i really do not see any consistent light at the end of this particular tunnel. the flickers may be the tricks your mind is playing on you.what specifically is the “if” that you are referring to in terms of more robust and aggressive policies when Geithner et al. intimate that the bailout funds are starting to run thin? print up more and more $?

@ GSM: What rot. The Fed is in no danger whatsoever. The Fed will do what its masters tell it to do. Join the dots Einstein. 2009-03-31 01:38:02This is no time to succumb to the psychological warfare of a small elite group that dominates this nation’s economic life, a warfare designed to weaken our moral fiber and destroy our roots in Western Civilization to render us “manageable.” Wrote Eustace Mullins in 1985 in “The Secrets of the Federal Reserve”:The Federal Reserve “created money” is used not only for financial matters; this money also is used to maintain the bankers’ control of every aspect of political, economic and social life. It is used to bankroll the enormous expenditures of political candidates, the swollen budgets of universities, the huge outlays required to start newspapers or magazines, and a vast array of foundations, “think-tanks” and other instruments of mind control.Few American know that almost every development in psychology in the United States in the past sixty-five years [since 1920] has been directed by the Bureau of Psychological Warfare of the British Army…to determine the breaking point of the soldier under combat conditions. The Tavistock Institute was taken over by Sir John Rawlings Reese, head of the British Army Psychological Warfare Bureau. A cadre of highly trained specialist in psychological warfare was built up in total secrecy…During World War II, the Tavistock Institute combined with the medical sciences division of the Rockefeller Foundation for esoteric experiments with mind-altering drugs. The present drug culture of the United States is traced in its entirety to the Institute, which supervised the Central Intelligence Agency’s training programs. The “LSD” counter culture” originated when Sandoz A.G., a Swiss pharmaceutical house owned by S.G. Warburg & Co., developed a new drug from lysergic acid, called LSD. James Paul Warburg (son of Paul Warburg who had written the Federal Reserve Act in 1910), financed a subsidiary of the Tavistock Institute in the United States called the Institute for Policy Studies, whose director Marcus Raskin, was appointed to the National Security Council. James Paul Warburg set up a CIA program to experiment with LSD on CIA agents, some of whom later committed suicide…The Institute for Policy Studies set up a campus subsidiary, Students for Democratic Society (SDS), devoted to drugs and revolution… The ‘sensitivity training” and “sexual encounter” programs of the most radical California groups such as Esalen Institute and its many imitators were all developed and implemented by Tavistock Insitute psychologists.NOTE: The Institute for Policy Studies (IPS) was founded in 1963 as a tax-exempt 501(c)(3) organization with seed money (derived from a fortune made in cosmetics sales under the Faberge trade name) from the Samuel Rubin Foundation. Samuel Rubin (1901-1978) was a Russian Bolshevik and the father of Cora Weiss, who headed the Samuel Rubin Foundation from its inception and is currently the principal financier of IPS. Weiss’ husband, Peter, is Chairman of the IPS Board of Trustees. He is also a member of the National Lawyers Guild and the National Emergency Civil Liberties Committee, both of which were created as Communist Party fronts. The Weisses selected Richard J. Barnet and Marcus Raskin to be the first Co-Directors of IPS, with the aim of transforming the United States by altering public attitudes, changing laws, and reversing foreign policy through an Academy that reached every nexus of the national nervous system.http://www.discoverthenetworks.org/groupProfile.asp?grpid=6991

The professor is not so sure anymore. We’re in unchartered territory, even the professor doesn’t know what’s going to happen so he is hedging.

It was interesting that Taleb was on right after Roubini – here is the link I posted in prior threadhttp://www.cnbc.com/id/29972678

Simon Johnson is raising hell over our response to the economic crisis so far. The former chief economist at the IMF says it’s been half-measures and soft steps and hasn’t gone nearly far enough to break up failed banks and knock back the Wall Street lords of finance.The reason, he says, is that a financial elite has quietly taken over this country and its assumptions — sewn up power, he charges, as surely as in any banana republic — and barred the way to real change.These are hot words from a top scholar and economist.

Are the Banks Running America? Tuesday, March 31, 2009Prof. Simon Johnson is the author of The Quiet Coup, the article from The Atlantic that seemed to be well received in the previous thread.I listened to this radio interview with him this morning on a program called On Point. The audio for this show will be available at the above active link by 3 p.m. ET today for those interested to listen.

