first?

Vocabulary Word for the Day:LIQUIDITYDefinition: Liquidity is when you look at your retirement funds and wet your pants.

No more power should be given to the Fed unless they are audited annually by an independent auditor. If the don’t agree, revoke the charter.

It appears that Roubini is placing caveats on his approval of the T-Sec’s plan. Maybe Roubini is seeing the plan as a means to an end. Maybe it is the first scene of a closing act?It is time for a new production to start, after all.Anyway, panic is starting to feel stale. Still, the fear still creeps in, because one wonders if any of Roubini’s caveats are actually going to be accepted. Sure, stress tests sound great, but will sensible policy get trampled, yet again? Will good accounting principles be hung out to dry, one more time?Nevertheless, it would be cool if optimism started to make some gains again, especially if it is in conjunction with wise policy and productive endeavors.

The plan of the bankers is to become the collector oftaxes, fees, licenses, tolls, fares etc. Financeall “free markets” activity to control all human activity, it is very simple and direct. Look at the financing of jeffersoncounty Alabama, MTA in New York, New Jersey Transit etc. through the bond markets and cds cdo financing.That is the system they are trying to save. Slavery.The systemic risk is the risk of ending your enslavement. Through really crappy financing.and ..”good luck with that, america.”It is now obvious to eveyone that the big banksare dying hungry beasts. What will we do? I know,lets feed them our bodies and what remains of ourdesperate lives! They might like that.

mmmm..soylent green.

it would be interesting to (re)define finance and banking in general. what does it really mean to us as a society today? when i studied econ at Stern the variable for human nature inherent in all models projections formulas etc. always made the analysis seem dodgy at best. we need a biophysics w/ psych and MRI brainscan economic and still that human variable throws it all off (even if you have a good range for unpredictability or chaos). but i digress. professor how about waxing philosophical and expounding on a revised definition of new banking in a morally bankrupt time? or some such title. we can have some interesting melding intersecting of disciplines…..ah to dream…….to procrastinate…..

美財長救銀行有後著.

隻手遮天

Oh?“This was a political call and in a nut shell – it ain’t going to happen any time soon,” Roubini said.@ Roubini”By proposing such a sweeping reform, China is demonstrating its growing influence in reshaping the global monetary system, and is now on offensive in the debate of who is responsible for the global imbalances,” Deutsche Bank’s chief economist for Greater China Jun Ma said in a note to clients Wednesday.”China has effectively set the agenda for the G20 leaders’ summit,” wrote SocGen economists in a note Tuesday, referring to next week’s meeting of finance chiefs from the Group of 20 leading economies in London.”It has the potential to lead one of the most profound reforms of the global monetary system in the coming decades,” said Deutsche Bank’s Ma about Zhou’s proposal.”The PBOC is more actively promoting the Chinese yuan itself as a reserve currency,” said RBS economist Ben Simfendorfer. “The ability to settle in Chinese yuan offers export manufacturers a way to hedge against large currency moves in the U.S. dollar and, increasingly, the euro.”Separately, Hong Kong Chief Executive Donald Tsang said Tuesday the city would consider altering its now U.S.-dollar linked currency to a system with “linkage” to the Chinese yuan, once that currency becomes freely traded on global exchanges.http://www.marketwatch.com/news/story/china-not-fooling-call-review/story.aspx?guid={2a51bb30-f103-4f34-ad1c-443f4315b370}Comment: As someone that would always give preference to the opines of von Mises and von Hayek and consequently believe NOT ONE word uttered by Messrs Bananke and Geithner et al, I propose that the USA dollar and the USA will collapse in 2009. You just can’t believe any American “leader” these days and to me, that says a lot!And when the USA goes, there will indeed be a new Reserve currency.Ho hum

It looks as if the ‘hat in hand’ will be a well used hat. There has to be an upper limit on how much money can be provided to the banks and other seekers of aid. We are coming up on another wave of mortgage resets. Perhaps the low interest rates will mitigate the impending disaster. Nevertheless, commercial real estate is coming in for a hard landing, not to mention the fallout from credit card debt. There has to be a line in the sand where there simply is no more government money to lend. What is it and how soon do we get there?

We will get to a point where every dollar increase in debt increases the GDP by less than one dollar. Then it will be an exponential curve.This has already happened.Then interest on the national debt will consume more and more of the budget, crowding out discretionary spending. Since the US funds itself with short term treasuries, once yields start rising this will happen very quickly. End of 2009?

Just in:”Open letter / London G20 Summit: Last chance before global geopolitical dislocation”"We will content ourselves with giving you three recommendations that we consider strategic ones in the sense that, according to LEAP/E2020, if they have not been initiated by this summer 2009, global geopolitical dislocation will become inevitable from the end of this year onward.http://www.leap2020.eu/open-letter-london-g20-summit-last-chance-before-global-geopolitical-dislocation_a3010.htmlHo hum

China can afford the loss, the US cannot… China has already locked in a lot of contracts for natural resources (but they, like everyone else, will eventually stall as growth swamps resource supply).If it’s Last Man Standing, then China wins. But pop goes the (population) bubble…Mark

Good question and most interesting:China has lots of useless USD and T Bonds or US debt and at the present this crap has internationally accepted value so China is placing this into assets within strategic places around the globe that will serve its own unique future problems and needs.No secret; China is investing heavily in Australia whilst the Australian Government is half resisting (stalling) as an ally of the USA and half encouraging as they have just realized the hell that the USA is dragging Oz into…Such investments by China reap it stability and mineral resources needed to grow their domestic economy (I don’t use the term stimulate here) – so consider that China is seriously effecting similar strong and urgent strategies in many countries; all unique in that which they can provide China.Better spend it while it has some value!Bottom line: I think that China will fair far better than the USA due to the fact that China does not suffer with “leadership” denial, whereas the USA continues to believe in Santa Clause, or whatever, etc., etc., etc.The eventual result? Any ones’ guess really, but that’s autopoiesis. If China wins we get great food – if the USA wins, we are all condemned to McDonalds.I doubt that China will lose anything much as they appear to have mended their internal rifts (nothing like a common enemy to bring everyone together) and China has much natural nationalism and pride – something the USA is lacking – and is not the big slave society that most naive Americans believe it to be…China is great and their people, wonderful ; there are always exceptions but the food is just superb.Ho hum

We will get to a point where every dollar increase in debt increases the GDP by less than one dollar. Been there, done that! http://market-ticker.org/uploads/debt-contribution.serendipityThumb.jpgOct 2009? Yes, according to http://usacreditdefault.blogspot.com/NOTE: Many thanks to the person who originally posted this article (Peter?).Mark

here is april edition of Portfolio articel on Nouriel… great read…http://www.portfolio.com/business-news/portfolio/2009/03/18/Profile-of-NYU-Economist-Roubini?ref=patrick.net

headline from Bloomberg just nowObama Seeks JPMorgan, Goldman, Citigroup Support on Bank Plan March 27 (Bloomberg) — President Barack Obama will seek support today from executives of the nation’s largest banks for his plan to stabilize the financial system and try to get beyond the furor over bailouts and bonuses.The White House meeting at noon Washington time is scheduled to include chief executive officers Vikram Pandit of Citigroup Inc., Jamie Dimon of JPMorgan Chase & Co. and Lloyd Blankfein of Goldman Sachs Group Inc…http://www.bloomberg.com/apps/news?pid=20601087&sid=aLhW6WphVhAk&refer=homeand from opensecrets.orga sampling of 2008 political contributions* from the finance sector:Goldman Sachs $5,842,471Citigroup Inc $4,374,098JPMorgan Chase $4,424,016Morgan Stanley $3,635,427http://www.opensecrets.org/orgs/summary.php?id=D000000085*but no TARP monies were used

Fungibility is the property of a good or a commodity whose individual units are capable of mutual substitution. Examples of highly fungible commodities are crude oil, wheat, orange juice, precious metals, and currencies.

Where’s the public outrage for the political contributions made by the banksters using taxpayers money.

Thanks Hayes, Adding that reference to my list.

But if you check Chinese imports that are down significantly. So the Chinese do not need to recycle as many US dollars. Although they may still be buying US debt, very likely their purchases will be down compared to earlier years. Let’s watch the data on UST’s and see what happens.PeteCA

why?

STRESS TEST? Enough of the stress test baloney! How difficult is it to subtract a business’s debt from it’s assets? The credit reporting companies which are authorized by our govt. don’t seem to have any trouble applying this basic procedure to the credit of every American. What credit score would they give give all the big banks and AIG-maybe a 50? This is simply another delay tactic aimed at transferring more of the taxpayer’s money to the elite; notice how we started with bailouts under a trillion (750 billion) and now they are in the trillions! As common sense bloggers above have correctly noted, we are rapidly approaching that point of no return where just the INTEREST on the debt becomes unpayable and results in a collapse of the dollar; I suggest we tell our children to start learning Mandarin!

expression of life forceis always sensitive toenvironmental resistance.modulated.

Obama answers in a town hall meeting about bringing home lost manufacturing jobs, he said” these jobs are not coming back and we don’t want them to anyway because we can’t compete with impoverished unstable countries that our corporations take advantage of their cheap labor so we need to find new high tech jobs here in the U.S.”. This is the same pie in the sky b.s. we’ve all heard before from the neo-cons, we elected a neo-con folks we were all fooled, and Obama is an idiot. Proof in point, if I own a company producing wind turbines I employ a few really good engineers from India pay them less through H1-visa programs then I produce the wind turbines in China or Mexico where labor is cheap and the threat of unions is minimal and I employ hundreds not just a few, is this what Obama means by high tech high wage jobs? We are doomed no one seems to have a brain in economics or politics, our politicians and economists live in a fantasy world blinded by their own limited success.

The problem is … not only are foreign countries going to do the jobs with cheap labor, but they’re also going to do the high-end jobs as well (high-tech, design, finance, banking etc.). To a large extent the rest of the world is now challenging us at ALL levels. For example, ask yourself this question … what is it that the Chinese cannot make now? Almost nothing. Everything we need or use they are already making, or have plans to be making soon. They already have plans in the works to be building their own airliners within another decade or so. They are already building their own rockets and spacecraft.Obama’s thinking is outdated here. We are getting challenged at all levels. It is going to be a TOUGH, TOUGH fight for us to regain a foothold in the global marketplace. I’m not saying that we don’t have a lot of terrific people … we do. But we’re not just not going to have that big advantage in the marketplace that we once had. There is no going back to a world where America held supreme dominance. That’s just gone.Our really big problem right now is that we’ve got no $$ left to make a big capital investment in our private industry. The Wall Street banks have gobbled up all of our “seed corn” as they try to cover their losses. Obama’s stimulus money has only minor contributions for new policies such as alternative energy … it’s too small and too late to start a new revolution.PeteCA

If you could be immune to this socioeconomic dynamic, it is interesting to watch it play out. However, I am an American and will be subject to the “down side” of this dynamic. We have been very blessed / spoiled / priviledge / exploiting / (insert your own word) over the last 50 years in the U.S.. The rest of the world wants its share. Who can blame them? Our policy makers wow benefited by the low cost countries over the last few decades have set us up for a dramatic fall vs a gradual allignment. The upside is, there can be grace and more connectiveness in a simpler life. One in which we are not trying to out do our neighbor in possesion owning. Put down the boat, sports car, exotic trips, big screen tv, etc… and talk more with your kids, neighbors and friends. We all might be surprised at how much more entertaining and rewarding these avenues of spending our precious time on earth are vs our ravenous consumerism of the past. BUT… still hold your elected official accountable for our countries policies. The USA (for Americans) needs to come first!

Dear Professor -What I am able to infer from your recent string of articles are the following 3-items:1. The PPIP is not on the critical path to resolving the financial crisis.2. Bank Nationalization as a phrase has lost its meaning and relevance by now and is too easily attached to uninformed, distracting stereotype. More precise terms that accurately focus us on the problems should be employed, if it is not too late.3. In the the year since BSC officially collapsed, the leadership and the experts have still not managed to clearly define the problem(s)nor break them into manageable parts to even have a foundation for resolution.Looking forward …

BULL case,FED pumping liquidity + rise in equity market => Strong dollar!! go Bull!!!

u r _________________. calm down. o’s approval rating is high enough to let the exec. + cong. do whatever they want. learn to live with the majority, or go to mombasa.

Is there any reason that AIG has been singled out for paying retention bonuses while on public assistance … I am wondering why JP Morgan has once again escaped public scrutiny to the fact that they received public assistance in their shotgun wedding to BSC – before the deal ultimately closed, JPM paid retention bonuses as well.

two posts from Krugman one from his blog and the second and Op-ed pieceLarry, Larry…I’m fine with this. Larry is a first-rate economist with a job to do, and I wish him luck in it. He understands what I’m saying, of course, but he’s doing his best to support the official line.That line now goes like this:…http://krugman.blogs.nytimes.com/2009/03/24/larry-larry/______________The Market MystiqueBy PAUL KRUGMANPublished: March 26, 2009On Monday, Lawrence Summers, the head of the National Economic Council, responded to criticisms of the Obama administration’s plan to subsidize private purchases of toxic assets. “I don’t know of any economist,” he declared, “who doesn’t believe that better functioning capital markets in which assets can be traded are a good idea.”…http://www.nytimes.com/2009/03/27/opinion/27krugman.html

THe leadership and experts may not have managed to clearly define the problems, but other people have. Look at what Jim de Costa says on http://www.deepcapture.com. The whole system of clearing share sales via the DTCC is riddled by FRAUD. THat is your fundamental problem. Without tackling the CORRUPTION and FRAUD at the bottom of the pile, there is no way of resetting the markets. This is the shoe they cannot let drop, as it will demonstrate that the regulators have been COMPLICIT in perpetuating FRAUD on investors for YEARS.

Thanks for proving my point.

corps like these………..

Thankyou for zeroing in on one of the major problems: our govt is tiptoeing around this problem, essentially asking the bank’s permission to account for their misdeeds without any mention of, at the very least, total incompetence and at the most, outright fraudulent acts of the “ponzi artists” and our regulators who have been complicit in this ponzi scheme. So after 100′s of billions of dollars gambled away, there is still no talk of prison for the perpetrators as our law enforcement is too busy rounding up the petty thief who steals food from the local convenience store. Big White Collar Crime sure pays well nowadays!

A Dragon On WInter’s Eve Agreed Peter, Chinese food (as found in China) is superb.And yes, China is stocking up on resources and mining and all things basic to survival.ex VRWC

zogby is so so. have u ever heard the name of chris matthews? the guy whose legs tingle when he hears o’s name, or sees the pictues of apes. the polls conducted by matthews’ network is more trustworthy. o’s rating is 66%. even rcp’s rating is 60+, and fox goes with rcp.

Dimon after meeting with Obama:”We want to do what’s right for JP Morgan and the country.”

Keep up the good work !

Even better call them! Go to congress.org and input your zip code on that page and you will get a list of all of them…I feel much better calling, especially if I’m angry! Of course you will get a staffer, but they do listen and I have received letters after calling regarding subjects. I have received letters emailing also. The representatives that I did not hear back from, not surprisingly no longer hold their offices.

Obama: “Okay which one of you two wants Citi?”

http://www.businesscycle.com/news/press/1368/WLI Growth at 21-Week HighReutersMarch 27, 2009(Reuters) – NEW YORK, March 27 (Reuters) – A weekly measure of U.S. future economic growth climbed along with its annualized growth rate, indicating signs of a smoother economic recovery, a research group said on Friday.The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose to 106.3 for the week ending March 20 from 105.8 in theprevious week.The index rose to levels last seen in mid-February, and its annualized growth rate — while still in negative territory — reached a 21-week high at -23.2 percent, up from the prior week’s rate of -23.9 percent.It was the index’s highest growth rate reading since late October, when it was -22.5 percent.”With WLI growth recovering to a 21-week high, the pace of contraction in the U.S. economy should begin to ease in coming months,” said Lakshman Achuthan, managing director at ECRI.The weekly index rose due to stronger money supply and stock prices, partly offset by higher interest rates and jobless claims, Achuthan said.

February PCE and Personal Saving Ratehttp://www.calculatedriskblog.com/2009/03/february-pce-and-personal-saving-rate.html”…It is not much, but this is definitely a positive report. “

lol. Further to the above, I just got sent this by a friend:The Peak Oil Crisis: Pondering the Near FutureWritten by Tom WhippleWe are faced with three serious problems that are going to bring about radical changes in our lifestyles. In order of urgency, the problems are the great economic recession/financial crisis, the peaking of world oil and other fossil fuel production, and global warming. The opening effects of these problems are already upon us, but it will be months, years, and in the case of global warming, decades before their full impact is felt.Our three problems are interrelated as changes in the status of one will lead to changes in the others. The global recession has already cut oil consumption, lowered gasoline prices, and put off the day when oil shortages develop. Someday soon faltering oil production will lead to much higher prices and thereby choke off an economic rebound. In the long run the depletion of fossil fuels should help the global warming situation if, as seems likely, we go over the infamous “tipping point” and the Antarctic ice cap melts. In this case, the world’s oceans are scheduled to rise by 25 feet or so, inundating important parts of the world’s land mass. It is likely to take centuries or perhaps millennia before all that water gets back into an iceberg on the Antarctic land mass where it belongs.In thinking about the years ahead, is there anything, other than speculation, that can be said about what human life will be like in the rest of this century?<.I>A few points seem obvious.First, most of us are likely to become much poorer in terms of our physical possessions and our consumption of services. This is already happening at an alarming scale, with real estate values, equities, and employment plummeting worldwide; only a few living in remote areas will be left untouched. For nearly a year now governments around the world have been thrashing around in efforts to stem the decline. Opinions on the success of these efforts vary widely.Government officials by the very nature of their positions must exude optimism and constantly tell us that changes for the better are just ahead. Others, without these responsibilities, and perhaps with a better grasp of the problems ahead, are skeptical and can foresee no immediate end to the economic troubles that could extend for decades.What we will be doing to earn a living in the years ahead will change for many. The economic system that allowed so many of us to live better lives, or at least consume more, with much time for recreation and leisure, is clearly coming to an end for a while – perhaps a very long while. The abundance of wealth that allow so many to earn livings while sitting around offices – reading, writing, talking, designing, teaching, coordinating, meeting and leading — is going to gradually melt away. With real wealth evaporating so rapidly, there simply will be less left over to support such activities that are not directly productive on the scale we have come to know.This transition is going to be brutal for many. With white collar, manufacturing, construction, retail and hospitality jobs slipping away, keeping millions gainfully employed is going to be a major challenge for all levels of government. Currently, extended unemployment insurance and government stimulus programs are seen as the answer. The problem will come when we realize that the stimulus, while doing some good, is not sufficient. Unemployment insurance will run out and it will become apparent that we can longer print enough money to finance annual stimulus packages.At some point, it is likely that the “free market”, bereft of capital and customers, is not going to provide new jobs quickly enough to keep ahead of mounting social tensions. For many, friends and relatives will be the first resort after benefits and savings are used up. As distasteful as it may be to many, direct hire government job programs as were created in the 1930′s may be the only way to avoid political unrest and damaging social problems.The millions of essential, but hard, dirty, and far less desirable jobs – farm labor, construction, food processing, cleaning services, care of the elderly – that have come to be occupied by millions of legal and illegal immigrants will be an interesting case. As more desirable jobs slip away, the willingness and ability of people to move into much lower paying and less skilled jobs in order to survive will be a key test of civilization’s resiliency.Over the next decade or so the question of education and retraining a major portion of our workforce will come to the fore as it is highly doubtful that the job mix pattern which has grown up over the last few decades will last much longer. There obviously will be massive amounts of work to be done, at all skill levels, retooling our civilization to survive and prosper in the midst of climate change with sharply reduced liquid fuels and much less fossil fuel derived energy in general.What appears to be lacking in the current economic debate is a coherent plan of where the U.S. and indeed the world’s civilizations need to go. Unfortunately the only stated, and politically feasible, goal at the minute seems to be a return to “economic growth,” an objective which is clearly unrealizable in the midst of the current but as yet unrecognized transition to non-fossil fuel energy.Gradually, the realization will set in that returning to “economic growth”, with cheap credit, McMansions in the suburbs, traffic jams and large cars simply is not going to happen. Somewhere in the next 12 months to 12 years the realization will come that returning to the abundance of the oil age is not going to happen for a long while and we can settle down to serious work.

