clear sky.Hint: First rule- DON’T PENALIZE SAVERS!!!!!

Thanks, ptm. I always appreciate and save all your reports: but they are chilling.

Reading the Vanity Fair article on the death of the rich gives you a perspective on what is going on. Just in their example of the 30-40 year old banker with the mortgage financed based on stock that nobody for one second thought could possibly go to 0. Well they did go to 0. We have to realize that unrealized capital gains AREN’T actual money any more than a bet on horse # 5 at the Derby is real money until after the horse actually crosses the finish line. Mortgages and other loans need to be backed by real assets not stock possession, 401 k or god forbid “equity”.This is natural protection against a bubble and against prices rising too far too fast. If you save 10% you’ve really shown not only can I save 10% but I can live on less than I make because I had the extra around to do the saving.If the same was true of student loans we’d have alot fewer people with advanced degrees but we’d also not have the exhorbitant college tuition rates…Thanks for the explanation Dr. Roubini. It sounds like you’re saying get ready for a Rouble Crash. What will that do to U.S. Banks?

Hayek vs. Bernanke by Doug French | December 8, 2008In response to the meltdown of financial institutions, unprecedented power has been unleashed by the federal government. Between actions by the Federal Reserve, the TARP, guarantees made by the FDIC and other direct bailouts the total comes to nearly $8 trillion. That’s over 30 times the inflation-adjusted cost of the S & L bailout, according to Bianco Research.But the mainstream financial press is urging the Fed to do much, much more. “Look, this is no time for the Fed to act like a bashful virgin,” ex-Fed operative Vincent Reinhart told Barron’s. Reinhart used to be the director of monetary affairs under Greenspan and now toils for the American Enterprise Institute. Ironically, Mr. Reinhart says that because we are now in a “dangerous period,” the central bank “needs to be aggressively buying all sorts of paper, including toxic assets like collateralized debt obligations, non-agency mortgage-backeds and non-investment-grade corporate bonds in order to bring liquidity to the markets and raise security prices.” That would be the paper much of which was created during the monetary expansion ramped up by Reinhart and his former boss.Fed chair Ben Bernanke is doing all he can to disabuse any and all that he is a bashful virgin. “Although conventional interest rate policy is constrained by the fact that nominal interest rates cannot fall below zero, the second arrow in the Federal Reserve’s quiver – the provision of liquidity – remains effective,” he told the Greater Austin (Texas) Chamber of Commerce. Bernanke told the Chamber audience that the Fed could buy long-term Treasuries and other agency securities on the open market to raise prices and lower yields. Indeed, Bernanke’s employer purchased $5 billion worth of debt from Fannie, Freddie and the Federal Home Loan Banks just a few days after he spoke.Of course all of this monetary pumping hasn’t put anyone to work. The labor department reports that 533,000 jobs were lost last month. And if part-time workers wanting full-time work and anyone who has looked for work in the last year unsuccessfully are added to those that are included in the official unemployment rate, the total amounts to a 12.5 percent unemployment rate, according to the NY Times, “the highest level since the government began calculating the measure in 1994.”But the argument is that we must be patient with our wise men at the Fed and the Treasury. Monetary policy takes time to work, but rest assured the mistakes of the 1930’s will not be made again. After all, Ben Bernanke is an expert on the Great Depression, we’re told over and over. He knows what to do to make sure it doesn’t happen again.But as F.A. Hayek explained in his 1974 Nobel Prize acceptance speech, entitled The Pretense of Knowledge, monetary and fiscal policies are the product of what he called the “scientistic” attitude which is in fact unscientific in that it “involves a mechanical and uncritical application of habits of thought to fields different from those in which they have been formed.”Just as it was 34 years ago when Hayek delivered this seminal speech, which is included in the newly-published book Free-Market Monetary System, there is the belief that there “exists a simple positive correlation between total employment and the size of the aggregate demand for goods and services; it leads to the belief that we can permanently assure full employment by maintaining total money expenditure at an appropriate level.”So while Bernanke, Treasury Secretary Hank Paulson and soon-to-be Treasury Secretary Tim Geithner think they can crunch the data, make a diagnosis, concoct the right monetary witch’s brew and inject lots of it to make us all employed and living happily ever after: the fact is that’s impossible. In the physical sciences that may work. But, as Hayek explains, “such complex phenomena as the market, which depends on the actions of many individuals, all the circumstances which will determine the outcome of a process…will hardly ever be fully known or measurable.”The wise ones at the Fed and Treasury are only looking at factors that can be quantitatively measured and disregard any factors that can’t. Thus, “they thereupon happily proceed on the fiction that the factors which they can measure are the only ones that are relevant.”No single observer could know all the factors determining prices and wages in a well-functioning marketplace. But because policy makers think they know, “an almost exclusive concentration on quantitative measurable surface phenomena has produced a policy which has made matters worse,” said Hayek back in 1974. Nothing has changed.Bernanke and company are making matters worse by endlessly inflating and bailing out dysfunctional firms. The result will be more unemployment, not less. But not-so-bashful Ben is arrogant enough to believe that he can step on the monetary gas, make things all better, and then return the Fed balance sheet to normal (whatever that is). Perhaps Chamber members believed him when he said: “To avoid inflation in the long run and to allow short-term interest rates ultimately to return to normal levels, the Fed’s balance sheet will eventually have to be brought back to a more sustainable level. The FOMC will ensure that that is done in a timely way.”The government’s moneymen are engaging in what Hayek referred to as “the fatal conceit,” thinking they have the knowledge to fix and plan the economy. They can and will only make matters worse.Doug French is executive vice president of the Ludwig von Mises Institute.

Excellent compilation!The common element appears to be that sustainability or long- range thinking is lacking.Leadership, anyone?

does this take into account the exchange of toxic assets for cash (used as reserves)? That would account for the apparent increase in money supply, but could still result in deflation since the money isn’t truly circulating…

Roubini is a cientist… Politics fear cientists…

The ghost of Christmases yet to come?UPDATE 2-Japan deeper in recession, third-quarter GDP showsBy Yuzo Saeki (excerpt)TOKYO, Dec 9 (Reuters) – Japan’s economy sank deeper into recession in the third quarter than initially estimated, reinforcing fears that the world’s No.2 economy is facing its longest contraction ever.The export-driven economy now looks likely to keep shrinking at least until the first quarter of next year — which would mark a postwar-record four straight quarters of decline — as leading manufacturers slash output to deal with a slump in global demand.”Japan will need to endure hardship next year,” Economics Minister Kaoru Yosano said. “Policy efforts are necessary to keep the economy from deteriorating sharply.”…The euro zone and the United States are also in recession, and growth is slowing in big emerging markets such as China, boding ill for major Japanese …Japan’s economy contracted 0.5 percent in July-September, far more than the preliminary figure of a 0.1 percent decrease, revised GDP figures showed on Tuesday. It was also a bigger slide than economists’ median forecast for a 0.2 percent fall.”The revision was bigger than expected. Given further weakness in exports and capital spending since October, the economy’s contraction will deepen in the fourth quarter,” said Tatsushi Shikano, senior economist at Mitsubishi UFJ Securities.http://www.reuters.com/article/marketsNews/idINT35635620081209

I think you mean does the drop in M3 account for growing bank reserves and subsequent re-investment into Treasury Bills and Notes? If so, the answer is yes. M0 through M3 do not include Treasuries which is how some explain the drop.

No wonder the Nikkei Index was up by 1.8% at one time——————————————–The longer TPTB plays this game, the more trust they lose/erodes

Here is a quote from John Williams April 2008 article predicting hyperinflation in 2010-2011 where he describes the US cash situation:

Some years back, I happened to be in San Francisco, having dinner with a former regional Federal Reserve Bank president and the chief economist for a large Midwestern bank. Market rumors that day had been that there was a run on a major bank in the City by the Bay. So I queried the regional Fed president as to what would be happening if the rumors were true.He had had some personal experience with a run on banks in his region and explained how the Fed had a special team designed to handle such a crisis. The biggest problem he had had was getting adequate cash to the troubled banks to cover depositors, having to fly cash in by helicopters to meet the local cash flow needs.The troubled bank in San Francisco, however, was much larger than the example cited, and the former Fed bank president speculated that there was not enough cash in the vaults of the regional Federal Reserve Bank, let alone the entire Federal Reserve System, to cover a true run on deposits at the major bank.Therein lies an early problem for a system headed into hyperinflation: adequate currency. Where the Fed may hold roughly $210 billion in currency (sharply increased in the last year) outside of $50 billion in commercial bank vault cash, the bulk of roughly $780 billion in currency outside the banks is not in the United States. Back in 2000, the Fed estimated that 50% to 70% of U.S. dollar cash was outside the system. That number probably is higher today, with perhaps as little as $200 billion in physical cash in circulation in the United States, or roughly 1.5% of M3.The rest of the dollars are used elsewhere in the world as a store of wealth, or as an alternate currency free of the woes of unstable domestic financial conditions. In Zimbabwe, for example, where something akin to hyperinflation is underway, U.S. dollars are used to maintain some semblance of economic activity, where wages and salaries seriously lag inflation, and goods often are available only on the black market.

As I mentioned before, Williams has moved up his prediction for hyperinflation to 2009. When trying to choose between NR’s deflation and Williams’ hyperinflation predictions, my heart picks NR, but my head chooses Williams.

Im not Roubini, but in december there is a sazonality that usually rally the stocks, unless new “surprises” come… I see stocks like sum of waves of different period, with variable amplitude…

sir permit me to add another comment.i find it extremely sad we americans are so concerned with the cost of helping our fellow citizens, and ultimately themselves.america is a rich and powerful country but what is the point of the wealth and power if we don’t use it when it is really needed?

No, the M0-M3 statistics do not account for velocity and, as NR, John Mauldin, and Williams all point out, velocity is slowing significantly.So it’s still a glass half empty/full analysis. NR will say slowed velocity will lead to deflation; while Williams says we cannot obtain an accurate a “real-life” measure of velocity.

Thanks a lot ptm.So for all practical purposes the total amount of USD is $450B, and according to most observer the US will have to issue $1.5T in new debt over the next year, and a big chunk of this will be bought by the Fed by printing money. I guess if you want to deleverage, when the numerator is tiny compared to the denumerator it is a lot easier to increase the numerator… we’ll see what the consequences are.

Simply because of perceptions among countries and investors everywhere. We are always the safe place to be. Russia is CERTAINLY not.

Besides the propensity of the Russian majority to seek the protection of their benevolent “Lords”, never underestimate the arrogance of the Russian elite.That same arrognace will get them into trouble time and again.

Interesting summation of ‘the problem’ from the BBC, Robert Peston (pdf link).http://www.bbc.co.uk/blogs/thereporters/robertpeston/thenewcapitalism.pdf

仆街美國人,又窮又大洗,借錢唔還錢.男人賓周長而無力,女人西大而嗅.

due lei no mou mei kwok yan.

Can you provide the link please?

heh?are you saying the arrogance of the Russian elite is a phenomenon different to the arrogance of the Washington elite or the Wall Street Elite or the Carmaking elite or the UK elite or the Icelandic elite or any other non-Russian elite we can think of?

Leo70: We’re working toward that result.This is a well-managed blog, so I’m certain that RGE’s monitoring the situation, and if it’s indicated (usage/activity) and has cost-benefit to RGE, they’ll certainly find a way to accommodate the need. They’re smart business people.The broader question is “can bloggers get beyond talk and stay focused on something long enough to be effective”.That’s a TBD. Looks good so far, though.BTW, if anyone’s got ideas or suggestions about the BT or about building systems to support massive collaboration / problem-solving, feel free to contact me at outerbeltway at yahoo dot com. I’d like to expand the set of people I’m collaborating with on this topic.

Did someone mention Ninncy Pelosi?Lawrence Livermore Laboratories has discovered the heaviest element yet known to science.The new element, Governmentium (symbol=Gv), has one neutron, 25 assistant neutrons, 88 deputy neutrons, and 198 assistant deputy neutrons, giving it an atomic mass of 312.These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons.Since Governmentium has no electrons, it is inert.However, it can be detected, because it impedes every reaction with which it comes into contact.A tiny amount of Governmentium can cause a reaction that would normally take less than a second, to take from 4 days to 4 years to complete. Governmentium has a normal half-life of 2 to 6 years.It does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places.In fact, Governmentium’s mass will actually increase over time, since each reorganization will cause more morons to become neutrons, forming isodopes.This characteristic of moron promotion leads some scientists to believe that Governmentium is formed whenever morons reach a critical concentration. This hypothetical quantity is referred to as critical morass.When catalyzed with money, Governmentium becomes Administratium (symbol=Ad), an element that radiates just as much energy as Governmentium, since it has half as many peons but twice as many morons.(now don’t get me wrong for posting this – i fully agree with whoever said I’m all for downsizing government just as soon as we shrink the ginormous business and banking behemoths who plunder the working people who create the wealth! It’s stupid to throw the baby out with the bathwater, and government needs to be fixed, not abandoned. Governments have been devoured by superwealth and need the people to rescue them.)