“Morally right thing to do.” Cynacysim aside, the guys and gals who put us into this situation didn’t burden themselves with morality. Hence, if they did, they would be a little lighter in the personal asset arena. Ah, but how about ‘if they did’nt do it, somebody else would’ logic. Does that soothe the soul of guilt? You got a wonder if a “civil, relatively just” society can endure for many centuries. The enduring sense of greed and “winning at all costs” drives many to positions of power within a society. Morality is often overshadowed by the urge for visceral pleasures sponsored by greed and warring attitudes. Our economy is led by little, quasi generals and their armies focused on ceasing more personal assets. Civilization is founded on war…winners and losers. Chaulk up our growing public debt to the board room war mongers and their lack of morality. We (The Losers) appearantly need to pay the price to support the financial “winners” of wall street and congress over the last couple decades. The bill has come due. Check please! And, on to the next economic war. (Aren’t they all?!)

Many people cannot pay their debts at all. Those that are paying their debts are spending less.Noone knows when when this is going to end.Everyone has their opinon. Roubini’s has been the best.

I should have given credit to this arguement to Steve Keen. I think he has it exactly correct.

This is a nice summary from last summer.http://www.rgemonitor.com/asia-monitor/253266You can also check his websitehttp://www.debtdeflation.com/blogs/

Many thanks –

Americans are in the “ninth inning” of a one-hundred-year-old financial con game. There are two opposing sides—on one side the taxpayers, on the other side the financial industry that includes the U.S. Congress (only a fool would believe Barney Frank and Chris Dodd are on the taxpayers’ side). Who will be the winner?An elitist victory revives the corruption that is crippling this economy, it continues the one-sided transfer of production money to the financial system, it allows the unabated siphoning of taxpayer money to go on with no redress for transferring back any of the bankers’ ill-gotten gains to the taxpayer.The taxpayers’ trump for a major upset includes the economic conditions that now are going to set the stage. Roubini’s light at the end of the tunnel isn’t the financial light of day, it’s the tail lights of a departing train that’s going to run over Obama and his team of banker prostitutes, a train everybody is trying to jump onto.Already France and Germany are saying they aren’t going to do the stimulus the U.S. wants because they don’t think it’s going to work. Dr. Roubini leaves himself a big out if recovery doesn’t happen on his time table: it sounds to me that the FDR depression is going to drag on for years and years and I don’t think the public will allow all the radical must do’s Roubini says must happen for his recovery scenario. When Roubini gets out of the forecasting box and into suggesting policy, he’s back into his gray area. He’s saying what all the policy wonks say, if we would do this and we would do that and we would engage this, then it’s going to work. Whenever you have continued radical changes, radical suggestions, such as Obama Motors is making by the people its appointed to deal with the auto crisis who have no auto experience, recovery isn’t going to happen

There is growing evidence that the falling investment in oil production. This, coupled with the OPEC supply cuts, is likely to result in a second oil price spike before the end of the year.The non-negotiable “way of life” is predicated on concepts that are not supported by physical (ie REAL) constraints.Trillions of dollars are being dumped into circulation. Currently this is having little effect on the exchange rates, but for how much longer? Added to this, the rest of the world is getting really rather irritated by the fact that they are financing the US system by virtue of the dollar as reserve currency (see recent moves by China and Russia) and getting pathetic returns on their recycled dollars.The “low-hanging fruit” resource-wise have been picked and we are entering a period of rapidly decreasing EROEI on energy resources, and increased processing costs of other materials.The soil in major agricultural areas is degraded – essentially dead – and is only capable of sustaining crops with massive inputs of chemical fertilizer in most of the major agricultural areas.We are facing aquifer depletion and a reducing supply of “fresh” water (term used loosely – most water is now heavily polluted by industrial, mining and farming activities).There are issues with the climate.The young have had their futures sold from under them by the boomer generations and are likely to get a bit annoyed by the expectation that they should bear the brunt of paying for said older generation’s excesses and gross stupidity.Tell me again why there is going to be a renewed period of growth? In fact, while you are at it, please explain HOW we can have continual growth ON A FINITE PLANET WITH FINITE RESOURCES.