3 o’clock — Ferry time? Time to paint green eye-lashes.

The head of one of the banks in trouble, who apparently couldn’t see the disaster brewing for his own bank, should now be trusted to see when things are turning around for the entire economy?

Data on Feb Vehicle Sales and Consumer SpendingIt’s worth taking a look at the two charts on vehicle sales in the USA that have just been published by Calculated Risk (BEA data). Here’s the link:US Vehicle Sales Since 1970Both charts in the article can be expanded if you click on them.A couple of points here ….First, I recall a statement from Detroit in the last 12 months that said something like this … “If total vehicle sales in this country go down to 10 million per year, then it’s doomsday for the US auto industry”.Well guess, what? We’re now down to 9.29 million vehicles per year.Second, in my mind these vehicle sales are a pretty good barometer of US consumer behavior. Most Americans still need a car for work and daily life. Cars are big-ticket items, but they’re not exactly like a mortgage on a house. Most people can afford to buy a car – if they’re doing reasonably OK with their household budget. So this cliff dive that is taking place with these vehicle sales is showing just how powerful “consumer deleveraging” is right now (read … US families paying off debts and credit cards, and not buying anything).In fact, if you look at the rate of change in vehicle sales for each of the blue recession periods (marked on the charts), the current decrease exceeds anything in recent history (since 1970).Clearly, this enormous about-face in consumer demand is one of the major drivers – if not THE major factor – in the current downturn. This is the US consumer collapsing. And when Mr. Bernanke hopes that he can “stimulate aggregate demand” with enormous bailouts (read: get Americans to go out and spend wildly again), he’s got to be dreaming. We’re looking at a permanent shift in American consumer behavior in the coming decade. There may be some recovery in the future, but not to where we were before.PeteCA

@PeteRe: “Cheap Labor”It is not labor that is cheap. The exchange rates must be rationalized.

I posted this a couple of threads agovia CR – worth taking the time to read as it lays out the distinction between Growth rates and Growth levels – Frequently mentioned in this (RGE) blog is the ‘good news’ of stabilizing economic indicators e.g. the WLI from ECRI. The reality is that stabilization at low levels without growth = stagnation.Presentation to the Forecasters Club of New YorkNew York, NYBy Janet L. Yellen, President and CEO, Federal Reserve Bank ofSan FranciscoFor delivery on March 25, 2009, 1:00 PM Eastern,”The Uncertain Economic Outlook and the Policy Responses1Good afternoon and thank you for inviting me. I’m delighted to speak before a group of such distinguished forecasters. As a member of the Federal Open Market Committee, I too must regularly predict the course of the economy and lately that has become a particularly hazardous occupation…”http://www.frbsf.org/news/speeches/2009/0325.html

Obama wants the banks to be nationalized.

Good place to find multiple poll results:http://www.realclearpolitics.com/polls/

Guest – I think you are exactly right in you comment – and the demeanor of the banksters after lunch with Obi was in my view somewhat subdued -

Obama promises a lot but delivers on little, do not expect great change within his administration. He will leave us a broke nation with wars and rumors of insolvency. He is no savior!!.

When is the earning season going to commence? Around the 15th of April? I am going to double-short Nasdaq? This animal is deeply punch-drunk! There is a 95% chance of making big money by going this route! Please stop me if my bet is likely to go wrong — EVEN SLIGHTLY!!! Thanks for encouraging me, or for stopping me.

Typo: I agree, but it may mean not as bad an outcome as the crowd was expecting late-Feb-Early March. I don’t see the soup kitchen lines getting that long:-)

this is dshort’s updated 4 bad bears charthttp://dshort.com/charts/bears/four-bears-large.gif

“Last month Ciavarella and another senior juvenile judge, Michael Conahan, pleaded guilty to having taken $2.6m (£1.78m) from the co-owner and builder of a private detention centre. The judges were accused of setting up a system to ensure a steady flow of children committed to custody in the care of the private firm in return for kickbacks.”http://www.guardian.co.uk/world/2009/mar/27/corrupt-judge-pennsylvania-victimsIs this the same America that was teh bastion of freedom?Ho hum

I attempted to comment on your site but it shut me down – so I respond here:A Dragon On WInter’s EveAgreed Peter, Chinese food (as found in China) is superb.@ ex VRWC on 2009-03-27 12:24:21China has no social safety net but it has (1) resilience, brought about by living through the Mao days – that is, unbelievable hardships (2) profound and fierce natural identity and (3) rice.Rice is grown almost everywhere in China and it is mostly (95%) consummate with 15kn of where it is grown; think about this – no starvation, food strategically available in hard times such as invasion by an external enemy (ies) and young intelligent hands-on leadership.China will suffer the downturn indeed but they know and acknowledge what is coming down the pipe.The Chinese also have what sometimes seems as inexhaustible energy – they just keep getting up and going on and when they rest, they console themselves in a family founded happiness surrounding a culture of rice.Tough times ahead? Yes. Is this a competition? It shouldn’t be.I will bet on China coming out of this in better shape that the mall dependent USA – this time around.Ho hum

I second that emotion.

I will venture a guess that between now and October, late Feb/early March will seem like the good ol’ days – I think we have another leg down (intuition) that could be exacerbated by an unexpected systemic shock and/or political shock.

http://www.unitedforpeace.org/.March On Wall Street, April 4National MobilizationPlans Set for National Mobilization to End the Wars in Iraq and Afghanistan and Address the Economic Crisis by Cutting Military SpendingSign UFPJ’s Petition to Cut the Military Budget!UFPJ/BOPM Statement – April 3 and April 4′Plans for the Day’ on April 4.Flier (NYC) / Flier (Local) / Labor FlierFlier (NYC) (Spanish) / Flier (Local) (Spanish)Website ButtonTransportation Page / Ride BoardHelp Volunteer!Donate Here! / Table RegistrationEndorse the April 4 Mobilization / List of EndorsersRead More »National Action for Peace in AfghanistanToday, President Barack Obama announced his plans to send another 21,000 troops to Afghanistan: he is girding the nation for a long and costly military occupation there.United For Peace and Justice calls for immediate action for peace in Afghanistan. Here are three things you can do:1) Call the White House today: 202-456-14142) March with UFPJ on April 4!3) Help organize local actions April 6-9

Humm. Didn’t even look at SP500 750 puts today. It may not be a bad idea…

note the comments section on this article on NC – some good stuff

http://stopwar.org.uk/content/view/1121/1/.Demonstrate at the G20 on 1 AprilAssemble US Embassy, Grosvenor Square at 2pmDetails of transport to the protestProtest routeThe leaders of the world’s big powers will meet at the G20 summit in London on 2 April.It is Barack Obama’s first visit to Britain. It is our chance to demand a change from Bush’s war policies.* Get the troops out of Iraq & Afghanistan* End the siege of Gaza – free Palestine* Create jobs not bombs* Stop arming Israel* Abolish all nukes

or should that be corpse(s)..

“But if you check Chinese imports that are down significantly. So the Chinese do not need to recycle as many US dollars. Although they may still be buying US debt, very likely their purchases will be down compared to earlier years. Let’s watch the data on UST’s and see what happens.”@ PeteCA on 2009-03-27 09:01:46It makes sense that the Chinese do not gain by destroying the USA despite it being already broken;China’s interests are best served keeping the fatally wounded USA alive and this is best done by keeping it on drip-feed (something like some Asian natives did to the Japanese soldiers during the end of WWII, ie broke their legs and arms and tied them to stakes under their houses and fed them – when they got fat, they ate them; not before)- that is, the operative term being ‘drip-feed’.You also need to understand that the biggest threat to China today comes from within, that is, political stability and those closed factories and unemployment problems around CNY highlighted this – just in time.China will now focus all its efforts (or most) on internal stability.As a side-note, you should note that the USA has been destroyed from within – and add to this, that the founding fathers of the USA knew this was the only serious threat to the USA and hence the Constitution and the right to bear arms. The latter was to allow the citizens to always be able to protect themselves from the only and real enemy of the USA, that is, from the government!Bush destroyed the Constitution and now what is left is being rapidly transferred to the lawless FedRes – to be soon known colloquially as “Cash City”.I repeat: China’s Prime concern now is domestic geo-political stability (and its a huge country of very wide diversity of ethnic demographics.And then there are the “Overseas-Chinese” – another day – another story.Ho hum

(Goldman’s) Blankfein Says Glass-Steagall Return Would Be ToughBloomberghttp://www.bloomberg.com/avp/avp.htm?N=av&T=Blankfein%20Says%20Glass-Steagall%20Return%20Would%20Be%20Tough&clipSRC=mms://media2.bloomberg.com/cache/vSUbx51vIRt0.asf

Global currency, it COULD happenPosted by Izabella Kaminska on Mar 27 12:02. 34 comments.Who would have thought, even a couple of months ago, that calls for a global currency might be taken seriously as a solution to the current financial crisis?Yet, the concept is gaining incredible momentum. More…Who would have thought, even a couple of months ago, that calls for a global currency might be taken seriously as a solution to the current financial crisis?Yet, the concept is gaining incredible momentum.The dollar’s hegemony, of course, was first seriously called into question by Vladimir Putin back in January. Further calls by Russia came this month. Meanwhile, China concretely jumped on the bandwagon this week — first with a written proposal by the governor of the People’s Bank of China for a new system based on special drawing rights and then with similar references made by the vice president of the Bank of China Wang Yongli on Thursday.As Dennis Gartman of the Gartman letter points out, Yongli’s calls came in an article penned for the Financial News. In the piece Yongli says the world actually needs a single global currency that should not be controlled by any single nation, and there should be a global central bank established to issue and manage this currency. And the crazy thing is that Gartman, despite seeing it as an anathema of a concept, is still taking it seriously:We would normally toss such a notion aside at a moment’s notice for this is utter and complete nonsense. The US would never accede to such a notion… at least not in our lifetime. Both the Left and the Right would and shall find it anathema; however, because the article was posted in The Financial News and because The Financial News is the People’s Bank of China’s “affiliated” newspaper, his comments were likely vetted by the PBoC and by Beijing too, for that matter.Meanwhile, as Bloomberg reports on Friday, Indonesia, Malaysia and Thailand are also joining the global currency call bandwagon.Bank of Indonesia Governor Boediono told reporters: “We need a currency that is stable by volume and value so that world trade and investment can be more stable, Trade transactions using one currency that’s dependent on the condition of a single country’s economy is dangerous.”Bank Negara Malaysia Governor Zeti Akhtar Aziz called it “a viable proposal that should be considered.”And Bank of Thailand Governor Tarisa Watanagas said it may benefit developing nations to have an alternative to the dollar.The main criticism of such calls is usually that it would take years to implement anything like a global currency, that the world’s governance is not suitably united to make it feasible and that America itself would never bow easily to seeing its dollar dominance slip away.Yet some very notable figures seem to disagree. Among them is Nobel prize-winning economist Joseph Stiglitz, who even inferred on Thursday not only was the implementation of a global currency possible, it was possible quickly.According to Reuters, Stiglitz believes the whole thing could in fact be phased in within a year. He addressed the subject as part of his role heading a UN panel analysing the financial crisis. As Reuters reports:Stiglitz’s panel has issued a set of recommendations for global financial reforms, including a proposal for a new SDR-based reserve system. In an 18-page report released on Thursday, the panel said such a system “could contribute to global stability, economic strength, and global equity.” The panel said such an SDR system would be “feasible, non-inflationary, and could be easily implemented.” Russia earlier this month proposed creating a new reserve currency, to be issued by international financial institutions. This week, China outlined how SDRs could take over the dollar’s role as the global reserve unit.Stiglitz said there was a “growing consensus that there are problems with the dollar reserve system.” He added that economists have been discussing the weaknesses of single-currency reserve systems for decades. “One of the problems (with single currency reserves) is that because of the huge level of volatility, countries are accumulating large amounts of reserves,” he said. The use of dollar reserves was also “contributing to the weakness of the global economy,” the former World Bank chief economist said.Driving much of the momentum for a global currency are probably increased fears about the viability of ongoing investments into US Treasuries by surplus countries like China. QE intervention has led to clear abnormalities appearing along the US Treasury curve. As Reuters columnist John Kemp explained in an article – there is very little appetite for investments at the back-end as investors increasingly price in the risk of inflation following the Fed’s QE efforts.This also appears to be the case in the UK, where investors are increasingly skirting long-dated conventional gilt issues, unprepared to invest in long-term securities without the provision of a corresponding inflation hedge — meaning long-dated index-linked issues are predominantly of interest .Back to the US, Kemp concludes:The U.S. government is trapped. It needs to issue more medium-term securities and lengthen its maturity profile otherwise it will become a prisoner of the refunding market, vulnerable to any shift in sentiment, like the banks before the onset of the crisis. Too much short debt that needs to be constantly rolled forward will complicate monetary policy when the time comes to start reducing the Fed’s balance sheet and start raising interest rates.Suddenly, all of the above does make sense. This is especially the case when you consider the following statistics on US Treasury investments as gathered by CFR blogger Brad Setser:China’s purchases of US Treasuries in 2008 (Setser/ Pandey estimate): $245 billionUS money market funds purchases of US Treasuries in 2008, from the flow of funds: just under $400 billionChina’s purchases of Treasuries and Agencies in 2008: $283 billionUS money market funds’ purchase of Treasuries and Agencies in 2008: $942bAs Setser points out, China’s large purchases of Treasuries in 2008 happened not because supply was there to be picked up, but because it was forced to stop buying other – now risky – securities like Freddie/Fannie agency debt. Eventually its reallocation to Treasuries-only investments will be completed, and when that happens its purchasing pace of Treasuries will begin to track its reserve growth.And, of course, as China’s reserve growth slows, the volume of Treasury purchases will slow – leaving the US vulnerable to a ‘refunding’ crisis – or as Kemp calls it a ‘refunding trap’.In the meantime, as Setser points out, it is US money market funds that will mostly plug the gap, which leads him to assert:I am waiting for a round of stories pondering whether money market funds will continue to buy Treasuries and Agencies at their 2008 pace!To sum up the situation, it is perhaps best to quote the following paragraph from an essay published on People’s Bank of China website on Friday:In fact, lack of remorse is one key factor leading to the current crisis. Before the crisis, there was a prevalent complacency. Although the US regulatory structure was a complex patchwork of fragmented agencies and jurisdictions, some believed that it worked quite well. Though some made efforts to address issues, most are reluctant to take a serious crack at the problems with an excuse of “(i)f it ain’t broke, don’t fix it.” The cost of waiting for the system to break has turned out to be tremendous. Against this backdrop, we should begin with an attitude of self-criticism while addressing the challenges of financial regulatory reform.So, is it the case the surplus countries are no longer prepared to tolerate waiting for the system to break?http://ftalphaville.ft.com/blog/2009/03/27/54110/global-currency-it-could-happen/

Like it or not the administration knows it will take a world approach to change the problems facing the world, pres..O will be the one to bring about this change and we will be closer to a social world society during this administration. The financial problems as we all know would have worked themselves out with minimal intervention with a better out come in the long run, but this problem is the rocket fuel for the coming call for unity. There is something going on that’s deeper than we can see now, but I am telling you watch for a move towards global governing counsel with greater powers and pres. O will be leading this new move.