May I translate?”The West is flat broke and the future lies in The East”

Spot on, anonymous. We humans have constructed a GLOBAL economy (100% rigged as it is), but we still THINK only nationally and internationally.We’re royally divorced from seeing the big picture – and that has to change.

I still wonder how it is the whole human race gets accused of being greedy when 99% of people on this planet are entirely willing to cooperate with an economics that underpays 99% of working people in order to overpay 1%.???

“OK Russia is of passing interest” . . . then. . . “We are still in extraordinarily uncertain times”Who is ‘we’? Everyone in America? Everyone in the world except for people inside Russia? Or are events in Russia only of passing interest to Russians themselves?This is the internet, an international phenomenon like the global crisis.

to the RGE BT:All of the comments above have merit. However, we need to do some root cause analysis to get to the real problem. I believe the USA has become what it has for many reasons (alot are stated above).If the USA is to survive and thrive, we must engage the population in this effort. In addition, this effort MUST start small and work on and FIX a problem that can be used to enhance the credibility of the project, gain momentum, and add needed experience to the BT members. Trying to solve the healthcare issue is a huge issue and could swallow everything unless it is narrowly focused IMHO.I think there is a tremendous amount of idle manufacturing capacity in this country that somehow we need to utilize. I’m just having a hard time figuring out how to do it! I KNOW there is an answer to this problem and I’m hopeful the BT can help figure it out.Countries throughout history that go from being a creditor nation (producer/seller) to a debtor nation (consumer/buyer) are on the way to disaster. Unless we change this thru innovating and using the capabilities that the US has, we are screwed. Use Apple computer as the example. Great company….why? they innovate like hell, stay ahead of the curve, and control their product to ensure it’s quality. By doing so, they command and get premium prices in the marketplace, have no debt and lots of cash in the bank.

Chanos on CNBC at this moment – he covered many of his shorts and but is now putting shorts back on in some sectors (the videos of this will likely be available over the next couple of hours – this guy is good!

This may come as a surprise to you Guest, but the vast majority of the people in Russia are dirt floor poor, barely surviving each day. Their attention is mainly focussed on survival, growing meagre wealth and staying out of the way of the “Man”. They have been at it quite a while now. Whilst they may get some info about what happens around the world, overwhelmingly Russians are tuned in to what is happening there. Not outside.The world has suffered a couple of Russian crises, and managed to survive.Whereas the biggest financial crisis since 1929 is unfolding in front of us, jeopordising the free worlds financial system. Yeah, I would still say that is THE big issue right now. Wouldn’t you?

And your suggestions Guest, to rectify this? Do share your ideas.

I don’t know OR. I don’t see the developed countries being so generous when so much of their wealth has already been chainsawed. In fact, it could be that protectionism starts to gather apace if the developed countries feel threatened by cheap Asian imports that suck valuable jobs offshore. Rightly or wrongly, we may hear a lot more about this.

The economy isn’t crashing because the Speaker of the House uses a jet to fly nonstop from CA to DC., something I believe to be entirely warranted. The economy is crashing because the financial system was totally deregulated, allowing the largest corporations to loot zillions from the taxpayers and because of a trillion dollar unnecessary, foolish war, giving away more zillions to war profiteers. Yet the idealogues still would rather point to a relatively small expense rather than face up to the facts.p.s. She is second in line to be president. When counting lineage to the presidency, you don’t count the president him/herself.

Let’s not forget to laugh about Grandma Millie! Ha! Ha! Ha!

There are rumors that after Citi, BAC is the next big one to run into troubles. Their loan portfolio, much of it acquired from ML, has gone sour and will be costing them over $25b in losses. They’ll be running to the Fed for help soon to repair the balance sheet.Will the Fed save BAC? Absolutely. But how long will this plugging the hole game carry on?

Financial Times’ John Dizard: “Put the Credit Default Swaps Market Out of its Misery.”While not all of the comments are in favor, here is one quote from the blog: “Allowing CDS is allowing your neighbors to take out fire insurance on your house. When ten neighbors each can make a million by burning down your house, how well would you sleep?”

Gold has no interest bearing; Saving accounts almost no interest bearing. Gold has intrinsic value. Saving accounts are debt instruments.

Hah! If that ain’t the truth!

For those who might be interested here are the videos from CNBC this morning featuring famed short seller Jim Chanos: Discussing whether this is the worst market condition in 70 years, with James Chanos Discussing what the next shoe to drop is A look ahead of the markets and economy Final thoughts

amacflyI am very impressed by your insight! You are obviously well-read and I could not agree with you more. However, what can we do about it other than have no debt?

and by the way, Guest, thanks for reminding us of that incident. people shouldn’t forget!

They’re only saying that because they want US bonds denominated in yen. That’s a terrible idea for the USA – we will drown in debt if we do that. So-called “Obama Bonds” in yen should be rejected.PeteCA

Citi is TBTFGM is TUTFU= ugly

If the SSO gets through $27.23, we will have another 345 point day today. No selling allowed I told you. You likey riggy riggy??

Why do you use SSO vs regular S&P or Dow futures?

It just went through 27.24

ex VRWC: Great stuff.We do have a bit of a human nature problem, but that’s what laws, mores, and the other host of interfere-with-the-individual constraints are designed to address.As always the challenge is for the cure to be less onerous than the disease.One thing I’ve noticed is that it’s a lot harder to scam people that understand how the system actually works. If I may, I’ll use you as an example. My guess is that you’ve not fallen for too many investment ruses lately.Now, what did it take to infuse that wisdom in you? Is there a way to somewhat more systematically provide that to others?Compounding human weakness is the fact that the complexity of finance has enabled that area to escape wide-spread public comprehension to date. Allure x complexity = risk.I’m wondering if that protective barrier of complexity can be breached?

pca, i’m not sure what the significance of the term “black swan” is? i saw the interview on p.b.s. , dismal. so is the black swan the thing that brings about the end of a paradigm. have we seen that already?

@VRWC,I agree with your thoughts. Thanx for sharing them. I’d like to add that society cannot regulate or legislate “greed,” which often manifests as the desire to borrow or own, but we can legislate and regulate the willingness and ability to lend. This is one aspect where the system failed us, at least this time.PKB

We need to kick all of our now corrupted political body out! This oughta be worth a couple hundred dow points!10:52 a.m.Governor charged with soliciting bribes to sell Senate seat

Cute chart, but I cannot tell if it is a 20 year coincidence or if there is a cause effect relationship.Nevertheless, fundamentals have not changed. It has been 18 or so months since the origination the 2006-2007 10-15 million sub-prime loans. Historically it takes about 18 months to shakeout marginal mortgages, so with all the job losses we should be seeing the number of mortgage defaults spike between now and April 2009.

The ongoing troubles Russia is having with the rouble underscore Russia’s unwise dependence on its oil and gas reserves for its economic development. Russia must work harder to diversify its industrial base so that it is not impacted so heavily from persistent volatility in the world’s energy markets.

so many words on here but still not making anything that anyone wants

I strongly disagree that society’s mistakes are rooted in human nature, and I furthermore think that we should consider how that meme serves to advance the interests of the world’s elite whilst devastating everyone else’s interests/welfare.”Poor human nature, what horrible crimes have been committed in thy name! Every fool, from king to policeman, from the flathead parson to the visionless dabbler in science, presumes to speak authoritatively of human nature. The greater the mental charlatan, the more definite his insistence on the wickedness and weaknesses of human nature. Yet how can anyone speak of it today, with every soul a prison, with every heart fettered, wounded, and maimed?” -Emma GoldmanI think our learned behaviors are contrary to our innate instincts.If we see the whole picture, ask the right questions, and do not fail to look at large parts of historical fact, myriad evidence is revealed demonstrating that mankind is indeed, in a natural state, inclined toward peace and harmony.(Note: some of this is in Howard Zinn, but I’m not quoting exactly as I have lent out his essential book “Declarations of Independence, A Cross Examination of American Values”)There exists no proof genetic, biologic, or anthropologic, that human nature is violent. Even Einstein and Freud could provide no evidence from their respective fields of science and psychology, and turned only to history to try and explain violence.There is plenty of evidence that our true natures must actually be overcome by unnatural (created/temporary/manufactured) cultural, social, and economic pressures in our environment, before we can be persuaded to be so obedient to authority that we will make war and inflict cruelties upon one another.As Stanley Milgram himself said, his famous experiment demonstrated that it takes intense indoctrination (is there anything stricter than bootcamp?) to make someone ignore his moral scruples to the point he will kill an innocent someone else at the behest of some authority figure, as happens in war (after all, if anybody thought only the guilty were being killed, we wouldn’t be concerned with war, would we), as it takes intense indoctrination to make us ignore our scruples and inflict painful electric shocks on another person when commanded.Again, there is no evidence genetic or biologic or anthropologic to indicate we are bound for wars, violence, cruelty, greed, and aggression by virtue of our human nature.Human nature is a constant, by definition. It’s something we have, not something we grow more of. If human nature was responsible for war and inequity, humans wouldn’t know peace and justice at all, we’d have always had a constant level of war, and nothing would ever have overcome greed in any situation.I think that we humans have actually but to begin acting in accord with what we really all already believe, to save the world. War is an affront to human nature, and so is needless, unjust deprivation: we are not acting in accord with what we believe at all. Our behavior betrays our nature. Our extremes of superwealth alongside starvation betray our ceaseless thirst and quest for justice.As Howard Zinn says, it is easy (mentally lazy?) to blame human nature, and harder work to examine the external forces at work on people that are producing predictable results.Joan Baez: “If it’s natural to kill, why do men have to go into training to learn how?”Sarah J McCarthy: “On close scrutiny, the beast within us looks suspiciously like a sheep.”“Contrary to previous theories that the instinct for self-preservation was the most basic and powerful of human drives, the Guyana (Jim Jones) suicides demonstrate that the socialization process is even more powerful (than instinct).”Imagine how empowering it is for the superwealthy, for us to be convinced we’re all simply inherently more base than noble – and that is a problem insurmountable. Talk about a fatalistic, inertia-enabling idea!”Darwin’s theory of the struggle for existence and the selectivity connected with it has by many people been cited as authorization of the encouragement of the spirit of competition. Some people also in such a way have tried to prove pseudo-scientifically the necessity of the destructive economic struggle of competition between individuals. But this is wrong, because man owes his strength in the struggle for existence to the fact that he is a socially living animal. As little as a battle between single ants of an ant hill is essential for survival, just so little is this the case with the individual members of a human community.”-Albert Einstein 1879 – 1955Yes, I think our learned behaviors are contrary to our innate instincts.We’re not evil – we’re just getting it wrong. And getting it wrong imo, too, when we blame human nature for war, poverty, or injustice, for there is no evidence to prove causality.Here is us getting it right: a just cap on fortunes defeats all methods past, present, and future of circumventing justice.Equity does not create weakness within a society, it creates strength, health, fraternity, happiness, opportunity, efficiency. All the wisdom of the ages and all the historical experience of humans tell us that extremes meet in violence and destruction while equity gives every positive benefit.And now a couple of questions:What if fighting the wealthpower giants for our rights, actually works against us?What if fighting them sends the exact wrong message to everyone?Consider: Fighting the wealthpower giants for our rights sends the message that it is good to fight them, it is necessary to fight them, it is proper to fight them, it is right to fight them, it will always be good and necessary and right and proper to fight them.What if those are exactly the wrong messages people must hear if they are to halt the destruction of everyone’s quality of life that is caused by the Globally Dominant Group, the wealthpower giants?We should not be fighting wealthpower giants for our rights. That struggle is never-ending, and only leads to hope-fatigue. The overpower of wealthpower giants to trample your rights and invent new legal thefts whereby to steal money, is ALWAYS going to exceed your power to get and ensure your rights and rightful pay, for precisely as long as there are wealthpower giants legally allowed. How very much smarter and easier is it to just outlaw the formation of wealthpower giants, to just strike the root instead of endlessly pulling leaves?We’ll rid our species of the idea of having wealthpower giants, or succumb to the result of having the next and the next and the next ad infinitum.We have much more power when working for the right thing than when working against the wrong thing. The most important work we can any of us be doing is pursuing equal pay for equal sacrifice. The lack of pay justice is the mother of all issues, yet we search in vain for discussion of it.And keep asking ourselves what the problem is, and blaming it on – oh, I dunno – must be human nature, I guess.Friends, it’s not our fault we have chimpy brains. We’re all working with the limited intelligence given humans by mother nature. Let’s blame her and screw carrying around the guilt for the guilty, and get on with using our limited wits to pursue the happiness we just might deserve??