Big 3 Represents 1.5% of GDPConsumers represent 70% of GDPCan anyone tell me what the forecasting focus should be hinged on?What is the % pullback in consumer GDP? If savings are headed towards 7%/year doesn’t that translate into -7% GDP?Since the home equity ATM machine is bust – what is the net % decline in that spending per year?The stimulus averages about 2% GDP per year into 2011.How can the Professor predict 1% growth in GDP in 2010 given the above.Can anyone help this “Einstein” connect these dots?Thanks

Subgenius: Your point is well made. Across the board, we cannot have growth. In fact, what we’re headed for in reality is nation-fighting-nation over scarce resources. But an “illusory growth” could occur in markets due to an explosion inh the global money supply. Anyone who measures the Dow in inflation-adjusted dollars will certainly see the difference.Obama’s desire to “turn things around” will be thwarted by the huge malinvestment in derivatives and short-term trading. What he really needs is a new generation of long-term investors to take the reins, but there has been no changing of the guard. The oligarchs still rule.PeteCA

Krugman weighs in:I’m detecting a trend in commentary that I find slightly ominous. Some of the economic news lately has been slightly better than expected, which was bound to happen at some point (on average, after all, half the news should be better than expected). Mostly this is in the form of things getting worse more slowly, but it wouldn’t be surprising if we see, say, an uptick in industrial production in a few months, as the inventory cycle runs its course.If so, that doesn’t mean the worst is over. There was a pause in the plunge in early 1931, and many people started to breathe easier. They were wrong.So far, there’s nothing pointing to a fundamental turnaround this year, or next, or for that matter as far as the eye can see.http://krugman.blogs.nytimes.com/2009/03/31/partying-like-its-1931/

I don’t know if someone mentioned that before but I adore making such correlations and professor gave me the opportunityWho’s got the BEST bazookas, missiles, rockets, artillery in the world?Dow to hit 40.000 in 50 monthsEurope is Germany, and Germany can no more pay the restGreetings from a bankrupted country (Greece – just not announced officially yet)

Addendum – Most critics of Malthus are economists, most of whom obviously (given the current situation) do not understand reality.Critics with backgrounds in science tend to dislike Malthus because he provides justification to conservative social policies and other policies such as eugenics. They do NOT tend to argue against the basic premise.

Agree subgenius. To continue growth according to traditional economic models/theories, will need a game changer equivalent to mechanized farming, abundant resources such as petroleum to run the machines and make fertilizers. Perhaps nuclear fusion would fit the bill. Otherwise declining birth rate in developed countries, wars over resources. My friends may think I am nuts, but I am warming up to the idea of farm life and more self suffiency and the benefits of some physical work.

This is exactly my point. In a 4-5 year depression, there are periods in which the contraction is less severe, and it moves between less severe and more serious time and again.Howusehold worth has collapsed, so a sustained recovery in the medium-term is still rather impossible. The bottomline is that poeple have less worth to get money against, and they might spend a bit more for a month, and might revert to spending less next month. The fundamentals aren’t strong.Unless money can be printed and thrown from a helicopter.

Technological cornucopians. We have been benefiting from the very high EROEI (energy retured on energy invested) of oil since after WWI. It’s almost gone. There is no other energy source with such a high net return on energy. None.When the energy required to extract oil exceeds the energy it yields, its a game changer.Read “Game Over” for a detailed analysis.

A Question, if I may?In the above link there is a photograph which shows Benanke and Geithner wearing what appears to be the same tie. What does that tie symbolize, er, anyone, please?thank you

I don’t think there is a direct correlation between savings and how spending affects GDP. There have been studies done in small towns as to how money spent locally use to run thru the community, like 7 times or something like that but I don’t think those numbers could possibly hold up since so much of what we buy is made over seas.And a 7% increase in savings is taken from the amount saved previously and not a direct deduction from GDP. If you saved $1 and you had a 7% increase, that would be $1.07 saved.. If you saved nothing or were spending your savings and you had a 7% increase in savings, that doesn’t mean you are even back to positive.And it depends who is keeping the score too. Did they change the matrix to change the numbers like they have been doing for years. Are they counting IRA values or 401ks and how about the value of your real estate? Is that counted now or not? They were for a while… If they count them, we know that there is a big hole and a 7% increase is what?I’m not sure what the GDP number represents any more. It has been changed so many times over the last few decades that it is meaningless to most of us. Makes the politicians look good or bad but not sure how relevant it really is.Do you have a job? Does your wife have hers? How about your relatives and friends? Those are important issues.