@ this is your history. face it.Martin Luther King, Jr.Beyond Vietnam — A Time to Break Silence.http://www.americanrhetoric.com/speeches/mlkatimetobreaksilence.htm.listen to the mp 3..Delivered 4 April 1967, at a meeting of Clergy and Laity Concerned at Riverside Church in New York City…….The truth of these words is beyond doubt, but the mission to which they call us is a most difficult one. Even when pressed by the demands of inner truth, men do not easily assume the task of opposing their government’s policy, especially in time of war. Nor does the human spirit move without great difficulty against all the apathy of conformist thought within one’s own bosom and in the surrounding world. Moreover, when the issues at hand seem as perplexed as they often do in the case of this dreadful conflict, we are always on the verge of being mesmerized by uncertainty; but we must move on.And some of us who have already begun to break the silence of the night have found that the calling to speak is often a vocation of agony, but we must speak. We must speak with all the humility that is appropriate to our limited vision, but we must speak. And we must rejoice as well, for surely this is the first time in our nation’s history that a significant number of its religious leaders have chosen to move beyond the prophesying of smooth patriotism to the high grounds of a firm dissent based upon the mandates of conscience and the reading of history. Perhaps a new spirit is rising among us. If it is, let us trace its movements and pray that our own inner being may be sensitive to its guidance, for we are deeply in need of a new way beyond the darkness that seems so close around us.Over the past two years, as I have moved to break the betrayal of my own silences and to speak from the burnings of my own heart, as I have called for radical departures from the destruction of Vietnam, many persons have questioned me about the wisdom of my path. At the heart of their concerns this query has often loomed large and loud: “Why are you speaking about the war, Dr. King?” “Why are you joining the voices of dissent?” “Peace and civil rights don’t mix,” they say. “Aren’t you hurting the cause of your people,” they ask? And when I hear them, though I often understand the source of their concern, I am nevertheless greatly saddened, for such questions mean that the inquirers have not really known me, my commitment or my calling. Indeed, their questions suggest that they do not know the world in which they live.In the light of such tragic misunderstanding, I deem it of signal importance to try to state clearly, and I trust concisely, why I believe that the path from Dexter Avenue Baptist Church — the church in Montgomery, Alabama, where I began my pastorate — leads clearly to this sanctuary tonight.I come to this platform tonight to make a passionate plea to my beloved nation. This speech is not addressed to Hanoi or to the National Liberation Front. It is not addressed to China or to Russia. Nor is it an attempt to overlook the ambiguity of the total situation and the need for a collective solution to the tragedy of Vietnam. Neither is it an attempt to make North Vietnam or the National Liberation Front paragons of virtue, nor to overlook the role they must play in the successful resolution of the problem. While they both may have justifiable reasons to be suspicious of the good faith of the United States, life and history give eloquent testimony to the fact that conflicts are never resolved without trustful give and take on both sides.Tonight, however, I wish not to speak with Hanoi and the National Liberation Front, but rather to my fellow Americans.Since I am a preacher by calling, I suppose it is not surprising that I have seven major reasons for bringing Vietnam into the field of my moral vision. There is at the outset a very obvious and almost facile connection between the war in Vietnam and the struggle I, and others, have been waging in America. A few years ago there was a shining moment in that struggle. It seemed as if there was a real promise of hope for the poor — both black and white — through the poverty program. There were experiments, hopes, new beginnings. Then came the buildup in Vietnam, and I watched this program broken and eviscerated, as if it were some idle political plaything of a society gone mad on war, and I knew that America would never invest the necessary funds or energies in rehabilitation of its poor so long as adventures like Vietnam continued to draw men and skills and money like some demonic destructive suction tube. So, I was increasingly compelled to see the war as an enemy of the poor and to attack it as such.Perhaps the more tragic recognition of reality took place when it became clear to me that the war was doing far more than devastating the hopes of the poor at home. It was sending their sons and their brothers and their husbands to fight and to die in extraordinarily high proportions relative to the rest of the population. We were taking the black young men who had been crippled by our society and sending them eight thousand miles away to guarantee liberties…”..”We can no longer afford to worship the god of hate or bow before the altar of retaliation. The oceans of history are made turbulent by the ever-rising tides of hate. And history is cluttered with the wreckage of nations and individuals that pursued this self-defeating path of hate. As Arnold Toynbee says: “Love is the ultimate force that makes for the saving choice of life and good against the damning choice of death and evil. Therefore the first hope in our inventory must be the hope that love is going to have the last word” .We are now faced with the fact, my friends, that tomorrow is today. We are confronted with the fierce urgency of now. In this unfolding conundrum of life and history, there is such a thing as being too late. Procrastination is still the thief of time. Life often leaves us standing bare, naked, and dejected with a lost opportunity. The tide in the affairs of men does not remain at flood — it ebbs. We may cry out desperately for time to pause in her passage, but time is adamant to every plea and rushes on. Over the bleached bones and jumbled residues of numerous civilizations are written the pathetic words, “Too late.” There is an invisible book of life that faithfully records our vigilance or our neglect. Omar Khayyam is right: “The moving finger writes, and having writ moves on.”We still have a choice today: nonviolent coexistence or violent coannihilation. We must move past indecision to action. We must find new ways to speak for peace in Vietnam and justice throughout the developing world, a world that borders on our doors. If we do not act, we shall surely be dragged down the long, dark, and shameful corridors of time reserved for those who possess power without compassion, might without morality, and strength without sight.Now let us begin. Now let us rededicate ourselves to the long and bitter, but beautiful, struggle for a new world. This is the calling of the sons of God, and our brothers wait eagerly for our response. Shall we say the odds are too great? Shall we tell them the struggle is too hard? Will our message be that the forces of American life militate against their arrival as full men, and we send our deepest regrets? Or will there be another message — of longing, of hope, of solidarity with their yearnings, of commitment to their cause, whatever the cost? The choice is ours, and though we might prefer it otherwise, we must choose in this crucial moment of human history.”..”And if we will only make the right choice, we will be able to transform this pending cosmic elegy into a creative psalm of peace.If we will make the right choice, we will be able to transform the jangling discords of our world into a beautiful symphony of brotherhood.”mlk.

And when our leaders and their elite puppetmasters point to all of America’s enemies, if they would only take a few steps back to hear the cries of the people, they would realize that they are really pointing into a mirror at themselves!

pca,the focus seems to be moving to pakistan?uuuggghh.? like, afghasistan is the entry to…these policy “folks” are insane.

Hate to say it, but the government is not conducting stress tests. The banks are.This so called treasury stress test regime is a “take home test” for the banks. How many of these institutions will allow results that show weakness to be released? Not any.In this I suspect market participants may well be surprised on the downside in more ways than one. And we will all be subjected to a fresh round of; “We had no way of knowing this could happen”.

I am, as you of you that read my comments in this venue know, in favour of such a move, however, the ideation being propelled towards reality is one thing but the mechanics are more vitally important:1. The IMF as we all know is controlled by the USA which today means, still means, the ‘neocons’ and all that is attached to them (read: not good).2. Stiglitz’s and his panel, given a real mandate could do the trick – I have much respect for Stiglitz but this is just the upper technical team.3. No doubt, Benanke, Geithner and the “Cash City” pious brethren will try to game and grab this “unborn king” for their own agenda and will play the big “O” hand to the nth.4. Obviously Big Banks, C, BoA, and their kindreds, JPM and GS et al, will also be looking for their concessions, franchises and convenient windfalls and all the above, excepting Stiglitz’s panel will be doing “everything” to bias the game to their favour, a priori.5, Add in every Nation (read: political bandito) will also want their share as well, so…how does this thing birth?how is creation effected?how do we create this beast or beauty?If those that attempt to sack this Temple d’Homme know nothing of physics and music, then, this venture will indeed become Hell on Earth! It is time to find intellect and wisdom which is entrenched in the compassion of life and founded in the knowledge of the Gods.Interesting question.Ho hum

another excerpt from the NC article posted above”Now whatever losses the banks can’t hide with revised accounting treatments, they can simply fob off on taxpayers via the partnerships. They got what they always wanted: A bad bank. An entity that will actually absorb losses from the asset side of the balance sheet. Shareholders and creditors don’t have to worry about further writedowns, not the ones that can’t be hidden anyway. Taxpayers will pick up the check!Even better, the Geithner plan is so ridiculously complex—and public disclosure is likely to be so minimal—that toxic asset transfers are likely to happen largely out of view. Maybe Treasury will have to increase its borrowing substantially in order to fund the losses, but by that point everyone will be celebrating that banks have started lending again. Hooray!By the way, are there ANY protections to prevent banks from gaming this plan?”http://www.nakedcapitalism.com/2009/03/guest-post-big-banks-pull-off-ultimate.html

BTW:Another term for “freedom: is ‘respectful discretion’.Ho hum

An excellent interview with William Grieder a writer for The Nation and author of Come Home, America on Bill Moyers (PBS) this evening:Key points paraphrased included: “the policies coming out of Washington are actually giving the FED more power and this is very dangerous”. “Bear Stearns was saved in order to save JP Morgan who had huge exposure and AIG is being saved in order to save Goldman Sachs” (that’s why Lloyd Blankfein was at the Fed Meeting). He also stressed that these policies are trying to restore the old power structure enabling these megabanks to run Wall Street and bring corporatism to an even more powerful level; he said instead, the FED should be creating thousands of small, local banks. There was more, perhaps it will be posted on youtube or PBS.org site.

Heard on a CNN news blurb on the radio this evening:”Investors ‘took a break’ today from the three-week rally, sending the Dow down 145 points.”Oh, really.

Yes they’ve got us by the balls. Time to see who has the bigger balls. See, when I grew up in the late 60′s LBJ and his gang of warmongering ideologues used Vietnam to pick a fight, and just about bankrupted the country. For a decade in the 60′s the power that be thought they got us by the balls. Then we cut their balls off. Yes we did that real good. And for the next 30 years no one in the military industrial complex dared to repeat the performance. I look at the generations after me I feel sorry for them – a bunch of gutless zombies.

Hayes,It’s done this way in order to avoid Congress.http://www.nakedcapitalism.com/2009/03/guest-post-new-bailouts-are-end-run.htmlIn essence, the taxpayer is f****d.

And what role would gold play as part of this new currency basket?

Classic comment reflecting the inflated sense of self importance of many of the 1960′s generation. To quote Frank Zappa’s “Turn, turn,” — “We lived on a whole bunch of nothing…” Some people just never grow up.SWK

In living systems mutation within normal cells sometimes result in rogue entities called cancerous cells. Cancer cells overwhelm the immune system, crowd out functioning normal cells, and rob energy/ nutritional supply eventually leading to the demise of the host living organism.They can do this because their mutations allow them to ignore or sabotage the natural laws of relating within a dynamic system…they no longer regard the intelligent protocols that evolution has created.Their new rogue programming gives them a competitive advantage over the host cells.I believe that extending unalienable rights and privileges to corporate entities is one of the reasons we have a mutant form of business and the culture that surrounds it in America. Other narratives can be proposed for mutations existing elsewhere on the planet.The surreal drama that we are witnessing is manifestation of this…rogue entities have been created that disregard all semblance of morality, ethic, or any other human value. Like cancer cells, these mutant corporations/banks are tools which overwhelm the protective immune system of legislative, media, and judiciary. Their selfish needs crowd out any democratic progress towards creating a healthy sustainable community in America or anywhere else they drag their long tails. They seek to rob all sustaining resources including the planet’s water and even the heritage of crop seed.Their competitive survival is deemed a measure of success and even necessary for everyone’s survival.This surrealism is why so many of us remain skeptics and react with nausea when we see even tentative support for any of these schemes coming from the talking heads. We recognize that rogue entities have overwhelmed our space and that these robots are programmed to break any and all our natural laws.What other narrative to explain the use of depleted uranium on innocent human society and littering the planet with billions of cluster bombs? What other narrative to explain this sabotage, all this totalitarian secrecy, this looting from future generations, this pervasive cognitive dissonance?Humans have learned that cancer requires a different strategy. In this case, the disease is advancing at a menacing pace.( I didn’t intend to confuse the rogue/mutants with those who profit from them. I also didn’t intend to offend any of the millions of Americans who believe in creationism. I only wish to give respect for the infinite wisdom that resides in all living forms.)

and to think they not only are recipients of TARP but also beneficiaries of the AIG counterparty settlement (which they had also hedged against, so they got paid twice). Now with the PPIF they will be able to game the system yet again.What we need is a chart or table of Goldman’s tentacles in the political/regulatory/Treasury/Fed establisment. Goldman alumnus Neel Kashkari who is in charge of the TARP would be a good name to start with. Then there is the Treasury Department Chief of Staff, Mark Patterson who was a lobbyist for Goldman Sachs. Over at the NY Fed Turbo was replaced by William Dudley also a Goldman alumnus.This is an interesting site I came across: http://www.whorunsgov.com/All_profilesand over at Muckety the map for Goldman is substantial:http://www.muckety.com/Query?name=Goldman+Sachs&prev=Goldman+Sachs&SearchResult=5017770&SearchResult=5058718&SearchResult=5005024&SearchResult=5004833&SearchResult=5000806&SearchResult=5043454&SearchResult=5003259&SearchResult=5004094&graph=MucketyMap

a timely offering from Bloomberg on the topic of GoldmanGoldman Sachs Funds Paid $49.6 Million to Top Executives in ‘08 ” March 28 (Bloomberg) — Goldman Sachs Group Inc.’s top 10 executives received $49.6 million from their investments in hedge funds and private equity funds during 2008, more than most of them earned in compensation after agreeing to forgo bonuses.Chief Executive Officer Lloyd Blankfein’s $1.1 million in total compensation was dwarfed by the $11.3 million he received in profits and other income from his fund investments, the New York-based company’s proxy filing showed. Co-President Gary Cohn’s $3.7 million in pay contrasts with $7.4 million in fund income, the filing showed. …”http://www.bloomberg.com/apps/news?pid=20601087&sid=ajrmM3vIahsg&refer=homeIt will be impossible for these banksters not to game the PPIF – it’s simply their nature.

A little anecdotal observations from the street level:In my neighborhood homes were valued at peak of about 150k’ish now selling for 75k if you’re lucky to get an offer, every other house has a foreclosure notice on the front door it’s surreal, they’re not stopping with foreclosures. The neighborhood is blue collar most people work in the trades plumbers electricians some retirees and some college educated who bought in peak times because they couldn’t afford the next step up. No one has any work they just continue to foreclose and kick people out. Oh and property taxes just went up, the city still values the homes at 170k. My neighbor works for EDS and she’s terrified of losing her job she said they laid off almost everyone in her office. Most professional I know with masters or better have been asked to take 30% pay cuts or have also been laid off. My other neighbor an average guy owns his house for 30 years works in a tool and die shop they just reduced his hours to 4 days a week down from 5, he said the other day he thinks there’s going to be a revolution. Normal everyday average people talking revolution weird…

You can do a global currency without states, without central banks and even without banks. All you need are multinational trading companies willing to use it. The most successful and sustainable example for such a trading currency was the Hamburger Mark Banco: It existed from 1622 to 1875, was never minted and never inflated – it was just the currency the merchants used for their business. The only Wikipedia article about the Hamburger Mark Banco is in German: http://de.wikipedia.org/wiki/Mark_BancoI published a little piece about that in my outlook for 2009 (in German, and labeled “satire”, http://www.welt.de/satire/article2974342/So-war-2009.html): An (still to be founded) “Association for a Better Currency” (ABC) starts a Mark-Banco project with a currency named Alpha (1 Alpha = 100 Omega), in the beginning only used for international trade. The value of the Alpha is calculated daily as weighted average of five currencies (Dollar, Euro, Yen, Franken, Renminbi) and five commodities (oil, gold, wheat, copper, rice).

well saidand this via RitholtzCNBC’s Dylan Ratigan to ABChttp://www.ritholtz.com/blog/2009/03/cnbcs-dylan-ratigan-to-abc/

The older I get, the more I have learned that when things are so complex that almost no one can understand them, it is a very bad sign.They also say “you can’t cheat an honest man”. If our government was up-front and honest, they would require transparency, we would beworking on cleaning up this mess, instead of hiring the people involved in making the mess. Maybe this is too simplistic, butthis is what I believe. If we look at both parties, and can not find anyone that can run things that hasn’t made errors on their taxes,it is a bad sign.

This article is a Must ReadThe Quiet Coup>by Simon Johnson – May 2009 – the Atlantic

The crash has laid bare many unpleasant truths about the United States. One of the most alarming, says a former chief economist of the International Monetary Fund, is that the finance industry has effectively captured our government—a state of affairs that more typically describes emerging markets, and is at the center of many emerging-market crises. If the IMF’s staff could speak freely about the U.S., it would tell us what it tells all countries in this situation: recovery will fail unless we break the financial oligarchy that is blocking essential reform. And if we are to prevent a true depression, we’re running out of time….Read More

Clearly you don’t know what the 60′s was like. You have no idea what incredible amount of state power was exercised, the turmoil, the assassinations, the blood on the streets and thousands of returning coffins. People don’t revolt unless they are put in a corner, not because they want to show ‘self importance’. Soon, you will find out what I mean. Then we’ll see what a bunch of gutless zombies will do when they are striped naked to beg like dogs. Let’s see how much ‘self importance’ they have then. I do feel sorry for you.

Hayes,Sobering. This is an article that the Professor should have written for this forum. Calling a “spade a spade” without any political cover. Option 2 seems the most likely to happen as quoted below.

the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy “stress scenario” that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression.

Does Obi have a Swiss bank account?

I’m pessimistic that the G20 can get anything done, either.But let’s stop for a minute and contemplate what Soros is saying here. This is important. Can anyone really imagine the UK having to go to the IMF … to beg with hat in hand. What does that say about the true state of the western economies – when that is really what’s going on? And at the same time … we’ve actually got investors in the USA who think we’ve reached a major market bottom? Unbelievable.The real problem is this. Suppose Britain does ask the IMF for money. What does that leave for bailouts for third world countries that are in serious shape … like Pakistan, Hungary, or the small East Europeans nations? The IMF cannot possibly cover all these losses. They just can’t do it.So where does that leave things? The IMF faces the choice of either bailing out a major western economy (like Britain), or trying to help a few third world nations. But not both options together. Literally, they just wind up making a choice about where the global economy tears apart first. Nothing more than that.PeteCA

We are going down. I own a home in contra costa county in california – and it is like theepicenter of foreclousres besides the cntral valley which has already burned. These bank fixes are a joke. They cure nothign but the pockets of the super wealthy. An super means those that could easliy touch 10 million or more. less than that and you are jsut like the rest of us. G20 next week is the last chance to figure out something, if not it will be a slow death spiral. christmas this year will be unlike any other christmas before…. Sadness and stunned looks will abound…. and the country will be dealing with much other serious probelms than bailing out banks and companies… such as riots, increasing crime, food shortages, gas lines, rolling blackouts, heating issues, rationing of everything…

Ways To Scam The New Bailout from clusterstock:Overpay for trash assets, after getting a secret agreement from the bank that the bank will make it worth their while. The hedge funds mmediately write the assets down, destroying their equity and the taxpayer. Then they sell them back for peanuts to the banks, but the bank pays the hedge fund a “fee” that would compensate for the lost equity. (It wouldn’t be explicit, of course. But given the amount of money that flows back and forth between the big banks and hedge funds, it won’t be hard to hide.) The hedge fund profits. The bank profits and the taxpayer is scammed.Make hundreds of long-shot bets, structuring each individual asset purchase as a separate entity. Most of these entities will lose money, but so what? You can just write them off and keep the money from the winners.Set up an investment firm to buy your trash assets from you and fund the firm’s equity with crap assets. This investment firm, which you control, will then intentionally overpay for your remaining tax assets with borrowed taxpayer money. It’s legal money laundering!Front run the government. If you’re a bank, buy toxic assets now on the secondary market and sell them once the plan ramps up. Some banks are already doing this now.Use the program to hedge your bond exposure. If you’re PIMCO or Blackrock, and you have big bond exposure to the banks, you participate merely for the purpose of propping up your borrowers with other people’s money.Got any more? Leave them in

Diz is where it starts getting really tasty. GS clever boyz, they know most people in the US are not interested in politics/public service so IT HAS BECOME PART OF THEIR CULTURE AND CORPORATE STRATEGY to serve in government. Can you think of any lobbying effort that is more effective than that?They know where the big bucks are, not in the salaries they make in “public service” (can you really call it that?) but in the outrageous windfall they get from influencing public policy.In a way it is our own fault that they are let in so easily. Many highly qualified are simply not interested to serve in government. The road in is indeed free of obstacles for the GS boyz, they rush in at 120MPH!