I am no savvy investor, which is why I don’t comment on the market. My transition away from a debt lifestlye waa a personal choice, which I made after viewing some out-of-the-box thinking in a video presented at church. Over time, I have taken the rather old-fashioned approach of payig off a house, buying cars with cash, basic investment in a 401K, and living within and a little under my means. Very old fashioned and not investment advice for others by any means.A regular dose of someone like Ken and Daria Dolan I think would be a great start to get more people to have this kind of wisdom. I think if we actually paid attention to these kinds of topics and made such people media stars instead of the babbling heads on CNBC it would be a good start. Of course, we watch CNBC to have those ‘in the know’ reduce the complexity for us. But a lot of what is on CNBC should not really be the concern of ‘average Joe’ anyway, in my book. Sorry it is an old fashioned outlook I bring.I don’t advocate excess government control, though I think perhaps the system should not permit certain kinds of things that are not really investments but rather just bets. Could there be a basic rule of thumb for what could be invested?For instance, consider you and I, connected as we are by these mice and keyboards. In what ways can I invest in you? I can loan you money, so you can buy a house or a business and you pay me back with interest. I can band together with other investors to enable you to start a business, getting a piece of it in the process. I can insure you, collecting premiums from you to provide insurance against your risks of various forms. We can jointly invest time in a venture. But can I bet you will fail in your business in any real life context and make money on that? Or bet you will die so I can collect insurance? Can you see where I am going? Writ large, the ‘finance industry’ has lost its roots, which should have been collectively the same as my example of you and I. Constructive, positive investment.

HEROES “jus find the level of bullshit you are comfortable living in” By the way, the word “shit” is a nautical term derived from manure being Shipped High In Transit on ships.)

Why are people making poor consume/produce/save decisions? Perhaps they are trying to keep their standard of living constant while their real income keeps falling.Read Morris’ Human Animal and Human Zoo regarding status and poor decision making to get one academic’s explanation, which sure looks to be accurate in these times.

i guess all those exclusive nightclubs that look at your face to make sure it is beautiful before entry will be lowering the bar?

the point is do you care enough about your happiness to consider without bias whether what’s in the post is important or not.sorry that there is no soundbite for wisdom.

don’t try an be so controlling. Just scroll down long posts:-) Some of the best posts I have read are long. Go to CR for cool short posts.

FBI: Illinois Gov. Blagojevich Tried to Sell Obama’s Senate SeatBy JOE BARRETT and EVAN PEREZCHICAGO — Throwing a harsh spotlight on a city that has been celebrating the election of a native son to the White House, federal agents Tuesday arrested Illinois Gov. Rod R. Blagojevich and a senior aide on broad corruption charges, including allegations they tried to sell the Senate seat being vacated by President-elect Barack Obamahttp://online.wsj.com/article/SB122883415161091395.htmlWhat an Assh*le!

SURVEY RESULTS: Well, I took my own advice and over the weekend spoke to 11 of my friends, relatives, etc presenting them with the following questions: what are the top 5 most important issues for you and for the country and if you could wave a magic wand to instantly change things what would you change? The consensus was as follows: the ability to earn a living wage defined by most as $20-$25 per hour, job security, affordable health costs, lower taxes and the ability to retire some day. The most common complaint that their magic wand would change tomorrow was “unfairness of the system and the obscene amounts of executive compensation” relating directly to the bailouts. When I presented the idea that smaller business was the fundamental building block of a more nimble, adaptive, innovative, stronger, fairer, more equitable system, I had unanimous agreement. They also liked the idea of “equitable pricing” where all businesses requiring the same materials or selling the selling the same products whether it be staplers, groceries or hamburgers could combine their buying power into a single pool and purchase at the same price as the big corps like Home Depot, Walmart, McDonalds. This is currently what the govt does when purchasing medications for the VA hospitals or Medicare/medicaid recipients. I found that people of all education levels were happy to participate and wanted to see more rapid change rather than “same old same old”. I would encourage all those who are concerned to do your own surveys; you may be surprised by the response!

http://onlinejournal.com/artman/publish/article_4101.shtml..Bottom lineNo matter how we cut it, the Fed needs to be bagged. It has bound and gagged our financial system for too long and the damage has been savage. There is a movement called THE FED IS DEAD, basically putting forth these ideas which are definitely worth considering, otherwise we all drown down the money hole while the rich and greedy sail away with everything we own. It’s that simple. Act now. This offer will be repeated. That is, until everyone gets it.

http://onlinejournal.com/artman/publish/article_3368.shtml.Reinventing America: A return to thinkingBy Gary SimonOnline Journal Contributing WriterJun 13, 2008, 00:12

If Lincoln were alive, he’d be rolling over in his grave.

The first guest is right about what is and isn’t cause of this meltdown.

wait a minute…what would he be doing in his grave if he was alive?

He would have committed a suicide or broke a nerve since.

Master – as one of your disciples – and a belief in the doctrine of infallibility – what about SSO $27.23

I sit in disbelief myself. The VIX is still down on the day even though the Dow is down 150 right now. Something doesn’t jive and I am kicking some butt to find out what gives. AN interesting development her eis the transports are tanking-down almost 6% right now. The other side of this it was a sucker move into a +2 stdev environment that needs correction. The day is far from over yet…

Finally a thaw in the credit marketsBy Cordell Eddings and Daniel KrugerDec. 9 (Bloomberg) — The Treasury sold $30 billion of four-week bills at Read more “Oh, that ain’t workin’ that’s the way you do itGet your money for nothin’ …” (Mark Knopfler and Sting)

BOOM! and you folks swear the markets aren’t rigged! Nice call CM

Market losses nearly halved! WOW! Shorts are toast in this casino!

Fixing the Problems means defining them.This financial crisis is the result of delusional thinking, moral hypocrisy and the rise of the corporate state. The future rests with not only the new President but all of the good people in this country doing good things rather than just hoping and praying. But leadership is crucial.Here are some of my list:I believe that extreme socialism doesn’t work because it takes away the incentives to be creative and productive. Extreme capitalism doesn’t work because it is based on monopoly and that leaves to many people as serfs and slaves with little or no chance to live a meaningful productive life.Where do you find balance between human nature, nature and dysfunctional systems? Is that something that is even possible or probable for more than a nanosecond? If a balance is to be found, it is in our Constitution with some added caveats about the restrictions on corporations. The way that corporations have taken over the USA and the world is one of the underlying issues that will need to be dealt with in order to fix the reasons for the current crisis.If you look at the consequences and trace them to their causes, you can come up with some issues that need to be dealt with to have differing consequences. This isn’t easy though. It may not even be possible to have meaningful change under a democratic system where undereducated or single issue voters will vote without knowledge or education on emotional sales pitches by groups who want to control the agenda. Even though the consequences are not good for the whole or the future. In this category I include government, corporations and religions. All of which have agendas which are not necessarily in the best interests of the whole body. Our Constitution covered two of the three but our forefathers never considered the power that the corporate world would end up with. Corporations were just a speck in 1650 as the first publicly owned ones were really just getting going, the Dutch West India Trading Company and the English Hudson Bay Trading Company. By 1776 they existed but no one really saw them as a threat to sovereignty.One issue is corporations having status as straw men. I personally think this was a bad idea and has been at the root of many of the consequences we are witnessing. I don’t think that status can be completely taken away but it sure could use some restrictions. Some of the dire consequences have been campaign finance. Who is it that runs the government? Those who pay for the elected to run do. Do We the people or the corporations? Then afterwards, who writes many or most of the bills Congress passes?Another culprit is the tax laws. Or lack thereof. Inflation is a tax. It also has a tendency to transfer wealth up from the working class to the elite. Called the silent tax. Let’s get real and honest with ourselves about what we are doing. Inflation by the Central Banks is a good reason alone to have a graduated tax system.. Those who benefit the most from printing of money should pay the most back to the government to support those who get the least along with all the other things that government has to do. The current system does exactly the opposite and that is one of the reasons for the wealth disparity. Well, maybe the biggest reason.Let’s eliminate the IRS as we know it! I could go on for days but the system in place is bad public policy! Either NO income should be taxed or ALL personal income should be taxed and those who make the most should pay the most. This is all our country, not your personal gift at the expense of the rest. All the special interest deductions is a mess and the entire system should be thrown in the trash. And the only reason to tax corporations is for political reasons. And without good public policy, this sure doesn’t work out. Tax the money once it is distributed, wages, dividends, or any distribution. But why tax the corporations if they use it for productive purposes or to benefit a public policy? Or maybe we should go to a value added tax and just tax everything and skip the income tax completely. The current way IS a huge burden on everybody and one of its accomplishments is to divide people.A tax is a tax. Treat all people equally. If SS is not a fully funded retirement guarantee or Medicare, why tax the working public the hardest for these programs? It is a social welfare program. We should take care of all the elderly the same. This tiered system is a joke. It is stupid. Tax all income equally to pay for it and make the entire system more realistic. And peg both programs to the real cost of living numbers, not the imaginary ones. Or if we aren’t going to take care of our elderly and our disabled then we should just cancel the whole thing and implement the Soilent Green Program for anyone who can’t work or can’t pay their own way. Making people live like animals and eat dog food is immoral for the Great Christian Nation we pretend to be.Another is regulation or the lack of its implementation by differing administrations. Do we spend resources protecting our planet and the people or promoting corporate job growth? Can we do both? Is there adequate resources to do it all? Everything has a cost. Either by direct taxation or thru inflating the money in the system, which is a tax and has uncontrollable and unpredictable consequences. Somehow we all have to pay for regulations or the lack there of. So let’s make them real and useful and enforce them. This is a huge deal and the way regulations are implemented or ignored is why some businesses do so well and others not. This area needs to be fixed! NOW!So does public policy need fixing. This is what is at the heart of all this. Bad public policy that puts money into rubber tire transportation systems and subsidizes them so that rational, efficient systems are not only ignored but educated against. (rubber tire is just one example of special interest, not to be thought of as THE special interest). You don’t want national health care because you don’t want to have to wait in line like the Europeans! What a bunch of hogwash. In this country, you don’t even have a line to wait in if you don’t have health insurance which costs twice what the European system costs because of insurance company profits and legal costs and high paid CEOs. And everyone having to make a big profit too. This area is a prime example of educating for dumb results. The public actually believes that real beneficial change would be harmful to their interests. Because the education is not fact based but an emotional sale pitch. Because there is no counter balance to this.Another is poor quality education in many of our school systems. What is it that a citizen needs to know to be an informed one? Can that level of education even be achieved with the complexities today? Can we provide a broad universal education to everyone or does education need to be restricted and more refined? What shall be the highest priorities, universal education to ALL,. Whether the person is capable or incapable or more focused on tracks for those who can and those who probably won’t and who decides? This area in the US is a total disaster. Kids with disabilities get huge resources in many communities while the gifted get nothing and the average gets a mediocre education. And these people are supposed to be the enlightened workers and voters of the future? Come on! If we can’t do it all right, what are we willing to do? Why bother to do anything if we can only do a very poor job? This area is like the elderly. Do we fix it or just let ourselves continue to rot?What we need is a consensus as to what we want as a country. As a national lifestyle. As sustainable and enjoyable over the long haul. Is it enough to just have employment that has no meaning, just an income to just pay the bills so that we can *live*in our modern world? Or is something more required? All we have now are modern slaves for the corporate elite. Does this make a great nation? Apparently not as the system is failing on almost all fronts.I would like to think that all these issues and more could be peaceably resolved but I think it would take a really special leader to convince the majority that it would be in their best interests to give up their own special cherished interest for the good of the whole country. Maybe our new president is that person but he is a special interest himself and was educated at an Ivy League school and so far has picked others much like himself to run his government. So I am skeptical as to whether we will have any real change and that the future will actually look brighter than it has.Good luck to us all!

3 month T Bill went negative today and there was no mention in any news items I have found!! Once again, another fleecing by the US govt-they will steal your money any way they can…

“… it’s that i’m sick of the manipulation. “Does fudging of data on US unemployment figures change the actual number of Americans who can’t pay their bills?Does manipulation of the US stock markets actually change whether any company will ultimately be competitive and profitable (or go bankrupt)?Does price manipulation in the precious metals market change the fact that many overseas buyers are acquiring and hoarding gold?No.Manipulation is a failed policy – no matter how many dollars are printed.The global markets will eventually adjust to the real bottom line.PeteCA

Exam1) What Alfred Marshall said about living a simple life? Did Keynes like Marshall?2) Why Fisher said that real estate and securities as well as finished and unfinished goods must be included in the equation of exchange MV=PT? Does CPI include securities?3) Who loses with deflation today? Who wins with deflation today? This is an important question! Does deflation support depression?4) What would happen if you printed money and with this money you bought Junk Trash Bonds from distressed institutions?5) Comment the following statement: (Saville)”A popular view is that an increase in the money supply would be beneficial.If so, then counterfeiting should be encouraged. If the economy would benefit from printing more money then expert counterfeiters (those able to produce currency notes that are indistinguishable from the ‘real thing’)would be performing a valuable service.”6)The Austrian economists were amongst the first to clash directly with Marxism. True or False?7)Some people do not know that economics is a very complex subject.They should be critical. Why are they “religious” about that? Are economists similar to football commentators?