A WORD OF CAUTIONNouriel’s sudden outburst of optimism is worrisome to me. I worry that he has been he has acquiesed to his buddies in the administration who maybe have requested that he be more upbeat in order to “give them a chance”. There just isn’t any obvious reason for his change of heart. Contrast his views with Krugman, who though an ardent Democrat, has been highly critical of this administration and continues to be very negative about the prospects for the economy. Are Roubini’s views now being modified he administration? If not, why the change of heart? What happened to the 1/3 chance of an L shaped near depression? Let the readers of this blog beware!

Who is Paul B. Farrell?

Your point is taken PeterJB … but I must admit when I first caught wind of the Congressional Tax Legislation that erupted from the recent AIG bonus-gate, I was surprised that the legislation only went back to Jan 1, 2009, to the exclusion of all of the similar shenanigans that took place in 2008.Is it possible that if this legislation is passed and implemented, that it could be a start at chipping away at the oligarchy?The proposed legislation that is located here =>Text of H.R. 1664PS: One of the additional sponsors of the Bill is Ms. FUDGE !

they were both cut from the same piece of TARP

There is always Daniel Alpert’s recent article Me Too! Look Ma, I can Earn a Positive Interest Spread with Fed Funds Near Zero and Bernanke Stomping on the Yield Curve! It’s gonna be OK, Really! to counterbalance the shifting wind.

…http://archive.wbai.org/.Tuesday, March 31, 2009 2:00 pmArtsarts magazine..to listen to this interview, second half hour or so, withphysicist dr. rugerrro santilli on beyond einstein and magnegas..http://pesn.com/2006/08/28/9500230_Santilli_magnecule_MagneGas_fuel/Tai_Robinson_feedback.htm.http://pesn.com/2006/08/28/9500230_Santilli_magnecule_MagneGas_fuel/

via Drudge“Slightly smaller than Oregon”: a White House briefing on BritainTelegraph – Toby Harnden – US EditorMar 31, 2009 at 12:18:00 [General]Posted in: Foreign CorrespondentsSo here’s what the White House is telling American reporters – and by extension the American people – about Britain. It’s laid out in an inch-thick “press kit”, with the Seal of the President of the United States emblazoned on the cover, handed out to each of us on board the White House press charter en route from Andrews Air Force Base outside Washington to Stansted.The United Kingdom, we are told, is “slightly smaller than Oregon”. As for the the British climate, it is “generally mild and temperate” and “subject to frequent changes but few extremes of temperature”. A “group of islands close to continental Europe”, Britain has been “subject to many invasions and migrations”…We’re taken through the Roman invasion (“brought more active contacts with the rest of Europe”), the Norman invasion (led to “active involvement in European affairs…for several hundred years”) and various travails with the Welsh, Scots and Irish before the British empire reached its zenith in Victorian times.Then it all started to go wrong. “The losses and destruction of World War I, the depression of the 1930s, and decades of relatively slow growth eroded the United Kingdom’s preeminent international position of the previous century”.http://blogs.telegraph.co.uk/toby_harnden/blog/2009/03/31/slightly_smaller_than_oregon_a_white_house_briefing_on_britain

Breaking News Last Updated: March 31, 2009 20:00 EDTObama Said to Conclude Bankruptcy Best Option for GM, Chrysler March 31 (Bloomberg) — President Barack Obama has determined that a prepackaged bankruptcy is the best way for General Motors Corp. to restructure and become a competitive automaker, people familiar with the matter said.Obama also is prepared to let Chrysler LLC go bankrupt and be sold off piecemeal if the third-largest U.S. automaker can’t form an alliance with Fiat SpA, said members of Congress who have been briefed on the subject and two other people familiar with the administration’s deliberations.While Obama two days ago…http://www.bloomberg.com/apps/news?pid=20601087&sid=aUFsRbmQyiJU&refer=home

There’s no doubt Roubini compromised his principles under the pressure from his old buddies, now Roubini’s on the defense checking everything he says with “the new plan won’t stop nationalization if done in the right way”, obviously someone has assured Roubini that it will be done in the right way for Roubini to back off on the criticism and basically give Geithner and the administration the benefit of the doubt. Frankly I don’t believe Geithner deserves the benefit of the doubt but the professor has risked his reputation for Geitner hopefully the professor doesn’t get egg all over himself for it.

thanks – I also was wondering what happened to the letter L and the reason for its omission.

He wasn’t early…..He was wrong. Plenty of upside until early August 07.I believe he’s too early here as well.