…The Wall Street–Washington Corridor Of course, the U.S. is unique. And just as we have the world’s most advanced economy, military, and technology, we also have its most advanced oligarchy.In a primitive political system, power is transmitted through violence, or the threat of violence: military coups, private militias, and so on. In a less primitive system more typical of emerging markets, power is transmitted via money: bribes, kickbacks, and offshore bank accounts. Although lobbying and campaign contributions certainly play major roles in the American political system, old-fashioned corruption—envelopes stuffed with $100 bills—is probably a sideshow today, Jack Abramoff notwithstanding.Instead, the American financial industry gained political power by amassing a kind of cultural capital—a belief system. Once, perhaps, what was good for General Motors was good for the country. Over the past decade, the attitude took hold that what was good for Wall Street was good for the country. The banking-and-securities industry has become one of the top contributors to political campaigns, but at the peak of its influence, it did not have to buy favors the way, for example, the tobacco companies or military contractors might have to. Instead, it benefited from the fact that Washington insiders already believed that large financial institutions and free-flowing capital markets were crucial to America’s position in the world.One channel of influence was, of course, the flow of individuals between Wall Street and Washington. Robert Rubin, once the co-chairman of Goldman Sachs, served in Washington as Treasury secretary under Clinton, and later became chairman of Citigroup’s executive committee. Henry Paulson, CEO of Goldman Sachs during the long boom, became Treasury secretary under George W.Bush. John Snow, Paulson’s predecessor, left to become chairman of Cerberus Capital Management, a large private-equity firm that also counts Dan Quayle among its executives. Alan Greenspan, after leaving the Federal Reserve, became a consultant to Pimco, perhaps the biggest player in international bond markets.These personal connections were multiplied many times over at the lower levels of the past three presidential administrations, strengthening the ties between Washington and Wall Street. It has become something of a tradition for Goldman Sachs employees to go into public service after they leave the firm. The flow of Goldman alumni—including Jon Corzine, now the governor of New Jersey, along with Rubin and Paulson—not only placed people with Wall Street’s worldview in the halls of power; it also helped create an image of Goldman (inside the Beltway, at least) as an institution that was itself almost a form of public service.Wall Street is a very seductive place, imbued with an air of power. Its executives truly believe that they control the levers that make the world go round. A civil servant from Washington invited into their conference rooms, even if just for a meeting, could be forgiven for falling under their sway. Throughout my time at the IMF, I was struck by the easy access of leading financiers to the highest U.S. government officials, and the interweaving of the two career tracks. I vividly remember a meeting in early 2008—attended by top policy makers from a handful of rich countries—at which the chair casually proclaimed, to the room’s general approval, that the best preparation for becoming a central-bank governor was to work first as an investment banker.A whole generation of policy makers has been mesmerized by Wall Street, always and utterly convinced that whatever the banks said was true. Alan Greenspan’s pronouncements in favor of unregulated financial markets are well known. Yet Greenspan was hardly alone. This is what Ben Bernanke, the man who succeeded him, said in 2006: “The management of market risk and credit risk has become increasingly sophisticated. … Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”Of course, this was mostly an illusion. Regulators, legislators, and academics almost all assumed that the managers of these banks knew what they were doing. In retrospect, they didn’t. AIG’s Financial Products division, for instance, made $2.5 billion in pretax profits in 2005, largely by selling underpriced insurance on complex, poorly understood securities. Often described as “picking up nickels in front of a steamroller,” this strategy is profitable in ordinary years, and catastrophic in bad ones. As of last fall, AIG had outstanding insurance on more than $400 billion in securities. To date, the U.S. government, in an effort to rescue the company, has committed about $180 billion in investments and loans to cover losses that AIG’s sophisticated risk modeling had said were virtually impossible.

I did say in my first gut feeling post on the PPIP that the program was Dynamite! Sure, dynamite for the private investors that buy in! Take a look! Diz is the best evidence I’ve found on of how “sweet” the deal is for investors. No hypothetical example here. A real example on watz already going on.There is no doubt in my mind the plan will work. The “optimistic” take is that it may be a win-win situation the investors make a killing, the credit markets improve, banks get capitalized, the economy improves, and if investors do not go overboard overpaying for the stuff, even the taxpayer may make a few bucks.http://online.barrons.com/article/SB123823062717964853.html…Indeed, the hurdle for many investors, particularly hedge funds, is the fear that they may earn so much that it will arouse the ire of Congress and perhaps incur some sort of punitive retroactive taxation. They point to the House-passed retroactive tax of 90% on the bonuses of employees at AIG and certain financial companies that received TARP financing.LET’S TAKE A LOOK at the way investors were able to play the government-sponsored asset-backed securities program that got under way earlier this month. Ford Motor Credit issued some $3 billion of triple-A-rated securities backed by auto loans that were eligible for government funding. As the table shows, investors received yields of 2 to 4.25 percentage points more than one-month Libor — the London interbank offered rate, a key short-term rate now at 0.50%. For the one-year securities, the yield was two points above Libor, or roughly 2.5% — not a particularly juicy return.What made the deal enticing was that buyers of the one-year Ford securities could get leverage of 16 to 1, meaning they received $16 of Fed financing for each dollar of equity. The financing cost is Libor plus one percentage point, or 1.5%.[Magic chart]SO WHAT’S THE RETURN over a year?The investor gets Libor plus two points on the securities and pays Libor plus one point in financing costs. The investor therefore earns 16% over a year on the leveraged portion of the investment (2.5% minus 1.5% times 16) and about 2.5% on the equity, for a total yield of nearly 19%. The leveraged return is even higher — more than 40% — on the three-year Ford securities, given the yield spread of 4.25 points on that paper.Ford was a winner because its financing costs prior to the TALF program had been as high as seven to eight points above Libor. Ford Motor Credit should be able to translate its lower funding costs into reduced rates to buyers of Ford vehicles. The investor response to the initial TALF-eligible asset securities was pretty strong, with a request of nearly $5 billion of Fed financing. The minimum government loan under TALF is $10 million, but given the high permitted leverage, the investor equity contribution could be as low as $600,000,Assuming that mortgage prices are artificially depressed, the winners from the Public-Private Investment Program could be the five yet-to-be-named investment managers and their clients, as well as hedge funds and others that choose to buy mortgage securities directly with cheap government loans.Real-estate investment trusts could benefit if rates on commercial real-estate loans come down, and life insurers stand to gain because they’re huge holders of commercial- and residential-mortgage loans.An aggrieved Wall Street might want to stop complaining about the rhetoric emanating from Washington and focus instead on the opportunities provided by the Obama administration. After all, rarely has the government offered such a potentially lucrative program to the investment community.

The other Barron’s piece about the PPIP is a more “Alice in Wonderland” kind of a piece that focuses on all the good things that I don’t doubt may be true about the program but totally ignores the dowside risks of the plan.http://online.barrons.com/article/SB123822921763064821.html

SATURDAY, MARCH 28, 2009FEATUREParsing the PPIPBy JONATHAN R. LAINGProgram could boost banks that are valuing assets correctly, expose those that aren’t.ITS OFFICIAL NAME, as unveiled last week, is the Public-Private Investment Program — the PPIP, or as the plan is now inelegantly known in the White House, Pee-Pip. But make no mistake: For America’s biggest banks, and the economy at large, the $1 trillion measure is no wee pipsqueak.The plan, which calls for big investors to partner with Uncle Sam to buy up troubled loans and securities, stands an excellent chance of helping the banking system get back on its feet. For one thing, it will remove much of the uncertainty over the value of these damaged assets, which have done so much to decimate financial stocks and the overall stock market.[drawing]M.E. Cohen for Barron’sBanks may sell more than $1 trillion in tainted assets.Stock prices, in fact, soared more than 7% last Monday after the program was unveiled and largely held the higher ground for the remainder of the week. Likewise, indexes of subprime securities and commercial-mortgage-backeds both rallied nearly 10% on the week as investors either covered shorts or decided to front-run the help coming from PPIP.The program “will only redound to the benefit of good banks that have properly valued their assets, while exposing the bad banks that have been hiding losses,” observes Vincent Reinhart, a resident scholar at the American Enterprise Institute and former key Federal Reserve operative in a powerful position as director of the division of monetary affairs.In other words, banks that have been actively writing down their assets to reflect market prices will be able to make the greatest use of PPIP, perhaps even selling paper for more than the carrying values.Beneficiaries should include Citigroup (ticker: C), Wells Fargo (WFC), JPMorgan Chase (JPM), PNC (PNC) and Bank of America (BAC), whose securities holdings and other mark-to-market assets make up 30% or more of their entire footings., according to Barclays Capital analyst Jason Goldberg.Banks, however, will be far more likely to sell securities than loans, because loan sales can mean big hits to capital. Loans are not marked-to-market, but instead are mostly carried in banks’ held-to-maturity accounts at par value as long as they continue to perform. Only a dramatic change in the fortunes of the borrower results in establishment of loss reserves on the loan. And these reserves probably fall far short of covering the difference between par and what a toxic-asset fund would pay for the loan.Sources in Washington tell Barron’s that regulators plan to pressure banks to sell some of their toxic loans. This partially will be for price discovery, so regulators can better assess which institutions are salvageable and which need to be seized or merged out existence. These prices also will determine how much capital the government will have to infuse into the 19 major banks and other financial institutions that have been deemed too big to fail.All of those outfits are going to be stress-tested in April and receive their marching orders as to how much of their bad loan portfolio must be liquidated, according to a knowledgeable source. Though the Treasury didn’t spell it out, the stress test and the loan-buying program “are part and parcel of the same strategy,” he avers.Table: Ready to UnloadTo Barclay’s Goldberg, the loan program may force a number of regional banks like BB&T (BBT), Comerica (CMA), Fifth Third Bancorp (FITB) and Marshall & Isley (MI) to take larger loan-loss provisions because of their above-average loan exposure to real estate and commercial construction.That is in sharp contrast to the prospects of the big banks. Morgan, Wells and PNC will additionally benefit from being able to sell loans that they marked down in value after their respective acquisitions of Washington Mutual, Wachovia and National City in recent months.TAXPAYERS, TOO, COULD FARE WELL if, as seems likely, the private-Treasury partnerships manage to turn handsome profits. The complex plan calls for private investors, including mutual funds, private-equity outfits and pension funds, to become partners with the Treasury (the taxpayers’ representative in the deals) on an equal-dollar basis and then lever up their equity with dollops of nonrecourse government debt guaranteed or provided by the Federal Deposit Insurance Corp., Treasury or Federal Reserve (depending on the program) to buy the damaged loans or securities.”I like the fact that the new bank plan relies less on private investors than the rather sketchy plan Treasury Secretary Timothy Geithner announced in February and yet doesn’t put all the risk on the government, as did the original Troubled Asset Relief Program in October of last year before it was changed to inject capital into the banking system,” says Mark Zandi of Moodys.com. “Direct federal purchases of these assets would’ve solved the banking system’s problems more quickly, but the new plan, for all of its complexity, is a good second-best effort.”By Zandi’s reckoning, the current asset-purchase program will probably remove around half of the $2 trillion to $2.5 trillion of the banking system’s troubled assets that have yet to be fully written down and now fester on bank balance sheets. Thus the government probably will have to double the funds that it already has committed to bolstering the banking system from the $100 billion capital contribution called for under PPIP and the $250 billion in financial-system capital injections made under the earlier TARP.With any luck, the government won’t need yet another program to finish the job. Market commentator Edward Yardeni, for one, asserts that likely changes in mark-to-market accounting requirements might obviate the need for more bank-asset buy-ups.Banks, of course, have been grievously hurt by the mark-to-market regime that has forced them to show massive unrealized losses on their residential and commercial mortgage securities, even as many of the securities are still performing in terms of generating cash flow. Since these securities suffer from illiquid markets in which there’s little trading, they’ve been battered by guilt by association with similar securities that financial institutions have dumped at fire-sale prices.As a result of these largely unrealized losses, banks’ net worth, as calculated by generally accepted accounting principles, has been crushed, and even their regulatory capital has been hurt once they take even minor impairment charges on the holdings. And when there’s a charge like that, regulators can force a much larger hit to regulatory capital.Yardeni, however, expects some accounting relief on the latter score. The Financial Accounting Standards Board is scheduled to announce new guidance on mark-to-market rules on April 2 that could allow banks considerable regulatory-capital relief on slightly impaired securities.That expectation is underscored by the fact that the head of FASB was taken to the woodshed during congressional hearings a few weeks ago for the standard board’s obduracy on mark-to-market and plainly didn’t relish the experience.After all, mark-to-market is viewed by many as the revenge of the accounting nerds on Wall Street for the latter’s complicity in such early-in-the-millennium accounting scandals as Enron.Likewise, the banking industry’s toxic- asset problem should diminish over time as banks take advantage of the current fat spreads between their cost of funds (rock-bottom on FDIC-guaranteed debt) and bank lending rates and replenish depleted capital levels. Warren Buffett suggested as much during an appearance on CNBC several weeks back.Certainly some regulatory forbearance on bank capital levels would seem in order after the reign-of-terror that mark-to-market has exacted on the industry. After all, such a change would restore some of the balance of classical accounting, in which income is matched over time against related expenses. Mark-to-market violates the matching principle by dramatically accelerating the recognition of losses.Until the accounting rules are changed, the PPIP program is almost sure to help the leading banks. The severe markdowns they have been forced to take on their residential and commercial mortgage-backed securities should make them avid sellers of the holdings to new investment partnerships. Any gains that the banks realize will boost their GAAP book value and that most closely observed metric these days: the tangible capital ratio — produced by dividing a bank’s tangible common equity by its tangible assets.So, finally, there’s light at the end of the tunnel after months of hysteria over impending nationalization of the banking industry. PPIP may not afford all the answers, but it’s a valuable first step on the road to financial recovery.

THE SCIENCE OF SATURATION MACROECONOMICSFebruary 26th, 2009The Great Global Equity and Commodity Asset Valuation Nonlinear CollapseThis predicted nonlinear equity and commodity collapse is a collapsing available speculative money phenomena – in a real contracting, asset oversupplied, maximally unrepayably debt-laden, dysequilibrium global macroeconomy; great psychological angst is present but this is truly …. this is truly a secondary event. This is not to imply that the human mind is not an integral part of this process. All events in the energy and space universe are ultimately causal and all are inevitable. As causally linked debates are directed at possible ameliorative remedies, as politicians force air over their vocal cords with linkages to individually preprogrammed and deterministic neural networks, the inevitable terminal nonlinear phase transition – of a 149 year US progenitor equity complex summation multigenerational second fractal saturation area bounded by debt, asset over production, asset overvaluation, and collapsing numbers of jobs and associated wages- likewise proceeds …. and proceeds in a mechanistic and predictable optimal quantum fractal decay nonlinear progression …..LIMITEDI AM riding on a limited express, one of the crack trainsof the nation.Hurtling across the prairie into blue haze and dark airgo fifteen all-steel coaches holding a thousand people.(All the coaches shall be scrap and rust and all the menand women laughing in the diners and sleepers shallpass to ashes.)I ask a man in the smoker where he is going and heanswers: “Omaha.”

Just a possibility, not the high probability event, but a gamble that may be worth taking…My take from all the dough Benny is trowing from his choppers, couple with all the sweet deals US banksters* are getting (see my PPIP posts above), is that the market may continue rallying like there is no tomorrow. Depression economics has been averted. The patient is out of the intensive care unit. Perhaps it will never fully recover but it will live to see another bubble.Think “As the World Turns”. Does the audience really care/give a dam that the clowns in the show all live happily ever after? All they care about is that the current soap opera tangle gets some resolution. Ask Buffy. He tunes in daily!* Last week diz guys were just bluffing, pretending they didn’t understand the plan, that the plan is not what it is: one of the sweetest deals ever offered on earth. Instead, they smartly focused on making sure congress will not take away any of the HUGE profits they will make. Now that they apparently got this issue out of the way. Hell is gonna break loose in the markets. If you are short, move away from the tracks!:-)PS: The post above is not what I consider to be the high probablility event, but I will not be surprised at all if it materilizes. Ex VCRX: Bets and comparisons are made a-priori, not a-posteriori:-) So the following lines you can save for your records:I had thought to hedge my bets, and even possibly make some money thanks to volatility, by buying SP500 750 May puts. Foigeit about dat!My intention (which may of course change if there is real deterioration in fundamentals, not just fear mongering) is to FREEZE my portfolio at the current risk exposure level and dust-off the trade links in my laptop when we return to Argentina early October.Best wishes to all! I will be traveling in a few few days. So I will be posting less and eventually go stealth.