@ OBI WOULD ADD–*APPLICATION ERROR

Here is some killer rally news!3:50 p.m.More than 8 million homes face foreclosure in next 4 years

Latest forbes article from Shilling. I just read his December letter. He did A+ work. The stuff below gives you a little flavor for the letter but the letter is filled with tons of charts and analysis. Hey, inflation worrywarts spend your energy elsewhere; read on:http://www.forbes.com/financialadvisernetwork/2008/12/09/deflation-lending-saving-fan-ii-in_ags_1209soapbox_inl.htmlDeflation Descends Upon The U.S.A. Gary Shilling, 12.09.08, 12:00 PM ESTA self-perpetuating decline in the price of goods will make debts harder to repay and prolong economic misery.For years, we’ve been forecasting that chronic deflation of 1% to 2% per year would start with the next major global recession. Well, it’s here!In October, the U.S. producer price index fell 2.8% from September, and the consumer price index dropped 1%, the biggest decline since before World War II. Sure, the big driver was the decline in energy costs, but even excluding food and energy, consumer prices dropped 0.1%. As retailers panic in the face of retrenching consumers, prices of many items have nosedived.Beware the bear market rally. Click here for Gary Shilling’s toolkit for navigating through the financial crisis, yours when you try Insight.Dell (nasdaq: DELL – news – people ) is offering 20% to 30% discounts on new notebooks. Nearly empty Hawaiian hotels give free drinks and all sorts of discounts. Retailers like Crate & Barrel have gained pricing power over vendors and are getting 10% to 25% lower prices to pass on to customers. Kohl’s (nyse: KSS – news – people ) is discounting Christmas merchandise up to 75% to attract shoppers. Toys are being discounted 50% to 60%, and sellers are emphasizing low-priced merchandise to attract frugal buyers. Just look at Wal-Mart (nyse: WMT – news – people ).Grocers are also gaining pricing power over suppliers of branded goods, as consumer zeal for house brands gives retailers more leverage with producers of national labels. Upscale retailers are unloading excess inventory on discounters who then offer designer apparel for 45% to 70% off list prices. And luxury goods makers themselves are slashing prices on apparel, shoes and handbags sold in the U.S. Of course, the strong dollar makes that easy for eurozone-based firms. Don’t forget that recent auctions were disappointing and saw prices of contemporary, modern and impressionist art drop 30%.The Fed worries that in deflation, offsetting monetary policy is difficult since its target rate has to stop declining when it reaches zero. Of course, the Fed has other tools, like quantitative easing (juicing the money supply). Nevertheless, all these measures amount to leading the horse to water, but he may not drink.The deflation in Japan in the 1999-2005 years worried the Fed when it appeared imminent in the U.S. early in this decade, and it still does. Japan again faces chronic deflation, and the Bank of Japan forecast zero change in the CPI (excluding food but not energy) for the fiscal year ending March 2010. Fed Vice Chairman Donald Kohn said the lesson from Japan was that “we should be very aggressive in combating deflation.”Deflation encourages saving, since money is worth more in the future than it is today. It also spawns deflationary expectations. Buyers anticipate lower prices later by waiting to buy. That sires excess inventories and capacity, which forces prices down. Buyer suspicions are confirmed so they wait even further to buy, generating a self-feeding downward price spiral, as now seen in autos and houses.Deflation also elevates the cost of debts and debt service since both remain fixed in nominal terms but the revenues and incomes used to repay them tend to fall with overall prices. Deflation fears and other forces have also reduced reducing 30-year Treasury bond yields to our long-held target of 3% and completed what we dubbed in 1981, when the yield was 14.7%, “the bond rally of a lifetime.” The recent financial crisis has also helped as investors abandon everything else, stocks and fixed income alike, in favor of Treasuries.Deflation results from overall supply exceeding general demand. We have been forecasting the good deflation of excess supply, as in the late 1800s and in the 1920s, due to today’s confluence of semiconductors, the Internet, computers, biotech, telecom and other productivity-soaked technologies. But we have allowed for the bad deflation of deficient demand, as in the 1930s, if one of two adverse conditions develops: widespread financial crises and worldwide protectionism. Sadly, both are real possibilities.Inflation? Many, of course, worry not about deflation but inflation, due to all the money being pumped out by central banks and governments globally. They, no doubt, are biased since most have lived only in an era of inflation and don’t agree with us that inflation is the result of excess government spending in wars, both hot and cold. In peacetime, deflation reigns. Starting with rearmament in the late 1930s, then World War II and the Cold War with its hot phases, Korea and Vietnam–wartime and inflation persisted for 60 years. For now, at least, all that money from central banks and governments isn’t getting beyond the financial institutions it’s meant to buoy.We’re in a liquidity trap. The horse isn’t drinking, thank you very much. And if lenders do start to lend, central bankers, with their congenital fear of inflation, will no doubt reel in all that extra credit. Even if the bank reserves stimulate the money supply with the usual multiplier effect, the credit created will pale in comparison to the destruction of derivatives and other privately created liquidity due to persistent de-leveraging and write-downs.Finally, the consumer saving spree we’re forecasting will probably increase the saving rate by one percentage point per year on average for the next decade. That would generate a cumulative $5.5 trillion in savings (read “not spending”) and go a long way to offsetting the intervening fiscal stimuli, and then some.

4:09 p.m.Electronic Arts sees 2009 revenue, earnings below forecast

so then how do you equally allocate work? Seeing as we are all born and blessed with different gifts which I would absolutely say are not equal in value. If I was a doctor or Engineer I for one would refuse to put in a hard days work for the same resources that a cook at Burger King gets. Your idea sounds good on the surface but life doesn’t work that way. Granted what I do is pretty much worthless and I would have to beg to live but I still don’t agree with you.

4:30 p.m.Novellus to cut workforce by 10%

Why do we consume what we consume?Because Madison Avenue has hired all the best psychologists in the world to make the uneducated consumer think they will get enjoyment out of owning whatever they want you to buy. Of course, the pleasure only lasts a short while but the interest and payment goes on. And the undereducated consumer moves on to the next fix… It was all really easy, especially when the schools don’t educate and truth is hidden or obfuscated.There is ties to religion or lack there of and politics and greed and power and it revolves around the lack of effective public policy and lack of meaningful regulation and trained professional regulators.It is all about the corporate state, with no morals, running amuck!

Latest from Das. It is from late November but still very relevant. Deals with the complexities and chain of events that arise when someone like LEH which held in the order of 2 million derivatives contracts go under. Excellent detailed analysishttp://www.prudentbear.com/index.php/commentary/featuredcommentary?art_id=10156

enjoy what you do. dont do it for money, do it because you can. inspiration, building something, making something, helping someone. finding compassion is worth more then money. imagine

painter, there have been times i’ve wanted to ask you to marry me, tee hee.YES. Ask yourselves, do you want caregivers who are in it for the bigmoney reason, or do you want the people who feel called to be healers in the hospitals?

Good article! It further exposes the major reason why laws are deliberately made so complicated: “the devil is in the details”. Lawmakers as well as corporations learned a long time ago that the best way to hide loopholes and other unfair measures was to bury them in 100s of pages of CONFUSING legal “mumbo jumbo” and fine print. The financial demons just took it to the next level when they misused leverage to create these “weapons of financial destruction”. It has become so complicated that no one really understands the full gravity and consequences of these devices; thereby, making a solution very difficult. If there is one overriding principle to prevent further injustices in this world, it is THE KISS PRINCIPLE (keep it simple, stupid). This allows for transparency, clear disclosure, clear analysis, clear regulation, clear solutions and above all else, comprehension by the majority of Americans! The answer really is that SIMPLE!

Here is an interesting article for those of us considering our future (inflation/deflation).Depression, Deflation and Your Survivalby Martin D. Weiss, Ph.D.”If you’re still skeptical that we’re sinking into America’s Second Great Depression, you don’t have to believe Alan Greenspan, who says we’re already experiencing the worst financial crisis in a hundred years. Nor need you heed the news that the economy just lost a half-million more jobs or that retail sales have just suffered their worst plunge in 35 years. All you have to do is get up from your chair, open the door and take a walk outside.”"Some people of my generation have fond memories of the family fellowship and sacrifice of the Great Depression, and I do too. But I also cannot forget the numbers or the suffering they implied. In just three short years between the peak of the stock market boom in 1929 and the bottom in 1932, it felt like the entire world was falling apart. The financial bubble burst. Big companies failed. America lost 13 million jobs. Unemployment surged to 25%. American industry cut its production nearly in half. Home construction plunged by more than four-fifths. Deflation — falling prices — drove the value of almost everything into the gutter. Over 5,000 banks failed and ultimately disappeared.”And yet, despite it all, there was one all-important investment that not only survived, but actually thrived: The United States dollar. Because of deflation, prices fell on virtually everything — commodities, farm land, homes, automobiles, consumer goods, even labor. And because of fear, investors shunned risk, seeking the safety of cash. Result: The dollar’s purchasing power and value surged.”——————-”Grand total: $7.8 trillion and counting, eleven times more than the hotly debated and widely opposed $700 billion bailout package passed just 66 days ago. And that excludes a new bailout for Detroit in the works, a new $500 billion stimulus package expected early next year, plus hundreds of billions for at least 19 states running out of money for unemployment benefits.Washington says it’s all for a good cause — to save the world from depression. But it is obviously reaching a level that’s beyond the threshold of the absurd.”Full article includeshttp://www.howestreet.com/articles/index.php?article_id=8127hlowe

JMR: I’m not exactly sure what the “application” is in this instance. Can you provide some more detail?Tks!

This reads more like an obfuscation piece written on behalf of the elites than a serious essay on deflation.

For years, we’ve been forecasting that chronic deflation of 1% to 2% per year would start with the next major global recession. Well, it’s here!

No it’s not; deflation is a prediction; even the gimmicked BLS numbers show inflation, so do not count your eggs before they hatch.

In October, the U.S. producer price index fell 2.8% from September, and the consumer price index dropped 1%, the biggest decline since before World War II. Sure, the big driver was the decline in energy costs, but even excluding food and energy, consumer prices dropped 0.1%. As retailers panic in the face of retrenching consumers, prices of many items have nosedived.

This suggests that the BLS reported deflation for November – Again, false.

Dell (nasdaq: DELL – news – people ) is offering 20% to 30% discounts on new notebooks. Nearly empty Hawaiian hotels give free drinks and all sorts of discounts. Retailers like Crate & Barrel have gained pricing power over vendors and are getting 10% to 25% lower prices to pass on to customers. Kohl’s (nyse: KSS – news – people ) is discounting Christmas merchandise up to 75% to attract shoppers. Toys are being discounted 50% to 60%, and sellers are emphasizing low-priced merchandise to attract frugal buyers. Just look at Wal-Mart (nyse: WMT – news – people ).

It takes a lot more than a few anecdotal accounts of seasonal prices and excess inventory retail numbers to justify deflation. Just ask AfA

Grocers are also gaining pricing power over suppliers of branded goods, as consumer zeal for house brands gives retailers more leverage with producers of national labels. Upscale retailers are unloading excess inventory on discounters who then offer designer apparel for 45% to 70% off list prices. And luxury goods makers themselves are slashing prices on apparel, shoes and handbags sold in the U.S. Of course, the strong dollar makes that easy for eurozone-based firms. Don’t forget that recent auctions were disappointing and saw prices of contemporary, modern and impressionist art drop 30%.

Again, what has this to do with anything? The latest BLS number showed that grocery prices overall are still climbing. And yes, retailers are dumping excess inventory, and the wealthy have stopped buying luxury goods, but none of this proves a general case for deflation.

The Fed worries that in deflation, offsetting monetary policy is difficult since its target rate has to stop declining when it reaches zero. Of course, the Fed has other tools, like quantitative easing (juicing the money supply). Nevertheless, all these measures amount to leading the horse to water, but he may not drink.

Again, proves nothing. In fact it pushes the monetary system to the brink of more inflation. By definition, when those banks do issue fractional loans, it will be inflationary and there is nothing the Fed can to call back those loans. If the Fed shuts down more lending, then we are right back to square one.

The deflation in Japan in the 1999-2005 years worried the Fed when it appeared imminent in the U.S. early in this decade, and it still does. Japan again faces chronic deflation, and the Bank of Japan forecast zero change in the CPI (excluding food but not energy) for the fiscal year ending March 2010. Fed Vice Chairman Donald Kohn said the lesson from Japan was that “we should be very aggressive in combating deflation.”