My reading of Taleb suggests that only fools would try to project big numbers in this ’land of extremistan’.Does anyone have a historical precedent that shows this ‘bazooka’ methodology has ever worked/not worked in a nation swamped in credit morass? The turn around in the Weimar didn’t proceed until after currency destruction.Related question: I realize we have been a nation of hypocrisy but where is the structural reform preached by Summers et.al/IMF/WB…or is that what’s on the way?

these are old antiquated arguments. i’m not sure who i’m blogging with nor how deep the knowledge runs, but i will say these resource arguments amongst others will simply be disproved. if that involves colonizing space or nanotech or biotech or extracting 80% conversion from a solar panels/battery tech (by the way the gains in these two techs are tending to exponential in the next few years) we shall defeat this Malthus arguments and supposed limitations. when Malthus was around there was no such thing as plastics so these would be new physical resources obtained via creative applications of knowledge. the real limitations i see are the responses i’ve just read — but i suspect none of you are sci-tech or economists so i suggest you do a little more research before jumping to conclusions. to state that you cannot create a tree is alarming — it is a sub-stupid comment — apologies but that’s a fact.

plants of the future + genetic manipulation (my good men dont get eco-moronic on me remember Mendel?) is the future. that is tech. yes? just like the tech that will convert saltwater into potable water w/ solar and wind driving pressure for reverse osmosis to take effect.the problem w/ many of these Rousseauian blogger that want to shun tech and econ and return to nature is that they are simply shutting down and dropping out — these comments are typed in this spirit and can’t be taken too seriously but hey at least yours truly replied.

Actually I have a fairly serious background (advanced degrees) in physics, computer science (specializing in AI and genetic algorithms for search and optimization) and electronic engineering. As part of my study of AI, I spent a few years learning neuroscience and evolution, plus a little general and cellular biology.Until you SHOW ME the WORKING versions of the high tech you are talking of, it is VAPORWARE. AI and nuclear fusion have been “ten years away” since the 1950sColonizing space? You just show your ignorance of the current state of the art of the scientific endeavor, your ignorance of resource management, and your wish to believe in your own brand of wood fairies.The point of the tree comment was that you cannot create what you wish for by thinking it – you must MANUFACTURE it. That takes resources.

just do a little research into battery tech and solar panel conversion rates. it’s a shame all of that supposed knowledge is tempered by a lack of vision and a disregard for history subG.

I find that very interesting, thanks.

Yes PeteCA, it’s all about joining the dots. Kasriel has been talking up the markets quite a bit recently. Now we understand where his motivation is coming from.Quo Bono? Who benefits? (PGC hopefully for Kasriel)

I did my part and bought a new Jeep—at $16K discount!