You 60s folks sound really brave, but where are youIts your savings that have been stolen, your retirement lost,Stolen by your peers, the same people who hated you during the 60s for what you stood for

A lot of 60′s types were just adolescents who grew up in tract houses rebelling from adults. They took drugs and had sex like dogs. There music was designed to vex little old ladies. There’s not much more to it than that. I hated those hypocrites then and now they they have turned into their parents, although they still listen to Pink Floyd, I don’t like them much now. The greatest generation was their parents. These people are just spoiled children. Well, now that I’ve offended everyone! Whew!

Geithner just might be onto somethingIHT (division of NY Times)Saturday, March 28, 2009

Will it work?Isn’t that the only thing that matters at this point? The big, new plan to solve the banks’ toxic assets problem, unveiled earlier this week by Treasury Secretary Timothy Geithner, has come under intense scrutiny in the blogosphere and elsewhere. The plan would create incentives for private investors to put up small amounts of equity, side by side with the government, to buy toxic assets from the banks’ balance sheets. To sweeten the deal, the government will also be putting in debt, at leverage ratios that could reach as high as six to one and will provide guarantees against most of the potential losses.The Treasury estimates that the program “will generate $500 billion in purchasing power to buy legacy assets with the potential to expand to $1 trillion over time.” (And yes, “legacy assets” is the new euphemism for toxic assets.)…When I asked Thomas F. Steyer, the head of Farallon Capital Management, the big West Coast hedge fund, whether he thought America was acting like Japan during its lost decade, he scoffed. “We were interested in some of the assets in Japan, but whenever we asked them when they were going to start dealing with them, the answer was always ‘in two years,’ ” he replied. “Japan fell apart in 1989, and we were having those conversations in 1998 and 2000. Our country is moving on this. This administration has only been in office for a little more than two months, and they are already grappling with this…”

http://www.iht.com/bin/printfriendly.php?id=21108157

Good article. Forgive my ignorance Why is it dated May 2009?

He’s been a real disappointment. Like others, I shed a tear when he was up there giving a speach on the dais in Chicago. I really felt like there was hope for America. Now all I see is that he has abdicated his responsibility to Geithner, Summers, Bernanke, and the big banks. Sometimes I wonder if he was taken aside and told, “You want to see your wife and children safe and so you know what you have to do.” But then that’s being some kind of conspiracy nut. Still, it does seem strange that he has completely shirked his responsibility. Wouldn’t it be better to stand up to those capos and risk being a one term president. If he did, the American people would want him to serve two terms. But by being overly concerned about his chances in the next election, he will end up a one-term president. I would rather see him fighting for transparency and accountability than saving the financial system.

h,ps.thank you for all your most excellent links andcomments.

They probably have some old urine samples in the fridge to use for their “stress test” when they get hauled in to produce a sample.

The economy is ‘cooked’. The soonerwe all face up to this, the better off we will all be.We are in debt, out of resources, and have lost the manufacturing and technological edge that we had coming out of WWII. Game Over.

Apparently, You are the smoker…and it’s not in Omaha.I use Neural Networks in my research, and your complete mischaracterization of their use shows me clearly the completeB***Sh**t that you are spewing on this site.

Obama cant demand any RESIGNATIONS to go against YES WE CAN WORK WITH PRIVATE SECTOR. Wow, we the taxpayers are definitely on hook. Obama like Geithner, are bother crooks.

here are the linksReggie Middleton’s Overview of the Public-Private Investment Program – Part IReggie Middleton’s Overview of the Public-Private Investment Program – Part II

g,i thought it was rather interesting! to each, his own interpretation, even of neural networking.

From page 1:

As for the complaint that it will make rich guys richer, well, you can’t win ‘em all.

The author appears to have no sense of political reality here in the US, judging by his cavalier dismissal of the main drawback of the plan (the moral hazard).

Guest -What you are observing is a direct result of a 2 party, winner-take-all political system. Beyond a few obvious differences, both major political parties in the U.S. are not all that different. They can win elections only by reaching to the political middle while counting on continued support from their ideological bases – and they all belong to the special interests represented by lobbyists who LEGALLY pay for influence.Until the political system is changed, you should not expect much more than what we are stuck with currently………

I am a young Boomer — 51– who never protested in the streets. Instead, at great personal sacrifice to me and my family, I became a lawyer and fought in the courts to stop the execution of indigents on death row, to secure political asylum for refugees persecuted in communist political prisons, and to protect small businessmen who were facing the loss of their livelihood due to large corporations misusing the law to bludgen them out of competition. I’ve made a career fighting real injustice in a meaningful way. I don’t need a lecture about courage from some vainglorious 60-something pinhead who feels safe to chant anti-government slogans and maybe waive a sign with thousands of others in his political tribe just to get an adrenalin rush and feel that is a big accomplishment. But perhaps I misjudge you as well. What have YOU done personally since the 1960s to put your neck on the line for your beliefs, in what is right and wrong? More importantly, what have you done to serve others – real human beings – in need and facing political, social, and economic injustice?SWK

Lets not forget the high likely hood of the stealth tax wrapped in inflation which will decrease everyone’s spending power.

I stated the below yesterday: G20 next week had better produce soem results as Soro’s bwlow says:From The TimesMarch 28, 2009George Soros, the man who broke the Bank, sees a global meltdownAlice Thomson and Rachel SylvesterGeorge Soros was 13 when the Nazis invaded his homeland of Hungary. As a Jew, he was forced to adopt a false identity and live separately from his parents in Budapest. Instead of being traumatised by the experience, though, he found the danger exhilarating. “It was high adventure,” he says, “like living through Raiders of the Lost Ark.”Sixty-five years later, he still thrives on danger. He famously made $1 billion on Black Wednesday by shorting the pound, earning him the label of “the man who broke the Bank of England”. Last year, as the world tipped into financial chaos, Mr Soros pocketed another $1.1 billion by correctly predicting the downturn. “I’m an expert in crises,” he says.The man who has a phobia about maths has made his name as the philosopher king of economics – his book The Crash of 2008, out in paper-back next week, has been a bestseller on both sides of the Atlantic. Since 1944 he has believed in what he calls “reflexivity” – the idea that people base their decisions on their own perception of a situation rather than on the reality.He has applied this both to investment and to politics: his skill has been to predict moments of seismic change by identifying a disjunction between perception and reality.Related LinksSoros hints that pound has hit the bottomGeorge Soros: Crunch will bite deeper in UKGeorge SorosWhen everyone else was convinced that the markets would automatically correct themselves, the 78-year-old “old fogey”, as he calls himself, was one of the few warning of recession. He put all his chips on “the Barack guy” early on when all around him were still gunning for Hillary Clinton. It’s almost as if he has been waiting for the Great Recession for the past ten years. When we ask whether he prefers booms or busts, he replies: “I have to admit that actually I flourish, I’m more stimulated by the bust.”This recession, he explains, is a “once-in-a-lifetime event”, particularly in Britain. “This is a crisis unlike any other. It’s a total collapse of the financial system with tremendous implications for everyday life. On previous occasions when you had a crisis that was threatening the system the authorities intervened and did whatever was necessary to protect the system. This time they failed.”The financial oracle does not know how long it will last. “That depends on how it’s handled. Allowing Lehman Brothers to fail was the game-changing event. That’s when the financial crisis went over the brink.” We could end up with a depression. “Unless we handle it well then I think we would. The size of the problem is actually bigger than in the 1930s.”The problem in Britain, he believes, is in many ways worse than in America or Germany. “American memory is seared by the Depression, the German memory is seared by hyperinfla-tion but Britain has a pretty serious problem in many ways worse than America because the financial sector looms bigger and the overvaluation of real estate is bigger than in America.”He is not worried that an auction of government bonds failed this week – “that was a blip”, he says. He would still buy British bonds – “it depends on the price” – but he agrees with Mervyn King, the Governor of the Bank of England, that debt is a real problem. It will, he says, put people off investing in Britain. “I think it will have an effect, yes. It is a matter of worry because effectively the hole in the banking system is replaced by increasing the national debt.” There has been some talk that Britain might have to go cap in hand to the International Monetary Fund. “It’s conceivable,” Mr Soros says. “You have a problem that the banking system is bigger than the economy . . . so for Britain to absorb it alone would really pile up the debt . . . if the banking system continued to collapse, it’s a possibility but it’s not a likelihood.”He refuses to say whether sterling has yet hit its lowest point. Has he shorted the pound recently? “I had shorted it last year, but I’m not shorting the pound now.” Is the euro under threat? “There is stress in the euro because of the differential in the interest rate that the different countries have to pay,” he replies.Mr Soros is critical of the tripartite regulatory system set up when the Bank of England gained independence. “I have a different view on how the market operates than the prevailing view. I believe that the authorities have the responsibility to forestall, to counter the mood of the markets . . . I think that the problem was that the Bank of England didn’t have the supervisory authority.”He does not, however, blame Gordon Brown. “He underestimated the severity of the problem, but then so did most people. Part of the perceived role of a leader is to cheerlead, so you can’t really blame him for that.”From the day he was born, Mr Soros says, he was attracted to crisis. “It precedes me. I inherited it from my father.” His father had lived through the Russian Revolution and every day after school he would take his son swimming and talk about his experiences. “I sucked it in that way. And then when I was not yet 14, the Germans occupied Hungary, and I would have been deported to Auschwitz if my father hadn’t arranged for false papers. So that was a pretty profound crisis. I had to assume a false identity and live a different life.” He was separated from his parents. “We met occasionally in the swimming pool. But imagine you are 14 years old, you like adventure, and you have a father who seems to understand the situation better than others. It’s very exciting.”He feels a similar thrill in an economic crisis. “On the one hand there’s tremendous human suffering, which is very distressing. On the other hand, to be able to handle the situation is exhilarating.”He has always been something of an outsider. He thinks that this makes it easier for him to see through conventional wisdom. “I have always understood how normal rules may not apply at all times,” he says. In recent years he has been arguing against “market fundamentalism” – “the accepted theory was that markets tend to equilibrium”. He believes that the credit crunch has proved him right. “It reminds me of the collapse of the Sovi-et system, events are always exceeding people’s understanding. The situation is out of control. There’s a shortage of time to adjust to the change. Change is accelerating.”Like Warren Buffett, he thinks that the complex financial instruments used by the banks were economic weapons of mass destruction. If anything he expected the tipping point to come earlier. “Everybody who realised that this was unsustainable expected it to collapse much sooner,” he says. “It is so devastating exactly because it took so long.”The urgent task now, he says, is to realise that the system that collapsed was flawed. “Therefore you can’t restore it. You have to reform it.” He worries that politicians have not yet accepted the need for fundamental change and that “a lot of bankers have their head in the sand”.H e was cast as the villain when Britain was forced out of the exchange-rate mechanism. “I didn’t speculate against sterling to benefit the public. I did it to make money,” he says.He tells us that he has psycho-somatic illnesses – backaches and pains – that tip him off to changes in the market. “It’s as if you’re a jungle animal, and you see another animal facing you. You have to make a decision: fight or flight? Your hair stands up and you growl and you decide, ‘Am I going to attack because I’m stronger or am I going to run away because otherwise he’s going to eat me?’ You are very tense. And that’s the tension that gives you the backache.”The G20 summit in London next week is, he says, the last chance to avert disaster. “The odds would favour that it fails because there are such differences of opinion. It’s difficult enough to get it right in your own country let alone with 20 governments coming together, but if it’s a failure I think then the global financial and trading system falls apart.”If the G20 is nothing but a talking shop then he thinks we are heading for meltdown. “That could push the world into depression. It’s really a make-or-break occasion. That’s why it’s so important.” The chances of a depression are, he says, “quite high” – even if that is averted, the recession will last a long time. “Look, we are not going back to where we came from. In that sense it’s going to last for ever.”

agree; decreased consumer spending, increased savings, increased consumer prices, increased taxes (wait until we get the energy tax), increased yearly deficit and finally increased, unsustainable federal debt (expect 15 trillion by next year) all leads to no way out without a drastic cut in government spendng and services and massive tax increases. I hope those Rhodes Scholars buying up everything useless they can on HSN (Home Shopping Network), Walmart and Best Buy wake up before they’re penniless and have to live in the storage container they will have to rent to store all that junk!

PPIP: Heads or Tails?By David Kotok – March 29th, 2009, 9:07AM

Dear Reader: Please give me 8 minutes to explain the $1.1 trillion federal government Public-Private Investment Program (PPIP).Start here with this simple example. It’s a coin toss. Heads you win $100; tails you get nothing. How much would you pay to play? You can play as many times as you wish. Answer: not more that $50. For less than $50, you would play as often as you can. $50 is your breakeven; only a fool would pay more.Now add Tim Geithner as your partner. He matches what you invest but you, and only you, get to set the price to play. Answer: you put up no more than $25 as the investor and that means he matches your number. At under $25 you play as much as you can. $25 is your breakeven as the investor; $50 is still the breakeven for the coin flip.Now let’s add some of the leverage from the FDIC.Suppose that the FDIC will loan you $40 as a non-recourse loan. You and Geithner each put up $5 for a total of $10 and, adding in the loan money, you pay $50 to play, just as before. If you get heads, you pay off the loan of $40, and you and Geithner split the rest. That means you get $30 for your $5 and so does he. Remember, you set the price to play. If you get tails you get nothing and lose $5, Geithner loses $5, and the FDIC loses $40.Now suppose we have an auction to decide who will play.The highest bidder wins the right to play as many times as he wishes. With this example the breakeven price rises from $50 to $70. At $70 you put up $15; Geithner puts up $15 and the FDIC still loans $40. Half the time you will win $100 and use $40 to pay off the FDIC, leaving $60 for you to split with Geithner. You will get $30 back for each $15 you play, when you win. The other half of the time you will get zero, since it’s still a coin flip risk.Notice that the price to play went from a $50 breakeven to a $70 breakeven. This happened while the odds remained a 50-50 coin flip.Also notice that the leverage ratio was low when you put up $15, Geithner put up $15, and the FDIC put up $40. Under the Treasury PPIP plan the leverage ratio can go as high as 6 to 1. Using the full 6:1 leverage ratio, a coin-flip breakeven point would be about $3.57 for the investor.Here is how I get that number. You put up $3.57; Geithner puts up $3.57; the total investor’s equity is $7.14. The FDIC loans 6 times $7.14, or $42.84. Total price to play is $49.98. Let’s call it $50, which is the amount to play each time.Notice that the breakeven auction price is now almost $93 each time. Remember you, as the private investor, are the one who sets the auction price, because you are the only one deciding the bidding. Geithner is matching you and the FDIC is loaning 6 times the equity.The leverage and the risk transfer have raised the investor’s breakeven from a $50 auction price, if you did this all by yourself and without any leverage, to a $93 auction price when leverage is fully deployed. The risk of winning or losing is still a coin flip.Let’s substitute a toxic asset on a bank’s balance sheet for the coin.Instead of a 50-50 coin flip, with PPIP we have a toxic piece of a mortgage-backed debt instrument that has an uncertain value. If we use PPIP, aren’t we really inflating the price artificially? It seems to me the answer is yes.How can we adjust for this risk transfer that allows the auction breakeven price to rise? That answer lies in how much the FDIC will charge to make the non-recourse loan. If the FDIC charges enough, it will bring the auction price back to $50 and restore the deal to neutrality. If the FDIC charges more, it will bring the price below what it would be without the leverage.But if the FDIC underpriced the loan cost, it would then have subsidized the deal and allowed the auction price to rise. That means the seller of the toxic debt instrument got more than it was worth and the investor made a profit because of the FDIC.Some of the risk of payment on that instrument transferred to the FDIC. That means it transferred to the FDIC insurance fund, which means it transferred to every insured deposit in every bank that pays an insurance premium into the fund. That means the depositor may be getting a lower interest rate on that deposit than he otherwise would get.That is PPIP…

read more http://www.ritholtz.com/blog/2009/03/ppip-heads-or-tails/

There sure is a lot of anger out there. Mostly misplaced. To much denial still for any real solutions. Not many wanting to take responsibility for their own actions it seems.The Boomers, I am 61, in general, have not had much of a stress test outside the Vietnam War and I’d say we failed it. So many who fought are now our homeless or the ones with no conscience who run the big corporations. The rest acted like spoiled brats who wanted everything and never wanted to pay for it. They supported low or no taxes while the country’s needs were ignored. We spent it on ourselves with expensive cars, boats, planes and McMansions.The pigeons have come home to roost. How we deal with this very real crisis will define our humanity and our real integrity. This isn’t about stuff…WE have the stuff. We produce enough food. We shouldn’t starve but can we rise to the occasion and make our world whole again?That is what the Brain Trust is working towards. They are not working for money or power but to help people change our world in positive ways to move into the future. They will be publishing on RGE. If you are interested you can contact Outer Beltway outerbeltway@yahoo.com

And this is the mechanism by which the PPIP is being financed – with TARP just about spent Chris Dodd et al. quietly set out to boost FDIC reserves ostensibly to shore up funding for FDIC deposit insurance (see article below). Either some smart folks saw through Dodds and Benny’s trumped up request for $500bn for the FDIC – or somebody new something of Turbo’s plan, which as it turns out will be needing that $500bn. Market action from Dodd’s $500bn request to Turbo’s leaked PPIP (on the weekend of March 21/22) is interesting.Monday March 9 – Citi was trading at a buck and Goldman at $74, the S&P hit 666.In the subsequent 9 days S&P rose 90 points (+13%) then Turbo’s PPIP was leaked on the weekend of March 21/22 and Monday March 23 S&P added an additional 7%.PS in that same period Goldman Sachs went up 50% from $74 to $111 and Citi tripled in value from $1.05 to $3.13______________________From the archivesWSJ MARCH 6, 2009Bill Seeks to Let FDIC Borrow up to $500 Billion

WASHINGTON — Senate Banking Committee Chairman Christopher Dodd is moving to allow the Federal Deposit Insurance Corp. to temporarily borrow as much as $500 billion from the Treasury Department.The Connecticut Democrat’s effort — which comes in response to urging from FDIC Chairman Sheila Bair, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner — would give the FDIC access to more money to rebuild its fund that insures consumers’ deposits, which have been hard hit by a string of bank failures……Mr. Dodd’s bill could also give the FDIC more firepower to help address “systemic risks” in the economy, potentially creating another source of bailout funds in addition to the $700 billion already appropriated by Congress.Mr. Bernanke said in a Feb. 2 letter to Mr. Dodd that such a “mechanism would allow the FDIC to respond expeditiously to emergency situations that may involve substantial risk to the financial system…”The FDIC would be able to borrow as much as $500 billion until the end of 2010 if the FDIC, Fed, Treasury secretary and White House agree such money is warranted. The bill would allow it to borrow $100 billion absent that approval. Currently, its line of credit with the Treasury is $30 billion…

Some SIMPLE Logic:Innumerable policies have already been instituted by our govt to resolve this global economic and financial crisis and things have continued to worsen. Can one conclude that our leaders do not know what they are doing (incompetent) or do know what they are doing by saving the corporate elite? Either way, are these the leaders we want to represent the American people?

