Four priorities: Stop the 1. fraud, 2. corruption, 3. collusion, 4. coercion.

absolutely agree-these are the cornerstones of rebuilding a healthy democratic free market system; add to that full transparency and competent regulation, the entire system could be made much simpler and efficient directly benefitting all Americans.

grow up TIT this is not facebook

A simple example for the functioning of an economy would arise from the way a central bank works. Any amount of money in circulation is a liability for a central bank. Since the bank has a zero net worth, the liability is backed with assets in form of government securities. The value of these securities is backed with the value of taxes a government collects. The tax value is, in turn, dependent on the level of profit of the real economy producing goods and services. Thus, any crisis can be explained with impairment in a real economy since impairment means lower taxes, and lower taxes mean higher interest rates in the long run due to depreciation in the asset value of the central bank. As a result, its liability is backed at level where purchasing power of the money will be lower.The situation today arises from the lack of enough value addition by the real economy to back the credit amount in the system. That’s why, we see an adjustment in the economy; the adjustment happens in a deflationary way by eliminating all those agents that were previously living on a bubble rather than true value addition. In order to reverse the deflationary situation, the central bank aimed to inject enough liquidity first to stop the balance sheet contagion arising from downward asset price spiral due to fire sales, and second to reinflate the economy. In addition, accounting rules are kept at a favourable position for the banks so that they could hide the real value of the toxic assets.Although such actions helped to slow the downward process, they still don’t offer any exit strategy from the recession/depression. This is because throwing money into the system without having any reorganization for the production strategy will only exacerbate the moral hazard and wealth transfer. The only way to alleviate the zero sum structure of all actions taken by the agents in an economy is to improve the technology. This is because as humans we first invented then printed money. Thus, any improvement in productive ability via innovation will increase the value addition and thus decrease the default rates and increase the purchasing power of the money. Unfortunately, we still don’t see any clear plan by the policy makers on how they are organize the production strategy. This is absolutely ridiculous!For almost a year and a half, the central banks are injecting cash with the hope that the markets would readjust thanks to the invisible hand. However, throwing money without understanding how value is created is simply futile and dangerous. What we call invisible hand is the monetary circulation is a system that creates value under a production scheme determined by the increasing, constant, and diminishing returns to scale [Manufacturing is an example for increasing returns to scale activity whereas agriculture is an example for diminishing returns to scale activity]. I believe that the situation today is the result of taking a “trading economy” (i.e. globalization) rather than an “innovatively producing economy” as an objective. The former aims to maximize the trading activity under Malthusian’s zero-sum and Ricardian’s production specialization argument, whereas the latter aims to maximize the real wage level in a more protective scheme. The second is better since it arises from the aforementioned fact that the humans have first invented then printed money and that innovation should be protected since it is relative in a fragmented world. The protection is necessary because those that profit more from increasing returns to scale will eventually dominate up to a point where the rest of the system will have to specialize in constant or diminishing returns to scale activities; this is what we call inequality.

Incognito – a very well written post. And why is it that we have a “trading economy” in the USA today? Largely because the real productive economy (e.g. manufacturing) shrank due to effective competition, and instead the banking and financial sector took over. So the mindset of “trading” has become endemic to our large investment banks, and by this we actually mean short-term trading. In my view, this short-term trading accomplishes nothing of value to America at the present time – though it may serve to enrich the banks (assuming they make the winning trades).I am amazed, if not stupefied, that Obama has continued to embrace the activities of the Wall Street banks … apparently without realizing that they are in no way contributing to his hopes for a long-term recovery of America.If in fact we had fired the leadership of our largest investment banks, and replaced it with leaders from the “good banks” (i.e. the regional and community banks that did remain profitable throughout the last decade), then very likely we would be starting to get on the right path.As it is … we are still being run by the financial oligarchs who created this enormous mess.That is exactly what the chief economist at the IMF also observed during his recent commentary. So at this stage – America has avoided some of the most essential steps towards reforming and correcting our system.PeteCA