“Obama’s Attack on the Middle Class” | Paul Craig RobertsObama and his public relations team have made it appear that his trillion dollars in higher taxes will fall only on “the rich.” Obama stresses that his tax increase is only for the richest 5 percent of Americans while the other 95 percent receive a tax cut.The fact of the matter is that the income differences within the top 5% are far wider than the differences between the lower tax brackets and the “rich” American in the 96th percentile.For Obama, being “rich” begins with $250,000 in annual income, the bottom rung of the top 5 percent. Compare this “rich” income to that of, for example, Hank Paulson, President George W. Bush’s Treasury Secretary when he was the head of Goldman Sachs.In 2005 Paulson was paid $38.3 million in salary, stock and options. That is 153 times the annual income of the “rich” $250,000 person.Despite his massive income, Paulson himself was not among the super rich of that year, when a dozen hedge fund operators made $1,000 million. The hedge fund honchos incomes were 26 times greater than Paulson’s and 4,000 times greater than the “rich” man’s or family’s $250,000.For most Americans, a $250,000 income would be a godsend, but envy can make us blind. A $250,000 income is not one that will support a rich lifestyle. Moreover, many people prefer lesser incomes to the years of education, long work hours and stress of personal liability that are associated with many $250,000 incomes. In truth, those with $250,000 gross incomes have more in common with those at the lower end of the income distribution than with the rich. A $250,000 income is ten times greater than a $25,000 income, not hundreds or thousands of times greater. On an after-tax basis, the difference shrinks to about 6 times.The American tax code taxes the $250,000 income at the same rate as it taxes a $100,000,000 or higher income. On an after tax basis, after the federal government grabs 30% in income taxes and state government grabs 6%, the “rich” man or woman or family earning $250,000 has $160,000. In New York City, where there is a city income tax in addition to state and federal, this sum diminishes further. State sales taxes take another 6 or more percent of most consumption expenditures.When all is said and done, the after-tax value of a $250,000 income in New York City is about $140,000.Is this rich? It might be in a small town in Alabama, but not in New York City. The “rich” person or family won’t be purchasing a Manhattan apartment, much less a brownstone. They won’t be driving a luxury car. Indeed, they won’t be able to afford a parking garage for an economy car. If they fly anywhere, it won’t be in a first class seat.For the most part, $250,000 incomes are located in large cities where the cost of living is high. For example, a husband and wife who are associates at major law firms, each of whom works 60 hour weeks and has no job security, earn $125,000 each. They might both have student loans to pay down. For the Obama administration to lump these people in with Hank Paulson or billionaire hedge fund operators is propagandistic.What is the difference between the $250,000 “rich” income and the $245,000 “non-rich” income? After Obama’s tax scheme goes into effect, the $245,000 income will benefit from a tax cut, and the $250,000 will have a tax increase. Will people in the 96th percentile ask for pay cuts that will drop them into the 95th percentile?In America, the truly rich are those in the top 0.5% of the income distribution. These are the people with yachts, private airplanes, and who are still rich after they lose half their wealth in a stock market collapse caused by government policy that accommodated financial gangsters.”Oh well, I was worth $600,000,000 last year and only $300,000,000 this year. Perhaps we should stop drinking $1,000 bottles of rare vintages and move down to $100 a bottle wines. Probably shouldn’t buy that new yacht or that villa in the south of France.”The upper middle class with $250,000 gross incomes are major losers of the financial collapse. Many of the people in this income class are leveraged to the hilt in order to maintain appearances and can be swept away as easily as the very poor. But those who were frugal and invested for their future have lost 50% of their savings. These wiped out people are the ones who will bear the brunt of Obama’s tax increase.If the tax rate on a multi-million dollar annual income goes up by 5 percentage points, the cutbacks won’t really affect the lifestyle. But for the $250,000 gross income group, it means no prospect of private schools and Ivy League education for the children, who will be attending state colleges with the rest of the non-rich.Obama is attacking the only income class that has any independence—the upper middle class professionals. The real rich are few in number and seldom present any opposition to government. Recently, the New York Times reported (March 23, 2009) that the 400 richest Americans’ “share of the nation’s total wealth has nearly doubled to more than 22 percent.” The average income of the 400 richest Americans is $263 million annually. That is 1,052 times the income of the “rich” $250,000 income.What the Obama administration is really doing is taxing ordinary people in order to bail out the super rich. The 95% of Americans who get the tax cut will find that it is offset many times by the depreciation in the dollar and the raging inflation that will result from monetizing the multi-trillion dollar budget deficits made necessary by the bailouts of the banksters.In the United States, government has become expert at manipulating both left-wing and right-wing ideologies. It keeps those on both ends of the spectrum set at each other’s throats in order to ensure the government’s continuing independence from accountability.Historically, the definition of a free person is a person who owns his own labor. Serfs were not free, because they owed their feudal lords, the government of that time, a maximum of one-third of their labor. Nineteenth century slaves were not free, because their owners could expropriate 50% of their labor.Today, no American is a free person. The lowest tax rate, not counting state income, property tax and sales tax, is 15% Social Security tax and 15% federal income tax. The “free American” starts off with a 30% tax rate, the position of a medieval serf.In medieval Europe, when tax rates reached beyond 30%, serfs rebelled and killed their masters.http://www.vdare.com/roberts/090329_obama.htm

if Obama wants bankruptcy for GM and Chrysler, will this not trigger the $1 Trillion in Credit Default Swaps now?

sns,You really should remove that corn cob from your orifice.There…it needed to be said.

Betting On INFLATION

The Bank of England’s pension scheme switched out of stocks in 2007-2008 and into index-linked gilts and have done rather nicely. Which means that in England the central bankers say in public that they are worried about deflation but get their pension trustees to bet that inflation is actually the thing to worry about.

The Bank of England’s gilty secret: betting on inflation?