Thanks for those candid comments. As Saul Alinsky has noted, there is “a difference between being a realistic radical and being a rhetorical one who used the tired old words and slogans, call the police ‘pig’ or ‘white fascist racist’ or ‘motherf—–’ and has so stereotyped himself that others react by saying, ‘Oh, he’s one of those,’ and then promptly turn off.” He understood full well that “one communicates within the experience of his audience — and gives full respect to others values,” and that “”Effective organization is thwarted by the desire for instant and dramatic change…the demand for revelation rather than revolution.” I agree fully with Alinsky, who advocated working within the system as the only means of effective and lasting change.SWK

You must be hooked on Hopium.

It is laughable that many decry the bankrupt U.S. system yet those who run it are tax cheats. Interesting, the malfeasance of the government knows no bounds. Palin is a tax cheat yet gets to live in the lime light and have continued substantive impact on the lack of justice system that exists in the U.S. Of course obviousness of Palin’s thievery on taxes is irrefutable just review her tax returns wherein she not only stole from the government she helps run by under reporting income and taking false tax deductions but she cheated the state of Alaska by filing phony expense reimbursement reports (and was actually compensated by the state for staying at her own home). Though Palin’s thievery is nothing in the context of Geithner or Mike Hamersley the high level government tax shelter lawyer who goes around confiscating income from honest citizens. Hamersley is perhaps the worst offender of all as he is a nationally renowned tax crusader who based on his own definition of tax fraud to the U.S. Senate purveyed massive tax fraud against the government he now works for utilizing sham foreign paper transactions to generate 100s of millions of phony tax deductions for his clients at KPMG. Of course KPMG, committed massive corporate tax fraud for its clients like the now bankrupt Citi. Though in defense of KPMG, the massive corporate tax fraud it purveyed pales in comparison to the financial statement fraud it engaged for its banking clients like Citi by falsely clearing balance sheets with Tier 3 sham investments and intentionally misevaluating sham derivative contracts such that the financial system crumbled and the costs to the citizens will run into the Trillions while all the while those that run KPMG like Tim Flynn earn their multimillion salaries from the high audit fees paid by their banking clients for issuing fraudulent financial statements which effectively the American people are now funding since if Citi was allowed to fail, KPMG would be out of business and Flynn would end up in the poor house instead of making millions. It is an awesome system if you are one of those like Flynn pulling the strings and defrauding the American people. Ask Flynn about his fraudulent Bermuda captive insurance company, Park, which is a sham paper company used to generate 100s of millions in phony tax losses for KPMG partners (just like it does for its corporate clients) and cheat future partners out of profits by deferring settlement payments for years through sham contracts devised by Claudia Taft of KPMG.

Here’s an interesting thought from the George Washington blog. It can be found at the following link:Is the US Now An Emerging Market?As the USA follows other (earlier) banana republics into a debt crisis … can we say that the US market is in effect an “emerging market”?Well, that’s an interesting point of view. And certainly, it should correspond with foreign creditors moving to park their money elsewhere, or demanding much higher interest rates.The really big problem is the potential knock-on effect on corporate debt. If foreigners come to view the USA as a major credit risk, this could well influence whether they are willing to continue to buy the bonds of US companies. A major retrenchment of US corporate debt seems like a very likely outcome as we move forwards. And it will become much harder to American companies to issue new debt and find willing buyers – only the businesses with really high credit ratings are likely to succeed.Moral of the story: A collapse in corporate credit (soaring interest rates on US corporate debt) could well lead to persistent high unemployment levels in the USA.PeteCA

PeteCA I like reading your comments a lot. Do you have a blog as well?

FOR IMMEDIATE RELEASEThe Office of the Comptroller of the CurrencyMarch 27, 2009OCC Reports Fourth Quarter Bank Trading LossWASHINGTON — U.S. commercial banks reported a $9.2 billion trading loss for the fourth quarter of 2008, the Office of the Comptroller of the Currency reported today in the OCC’s Quarterly Report on Bank Trading and Derivatives Activities. For 2008, banks reported an annual trading loss of $836 million, compared to trading revenues of $5.5 billion in 2007.“While banks reported reasonably strong client demand and wide intermediation spreads in the fourth quarter, large write-downs on legacy credit positions continued to take a toll on trading results,” Deputy Comptroller for Credit and Market Risk Kathryn E. Dick said. “Trading results continue to reflect large changes in the fair values of derivatives receivables and payables, based upon market participants’ views of the credit quality of both banks and their counterparties.”Ms. Dick noted that trading results suffered from an unfavorable combination of higher overall corporate credit spreads and lower bank credit spreads, each of which result in trading losses.The report shows that the notional amount of derivatives held by insured U.S. commercial banks increased by $25 trillion (14 percent) in the fourth quarter to $200 trillion. The increase resulted from the migration of investment bank derivatives activity into the commercial banking system. Interest rate contracts increased $27 trillion to $164 trillion, while credit derivatives fell 2 percent to $16 trillion.The OCC also reported that net current credit exposure, the primary metric the OCC uses to measure credit risk in derivatives activities, increased $364 billion, or 84 percent, during the quarter to $800 billion. “The sharp decline in interest rates continues to increase derivative exposures, both payables and receivables,” Ms. Dick said.She also noted that, similar to the notional derivatives increase, migration of derivatives activity from investment banks into the commercial banking system accelerated the growth in credit exposure.The report also noted that:* Derivatives contracts are concentrated in a small number of institutions. The largest five banks hold 96 percent of the total notional amount of derivatives, while the largest 25 banks hold nearly 100 percent.* Credit default swaps are the dominant product in the credit derivatives market, representing 98 percent of total credit derivatives.* The number of commercial banks holding derivatives increased by 33 in the quarter to 1,010.http://www.occ.treas.gov/ftp/release/2009-34.htm

more on PPIP from Barrons”If you’re dubious that a leveraged buyer of a loan or security will pay more thatn a buyer paying all cash, consider this: Would you pay more or less for a house if you had to pay all cash? Probably less. One of the reasons for the housing bubble was the ready availability of mortgages with low or no down payments. The use of leverage can magnify returns..or losses.In a recent note Goleman Sachs analyst Richard Ramsdern argued that leverage can significantly raise the pirce that and investor will pay for a (toxic) asset. As an example, he looked at the theoretical price of a potentially troubled bank lona. Assuming a 20% loss, an investor without leverage might pay just 24 cents on the dollar for that loan, hoping to earn a 25% annualized return. However, an investor with 6 to 1 leverage (courtesy of teh FDIC PPIP) could pay 66 cents on the dollar and still earn the same 25% annualized return.”So what the author of this article is saying is that PPIP will cause the toxic assets to sell well above market. Add to that the non-recourse nature of the loans to the hedge funds and other potential investors and the price will be even higher.I think OR is correct that in the short to mid term this may put a floor in the market (though it may be that much of this was discounted in the share price of the likely beneficiaries of this scheme e.g. Goldman was up 50% and Citi 200% since the FDIC special loan was announced back in early March. Could someone have known what was going to happen in advance of the official leak of the PPIP on March 21?The example in the quote above is interesting since to explain the strength of leverage the article’s author compares it to the “housing bubble”.

Hayes:I think you’ve got an argument that it might put a floor on US banking stocks in the short term. I’m not at all sure that it puts a floor on the whole US market though – but we’re going to find out in the next couple of months. The Wall St banks have continued to succeed in their quest to turn their financial losses into government debt (and hence losses to the US taxpayer). If the debt of the US Gov’t was at sustainable levels now, I’d say that we might have reached a market bottom.But I think at this stage that foreign creditors see the writing on the wall and realize that they are going to take substantial losses on holdings of dollar-denominated assets. Frankly, they have been lethargic in their actions to date (they are dropping out of US assets, but still holding a lot of UST’s). But there are rumors of growing angst and direct anger amongst these creditors now. Possibly – we may see action start to happen.Translation: The credit crisis now morphs into global action to develop real alternatives to US debt and the US dollar. And at the same time, the rapid expansion of gov’t spending comes at a high cost to the private sector in the USA (lack of available capital) – causing significant further bankruptcies in the business sector. That would be the downside risk at this stage. In my view – it is considerable.Amazingly enough, the global stock market has been extremely smart in figuring out the “truth” about the direction of the world economy. The free market (globally) has defied all attempts by individual nations and central banks to “talk up” a bad situation. Let’s see where that global stock market takes us next.PeteCA

Agreed – I said in a post above that by October early March will seem like the good ol’ days – but this PPIP scheme is a short term windfall for the banks — in fact I would not be surprised to see them buying each other’s toxic assets in some sort of perverse game — The elegance of what Turbo has done is that he has circumvented congress by using the FDIC’s balance sheet and effectively added and additional one Trillion dollars to the TARP. Even more elegant half of whatever upside there is will go to the likes of Goldman while the banks offload their garbage to the taxpayers.As I look at the details there is no reason that this should not work (to a point) that is to say this plan should be able to remove the toxins from the banks. But they are still toxic and so this will indeed morph as you suggest to a currency crisis. And as everything else in this – it will happen faster and deeper than most expect.

Comment:There is much screaming and finger pointing by “leadership” and all that hangs off them and to another degree, calls for regulation, return of bonuses, even suicide, etc.Wrong – so be damned I say to the ‘vulture-droids’ and ‘reformed whores’ of “leadership” – go and pick the damned cat up by the tail as obviously your minds are just full of nothing but puss, unserviceable and dysfunctional and which can only make the situation far more worse while you attempt to impose on humanity, your mindless and ludicrous overkill “fixes” that are naught but cheap and stupid attempts to cover your own incompetent butts..I demand that we learn from that which is rolling out – learn where we went wrong – learn how to rebuild a far better, stronger more viable economic structure; find the way forward and build towards far greater growth in future terms. Pain is a warning; heed the warning; learn the lesson.Learn the basic of life: Physics and listen to the heartbeat of humanity: music and drop that love stuff and embrace compassion.’There is nothing worse and more evil than a reformed whore’ (I forget the source but I believe that it may have been an American cowboy… Langtree?)You just gotta’ get some independent talent and integrity into your socio-economic Authorities as these guys are just killing the World.Oh, Yes! The problem is the lack of “leadership”.Ho hum

G20 unity spells end of Brown’s ‘New Deal’Last Updated: 10:11PM BST 29 Mar 2009Gordon Brown’s plans for a $2 trillion (£1.4 trillion) “New Deal” to revive the global economy have been quietly dropped to preserve the facade of unity as world leaders gather in London for the G20 summit. …http://www.telegraph.co.uk/finance/financetopics/g20-summit/5073135/G20-unity-spells-end-of-Browns-New-Deal.html

Indeed – “sacrifices” appears to be a newly introduced word to the “serious steps”.Ho hum

THE 3 HEADED EAGLE FORMED BY OUR FOUNDING FATHERS IN 1776. Excerpts from The 5000 Year Leap.”Wing #1 referred to as the problem-solving or the wing of compassion. Sensitive to the unfulfilled needs of the people. They dream of elaborate plans to solve these problems.” –Executive Branch”Wing #2 has the responsibility of conserving the nation’s resources and the people’s freedom. Its function is to analyze the programs of Wing #1 with TWO questions….First, can we afford it? Secondly, what will it do to the rights and individual freedoms of the people?–JudicialA WARNING FROM OUR FOUNDING FATHERS–”If Wing #1 becomes infatuated with the idea of solving all the problems of the nation regardless of the cost, and Wing #2 fails to bring it’s power into play, to sober the problem-solvers with a more realistic approach, the Eagle will spin off toward the left, which is tyranny.”WARNING AGAINST THE DRIFT TOWARD TO COLLECTIVIST LEFT”Since the genius of the American system is maintaining the Eagle in the balanced center of the spectrum, the founders warned against a number of temptations which might lure subsequent generations to abandon their freedoms and their rights by subjecting themselves to a strong federal administration operating on the collectivist left.”" They warned against the “welfare state” where the government endeavors to take care of everyone from the cradle to the grave. Jefferson wrote: “If we can prevent the government from wasting the labors of the people, under the preface of taking care of them, they must become happy.”"They warned against confiscatory taxation and deficit spending. Jefferson said it was immoral for one generation to pass on the results of its extravagance in the form of debts to the next generation. He wrote “…we shall all consider ourselves unauthorized to saddle posterity with our debts, and morally bound to pay them ourselves; and consequently within what may be deemed the period of a generation, or the life [expectancy] of the majority.”—ALL QUOTES FROM “THE 5000 YEAR LEAPWe are at the crossroads of the most perilous time in the history of The United States of America. We must stand up NOW and not let Obama’s budget pass as is. We will become slaves with trillions of dollars of current deficits saddled on our and our future children’s back. LESS GOVERNMENT NOT MORE, OUR GOVERNMENT NOT THEIRS, THE WHITE HOUSE WORKS FOR US AND WE WILL NEVER BE SLAVES TO THESE CRAZY POLICIES. We must vote collectively on proposals this big, that will have long-lasting binding effects for years and years to come. Budgets of this magnitude must be voted on by the majority of citizens in the U.S.A. IT WILL NEVER BE THEIR DECISION TO STAKE OUR LIVES LIKE THIS. THIS BUDGET SHOULD SLOWED WAY DOWN, AND WE MUST FIND OUT WHAT WILL HAPPEN IF WE TELL HIM NO WAY. Their true colors might finally be revealed. A CHANGE OF DIRECTION, FOR THE U.S.A, THIS BIG SHALL NEVER BE PASSED IN THIS SHORT AMOUNT OF TIME. WE MUST HAVE BI-PARTISAN AGREEMENT ON RADICAL CHANGES LIKE THIS, AS CITIZENS, WE MUST ALL BE IN AGREEMENT BEFORE THE VOTING PROCESS IS EVEN CONSIDERED.-My name is Andrew Bost, I am 22 years old and vote NO at the present time until I am very sure exactly what the future consequences of this budget will be. Too many lives are at stake and again we must all rise and slow this thing down.The administration has already shown they are not capable of micromanaging companies, let alone the entire population of the United States of America. THAT WILL NEVER HAPPEN. The TWO main examples I am talking about are as follows.1) AIG fiasco2) The protectionism slipped in the “stimulus package” in regard to the violation of NAFTA with the country of Mexico, preempting them to raise tariffs across the board.IF I AM WRONG PLEASE CORRECT ME AND ADD WHATEVER SHOULD BE ADDED BECAUSE WE MUST ALL LET THE WORD BE SPREAD TO SLOW THIS LIFE CHANGING BUDGET DOWN, BEFORE IT IS TOO LATE AND BIGGER SNOWBALLS ARE CREATED THAT MAY NEVER BE STOPPED.

Diz one makes it worth coming out of hibernation.1. A dynamite interview with David Rosomberg which, IMO, is most definitely a “party spoiler”. I cannot say I tried my very hardest but I couldn’t poke any holes on his “Shilling style” bearish case.http://zerohedge.blogspot.com/2009/03/week-that-was-not-as-market-and-media.htmlBottom line, he thinks there are a few HUGE “GDP vacuum cleaners” out there that will swallow most of the government economic stimulus money.