Since the 1930s, the last eleven Administrations have used inflation to fight to possibility of deflation; why would this policy stop now?

Deflation encourages saving, since money is worth more in the future than it is today. It also spawns deflationary expectations. Buyers anticipate lower prices later by waiting to buy. That sires excess inventories and capacity, which forces prices down. Buyer suspicions are confirmed so they wait even further to buy, generating a self-feeding downward price spiral, as now seen in autos and houses.

The truth is that there has not been generalized deflation in 80 years; and even then the deflation was ~15%. Since 1930 the consumer price index has risen from 15 to 550.

…widespread financial crises and worldwide protectionism. Sadly, both are real possibilities.

<Skip pandering to fears of deflation…>

Inflation? Many, of course, worry not about deflation but inflation, due to all the money being pumped out by central banks and governments globally. They, no doubt, are biased since most have lived only in an era of inflation and don’t agree with us that inflation is the result of excess government spending in wars, both hot and cold. In peacetime, deflation reigns. Starting with rearmament in the late 1930s, then World War II and the Cold War with its hot phases, Korea and Vietnam–wartime and inflation persisted for 60 years.

Wrong, inflation has been with us since 1913 when the the Federal Reserve was formed, 95 years ago. We have yet to and will probably never deflate the currency back to 1913 levels.

For now, at least, all that money from central banks and governments isn’t getting beyond the financial institutions it’s meant to buoy.

So what’s the point of this remark? Buoy? The $700 billion was just to make the bankers whole again and that is good!?! This has to be the most insulting comment in the article.

We’re in a liquidity trap. The horse isn’t drinking, thank you very much. And if lenders do start to lend, central bankers, with their congenital fear of inflation, will no doubt reel in all that extra credit. Even if the bank reserves stimulate the money supply with the usual multiplier effect, the credit created will pale in comparison to the destruction of derivatives and other privately created liquidity due to persistent de-leveraging and write-downs.

If the bankers are fearful of inflation, then why have they supported it for 95 years? The truth is that is much less painful to loose a part of your money to inflation rather than all of it to deflation-caused debt default.

Finally, the consumer saving spree we’re forecasting will probably increase the saving rate by one percentage point per year on average for the next decade. That would generate a cumulative $5.5 trillion in savings (read “not spending”) and go a long way to offsetting the intervening fiscal stimuli, and then some.

Agree, but what the poor dumb consumer does not know is that even a very modest inflation rate will evaporate those meager savings.

Nail on Head. The battle lines are drawn. It will be interesting to see how deep the OPEC cuts will be. Also whether Comex will survive the next few months.

Looks like week will cool off. Back down to reality again.

I like falling prices. My money buys more stuff.(a saver)Govt prefer inflation, Bankers too.The motto is: Lets get a loan!!!

j, your imagery is truly frightening. thank you! to Halloween we go.

Russia is a deeply divided country. By divided I mean the spoils. Each region/republic/governorate is ruled in effect by local mafia and FSB lords (hoods) reporting ostensibly to the centre, whose main aim is to extract as much tithe from the region as possible. The spoils are divvied up in back room deals with Moscow. The basis of much local revenue is from the vast resource base of Russia. The vast energy resources of Russia are prdominantly in her frozen north, a very bleak place. And therefore, exhorbitant to extract.In some more higher developed areas of major cities, the “take” extends obviously to other industries and enterprises (manufacturing, RE, Banking, retail etc). In effect, Putin is the centre. Because he has uncontestable control of the FSB (ex KGB).But he allows his minions in the regions and Mafia cohorts to make a living as well.Thusly, Russia only makes sense in a boom when all parties (including investors) are winning. In a bust, this situation can get rather unstable fast.

Yes, and instead of forex interventions it shoul rather redeem Alaska.

How would he know? Has he got cable in there?

I have faith

Guest, do you have the link? Thanks.

I’m not that guest, but I think this is the article:http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aRgFC7gr5O8U

An article by Mike Whitney on Counterpunch-Card Check”The Fed has expanded its balance sheet by $2 trillion, guaranteed $8.3 trillion of dodgy mortgage-backed paper, provided a backstop for bank deposits, money markets, commercial paper, and created 8 separate lending facilities to ensure that underwater financial institutions can still appear to be solvent. The whole system is a state subsidized operation buoyed on a taxpayer-provided flotation device which bears no resemblance to an invisible hand. More astonishing, is the massive power grab engineered by the Fed which has taken place without the slightest protest from 535 shell-shocked congressmen and senators. Elected officials have either kept their finger in the air to see which way the political wind is blowing or timidly caved in to Treasury’s every multi-billion dollar demand. It’s flagrant blackmail and everyone knows it. Congressional oversight is an oxymoron.”"The only hope for deep structural change is to strengthen the unions and give workers a place at the policy table. That’s the only peaceful way to dismantle this parasitic financial regime and bring about a more equitable distribution of wealth.”http://www.counterpunch.org/

Hi, I,m new to this blog and frankly a little out of my league.However, My suggestion of aplication error is that all the who, what, where, when, and how questions related to the implementation of any program be considered at length prior to proceeding with instituting any action. Especially those that involve our complex society.Many programs seem to have all the answers on paper. The math, the theory, the information, and the support all point to sucess only to fail because of someone’s negligence(operator error), greed, personal agenda, or lack of action. Then all the flaws are exposed and failure becomes inevitable.Measure twice and cut once is a good carpenter’s adage. We should apply that theory to our program implementation.All the housing and financial woes came about because some of our brightest stars, educated in the theory of numbers and financial instruments from our most prestigious colleges, postulated some erroneous theories about how markets should behave in the event that certain events came to pass. What they forgot to take into account was the actions of humans to circumvent those theories for personal gain and profit.PS. I am not a professional in the financial sciences nor the business environment. I dabble in the market and understand some micro and macro economics.

History is nothing but the continual transformation of “human nature.” We shape society and it shapes us.It was once normal and natural throughout the world to own slaves. Today it is normal and natural to live off the labor of others. There is no commandment that says: Thou shall not exploit thy neighbor. Why not?

Seattle Area: Current Temp 44 F, Winds Calm.Thanks for the info about next week.

‘bear’ in mind both the climate and markets are volatile but I will keep you posted

History is nothing but the continual transformation of “human nature.” We shape society and it shapes us.It was once normal and natural throughout the world to own slaves. Today it is normal and natural to live off the labor of others. There is no commandment that says: Thou shall not exploit thy neighbor. Why not?

It strikes me as an American living overseas that if we just do the opposite of what the American press espouses, we’ll make quite a lot of money. For instance,From 2002-7 we were told to borrow wholesale money from “US Institutions” on low interest rates with a weak dollar and invest in housing. Now that money has dried up, housing prices going down, and with a strong dollar we are told “paying down debt” is the thing to do because of deflation. Yet the US is printing money madly looking to devalue the currency. So here the foreigners are paying off debt into a high dollar.It stands to reason that if I now borrow in USD and invest in foreign currency, when the effect of the printing press starts hitting next year, the US Dollar will fall sharply, and I can repay my loan and have heaps left over.On the other hand those that are paying down debt now are doing so with a currency thats weaker than when they bought, house prices weaker, and their paying off debt in a currency thats probably going to drop substantially within a short period of time after they bought it.

@ Uncle Albert – Absolutely hilarious – Thanks.I’m afraid, we are about to find out how Governmentium reacts to an onslaught of obamatons. I suspect that fairy particles will form and we will see a concomitant increase in energy states. These fairy particles will not be contained, however, and they will pulse throughout the nation at the speed of light where they will strongly interact with hope particles to form super positrons which will annihilate all anti-chatter. Eventually, all the rigged boastons will be contained. Yet in the end, they will find out that there were unknown holes at elevated energy states that eventually decayed the entire material state into the synthetic and radioactive element Americium.

A couple of threads ago, someone here made the remark that Pakistan was in a state of internal war between various factions. The following story certainly supports that view. It implies that the West is losing in the struggle against militants – who are progressively overwhelming the police force.http://www.msnbc.msn.com/id/28057057/The relevance to economic issues is the loss of stability in SW Asia. If the trend continues, we will have 3 countries in a state of social breakdown and anarchy in Asia: Iraq, Afghanistan and Pakistan.PeteCA

Isn’t this another iteration of the idea of co-operatives? Co-op living, co-op grocery stores? Hey. Why not co-op auto dealers?Back in The Day where I come from there used to be co-operative utility companies. We have surrendered our public commons to the behemoths. Why not have The People owning The Public Commons again? I thought my taxes paid for the Public Commons. Instead we’re now considering selling off more to the highest private bidder, be they from Dubai, China, Japan or Wall Street. We’ve outsourced our public commons, folks. We also seem to have outsourced our common sense.Perhaps we need to stop acting like two-year-olds and learn to share again. Our entire populace has been divided. And conquered. The haves versus the have-mores versus the have-nots. Democrats versus Republicans. North versus South. Non-caucasians against caucasians. Christians against every other religion. Men versus women.We are hanging on for dear life to a way of life that’s given us what? Indentured servitude to debt courtesy your friendly ubiquitous mortgage holder and credit card company. What have we in return? Lots of cheap plastic stuff made somewhere overseas by people who are paid $30 a month to make it for us. And higher education for our children is unaffordable as is health care for ourselves and our families. Good grief, Charlie Brown.United we stand; divided we fall. Think about it.

Huh huh, MOG, u said it and we got u:”Under-pay justice…”More seriously, in my opinion, payment for labor (physical or otherwise) is/should be tied to many factors and not only one:*Value given to the job by society (not in $-terms)*Need by society for that type of job to be performed*Rarity of that type of performance on the job market*Demand for that kind of jobs*Number of qualified job performers (Offer)*Effort put to perform a job (in kilojoules)*Length of time to perform the jobAdvocating pay justice, is advocating that, in some combination, all these factors (and others probably) would have the same value (in $ terms). It is not sufficient to call for equal pay for two people who make the same effort or spend the same time to perform their respective jobs.What a person sacrifices before or after that, what a person was born with or without plays little role on how he/she would be paid, and matter only at the margin.

Huh huh, MOG, u said it and we got u:”Under-pay justice…”More seriously, in my opinion, payment for labor (physical or otherwise) is/should be tied to many factors and not only one:*Value given to the job by society (not in $-terms)*Need by society for that type of job to be performed*Rarity of that type of performance on the job market*Demand for that kind of jobs*Number of qualified job performers (Offer)*Effort put to perform a job (in kilojoules)*Length of time to perform the jobAdvocating pay justice, is advocating that, in some combination, all these factors (and others probably) would have the same value (in $ terms). It is not sufficient to call for equal pay for two people who make the same effort or spend the same time to perform their respective jobs.What a person sacrifices before or after that, what a person was born with or without plays little role on how he/she would be paid, and matter only at the margin.

d, a position in compliance, if done well, forces industry to compliance. if the refered compliance is “good”, and would be skirted for the sake of profit, less cost, then all benifit. without protection, productivity will ultimately lead to some detriment. revisit the environmental destruction associated with the industrial bloom of the u.s.a. throughout the period 1940 to 1970. not to mention the f.d.a. is currently a joke when it comes to protecting the health and well being of the consumer..i do agree we are all being screwed by industrial lawyers, financiers, bankers and politicians. not to mention the insurance fraud.

never underestimate the power of incentive

NYT News———————–NEW YORK (Reuters) – The 10 men who conducted the attacks in Mumbai belonged to a group of 30 recruits selected for suicide missions and the whereabouts of the other 20 are unknown, the New York Times reported.India has no reason to believe the other 20 are in India, but that could be a possibility, the newspaper’s website (www.nytimes.com) quoted Mumbai Police Deputy Commissioner Deven Bharti as saying on Tuesday.”Another 20 were ready to die,” Bharti said. “This is the very disturbing part of it.”——————-It’s always hard to know if these reports are true. But it would explain why the terrorists were communicating with sat phones – and why a higher level of coordination was happening. So – 20 missing men somewhere out there. Maybe on other boats?PeteCA

Interesting points afa and MofG.Our problems really do go deep. Some notes,”*Value given to the job by society (not in $-terms)”===> first we need to have a society that we can trust to fairly value these jobs. To me it is evident that ‘free-markets’ (and the kinds of governments that create free markets) cannot be relied upon to do this.”*Need by society for that type of job to be performed”===> Again, who decides what is needed? The uk.gov has spent the last 25 years thinking the type of jobs it needed were in financial and consumer services.