Banks Demand Perfume for Rotting Balance Sheets: David ReillyApril 1 (Bloomberg)The FASB’s mission is to craft rules that give investors clear, relevant financial information. Its latest proposals are nothing more than sops to the banks.If adopted, they will only confirm for investors that markets are now a rigged game.We already knew. Just another confirmation.New description of an investor according to banks:An investor is a potential client who is given as little transparency and as much of rosy coloured misinformation as possible in order to lure him into buying our products and to enrich ourselves. Government should help us to fulfill this task because we pay politicians to edit the rules and if they don’t help, we blow the whole thing up. We rule and we decide who takes the profits home.April 1, 2009

WSJThe Real Geithner Plan, a ‘Nuclear Option’

The Obama administration is seeking broad new resolution authority for banks, Peter Boone and Simon Johnson argue that the powers should be approved by Congress and used quickly and decisively. Boone is chairman of Effective Intervention, a U.K.-based charity, and a research associate at the Centre for Economic Performance, London School of Economics, and Johnson is a former IMF chief economist, and is currently a professor at MIT Sloan School of Management and a senior fellow at the Peterson Institute for International Economics. They run the economic crisis Web site http://BaselineScenario.com.

http://blogs.wsj.com/economics/2009/03/31/guest-contribution-the-real-geithner-plan-a-nuclear-option/

Via NCWill The Real Geithner Plan Please Stand Up?By Simon Johnson (MIT Sloan School of Management)March 31With all the material and moral support for U.S. mega-financial institutions currently on the table, why are bank holding company credit default swap (CDS) spreads at new highs? (For more on how and why you might want to think about CDS spreads, we have a basic guide.)The most plausible explanation is that creditors – unlike equity investors – are spooked by the new resolution authority that is now sought by Treasury and the Fed. This would, after all, allow the government to manage something akin to (but potentially better than, from a social perspective) a bankruptcy process for our largest financial institutions.These creditors are right to be worried; the authority, if granted, would almost certainly be pressed by events (and creditors’ self-fulfilling runs) into use.But, if handled right, this authority can help solve the financial mess at minimal cost to the taxpayer (although there are no magic bullets or easy exits at this stage). The key – as always in any major crisis – is decisive action. Over on wsj.com this morning, Peter Boone and I outline one way forward.http://baselinescenario.com/2009/03/31/will-the-real-geithner-plan-please-stand-up/

The spin is contagious and has infected Roubini’s ideas. Don’t need to hang out at this blog as much. Gives me more free time.

And now for something completely different.- Monty Python“BEN: You lucky, lucky bastard.BRIAN: What?BEN: Proper little jailer’s pet, aren’t we?BRIAN: What do you mean?BEN: You must have slipped him a few shekels, eh?BRIAN: Slipped him a few shekels? You saw him spit in my face!BEN: Ohh! What wouldn’t I give to be spat at in the face! I sometimes hangawake at night dreaming of being spat at in the face.BRIAN: Well, it’s not exactly friendly, is it? They had me in manacles!BEN: Manacles! Ooh oooh oh oh. My idea of heaven is to be allowed to beput in manacles… just for a few hours. They must think the sun shines out o’ your arse, sonny.BRIAN: Oh, lay off me. I’ve had a hard time!BEN: You’ve had a hard time?! I’ve been here five years! They only hung methe right way up yesterday! So, don’t you come ‘rou–BRIAN: All right. All right.BEN: They must think you’re Lord God Almighty.BRIAN: What will they do to me?BEN: Oh, you’ll probably get away with crucifixion.BRIAN: Crucifixion?!BEN: Yeah, first offence.BRIAN: Get away with crucifixion?! It’s–BEN: Best thing the Romans ever did for us.BRIAN: What?!BEN: Oh, yeah. If we didn’t have crucifixion, this country would be in aright bloody mess.BRIAN: Guards!BEN: Nail him up, I say!”Life is all about perspective, is’nt it? We owe ourselves a laugh in the mist of this horrible economy, to keep out wits about us.

The report on OCC Derivatives holdings at US banks can be found at the following link:OCC Derivatives at US Banks for 4Q of 2008There’s some pretty interesting reading. Yes, it appears that Goldman has been piling up new derivatives deals recently. But what I found noteworthy is that over 30% of the credit default swaps held by these banks are on sub-investment grade assets.Sure gives you that warm comfy feeling.PeteCA

No amount of lipstick gonna make this pig beautiful enough for kissesEven “massaged” government data are horribleno way were gonna make out of this unscathed