據 英 國 《 觀 察 家 報 》 披 露 ， 對 於 應 否 稱 倫 敦 峰 會 為 「 G20 峰 會 」 ， 白 高 敦 曾 與 八 國 集 團 （ G8 ） 其 他 成 員 國 尤 其 是 意 大 利 發 生 拗 撬 ， 雖 然 最 後 得 以 堂 而 皇 之 地 打 「 G20 峰 會 」 旗 號 ， 但 此 事 或 多 或 少 令 峰 會 的 重 要 性 打 折 扣 。美 國 及 歐 盟 出 於 自 身 利 益 考 慮 ， 在 當 務 之 急 是 加 大 經 濟 刺 激 力 度 還 是 加 強 金 融 監 管 現 明 顯 分 歧 ， 這 給 峰 會 能 否 取 得 重 大 成 果 蒙 上 陰 影 。 而 身 為 東 道 主 的 英 國 試 圖 游 走 於 美 歐 之 間 ， 立 場 飄 忽 不 定 ， 正 因 如 此 ， 德 國 及 法 國 日 前 撇 下 英 國 ， 為 在 峰 會 上 力 促 國 際 金 融 改 革 結 成 統 一 戰 線 。美 國 總 統 奧 巴 馬 日 前 企 圖 為 峰 會 定 調 ， 認 為 對 於 全 球 經 濟 面 臨 的 挑 戰 ， 任 何 國 家 未 盡 全 力 或 孤 立 的 行 動 都 是 不 可 行 的 ， 各 國 必 須 聯 手 促 進 全 球 經 濟 復 甦 。德 國 總 理 默 克 爾 不 以 為 然 ， 稱 縱 使 要 再 推 刺 激 措 施 ， 都 將 是 國 會 的 事 ， 輪 不 到 國 際 會 議 越 俎 代 庖 。 擔 任 歐 元 集 團 主 席 的 盧 森 堡 首 相 容 克 亦 稱 ， 不 應 應 美 國 要 求 擴 大 刺 激 經 濟 方 案 。 英 國 方 面 ， 白 高 敦 近 日 不 再 堅 持 聯 手 救 經 濟 ， 轉 而 倡 議 聯 手 救 世 界 貿 易 。金 磚 四 國 有 訴 求而 作 為 峰 會 第 三 勢 力 的 「 金 磚 四 國 」 ─ ─ 中 國 、 俄 羅 斯 、 印 度 、 巴 西 的 訴 求 也 不 容 忽 視 。 四 國 在 G20 財 長 會 議 前 首 次 發 表 聯 合 聲 明 ， 呼 籲 加 快 處 理 銀 行 不 良 資 產 ， 促 請 國 際 金 融 機 構 增 加 借 貸 及 增 大 發 展 中 國 家 的 發 言 權 ， 四 國 在 峰 會 上 或 有 令 人 刮 目 相 看 的 表 現 ， 人 們 正 拭 目 以 待 。在 全 球 經 濟 急 劇 放 緩 ， 發 達 國 家 相 繼 陷 入 衰 退 ， 金 融 市 場 百 廢 待 舉 之 際 ， 民 眾 仍 對 倫 敦 峰 會 寄 予 希 望 。 由 一 百 多 個 團 體 組 成 的 大 聯 盟 上 周 末 在 倫 敦 海 德 公 園 集 會 ， 呼 籲 白 高 敦 及 其 他 國 家 領 袖 改 革 國 際 金 融 市 場 、 保 障 就 業 及 體 恤 全 球 窮 人 ， 且 看 民 眾 的 呼 聲 能 否 打 動 G20 領 袖 的 心 ， 令 他 們 摒 棄 歧 見 ， 達 成 具 體 協 議 ， 造 福 全 人 類 及 全 球 經 濟 。綜 合 各 界 意 見 ， 倫 敦 峰 會 應 不 會 「 食 白 果 」 ， 最 低 限 度 會 達 成 某 些 協 議 。 法 國 總 理 菲 永 日 前 會 晤 美 國 副 總 統 拜 登 及 國 家 經 濟 委 員 會 主 席 薩 默 斯 後 ， 稱 歐 美 之 間 已 就 監 管 對 沖 基 金 及 評 級 機 構 、 改 革 國 際 會 計 標 準 及 制 訂 企 業 行 政 人 員 薪 酬 規 則 等 廣 泛 問 題 達 成 一 致 意 見 。

Evan Thomas writes in Newsweek: Obama’s Nobel Headache. An excerpt:If you are of the establishment persuasion (and I am), reading Krugman makes you uneasy. You hope he’s wrong, and you sense he’s being a little harsh (especially about Geithner), but you have a creeping feeling that he knows something that others cannot, or will not, see. By definition, establishments believe in propping up the existing order. Members of the ruling class have a vested interest in keeping things pretty much the way they are. Safeguarding the status quo, protecting traditional institutions, can be healthy and useful, stabilizing and reassuring. But sometimes, beneath the pleasant murmur and tinkle of cocktails, the old guard cannot hear the sound of ice cracking. The in crowd of any age can be deceived by self-confidence, as Liaquat Ahamed has shown in “Lords of Finance,” his new book about the folly of central bankers before the Great Depression, and David Halberstam revealed in his Vietnam War classic, “The Best and the Brightest.” Krugman may be exaggerating the decay of the financial system or the devotion of Obama’s team to preserving it. But what if he’s right, or part right? What if President Obama is squandering his only chance to step in and nationalize—well, maybe not nationalize, that loaded word—but restructure the banks before they collapse altogether?http://www.calculatedriskblog.com/2009/03/newsweek-cover-story-on-krugman.html

OK, this is why I missed it. He was in GS’s board but his “big pay job” before retiring was AllState CEO!!!http://www.philly.com/inquirer/world_us/20090320_Edward_Liddy__AIG_s__1_Man.htmlThe government’s goal was to save AIG from bankruptcy and spare the world economy from the consequences of the firm’s failure. Liddy told Congress this week that he “came out of retirement to help my country.” A former CEO of Allstate Corp., he agreed to limit his AIG pay to $1 per year.”My only stake is my reputation,” Liddy said in a letter Saturday to Paulson’s successor, Timothy Geithner.If he turns around what is left of AIG, however, Liddy apparently could benefit financially. In a Nov. 25 news release, AIG said that beyond his $1 salary in 2008 and 2009, Liddy’s “initial compensation will consist entirely of equity grants.” AIG said: “He will not receive an annual bonus in those years, although he may be eligible for a special bonus for extraordinary performance payable in 2010.”Some facts about Edward Liddy:Age: 63.Previous salary: $1.2 million in 2006, his last year in charge at Allstate, plus $16 million in nonsalary compensation and $16.5 million from exercising option awards during the year.Education: B.A. (1968), Catholic University. M.B.A. (1972), George Washington University.Other jobs: Joined private-equity firm Clayton, Dubilier & Rice Inc. last year after retiring as Allstate chairman; left to join AIG. Allstate chief operating officer from 1994 to 1998. Executive at Sears Roebuck & Co., Allstate’s former parent, from 1988 to 1994. Former national chairman, Boys & Girls Clubs of America. Director, Goldman Sachs Group Inc., 2003 to 2008. Director, 3M Co., Boeing Co., Kroger Co.Whom I they trying to fool? No-one! It is all there in plain sight! And No-one cares!

even more from zerohedgeSunday, March 29, 2009Exclusive: AIG Was Responsible For The Banks’ January & February ProfitabilityZero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continueshttp://zerohedge.blogspot.com/2009/03/exclusive-aig-was-responsible-for-banks.html

March 29, 2009: Happy B’day Professor Roubini!!!!

Andrew – You should be very concerned. This is your future in our country of America that is being gambled away – by Wall Street and Washington. Your generation will need to become survivors in order to get by in this country. But you have several very big advantages that come with youth – esp. mobility and flexibility. You can change stratgies as you learn what works and what doesn’t in the future. And you can re-locate to parts of the country where opportunities are better (or even overseas). So work your strengths!PeteCA

Yes. That sounds about right. I wonder if newspapers will actually pick this up. They are not gettting any of this money back from AIG. I hope the taxpayers realise that. They have effectively taken money and given it away via a money-laundering operation called AIGFP.

poof

what is the lesson for the day??”they” short the market when its high”they” game the market when its too low”they” lead you like youre a blind man and say “Here i’ll show you the way” then theykick you in the arse at the edge of a cliff”they” are the frickin marketHow the hell you’re supposed to beat them..Dont play at all..

Would somebody please tell me how do I bring the text of this blog down to the screen size? Over the last few days the text goes from left to right for more than two or three widths of the screen. It is so hard to read and at the same time scroll the screen.Thanks

From Bill Moyers JournalTranscript: http://www.pbs.org/moyers/journal/03272009/transcript4.html

WILLIAM GREIDER: Unfortunately, Secretary Geithner, has a record- which we know about. When he was President of the New York Federal Reserve Bank. And he was at the table, in many of the bailout transactions. First Bear Stearns then A.I.G. and others. And this is, again, not my opinion, but people on Wall Street talk about it all the time. He got spun around again and again by the big Wall Street players. The bailout of Bear Stearns was really about protecting J.P. Morgan Chase.The story was told backwards in the press, basically, because it’s a story the government told that J.P. Morgan came in to buy Bear Stearns at the behest of the government. But in fact, if Bear Stearns had gone down, J.P. Morgan Chase was vulnerable itself to a wave of derivative crashing crisis. When they bailed out A.I.G., the chief executive of Goldman Sachs was in the room. Why was he in the room? Well, because he had big exposure to- through derivatives, to A.I.G. So, when they pump money into A.I.G., it sends the same dollars out and buys back these derivative contracts at par value, not even discounted, to the banks and others who hold them. Goldman Sachs gets $12 billion out of that transaction. This is another scandal waiting to surface. And I trust good, smart reporters are already on the case. And following the dollars that moved around among the leading financial institutions in ways that politicians could not have not known about it. It defies reason to think that Washington didn’t know this was happening.

Unfortunately it didn’t work. I forgot to say that this thing happens only after I click on COMMENTS and they (comments) would appear in very long horizontal lines.

US market tumbling today as the Obama administration shakes up management in the Detroit auto companies. I wonder why this is happening now – pressure from the Detroit union leaders maybe? Or just too many new requests for bailouts?Remember my earlier post. Auto sales are down to 9.3 million per year. The Detroit Big Three cannot survive in current form with demand at such low levels.PeteCA

As I mentioned several days ago, Bill Moyers on PBS (past Saturday) did an interview with William Grieder who basically said the main reason Bear Stearns was bailed out was to save JP Morgan and the main reason AIG is being bailed out was to save Goldman Sachs and that the MSM either presented this info opaquely or got it backwards. Check PBS.org to watch the rest of the interview-very enlightening!

good post; that’s what I was referring to above.

watch 790 on S&P -

Having the same problem.

m,i imagine this is the type of zobmie behaviour thattriage is meant to curtail. so the choiceto feed the zombie continues.think: special investigative committee. specialprosecutor.geitner..”nation of laws .” right!

U.S. programs seen too late to stem foreclosure wavehttp://www.reuters.com/article/gc03/idUSTRE52P7IB20090326

nice correction MM; keep them honest!

why? it’s just a number.

wow..o..oh…No CAPS, and I can read it all.

A question!If China would have done something (for example with their vast foreign reserves) that caused global instability, would not most countries and people have attacked, at lest verbally and in newspaper articles (Bloomberg, FT, etc) the behavior of the Chinese government?In fact China would, in such a situation, have been treated similar to Iran.But yet USA and UK pushed for years for a very irresponsible way of increasing their GDP. We are currently living inside the end result, and what are we being told? That it is “some sort of an unusual global situation that everyone has to help to resolve”. Say that out loud in some sort of emotional girlie voice, and you will get the full drift of the message.President Bush said, once upon the time, that USA has a right to attack other countries preemptively to solve problems that are viewed as threatening the nation. Obviously he should have preemptively attacked all that behavior (financial institutions, accountants, rating agencies, financial regulators, etc) inside of USA that has to date caused far more damage than Iran likely ever will. Would he have done so, Obama would have far less of a mess to clean up.

i think they confused home sales with camping supply sales. specifically tents.

A couple of notes about what you wrote:1. people whose job is to read the teleprompter (such as news anchors) are often not in a position to really contest what is supposed to come out of their mouth.2. you are correct about that we will hear again about autos and AIG and all the others needing money. This is because there is not enough money in the US economy to get from the grass-root-level. I will say this one more time: the U.S. populace does not have enough money to support these organizations. Within the last couple of years they were only kept up because of borrowing. Now, USA is like Soviet Union in one sense – it is the government that keeps up these organizations.3. the problem with USA is not only the news media. It is also the rating agencies, the lending institutions, and even the government that ridiculously relaxed the lending standards during that last administration.

mm ca: you can also gauge the stock market in a similar way; ie the declines today are still well above the real value of say the DOW. so when the market ends for the day at say 450 down we are still well above 6k. it becomes even more difficult to perform simple arithmetic when money is being printed at the current rate and bailout monies are being infused and circulated at difficult to impossible to track frequency. to perform basic arithmetic one must first untangle the complex formulas concocted by mathematicians and physicists hired by financiers for the express purpose of justifying the end result — this is the exact opposite of the scientific method. the issue becomes this: you start with 5 and know that 2 was given as bailout plus minus the innumerable variables +/- and phony formulas and when it may just be too late you start getting to the bottom of the your values. fun isn’t it?

Pensions are the next nuclear Financial bomb to come… those retired and those expecting to retire… the top 100 largest funds are all in trouble for the most part.

The Fed needs to go: personally I think they now report to Goldman Sachs…Bernanke Seeks to Avert Pressures on Fed After Crisis (Update1)Share | Email | Print | A A ABy Craig TorresMarch 30 (Bloomberg) — At 4:30 p.m. on March 23, on a day dominated by release of the Obama administration’s plan to save the banking system and the fourth-best day in postwar Wall Street history, the U.S. Treasury and Federal Reserve released a one-page joint statement on the division of economic responsibilities between the two agencies.Amid the flurry of news, the statement passed with little public attention; neither the New York Times nor Wall Street Journal printed articles about it the next day. The release said that while the Fed collaborates with other agencies to preserve financial stability, it alone is in charge of keeping consumer prices stable, its independence “critical.”The statement was the culmination of a behind-the-scenes, two-month long debate involving the Fed’s Open Market Committee, as well as the Treasury. The discussions were driven by Chairman Ben S. Bernanke’s concern that work with the Bush and Obama administrations on repairing banks and markets not lead to attempts at political pressure later that would delay the start of measures to combat inflation.“This is all about independence,” said Laurence Meyer, vice chairman of Macroeconomic Advisers LLC in Washington and a former Fed governor. “Even though the Fed is cozying up to the Treasury, it is important to know that the Fed would maintain some stability over monetary policy.”1951 AgreementJPMorgan Chase & Co. analyst and former Fed economist Michael Feroli called the statement “The 2009 Treasury-Fed Accord,” harkening back to a joint announcement by the agencies in March 1951 that freed the central bank from pegging government-bond rates.Fueling the debate is the concern that policy makers will have a tough time if they try to end their emergency-lending programs as soon as next year while the unemployment rate, currently a quarter-century high 8.1 percent, remains at elevated levels.The risk is that, on the one hand, lawmakers and even some administration officials might balk at what they would see as premature steps, and on the other hand that any hesitation on the Fed’s part could spark inflation.“If we have a slow recovery, which seems likely, who is going to watch them raise interest rates as the Treasury sells this mountain of debt” stemming from fiscal deficits, Allan Meltzer, author of “A History of the Federal Reserve,” said in a Bloomberg Television interview. Politicians “are not going to let them do that, they are not going to want them to do that.”Holdings SurgeFeroli said he gets frequent calls from clients worried consumer prices will surge as a result of the Fed’s record injections of reserves into the economy. After already more than doubling its balance sheet to $2.1 trillion, the Fed has pledged to buy $1.25 trillion of mortgage-debt and $300 billion of Treasuries, and finance a $1 trillion consumer-loan program.Fed district-bank presidents Jeffrey Lacker of Richmond and Charles Plosser of Philadelphia have been among the most outspoken sitting officials to warn about diverting the central bank’s mission.Plosser said in a Feb. 27 speech that “an accord to substitute Treasuries for non-Treasury debt on our balance sheet would” help the central bank better implement monetary policy. It would allow pulling back on liquidity injections with “minimal concerns about disrupting particular credit allocations or the pressures from special interests,” he said.Lacker DissentOn March 2, Lacker said that an accord with the Treasury “could stipulate that the emergency lending is transferred to the books of the Treasury after a brief period of time has elapsed.” In January, he voted against an FOMC’s commitment to buy mortgage debt and finance securities backed by consumer loans, preferring instead to purchase Treasuries.The agreement between the Fed and Treasury last week included a pledge that “in the longer term and as its authorities permit, the Treasury will seek to remove from the Federal Reserve’s balance sheet, or to liquidate” the assets the central bank has acquired from rescues of Bear Stearns Cos. and American International Group Inc.Treasury Secretary Timothy Geithner, a former president of the Federal Reserve Bank of New York, said yesterday that the Fed’s injections of reserves into the economy are “not going to create the risk of hyperinflation in the future.”Brake ‘Too Quickly’“We have a strong independent Federal Reserve with a very strong mandate from the Congress, and they will do what’s necessary to keep inflation low and stable over time,” Geithner said on ABC television’s “This Week with George Stephanopoulos.” At the same time, he warned that policy makers shouldn’t “put the brakes on too quickly.”One lesson from the Great Depression was that in the late 1930s, officials acted too early in pulling back on stimulus measures, the Treasury secretary said.Some investors worry that the Fed will be too slow.“I don’t think there is a chance that we can have low inflation coming out of this,” said Axel Merk, manager of the $300 million Merk Hard Currency Fund. “All this money is going to stick at some point.”Meltzer cites a 1979 lecture by Arthur Burns, who ran the Fed from 1970 to 1978, as an example of how the political climate can influence central bankers. Burns oversaw a surge in the U.S. inflation rate to 12.3 percent in 1974 from 5.6 percent in 1970.Burns’s Inflation“‘Maximum’ or ‘full employment,’ after all, had become the nation’s major economic goal — not stability of the price level,” Burns wrote, while noting that politicians didn’t support an inflation fight.Only days after Burns’s lecture, then Fed chairman Paul Volcker launched an attack against inflation, dispensing with political concerns about the economic cost.By March 1980, when consumer prices rose almost 15 percent, Volcker engineered a tightening in monetary policy that drove the benchmark rate to 20 percent. The step sent the economy into a recession and caused unemployment to climb. By December 1982, consumer-price gains had slowed to just 3.8 percent, at the cost of a 16-month recession.President Ronald Reagan replaced Volcker with Alan Greenspan in 1987. Bernanke’s term is due in January 2010.No congressional leader is calling for the Fed to ignore inflation today. Still, the Fed-Treasury statement specified the central bank shouldn’t “allocate credit to narrowly defined sectors or classes of borrowers,” providing a door to exit from aid to specific markets in the future.Fed BillsTo help raise rates when the time comes, the Fed wants the power to sell its own debt as a means of mopping up some of the funds it’s pumped into the economy. San Francisco Fed President Janet Yellen said last week: “I would feel happier having it now.”Yellen noted that there are other steps the Fed could take. One option would be long-term reverse repurchase agreements, where the central bank borrows cash from Wall Street dealers, putting its mortgage-debt holdings up as collateral.“Every single member of the FOMC is right on top of this, including Bernanke,” said Ethan Harris, co-head of U.S. economic research at Barclays Capital Inc. in New York. “The problem is they are spilling over into credit allocations; they are risking Congress stepping in.”

After his administration forced GM Chief Executive Officer Rick Wagoner to resign and pressed Chrysler to form a partnership with Italy’s Fiat SpA to get more taxpayer aid, Obama today said that company creditors, shareholders and workers will be expected to make more sacrifices.Can he perhaps explain why he doesn’t ask the same from insolvent banks? Banksters, not car manufacturers in highest government positions. Self-service. No change. Root of the problems not addressed.

I wrote this a few months ago- A differnet type of model. you would nto know there was a recession in this state, low unemployment, afforable hosuing, jobs being created… shame its so small…. other links in the article…http://www.dvorak.org/blog/2009/03/28/the-bank-of-north-dakota-state-owned-is-very-profitable/How the Nation’s Only State-Owned Bank Became the Envy of Wall StreetThe Bank of North Dakota is the only state-owned bank in America—what Republicans might call an idiosyncratic bastion of socialism. It also earned a record profit last year even as its private-sector corollaries lost billions. To be sure, it owes some of its unusual success to North Dakota’s well-insulated economy, which is heavy on agricultural staples and light on housing speculation. But that hasn’t stopped out-of-state politicos from beating a path to chilly Bismarck in search of advice. Could opening state-owned banks across America get us out of the financial crisis? It certainly might help, says Ellen Brown, author of the book, Web of Debt, who writes that the Bank of North Dakota, with its $4 billion under management, has avoided the credit freeze by “creating its own credit, leading the nation in establishing state economic sovereignty.”