Greetings OB:It’s been a while since I have posted here, but thought it might be useful to repeat the suggestion offered by TfT (a few months back) called RoubiniPedia as a potential adjunct space for your Brain Trust effort.Best to you and to all …

Thats one and half, Iran must be close by now

Ralph:I agree with you that man, left to his own, tends toward greed (or evil as you put it). The bible says “all have sinned and fall short”…..that’s our inherent nature.I also agree there has to be regulation or rules of the game that MUST be followed by everyone.I do not believe Keynesian economic theory applies to the global economy anymore because it, like Marx, Adam Smith, and the other theories were are based on a fixed currency system. With our floating exchange rate system capital flows where ever there is an opportunity to make a $$ whether this makes sense or not.Concerning the FED and coining money. Read the US constitution. The power to coin money lies with CONgress. Unfortunately, we gave that power away to the banster cartel in 1913 and have been suffering with it ever since. The answer is obvious.

Payam is an stupid.

At least there are no politically opportunistic regimes in the neighborhood, if you don’t count Iran, Russian,China and perhaps even India. And of course in good economic times political unrest / adventurism is less of a threat.

BONO?

Some Great NewsQ Ratio Signals ‘Horrific’ Market Bottom, CLSA Says (Update1)

Dec. 10 (Bloomberg) — A global stock slump may have further to go, according to Tobin’s Q ratio, which compares the market value of companies to the cost of their constituent parts, CLSA Ltd. strategist Russell Napier said.The ratio, developed in 1969 by Nobel Prize-winning economist James Tobin, indicates the Standard & Poor’s 500 Index is still too expensive relative to the cost of replacing assets, said Napier. While the 39 percent drop in the S&P this year pushed equity prices below replacement cost, history suggests the ratio must sink further as deflation sets in, he said. The S&P may plunge another 55 percent to a trough of 400 by 2014, the strategist said.“Things have always looked absolutely terrible at the bottom,” said Napier, Institutional Investor’s top-ranked Asia strategist from 1997-1999. With deflation “the value of assets falls and the value of debt stays up, then equity gets crushed. The results are always horrific.”Shares have fallen this year as the worst financial crisis since the Great Depression caused almost $1 trillion of losses at institutions around the globe and dragged the world’s largest economies into recession. The MSCI World Index has tumbled 44 percent in 2008, set for the biggest annual decline in its four- decade history.Bear-Market ScholarNapier, who teaches at Edinburgh Business School, based his S&P 500 forecast on the Q for U.S. equities as well as the 10- year cyclically adjusted price-to-earnings ratio, another measure of long-term value.Before the trough in 2014, investors are likely to see a so-called bear market rally for the next two years as central bank actions delay the onset of deflation, he said. Read more

and some more great newsWorst Spending Slump Since 1942 Extends ‘Scary’ U.S. RecessionDec. 10 (Bloomberg) — The biggest slump in U.S. consumer spending since 1942 will extend the recession and push the jobless rate to the highest level in a quarter century, according to economists surveyed by Bloomberg News.Household spending will drop 1 percent in 2009, the biggest decline since after the attack on Pearl Harborhttp://www.bloomberg.com/apps/news?pid=20601087&sid=ado8P..GCtC4&refer=home

This is not at all good news;Dec. 10 (Bloomberg) — China’s exports fell for the first time in seven years, more evidence that recessions in the U.S., Europe and Japan are driving the world’s fourth-largest economy into a slump.Exports declined 2.2 percent in November from a year earlier, the customs bureau said in a statement on its Web site today. Imports plunged 17.9 percent, pushing the trade surplus to a record $40.09“The figures are horrifying,” said Lu Zhengwei, chief economist at Industrial Bank Co. in Shanghai. “Plunging imports show that on top of faltering global demand, domestic demand is also shrinking as the economy cools.”http://www.bloomberg.com/apps/news?pid=20601087&sid=ao5xLQy21pYk&refer=home

Q Ratio Signals ‘Horrific’ Market Bottom, CLSA SaysBy Patrick Rial(excerpt)Dec. 10 (Bloomberg) — A global stock slump may have further to go, according to Tobin’s Q ratio, which compares the market value of companies to the cost of their constituent parts, CLSA Ltd. strategist Russell Napier said.The ratio, developed in 1969 by Nobel Prize-winning economist James Tobin, indicates the Standard & Poor’s 500 Index is still too expensive relative to the cost of replacing assets, said Napier. While the 39 percent drop in the S&P this year pushed equity prices below replacement cost, history suggests the ratio must sink further as deflation sets in, he said. The S&P may plunge another 55 percent to a trough of 400 by 2014, the strategist said.“Things have always looked absolutely terrible at the bottom,” said Napier, Institutional Investor’s top-ranked Asia strategist from 1997-1999. With deflation “the value of assets falls and the value of debt stays up, then equity gets crushed. The results are always horrific.”… The MSCI World Index has tumbled 44 percent in 2008, set for the biggest annual decline in its four- decade history….Before the trough in 2014, investors are likely to see a so-called bear market rally for the next two years as central bank actions delay the onset of deflation, he said….Quantitative EasingMeasures such as Tobin’s Q ratio and a 10-year price-to- earnings ratio are “valuable tools,” said Andrew Milligan, the Edinburgh-based head of global strategy at Standard Life Investments, which oversees about $190 billion. Milligan said he is bullish on U.S. equities for now as central bank efforts to fight deflation will push the market higher….Federal Reserve Chairman Ben S. Bernanke’s indication that he will use “quantitative easing” to prevent deflation points to a stock market rally that may last for the next two years, Napier said. With quantitative easing, a tool pioneered by the Bank of Japan, central banks can stimulate inflation by printing money and flooding the market with cash in order to encourage consumers to spend.The government’s efforts will eventually fail as ballooning government debt devalues the dollar, causes investors to flee U.S. assets and takes the S&P 500 to its eventual bottom in 2014, Napier said.“Bear markets always end for exactly the same reason, and that is the market begins to price in deflation,” he said. “Equities will be incredibly cheap.”A 2 year rally? I think that is essentially the same thing as a bull market. Time to go long now?

but then againDec. 10 (Bloomberg)The Baltic Dry Index advanced for a second day from a 22- year low. The premium for 12-month oil futures contracts over the spot price, a situation known as contango, reached the highest level in a decade last week.“With long-dated oil contracts at a much higher premium to the spot price, the market is telling us that commodities are bound to rise and that the cyclical stocks have been oversold,” said Sumitomo Mitsui’s Ikunaga.Congressional Democrats and White House negotiators agreed on the outline of a $15 billion plan to give General Motors Corp. and Chrysler LLC federal loans to stay in business. Asian carmakers and parts suppliers surged in the afternoon on speculation the bailout will ease turmoil in the industry.http://www.bloomberg.com/apps/news?pid=20601101&sid=aw7RZHArj9qs&refer=japan

Whitney: Banks On Life Support Next 18 Months

Influential bank analyst Meredith Whitney remains bearish about the economy, and her outlook for the banks that “lubricate the economy” is grim.”The big banks are going to be on life support for at least 18 months, if not 36 months,”Oppenheimer’s executive director of equity research told CNBC Wednesday morning. “The big banks will not fail, but the big banks will not grow, in my opinion, for at least another two years.”She echoed other analysts who see the funds from the TARP program being used to fill holes, and do nothing to stimulate the economy.”You’ve had massive asset deflation,” she said. “There’s more of this to come.”An example? The Wednesday morning report that American International Group owes Wall Street investment banks about $10 billion for speculative trades that went bad.( See Whitney’s full interview in the Video)Recent remarks by Whitney have been market-movers.Earlier this month, shares of Wells Fargo fell 19 percent after she called the company her biggest “sell” recommendation among financials. In the same interview, she also said the credit-card industry may cut two trillion dollars in credit lines over the next 18 months.And that, she said Wednesday, is the next major trauma in the credit crisis.Just over 70 percent of American households have credit cards, but over 90 percent of those households revolve at least one time a year, so they’re using it as a cash flow management vehicle,” she explained. “The banks now are starting to cut those lines back. That will impact spending.”"Just over 70 percent of American households have credit cards, but over 90 percent of those households revolve at least one time a year, so they’re using it as a cash flow management vehicle,” she explained. “The banks now are starting to cut those lines back. That will impact spending.”

The future service workers of America will simply avoid rewards in monetary compensation and become more socially altruistic. They will find satisfaction in helping others. And apply their lives to to people instead of things.

@CM – perhaps this explains Tuesday”It’s probably just some profit-taking and today’s decline was probably well indicated by the McClellan Oscillator posted yesterday.”http://static.seekingalpha.com/uploads/2008/12/10/saupload_image072.jpghttp://seekingalpha.com/article/110035-wednesday-outlook-reality-check-ahead

Please knock off the politics if it is not appropriate here. Thank you.

a while back someone on another thread was asking about the Treasury Fed leverage play with the TARP money (Santelli / El Erian) — here is an article on NC that touches on that as wellFed Ponders Issuing Debt to Finance Its Mushrooming Balance Sheethttp://www.nakedcapitalism.com/2008/12/fed-ponders-issuing-debt-to-finance-its.html

The gov will continue to print and bailout until it can no longer do so… i.e. until inflation sets in, not on the merits of whether an institution is insolvent or merely temporarily experiencing a cash flow problem. So the answer to bail or not to bail is simply whether there is still derflation.Investors are lining up behind zero interest T-Bills. Kind of like the migrating wildebeests reaching the river edge but afraid to enter the croc infested waters. Sooner or later, it comes down to starve or be eaten. Investors it seems will eventually take the plunge into stocks? gold? farmland? And with that the price of treasuries will drop (yields rise). Don’t know if this will be reasonably orderly or a bloodfest.

My takeaway from this excellent post is that a major element of the “solution” the BT proposes builds and leverages the U.S.’s culture of innovation. The way forward for us is to cooperate and use our brains and drive.Message received, DrSteph.

Why is Goldman Sachs always in the middle of of everything… read this… GS needs to go away for goodhttp://clusterstock.alleyinsider.com/2008/12/black-hole-aig-aig-needs-another-10-billion

Good to hear from you, PhilT. Don’t tarry so long between visits!

giving charity is just doing enough to get yourself a good reputation without doing what would solve the problem. giving charity helps the richest – those who have so obviously reaped the greatest benefits from the need of mankind to live in societies – to evade their responsibility to their environment. giving charity is evil unless you are simultaneously working to see that no working person needs charity for their family to survive and thrive. woe to the society that relies on charity to do the work of social and economic justice. giving charity without insisting on pay justice is inhumane.welfare is not a cure for poverty; welfare is but a stop-gap measure to prevent starvation temporarily.the cure for poverty is affordable shelter and food and clean water and education and transportation and healthcare – and that takes paying working people equal pays for equal sacrifice – not a “kind” “handout” from someone who can elect to handout or not at whim.don’t condescend to “be nice” to me – give me my rightful wages!! i want JUSTICE, not your “hand-out”!signed, the billions of Working Poor

A very interesting read.http://www.cross-currents.net/charts.htm

“An unjust society causes and defines crime. An aggressive social structure, which is unjust, and must create aggressive social disruption, receives the moral sanction of being law and order. Law and order is one of the steps taken to maintain injustice.” – Edward Bond.”The continuance of the inheritance idea, the idea of living on through things, property, children, subtracts any possibility of the communal society proceeding. For people to live communally [constructively] instead of competitively [destructively], the bonds of inheritance must becompletely broken.” – Ti-Grace Atkinson.”Poverty? Wealth? Seek neither. One causes swollen heads, the other swollen bellies.” Kassia.”The meek shall inherit the earth but not the mineral rights.” Paul Getty.The meek, the less rapacious and aggressive, do not inherit even the earth. And why dont they inherit the mineral rights also? Natural birthright means that every living person has a right to an equal share of the land and the mineral rights, to an equal share of all of nature’s gifts. Society must be judged against nature. Society should add rights to people, not subtract any natural rights. 90% of people earnfar less in society than their work would earn in nature.Society has failed most people financially and failed everyone happiness-wise. Private ownership of everything of nature means that every new generation must buy its rights in nature from the preceding generation. Whereas animals automatically have an equal share in nature’s gifts of food andplace to live. Private ownership of land is useful, but there should be a social mechanism of restoring lost natural gifts caused by private ownership. State ownership of nature’s bounty causes fascism, is intrinsically unjust. Ownership of nature and all her gifts should be invested in every living person. Those without land have a naturalright from birth to landrent from those who do own the land.This is another major legal theft. Just limitation of maximum fortune and distribution of overfortune would automatically compensate for these stolen ownerships in diamonds, gold, oil, minerals, the economic value oftourist attractions, natural food supplies, etc. Society takes nature’s bounty and converts it to ownership by the older generation, leaving the younger generation to buy their share of nature’s bounty, with their underpay. This is simple rational justice, but people have never been strong on rationality or justice, although rationality and justice arefriends, and the ruling classes are biassed against practising it and against teaching it. Most people are unaware of their rights to nature’s bounty, as obvious as it is. This is the negative power of custom and convention, of assuming that society is not getting it wrong.