“…attempting to avoid the need for debt restructuring by wasting trillions in public funds increases the likelihood that the current economic downturn will be prolonged, places a massive claim on our future production in order to transfer our nation’s wealth to the bondholders of mismanaged financial companies, and raises the likelihood that any nascent recovery will be cut short by inflation pressures. We are nowhere near the completion of this deleveraging cycle.” – John P. Hussman, Ph.D.

i have not addressed nuclear fusion nor do i think it is a preferable tech solution. the statement that tech is going to save the day is not so much a blanket statement as a historically proven fact. you can go back to the farm circa 1820 and ignore all tech advances including medical and call that religion – but to equate tech w/ religion is silly.re: financial jargon, “past performance is no gurantee of future results.” — so you equate a financial institutions covering their asses to bleeding edge tech performed at the best universities by our brightest minds? i believe this perfectly sums up our chat.

when the comments degrade to name calling (ie dolt) we can infer that the one doing the name calling is the one afflicted w/ the insult.Stephen Leeb is yet another doomsday soothsayer. How much did he prosper specifically from this supposed “game over”? jasonB why not show us how much you’ve prospered by reading this bunkum? i will wager you say $1,000 or whatever amount you’d like that you have not prospered from this book you just linked. in fact have you visited Stephen Leeb’s website? it’s a joke. there is not one single prospectus showing that is PROVING how his investment strategy in doomsdayland has fared. he makes the claims that you can PROSPER in this recession but fails to show his investment charts over time. you can call me whatever you want but again you can’t prove anything and neither can Stephen Leeb.

RE: “I have done rather a lot of research into solar over the years. Silicon-based panels recently hit 25% efficiency, multi-junction cells can achieve over 40% efficiency. Unfortunately the multi-junction cells rely on iridium, a rare element (found in only a handful of minerals, and at a concentration of 0.25 parts per million in the Earth). At current rates of use (mainly in LCD screens) we apparently have only enough for a decade or so.”so your research ASSUMES and your conclusions PREDICATED on static tech. you assume no new advances in material tech for panels? you assume no tweaks of existing materials to use say 1% or less of “handful of minerals” not to mention recoup via recycling of pre-existing materials. you make assumptions that we can engineer new approaches. i really hope w/ al of your “degrees” that you are not in any serious lab doing serious work or even mopping the floors in any labs.

No, what I said is that until a physical, testable example exists, it is vaporware. I seem to recall, for example, mentioning that AI has been “10 years away” for over 50 years.I said nothing about static tech, just that you cannot rely on as yet UNDISCOVERED tech.As you obviously know so much about all this why don’t you enlighten us as to your background?

The IMF is looking to recieve funding at the G20. I’d like to see it come with conditions such as it will not put outrageous conditions on crisis loans.

Most nations should withdraw from the IMF. If their terrible policies had an upside, then maybe an argument could be made that their “tough love” approach works.The true fact is, the IMF has a terrible track record of helping countries. They might help a dictator every once in a while, but as soon as democracy rears its ugly head, the IMF is there to squash it by demanding repayment of the money that the dictators borrowed.The IMF directly… DIRECTLY killed untold numbers of people when they did things like demand governments stop subsidizing medical care in disease-wracked countries.They are only about exploitation.

Let me guess. You make $250,000 a year.

What about Japan collapsing? Structurally their economy is extremely unstable, it has been for the last 30 years… So, professor what if Japan goes down? Can you give us an idea of its effects in the world’s economy?

What a joke. 250k is ridiculously rich. You’re talking about serfs and slaves here… is anyone supposed to take this post seriously?”The upper middle class with $250,000 gross incomes are major losers of the financial collapse.”Really, even more than a $35,000 worker at GM or Caterpiller who just got laid off and can no longer pay their mortgage? Idiot.

It’s probably going to be some kind of “organized bankruptcy”, whatever that means. Not chapter 11 though. Maybe the gov’t will protect the bondholders, and CDS’s won’t be triggered?

My concern with technology is how we implement it. Societies use technology like herbicides, pesticides, and nuclear power, etc. before they really understand the long-reaching implications, and usually for fairly superfluous things like improving crop yields or generating electricity. The risks of inappropriately applied technology are so great that it warrants greater caution in moving forward with large-scale implementations of new tech. I don’t mind the research part, just the rush to implement when there really isn’t anything “wrong” with primitive farming techniques.

If Fiat comes to the rescue it´s only because some few people are going to make a lot of MONEY out of the deal. Before you know Fiat will throw the white towel on the ring and by then their financial situation will be on a respirator.