Florida’s State Retirement System is apparently ranked 10th in the nation in size, and has lost a bundle due to investments in CDOs. When the State’s popular Chief Financial Officer, Alex Sink, recently suggested that the state government should invest in the U.S. Treasury’s toxic asset buyback program for banks, she generated a lot of bad publicity for herself.SWK

JUST FOLLOW ALL THE TEA PARTIES ERUPTING ACROSS THE U.S.A. APRIL 15-16.

a great article from Krugman that references the article in the AtlanticAmerica the TarnishedBy PAUL KRUGMANPublished: March 29, 2009http://www.nytimes.com/2009/03/30/opinion/30krugman.html?_r=1

Great Link- TY..

Banks and lenders are now walking away from foreclosed homes because of no buyers and the forclosed homeowner is being held responsible for upkeep by cities and counties. Seems majority of the foreclosed propertys still have the orignal buyer listed on the deeds. You knwo thigns are bad when we are seeing this. I read a few weeks ago that there are almsot 20 Million unoccupied housing units nationally (houses, Duplex, condos, apts, etc) No way they sell or fill all that. They will have to start tearing down these untis. Also they shoudl not be buidling anything new anywhere until this glut is reduced. producing more housing units as just pouring gasoline on the burning real estate buble.

Quite true. Break union contracts but not bonus contracts. What double speak Obi attends to. He has lost all of my confidence for REAL CHANGE you can believe in.We are going into the toilet folks – and fast.

Here’s some advice for you:”Better to remain silent and be thought a fool than to speak out and remove all doubt.”– Abraham Lincoln

God’s with feet of clay.

yep.and here is the link:http://www.nytimes.com/2009/03/30/us/30walkaway.html?partner=rss&emc=rss

Suburbia is a dead concept with out cheap oil and good jobs. It isn’t only the access but the maintenance that is out of step with incomes. Globalization took our good paying manufacturing jobs and the high tech industry has also moved off shore. What do we have left to generate the income to pay for our extravagant lifestyles?If the world has a recovery, or when, oil will resume its previous highs in dollar terms due to lack of supply and high demand. So then we will be left with high oil and jobs that on average don’t pay enough to support our lifestyles.We have been subsidizing housing in many ways over the last 30 years but now that we have finally hit Zero Hour, all our subsidies have become meaningless. Cheap water, cheap sewer, cheap electricity, cheap oil and tax breaks gave us suburbia and now that has changed and suburbia is no longer affordable. Everything built needs to be maintained. Suburbia will die as did the dinosaurs. No longer viable.

WOW! What a twist to the coming meltdown.

More on this subject… every part of real esate is only in the third inning of a total meltdown… Commercial, Residential, Alt A, Prime, ARM’s.. the entire country will be brought down by this mess….http://www.housingwire.com/2009/03/30/viewpoint-the-latest-witch-hunt/

sounds like as good a solution as i have heard of… how about maybe they are just responsible and have moral and business standards…. I doubt Wall Street had much interestin nayhting in ND- thats why they are in good shape as of today…

Gold comeback even considered by a nation-state:”Arkady Dvorkevich, the Kremlin’s chief economic adviser, said Russia would favour the inclusion of gold bullion in the basket-weighting of a new world currency based on Special Drawing Rights issued by the International Monetary Fund. Chinese and Russian leaders both plan to open debate on an SDR-based reserve currency as an alternative to the US dollar at the G20 summit in London this week, although the world may not yet be ready for such a radical proposal.” UK Telegraph

http://www.youtube.com/watch?v=n-arbfLTCtIi think roubini needs to explain himself

REMEMBER WHEN PENSION 401KS GOT 8-12% SAFE INTEREST?Well those days are long gone and the old folks with big retirement savings interest used to purchase a lot of new cars, airplane tickets, etc….

Roubini is soon to be a “washed out voice” that was crying out in the anticipation of the pending wilderness of DOOM! The coming populace rage will soon overtake all rational discourse. In anticipation of that coming day of SHAME my we now bow our heads in disgrace.

Don’t bite the BLOG that feeds you !

cannot access your link; is it correct?

The text in NR’s articles is scrolling off the right side of the page, but the text in other articles on the site is still okay. Anyone else having this problem?

You are talking about the bottom rung of the market. These are properties that are borderline inhabitable, if at all. Banks are not going to walk away from viable assets. Neither the houses nor the mortgages on the properties banks are walking away from are viable. Assuming you live in a decent neighborhood, which is a given for most of those reading this blog, this phenomenon will not be coming to a house near you. It does make for dramatic headlines and also points to the toxicity of the sub-prime “assets,” which are negative assets, aka liabilities, in cases like these. The real worry is how much of this stuff is on the books and at what price.

I can’t agree with you that suburbia is dead, but I think it is fair to say that some forms of suburbia are dead, such as the McMansion and 60-mile commutes to name two. Better schools and lower crime rates will keep many people out of cities.

The answer to my morbid forecast is for us to act smart instead of telling everyone how smart we are while doing stupid things. Much of what we are doing makes no sense outside the concept of cheap oil and ever expanding debt. Increasing the debt to pay for what we can’t really afford because we wanted to spend our inheritance on frivolous or glitzy things has come home to haunt us. It is over! Done! Kaput! No More!You have to produce more than you consume to get ahead. We have for 3 decades been consuming more than we produce. What did you think would be the outcome? Lower taxes? Prosperity?The cycles of human kind are. We will recover some day. But first we have to admit our failures and quit hanging on to the past greatness and write down the debts. Meaning that pension funds will have much less. Meaning pensioners will have less income and we will have to either put them to work or design cost effective systems to support them in their old age.We are all going to have to learn to do with much less and the sooner we accept that fact, the better off we will all be. McMansions are dinosaurs after the meteor hit and the atmosphere is full of dust for a couple of years…Give it up, we borrowed against health care, schools, highway trust funds, and everything else that wasn’t already leveraged to fund irrational consumption and now we anyone who points this out is giving a Draconian forecast?

Speaking of relevant Quotations:http://www.dailygrail.com/“It is not getting any smarter out there. You need to come to terms with stupidity and make it work for you.”Frank Zappaand not to be forgotten:”I take this action after 11 years of dedicated, honorable service to AIG. I can no longer effectively perform my duties in this dysfunctional environment, nor am I being paid to do so. Like you, I was asked to work for an annual salary of $1, and I agreed out of a sense of duty to the company and to the public officials who have come to its aid. Having now been let down by both, I can no longer justify spending 10, 12, 14 hours a day away from my family for the benefit of those who have let me down.” via Op-Ed Contributor — “Dear AIG, I Quit!” — NYTimes.comhttp://www.smirkingchimp.com/thread/20988Ho hum;-)>

Have a look at the SDR deposits held by National Banks at the BIS, Hayes. You may find it interesting.

I find that “Ho hum” annoying.

pjb,re . first quote, zappa.one of my personal guiding principles.ps. you know why history always repeats itself?because no one was listening the first time.

ps,speaking of putts. did you see how nbc pulledthe third part of their series “inside the financialmeltdown” last night. instead they aired tigerwoods golf, knee surgery come back.msm / cm priorities. media mind control is infull force right now. important week ahead.ps. i randomly have that stretch screen problemwith this site too. ?

BIG NEWS TODAY WAS THE PGBC MEGABILLION $$$ HELLHOLE…A potential powder keg that will make the AIG bonus babies & GM CEO dismissal headlines look like the media diversions “from the real stories” that they truly are…diversions. Media head cheerleader Cramer says there is no catalyst for a potential free fall? Pleeeezzz. http://www.boston.com/news/nation/washington/articles/2009/03/30/pension_insurer_shifted_to_stocks/ This would be the equivalent of learning that the largest flood insurance company in the USA had invested all of it’s assets in New Orleans real estate! Is anybody home?

“You have to produce more than you consume to get ahead. We have for 3 decades been consuming more than we produce. What did you think would be the outcome? Lower taxes? Prosperity?”This is why we’re in trouble, in fact we need to consume only what we produce and produce only what we need if the wealth is shared an equilibrium will occur. Producing more than we can consume is code for we don’t want to share a failing formula. Somebody has to lose for me to win.

I had two houses valued at 100k each in peak fixed up and nice but in semi-downward neighborhoods but certainly no ghetto, I’d say the houses are worth combined 40k in this terrible market well the city foreclosed for back taxes and the bank let them have them when only say 5k was owed in back taxes. If someone bought these houses they could make an easy $1200 in rent a month so they’re worth something especially being in mint condition after I fixed them up but the bank did not want them. No deals were ever offered to me from the banks so I say to hec with the banks let them lose and lose until the government takes them over. The banks/government still believe they are God and that is ultimately our biggest problem. All offered solutions are token and on their terms only so I said pi$$ on them I’ve got no skin in the game, the banks are playing a game they cannot win.

What do you suppose a good name would be to assign to the “insulter.”

That was a good way to put it: either audit or revoke.

You are right. Did you see that Millard guy they quote?:

However, Charles E.F. Millard, the former agency director who implemented the strategy until the Bush administration departed on Jan. 20, dismissed such concerns. Millard, a former managing director of Lehman Brothers, said flatly that “the new investment policy is not riskier than the old one.”He said the previous strategy of relying mostly on bonds would never garner enough money to eliminate the agency’s deficit. “The prior policy virtually guaranteed that some day a multibillion-dollar bailout would be required from Congress,” Millard said. He said he believed the new policy – which includes such potentially higher-growth investments as foreign stocks and private real estate – would lessen, but not eliminate, the possibility that a bailout is needed. Asked whether the strategy was a mistake, given the subsequent declines in stocks and real estate, Millard said, “Ask me in 20 years. The question is whether policymakers will have the fortitude to stick with it.”

So we have this guy, the former managing director, basically espousing risky moves as the only way to avoid a future bailout, piling into the market at exactly the wrong time, then espousing ‘hold and hope’ nonsense. All with the pensions of millions of Americans hanging in the balance.Nice catch. Thanks for pointing it out. Of course, this will be another one for Obama’s team to blame on the Bush administration.

The article Anglo-American Capitalism on Trial starts with:

Sitting in a gilded upper room at 10 Downing Street last week listening to Prime Minister Gordon Brown outline his ambitions for reforming the world economy had something of an out-of-this-world feeling….

I think the reason why UK tries to come out with the proposal for reform is to keep a form of “leadership”. The thinking seems to be along the lines of “if we come up with the ideas first, we can hopefully control the direction taken. When we control the direction, we are leading.”In fact UK should be ignored in the contest of new ideas. They have proved their “ideas” as being a cause of major problems.

@ Morbid: March 30 (Bloomberg) — At 4:30 p.m. on March 23…the U.S. Treasury and Federal Reserve released a one-page joint statement on the division of economic responsibilities between the two agencies…that while the Fed collaborates with other agencies to preserve financial stability, it alone is in charge of keeping consumer prices stable, its independence “critical”…This is the beginning of the Federal Reserve’s attempt to defend itself against the coming onslaught of demands for accountability, transparency and, after all these years, who it is, what it is, and how it has been handling the coin of the realm.The members of this cartel–and, yes, it is a cartel in every single sense of the word–are obviously feeling the coming bright lights, and who can blame them for getting nervous, in light of one of the most irresponsible, private and criminal actions ever taken on a nation’s population?

This kind of “gambling” is probably the tip of another iceberg about to come into view as the FWMD death spiral continues to unfold in the months ahead. There are poster children everywhere starting with Made-off. When will the real crooks be brought to justice? Probably never – and the longer “never” ensues the more assured the citizens of the USA will become that our way of life has been highjacked by the new ruling elite – the new Czars.

nice chart of bailout expenditures via Ritholtzhttp://money.cnn.com/news/specials/storysupplement/bailout_scorecard/index.html

You and I and others did what was right. We did not live beyond our means but the numbers show that the majority of the Boomers did. I did what my grandfather told me to do. I saved and didn’t buy what I couldn’t afford. I fixed things and wore them out until their usefulness was all gone. I even built my own house to save money and build equity (real savings).It is a Sad story, the numbers show that there are fewer of us than the media would want you to believe who are prepared for retirement. You have beaten the odds and I commend you for it. I just hope your pension fund didn’t buy AAA rated toxic waste as an investment, many did and have not yet had to mark to market their asset and may never have to if the government support of the insurance industry holds. But the money will have to come from some where. Either from hidden taxes or the cruelest tax, inflation.The responsibility we all bear is that few wanted to question or raise a red flag about things that made little sense. Those that did were told they were depressing or bores or accused of being conspiracy theorists. The Power of Positive Thinking ruled the land. Even when the thinking was denial of the facts and ignorance of the consequences. People spent their time enjoying the fruits of labor that were fictitious. Using cheap debt to fund consumption. Ignoring the consequences of both trade, fiscal and off balance sheet deficits.I know some of these concepts are controversial but I do believe they are based on facts that will be more recognizable as time goes on.

Sunday, March 29, 2009Afghanistan: The Four Questions.http://crap713three.blogspot.com/2009/03/afghanistan-four-questions.html..4. Is the United States prepared to address the political roots of Pakistan’s relationship with the Afghan insurgencies?US officials are regularly quoted saying that the insurgencies in Afghanistan cannot be effectively addressed without addressing the support these insurgencies draw from Pakistan, including from elements in Pakistan linked to the Pakistani military. But discussions of the role of the Pakistani military are generally limited to exhortations to the Pakistani government and military to “do more” to confront insurgents, without addressing the motivations for the Pakistani government and military to “do less,” even though it is conceded that powerful elements in Pakistan see their relationships with insurgent groups as essential elements of national self-defense in their long confrontation with India…

MM,Would you be surprised if those same traders who unwound the trades at off mkt prices find a job with the same banks they unwound with? Sadly, I will not be surprised.There is no greater corruption of the industry than this.

What rot. The Fed is in no danger whatsoever. The Fed will do what it’s masters tell it to do. Join the dots Einstein.

It’s always and everywhere like that AJ. There are producers and consumers. The problem comes when the consumers get their hands on the levers of production and abuse it for their own purposes.See also MA’s post: http://www.rgemonitor.com/globalmacro-monitor/256207/bottom_up_tomorrows_real_economy

Your numbers are off. If a house is worth $20k, rent is surely not $1,200 a month. It makes no sense for a bank to take back a $20k house. It would be interesting to know on average what the minimum valuation of a property needs to be for it to be worthwhile for a bank to take it back. I’m going to guess maybe $40k or $50k, possibly $60k. So properties valued at less than whatever the takeback number happens to be are essentially worthless and should be accounted for as such on the books. Whether they are valued this way or not is another matter. Probably not.

YEA ILL JUST SIT ON MY HANDS LIKE YOU HAVE SIR, AND WATCH THE WORLD BURN……

“What rot. The Fed is in no danger whatsoever. The Fed will do what it’s masters tell it to do. Join the dots Einstein. “And finally, as the dust settles and the economic losses really take hold, Americans eventually reach the truth. Our country is run by oligarchs. Not a lot different from Russia, really.When the President of the United States asks the chairman of an auto company in Detroit to step down, the man will resign. But when it comes time to place the Wall Street banks into receivership and divide them into smaller pieces – instead it is the bank CEO’s who prevail and it’s the President of America who changes his policies.PeteCA

you mean: “oli plutocracy”!

“After they’ve exhausted every other option, America will do the right thing”. – Winston Churchill.This message goes out to the people that are no longer mesmerized by the spectacle of collapse, but are wondering “what next?“.Miss America’s latest offers a good signpost along the way. There are several among you that have recently commented to the effect that “someone needs to spend some time thinking about what the economy is going to be based upon once the dust settles from this collapse.”Correct.Where you expecting the Fed to be that someone? Or maybe President Obama? No?Where are you expecting the thinking to come from?Who’s doing the thinking, planning, cooperating, team-building, vision-articulating, process-building…you know, the actual work to devise a viable, sustainable economy from the wreckage of the old one?If you answered “I guess we’ll have to do it”, I think you’re dead on.If you don’t do it, it isn’t going to get done for you, of that you can be certain. It might get done to you, but it won’t get done for you.Defend yourself. If you don’t start playing like a team, you’re going to get squashed. Think!The BrainTrust is a group that’s evolving – that’s changing with the times. For all our limitations and challenges – and we’ve got plenty of them – it’s fair to say we’re headed in a very constructive direction, and we have the beginnings of an excellent team. And, we have built tools – the hallmark of human development.This group would become more powerful, better directed, and much more effective if you joined it.Joining a group doesn’t always have to equate to loss of individuality, or the taking on of dead-weight. It can be a multiplicative phenomenon if you choose your team well.We have chosen well, so far. We would like to continue to choose well, but in order to do so, we need good people to choose from, right?May I recommend you read the latest from Miss America.

Any time Matt Simmons puts together a set of charts on the energy situation, I always take a look. It’s really worth taking a look at his latest viewpoint, which can be found at the Financial Sense web site:http://www.financialsense.com/Go to the main page of the site and click on the video presentation labeled “Matt Simmons: State Of The Energy Union”.Please note Mr Simmons projection that it would take the world $50-$100 trillion dollars to re-build all the aging infrastructure in the energy sector. This includes not only outdated rigs and platforms, but also countless miles of rusting pipelines for oil and gas.Do we see now why America is headed for a cliff – in terms of energy policies. And why feeding all this taxpayer money to the Wall Street banks has consumed our “seed corn”?PeteCA

you’re hysterical. did you ever think what we’ve endured with 8 years of Bush? torture, WAR!!!!!!, deregulation and Patriot Acts? at least now we have no Guantanomo, no torture, stem cell research, a pullout date from Iraq and a President who understands what it’s like to be poor. ‘The mask of Obama” Please please calm down and let the cooler heads prevail.

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Thanks. Keep us informed, and let us know how to join and become an active part of this. A grass roots approach in an intelligent way could become a viable hope for those of us who are outraged. I’m not the only one of regular folks (middle class professional, not an economist) who is increasingly aghast at our nation with every successive increment of knowledge.

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