GM Should Quit North AmericaA lot has been said already about the bailouts for Detroit. The bailout is a stupid way to go (from a business perspective) … but that hasn’t stopped the Gov’t before.Here’s what GM should do.They should file for Chap-11 bankruptcy.They should void all agreements with US auto workers, shut down their plants in America, and go international.That’s right. Shut down shop in America.Many people don’t realize it, but GM is a profitable company overseas. Their sales of cars on a global basis are a money-maker for them. It’s just the American car sales that are causing major losses. So if GM truly listened to what the business models are telling them – the answer is simple. Just quit the American markets, end production in the USA, and go overseas.This is not a revelation. In fact, GM management have argued this very same point in their negotiations with the UAW. Namely, if the UAW doesn’t agree to lower wages/benefits then GM will shut down North American operations.But in point of fact – it’s what the business model points to. It’s the only really logical step for them. The problem is the huge political “hot potato” that comes from ending all the jobs in the GM production lines. As Congress would have it, the public is now paying to keep those production lines open. Basically, it’s no different than when Congress offers subsidies on agriculture – farmers are paid not to produce food. It doesn’t make any sense.We can’t afford a country that doesn’t make sense any more. America is broke.PeteCA

Good points! What I love about Congress (and the FED, etc) is that they narrow the focus of the discussion to such a great degree, that the general public never gets the whole picture. This, of course, as you point out, leads to faulty analysis and reckless spending of our OUR MONEY (and our future)! Is it a prequisite for public office that one be short sighted, arrogant, deceptive, irresponsible and unrepresentative of the public good?

Where is London Banker?

Great article – thanks

here’s a prediction – the auto bailout is going to get “stalled” in the senate today and tomorrow and until next week – at this very momentF 3.18 -0.05 (-1.55%)GM 4.79 +0.09 (1.91%)

very clever, 2cents! (and original, unlike mine – i didn’t write the governmentium bit, just dug it out of stuff i’ve kept, and don’t know who originated it so i could credit them, unfortunately)glad you 2 got a laugh from it

Paulson and his generosity towards bottomless pits (Marketwatch)More troubling is that the government already has committed more than $150 billion to AIG’s bailout, an amount that does not cover these potential losses. It also raises legitimate questions about AIG’s relationship with Goldman Sachs Group Inc. (GS:Goldman Sachs Group, Inc, the former firm of U.S. Treasury Secretary Henry Paulson. AIG was in danger of defaulting on billions in obligations to Paulson’s former firm, according to the report.Even if the relationship is valid, AIG’s debts across the financial services industry present what the regulators call a systemic risk. Without the bailout, AIG would likely have defaulted to Societe Generale, Deutsche Bank AG. It’s why the government is being forced to eat the onion, even though it’s proving to be rotten.- David Weidner

PeteCA,Very good points.In fact, I remembered some statements form Lieberman Macroeconomics book.He “asks” if we would be directed to a debt disaster and answer that”it is important to notice that although we can opt to pay national debt, nothing forces us to do that”"The truth is that many successful firms follow this principle and continue to prosper. For exmaple, the debt of many big firms as AT&T and GM increases every year. When their bonds mature they issue more bonds to pay the old ones”Intelligent Behaviour!!Do it yourself.

True, but sometimes (in order to avoid The Pit of Despair), I just have to laugh at the sheer insanity of it all.. :-p

Goldman Draws Ire for Advising Default Swaps Against New Jersey Dec. 10 (Bloomberg) — Goldman Sachs Group Inc., one of the top five U.S. municipal bond underwriters, is angering politicians and public-finance officials in New Jersey, Wisconsin, California and Florida by recommending that investors purchase credit-default swaps to bet against 11 states’ debt.http://www.bloomberg.com/apps/news?pid=20601010&sid=ac9AV.yzTCNw&refer=news

No red allowed! Now Mush!

How much was he bidding?

this late day sh%t is really irritating!

I’m glad you’re back MoG, I appreciate your perspective on issues.I’ve been trying to do my homework and I’m having trouble understanding just what you mean by ‘pay justice.’ It’s a term you use often and I can’t find another website that explains it in simple terms. You state that it’s equal compensation for equal sacrifice, but how would a system like this be implemented? Who determines the sacrifice and the value associated? Who would arbitrate such a system?I would say that inequality is a natural order, for the simple fact that the distribution of talent, intelligence, and health IS a lottery. I agree that our society can unfairly magnify this inequality, but forcing everyone to the lowest common denominator isn’t “fair” either. The assertion that “man can have no more than he can procure or produce by the sacrifice of his own time and energies to procure or produce” only works if man is completely isolated. As soon as family groups and clans form, studys have shown that there is an immediate disparity in productive effort amongst the group members.I would love to see equal pay and equal justice for everyone, but I guess I just don’t have the “economic clarity about pay justice” yet because I don’t see it as feasible on a large scale. Can you point me in the right direction?

Maxim:Scientific theory must be tested through prediction in empirical independent and repeated demonstration.Given that Economic Theory (as in practice by “leadership” today) is a diverse and independent demonstration continuing ad nauseum in every corner of the globe – on a daily basis and,has failed, is failing and will continue to fail – can we not therefore with some humility, common sense and dignity, finally conclude that [Economic Theory] is invalid and totally flawed?Is not “Economic Theory” merely the opines of those pompous little men that have been given positions of authority for which they are not qualified to hold?Does the taking on one mans’ asset to give to the other man, the one which has lost his money in the casino, amount to “Economic Theory”?. Some would call it grande theft!”Economic Theory” as it is practiced is nothing more than a collection the opinions of a priesthood and arrogant class of incompetents (Leadership) and cannot and should not be trusted – at all.If anyone bothered to look, all the economic and socio-economic indicators are now well advanced into chaos; are accelerating while accumulating inductive growth through associations and will not reverse for some years to come.And still, the Fatt Lady is not ready to sing…Ho hum

Bob Chapman predicting 2-3 years of hyperinflation, followed by depressionhttp://www.theinternationalforecaster.com/International_Forecaster_Weekly/Hyperinflation_and_then_The_Second_Great_Depressioncaution:take with Xanax

you are so awake

I believe as aforesaid, the the USA as a coherent nation is about to totally collapse – by mid 2009.Then the Fatt Lady will singHo hum

Do you think it will be that fast? To this point there hasn’t even been a protest of note, moreover most of those who supported the TARP got re-elected in November – the water supply still seems to have sufficient quantities of what ever opiate they use to keep the population complacent.

GEAB N°29 is available! Phase IV of the Global Systemic crisis: Breakdown of the Global Monetary System by summer 2009http://www.leap2020.eu/GEAB-N-29-is-available!-Phase-IV-of-the-Global-Systemic-crisis-Breakdown-of-the-Global-Monetary-System-by-summer-2009_a2435.html

Yeah and I heard those bikes were custom-built titanium fuel cell bikes that cost $1,000,000.00 apiece…

SOrry MOG. Makes my endless daily drivle seem worthless huh. God speed.

condolences

For Alternative Energy Investment clues vis a vis Obama – here is a good place to start Steven Chu, Director,Lawrence Berkeley National Laboratory

Our next Sec of the Dept of Energy Steven Chu – I think he buys into man made climate change, it figures…On Our Energy Future UC-BP partnership offers path to energy independence Robert Birgeneau, Steven ChuSunday, April 15, 2007

Stronger storms, shrinking glaciers and winter snowpack, prolonged droughts and rising sea levels are raising the specter of global food and water shortages. The ominous signs of climate change we see today are a warning of dire economic and social consequences for us all, but especially for the poor of the world.The development of new, carbon-neutral energy sources are needed to avert the predictions of disastrous climate change. The landmark global warming legislation signed by Gov. Arnold Schwarzenegger last year committing our state to ambitious reductions in greenhouse-gas emissions by 2020 is a strong and encouraging step. California is a national and global leader moving toward a sustainable energy future, and it is in the public mission of the University of California to help find ways to meet these goals.How do we solve the world’s energy needs in a clean and socially responsible way? Read more

Condolences.May you find peace with time.

Reagan. Ownership society. Though I think that latter term was coined later.It was the change to the tax code that allowed tax deferred retirememt accounts. What we didn’t know 30 yrs ago was what would happen when the electorate became investors. Markets must respond to the political interests. Or, more accurately, politcians must respond to the markets. Tail wags dog.

What about this?Consumer Spending will be 70% 50% or 40% GDP in 2009?Meredith Whitney:” I think the overall economy will be worse than people expect. The biggest issue will be consumer spending.”"If 2008 was characterized by the market impacting the economy, then 2009 will be about the economy impacting the market. “

Wise words. This is the key issue facing the US and indeed the world- not Brad and Angie.The US economy will shrink. Subtstantially. The debt implosion , share prices (retirement savings), household debt levels, collapsing property prices, proximity to retirement, rising jobless, loss of access to credit – all will combine to make US consumers save much much more. In a word FEAR.The latest figures out of China are adding more veracity to this new and powerful trend. Exports down over 2% in Nov and imports down a stonking 17%. Manufacturing for export has hit the wall in China.Background to this is the worlds developed countries flooding their economies with money , spending like crazy trying to offset this great sucking sound of consumers wallets and bank accounts as they save.It is war- financial war- being waged by Govt’s against the hapless consumer because he has the temerity to save. Rather than transfer his wealth into the coffers of corperations, multi-nationals and chinese manufacturers of rubber dog sh*t. In so doing they are running their treasuries dry, racking up gargantuan levels of debt and setting the seeds for dramatic currency debasement and destructive inflation.Frikkin madness.

response to PeteCA quote”Here’s what GM should do.They should file for Chap-11 bankruptcy.They should void all agreements with US auto workers, shut down their plants in America, and go international.That’s right. Shut down shop in America.”This whole idea that the definition of a good company is how profitable it is a major misnomer the definition of what a good company is should be how valuable it is to a society -how profitable it is is meaningless without proper context. In any given company if 90 % of the profits go to 1% of the employees then these companies will cause a collapse of aggregate demand ultimately devastating a healthy economy. What’s ironic is these failing companies with seemingly (relative) high employee costs are actually the last thing left holding up the economy and just listen to the economic experts advocate the importance of taking out the last remaining pillars holding up our economy. It’s utter insanity- please what makes sense on the surface may become superficial when you take it in the proper context. If I could use slaves in my business then I could make unbelievable profits but when we also count on those slaves to be our consumer, we’re asking for big trouble!

a must visit siteThe Congressional Oversight Panel cop.senate.gov

The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if Rome does not want to go bankrupt. People must learn to work, instead of living on public assistance.(CICERO in 55 BC)The only thing we learn from history is that we never learn.(CHURCHILL)

Notable bears who think we are in for a substantial bear market rally:Marc FaberMike ShedlockBarry RitholtzAll believe the market is oversold and will rally substantially before resuming its descent. This viewpoint meshes nicely with the coming optimism which will surround the Obama innaguration. The most striking manifestation of this phenomenon for me was the rally on Friday, following release of unemployment numbers which were nearly double that expected. The coming automaker bailout will add gasoline to the fire. Beware the raging bull. Followed by a fall off a cliff.

Substitute China in this post, with some different particulars, and the picture is the same.They call them ‘emerging markets’ for a reason. It is because they have not grown up yet to the level they need to be stable long term through ups and downs.

And the partially developed countries. Theirs is the same path (govt stimulus).You can negotiate in China – a lot. You can buy stuff anywhere at fire sale prices. Walk away and they half, quarter their price to get you to spend.They have a long way to go here. Their economy is taking a major hit that is just now making itself felt.And their plan – get their huge population to consume. Thing is, they have no social safety net. Therefore they save.I think their vast ‘reserves’ may evaporate more quickly that anyone wants to admit.

I posted this link some time ago – it’s a great article on the topic of the consumer. The Great Consumer Crash of 2009 by James Quinn After all these weeks/months of posting mostly links, I will also take a name other than “Guest”

PeteCA you are on the money – the Chicago machine has its tentacles spread far and wide – Borger, if anything is left of center so her comments are not to be discounted. As for your observations of Obama’s response — two thoughts – Wright and NPD What should be of concern is that a scandal such as this is the last thing the economy needs.

Thank you for that photo. Now that presents a whole different viewpoint doesn’t it?PeteCA

@ PeteCABusiness will continue to do things that don’t make sense as long as doing so continues to allow them to make more than they otherwise would.

Ditto. Miss him. Where’s Miss America, too?

The greatest gains in individual health were made when the focus shifted away from the individual and towards public health, as London learned how to provide clean water and handle sewage properly. More recently Dr. Paul Farmer described in his book Mountains Beyond Mountains how an effective treatment for pneumonia in Haiti was to be sure people had sound roofs and mud free floors. Are there ways that this point of view can be applied to economic health? What first comes to my mind is to provide everyone access to high speed internet, to encourage some basic business literacy, to provide local forums so that people can identify and cope with their common problems, and learn from other such groups. It is important to learn that we are not isolated individuals facing alone immensely powerful forces over which we have no control. If those things mentioned above were growing in our communities, efforts to create specific structures in a new economy would have a greater chance of success.

http://www.ae911truth.org/…I would like to thank Richard Gage, AIA and Architects and Engineers for 9/11 Truth for presenting the scientific facts behind the unprecedented destruction of the World Trade Center Twin Towers and Building 7. AE911Truth presents solid research that contradicts the official story of the building’s destruction with the overwhelming evidence of explosive controlled demolition…….http://www.skolnicksreport.com/bankbord-1.html….As we found out over a series of years, the Bankruptcy Club in Chicago is just typical of what exists in Bankruptcy Courts in major cities of the U.S. it consists of a tight-knit group of usually about thirty Judges, Lawyers, Court Clerks, Bankruptcy Co urt assignees and auctioneers, Bankruptcy Trustees, and others. In Chicago, someone apparently “bugged” their monthly meetings and we had the details. They met at the home of a long-time attorney. We found out how they arrange the monthly membership fee s and assessments. And the specific banks used to funnel the bribery loot offshore. One bank used has been La Salle National Bank, a reputed longtime bribery center for payments to state and federal judges. ……

NPD.5. Has a sense of entitlement.Translation: They expect automatic compliance with their wishes or especially favorable treatment, such as thinking that they should always be able to go first and that other people should stop whatever they’re doing to do what the narcissists want, and may react with hurt or rage when these expectations are frustrated..6. Selfishly takes advantage of others to achieve his own ends.Translation: Narcissists use other people to get what they want without caring about the cost to the other people..7. Lacks empathy.Translation: They are unwilling to recognize or sympathize with other people’s feelings and needs. They “tune out” when other people want to talk about their own problems.In clinical terms, empathy is the ability to recognize and interpret other people’s emotions. Lack of empathy may take two different directions: (a) accurate interpretation of others’ emotions with no concern for others’ distress, which is characteristic of psychopaths; and (b) the inability to recognize and accurately interpret other people’s emotions, which is the NPD style. This second form of defective empathy may (rarely) go so far as alexithymia, or no words for emotions, and is found with psychosomatic illnesses, i.e., medical conditions in which emotion is experienced somatically rather than psychically. People with personality disorders don’t have the normal body-ego identification and regard their bodies only instrumentally, i.e., as tools to use to get what they want, or, in bad states, as torture chambers that inflict on them meaningless suffering. Self-described narcissists who’ve written to me say that they are aware that their feelings are different from other people’s, mostly that they feel less, both in strength and variety (and which the narcissists interpret as evidence of their own superiority); some narcissists report “numbness” and the inability to perceive meaning in other people’s emotions..8. Is often envious of others or believes that others are envious of him.Translation: No translation needed..9. Shows arrogant, haughty, patronizing, or contemptuous behaviors or attitudes.Translation: They treat other people like dirt.

Was just looking at that, along with the euro..

they, the congressional oversight panel, could not have picked a better location for thefirst field hearing…….Public HearingsIn the weeks ahead, COP will hold a series of field hearings to shine light on the causesof the financial crisis, the administration of TARP, and the anxieties and challenges ofordinary Americans. The first of these hearings will occur next week in Las Vegas,Nevada. At each hearing, COP members will conduct a thorough investigatory process onbehalf of American taxpayers, consumers, and workers.

“BIGGEST BRIBERY CARTEL EVER”by Sherman H. Skolnick 12/17/05http://www.skolnicksreport.com/bbce.htmlHenry Crown Family, Jenner & Block, General Electric. and their criminal combineIn the beginning, it was a woman. She said that she was the major owner of what became in 1919, Material Service Corporation. Henry Crown was just a very young man. He stopped by her house, she later said, for sandwiches and cookies..Yes, Crown later had ways of getting very lucrative street paviing contracts from “the city fathers” in Chicago City Hall. Simple. The City Officials were “for sale”. So, he “bought them”.[She told about in in a very lengthy recorded discussion.]He ran her business in an integrated method. From sand-dump to the streets. He knew how to exert “muscle”. Many decades later we chatted with a sand-pile owner.”I understand Crown’s people were here during the night. I presume they parked a few bodies. I don’t look. I don’t ask.” He ended the talk with a worldly chuckle.Some Europeans let over from World War Two were visiting Du Page County, just west of Cook County and Chicago. They stopped to look at the old red brick clock tower, Du Page County Courthouse.Puzzled, they remarked, “So you have the Gestapo here now, huh? This is the color and style of building they liked for their local headquarters at the time of Hitler.”To do their “civic duty”, Material Service donated an abandoned toxic dump as the site of the new Du Page Courthouse. After a few years, courthouse workers began suffering an epidemic of strange debilitating ailments. The Liars and Whores of the Press took the easy way out, proclaiming the cause as supposedly the reputed “mafia contractors” having put in a cheapo ventllation system. Press fakers know it is personally unprofitable if not also unhealthy to point an accusing finger at the Crowns.In the 1960s, the woman claiming she was the true majority owner of Material Service Corporation sued them in Cook County Cicuit Court, to force the firm to correct their records. The Judge seemed to be siding with her and her daughter who kept track of Henry Crown as his Secretary.Mysterious forces worked to remove the Judge, or make him disappear, or make him blotted out [take your pick of demise]. By the 1970s, the Crown Family had a 89% stake in General Dynamics, the major war-monger, maker of submarines, tanks, and many other weapons. Lester Crown became a top official of General Dynamics. But back in the Windy City, Lester had a problem. The Chief Federal Hangman said Lester was facing federal criminal indictment for his part in a bribery/extortion conspiracy involving road paving contractors.[We knew a lot about it. One of our secret team put together the evidence forcing the Crowns to face the music.]Lester had two choices (1) he could wait, get indicted and prosecuted and most likely end up with a long prison term or (2) he could work an unholy deal with the Chicago Chief Federal Prosecutor, in the past always concerned about a future career in private lawyering as a “bagman” and “fixer”. …………….TRAIN ROBBER PROTECTEDThe Henry Crown Family, by dirty tricks, seized control of the Rock Island Railroad, not to run the railroad for the public good but to liquidate it for its asset value. As with other bloody work for the Crowns, super-crooks Jenner & Block did not give a hoot about damage to the public. Thousands became unemployed and many private businesses went under. Aren’t there laws against protecting train robbers?

Wednesday, December 10, 2008 3:00 pmPublic Affairs.http://archive.wbai.org/index.php

Hmm.. the greatest nation in the world unless you’re sick or poor.Innovation unfortunately increasingly gets rid of jobs or sends them off to china.Ipods for example are great, designed in Cupertino, but assembled in China from parts manufactured all over Asia. Eventhe customer ‘service’ functions are in Ireland I think.

USDollar tanking. The next crisis for the US is beginning.

OVERPRODUCTION AND STAGNANT WAGES (WHICH LED TO TOO MUCH DEBT) CAUSED THIS CURRENT CRISIS.Recessions are inevitable under capitalism. In U.S. history, there have been at least 25 so far.Pre-capitalist societies were plagued by crises of scarcity, but capitalist recessions are actually crises of overproduction. When the market is glutted with commodities businesses cut down on production and layoff workers, which increases job competition and lowers the average wage; which means the working class will earn a smaller wage; which makes it harder to buy up those extra commodities on the market.It should be pointed out that the crisis of “overproduction” is from capital’s point of view, not humanity’s. Our economy suffers recession because of “overproduction,” as 8 million people die of poverty each year.How can capitalism cure world hunger when “overproduction” causes recession and poverty? Capitalism can’t.The growth in productivity that causes the overproduction is a result of the growing concentration of capital. The more human labor is replaced by mechanized labor, the greater the productivity of labor and capacity to produce greater quantities of commodities.People get fired when machines replace their labor, and can’t earn wages until they find another job. When automation outpaces the working class’ ability to maintain full employment, (a condition marking periods of economic prosperity,) overproduction ensues.It’s a law of capitalism that capital concentrates into fewer and fewer hands. When this concentration proceeds too rapidly for the capitalist framework, overproduction arises and ignites recession, forcing a large percentage of capital to lie idle.The concentration of capital is a permanent feature of capitalism; likewise recessions will recur again and again so long as the means of production are the private property of capitalists under the influence of the profit motive. Capital thus becomes a fetter to the development of the productive forces, to society’s detriment.

Dave Rosenberg and Bernstein on CNBC now – video clip later — good stuffRosenberg – understand the differences and similarities to the 1930s and Japan. GDP 2009 (-2.5%) and 2010 flat.Bernstein – we are Japan

one thing I do not understand about GM is why they do not sell the same cars, that they sell in Europe, also in U.S.? The cars that are sold under e.g. the Cadillac brand are smaller (and thus more fuel efficient) but very nice looking and sporty. It should be relatively easy for GM to start making the same cars also in U.S.

Rosenberg – Gold is a hedge against inflation and deflation. In a deflationary environment priority should be security and duration e.g. treasuries.Housing down at least 15% in 2009. 11.1 months of supply needs to be at 8 months to put in a floor.Bernstein – Treasuries are the key asset to hold. If you are in a weaker currency he suggests Gold.

This is the argument I’ve been trying to drill into this board over and over and it’s the first time I’ve ever heard anyone agree with me. I think the problem is that it’s too abstract not right in front of your face to acknowledge it and so somehow our greatest minds(economists) are for the most part missing this entirely. Also an admittance to this problem would basically be admitting the liaise faire economic approach with voiceless workers was wrong and since 99% of all economists were on board it takes courage to admit you were wrong. Sadly the economists and MBa’s are too pride full to acknowledge this- the change I am seeing is only from absolute necessity or out of desperation, those in charge still seem to think a blind focus on profitability and by further increasing efficiencies will solve our problems they’re trying to use the same cure that got us into this mess.

Here is the Rosenberg and Bernstein interview from CNBC this morning (a must watch) Outlook for 2009 – 17 minutes

Had the leverage cease ?

h, this sneaks up on you. if the chart could be said to show a trend, the projection appears to be shooting us off the chart. from right to left, up to 2007 and then, off the chart,(left) 2009. thanks.

With the US dollar sinking, and T-Bills earning negative interest, it’s not going to be long before a lot of people start pulling money out of cash (T-Bills). Time to look for a better refuge. This will cause a more rapid decline of the dollar – foreign investors and hedge funds can’t afford these losses.PeteCA

Professor, do you blame the recession on the innovation of derivatives which gave way to the shadow banking system and lack of transparency?

Take a look at this, 1 month and 3 months yield set to 0 ! All others yields decreasing.http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml

The corporate-run govt is trying to herd the sheeple into buying stocks.

Disintegration of efforts in Afghanistan. I have no idea how the next US administration can pull this together.http://news.yahoo.com/s/time/20081211/wl_time/08599186573000PeteCA

You are so welcome Grasshoppa!

12:11 p.m. Households pay down debt for first time since 1952, Fed data shows.

DECEMBER 11,2008 14 days before Christmas…KB Toys Files Bankruptcy, Citing ‘Sudden’ Sales Dropummm…

O que este cara escreveu?

We need something like this law here. For Banks, Automakers, and any company such as Enron, MCI, Tyco, that engage in fraudulent activities; plus, some jail time when appropriate. Tink uncle Obi would support it:-)?

Ok, U planning on taking some Biz away from ECRI:-)?

1:41 p.m.Treasury sells 10-yr bonds at lowest yield on recordWhat the hell is everyone afraid of? Thought everything was “priced in”…

Aslo, one of the most popular strip clubs in Detroit lowered lap dance fee’s to $10, down form $20 and the girls get no fees charged.

the people you hire to run your country should punch daily time cards /have nanny cams on them to make sure they are not sleeping

Errrrr, I just lost a long post I spent 20 minutes to write.Executive Summary: I do not agree with you

Professor – the real question is there those estimates of equilibrium exchange rate come from?The ruble is off 10% from it’s peak to bicurrency basket already, so you think there has to be 20-25% deval on top of that?And on domestic rates in Russia – due to defunct monetary policy the rates were very negative for many years now.So, adjustment to real positive rate is painfull, but whow esle could athourities combat rampant inflation?And the panic – trust issues are very important here as you correctly mentioned. And if you do not mind – what private sector economists have you met in Moscow?

FAMC, did you see the October article in the NY Times about this? I have a link here. Here are two quotes:“Over the following months and years, each of the firms would take advantage of the looser rules. At Bear Stearns, the leverage ratio — a measurement of how much the firm was borrowing compared to its total assets — rose sharply, to 33 to 1. In other words, for every dollar in equity, it had $33 of debt. The ratios at the other firms also rose significantly.”“We have a good deal of comfort about the capital cushions at these firms at the moment.” — Christopher Cox, chairman of the Securities and Exchange Commission, March 11, 2008.

New thread! The “first” anonymous moron in the new thread didn’t have the manners to tell you. What you do under an anonymous disguise tells who you really are:-)

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