INFLATIONARY DEPRESSIONPeter Schiff Interviews Marc Faber | April 2, 2009(Dr. Marc Faber runs his own business, Marc Faber Limited, which acts as an investment advisor and fund manager. He publishes a widely read monthly investment newsletters The Gloom Boom & Doom report which highlights unusual investment opportunities, and is the author of several books including Tomorrow’s Gold – Asia’s Age of Discovery which was first published in 2002 and highlights future investment opportunities around the world. Dr. Faber is also a regular contributor to several leading financial publications around the world. A book on Dr. Faber, Riding The Millennial Storm, by Nick Vittachi, was published in 1998. In late February, Euro Pacific President Peter Schiff interviewed the eminent economist Marc Faber by telephone from his office in Hong Kong.)Q: Marc, many thanks for taking the time for this interview from your busy schedule.I’d like to start with some macroeconomic questions, and then talk about some of the investment implications of the larger macro questions. Let’s start with the stimulus and bailout, which is very much on everyone’s mind. What do you think are the long-term effects of the stimulus and bailout proposals on all the Western countries, including the U.S.?MF: Well, first of all, there are lots of academic studies on bailouts and stimuli; and also on money-printing. And, in terms of fiscal spending, bailouts usually don’t work. When the government sits in and tries to offset sagging private demand with government demand, it usually does not work. This is the pattern we have seen in the past. The long-term effect on the US economy from all the bailouts and deficits is basically that government’s debt will rise very substantially and the balance sheet of the Fed will expand. Many people think that the global recovery will begin in late 2009. I seriously doubt that. I think it will be at least two years from now, worst case maybe 10. And when we do start recovery, interest rates will rise and inflationary pressures will be enormous.An economy always fluctuates around the trend line. If you try to postpone recession the way the US government has tried to do, then one day you will have a much bigger problem. If you postpone recessions through deficit financing, or through easy monetary policies, then obviously you have very strong debt growth as we have had in the US. Debt as a percentage of GDP has expanded from 130% in 1980 to 360% today. This does not include the unfunded liabilities arising from pensions and from Medicare and Social Security.The best that the government could have done would have been to take a more severe recession in 2001, and then all the excess that followed would not have occurred. Now, we have an environment where the patient has died; no matter how much stimulus there is, it’s not going to revive the economy.Q: Does this mean that in the longer term we’re going to see an inflationary environment?MF: There is no other way for the US but to inflate. It’s not a desirable policy, and it has in the end disastrous social consequences. But given that we have a money-printer at the Fed and an Administration that wants to expand the role of government as a percentage, the result will be, unfortunately, inflation.Q: Are we looking at the same kinds of inflation we saw in the late ’70s, or not quite as bad?MF: My view is that, eventually, we will see a much higher inflation rate than in the ’70s. In the short term, because of the collapsing asset market and increased savings rate in the US, we will see deflationary pressures. But in the long run, we’ll have a much higher inflation rate. That will be negative for US bonds and equities.Q: Not a pleasant picture. Are there any other bubbles on the horizon?MF: Basically, we always have bubbles and investment mania in the world. Even in the 19th century, under the gold standard, from time-to-time investment manias and bubbles developed in railroads and in canals and in real estate, just to name a few. Under a fixed monetary, or gold, standard, where the quantity of money cannot be increased indefinitely; there is a natural limit to the scale of the crisis. Usually when there’s a boom in one sector of the economy, you have some kind of deflation somewhere else; that was also the case in the 1970′s. We had a boom in commodities, but bond prices collapsed.What Mr. Greenspan and Mr. Bernanke have achieved is historically quite unique. They have managed to create a bubble in everything, everywhere in the world: in real estate, equities, commodities, art, worthless collectibles; even bond prices continued to rise as interest rates fell due to the loose monetary policy. Since 2007 and 2008, everything has collapsed. But government bond prices continue to rise, and went ballistic between November 2008 and December 2008, when 10- and 30-year Treasury yields collapsed. So my view would be that this was the last bubble they managed to inflate. From here on, the government bond market will fall. In other words, the trend will be for interest rates to actually go up.Q: If you were the Chairman of the Fed or the Secretary of the Treasury, what would you recommend now to the Congress?MF: I think the best move would be to resign, but that aside…Q: Unlikely.MF: The problem is that no officials in the US are telling the truth. Let me give you an example: The elderly statesman in Singapore, Lee Kuan Yew, immediately said in last September, “we’re going to face very tough times; we have to tighten our belts to stay competitive.” This is something no president in the US will say: that you have to want for a few years, tighten your belts, and endure some pain in order to safeguard the country’s economic health – for the sake of your children and for the sake of the nation as a whole.Neither party in the US nor any elected government official dares to tell the electorate how disastrous conditions in the country have become. Ill-conceived policies by the last few administrations, Republicans as well as Democrats, were designed to stimulate consumptions. As a result of these policies, we will now have a period of subpar growth for quite some time. The government’s policy should have been to stimulate capital formation, education, and R&D, and to encourage people to save.If I had been Fed Chairman, I would have kept interest rates at a much higher level after 2001. I also wouldn’t have cut interest rates as aggressively as Mr. Bernanke did after September 18, 2007. Don’t forget, low interest rates actually hurt savers. There are a lot of people in America, like retirees, that have money on deposit, and now don’t get much interest on their deposits. So it basically forces them to speculate.If I were at the Treasury, I would let the financial institutions that overly leveraged themselves and gambled with other people’s money, like AIG and Fannie Mae and Freddie Mac, go bankrupt. You can still protect depositors and the policyholders of these companies. But let the system, through the market mechanism, deal with the problem.Q: It looks like Iceland’s on its way to bankruptcy. Do you think there are any other countries that are going to be in a similar shape to Iceland? Which countries are vulnerable?MF: I’m sorry to say I think the whole world is an Iceland. I think we have countries like Britain and Ireland and Switzerland that have problems similar to Iceland, though they’re not as bad as Iceland. Basically, Iceland became a huge hedge fund. They raised money in the international capital market; they then leveraged that money to buy assets all over the world. So, when asset prices stopped rising, banks and institutions in Iceland had a major problem. Banks were some of the worst offenders. They raised money from depositors, and by issuing bonds and certificates of deposit. Then, they gambled on poor investments, believing that markets couldn’t fail. They are children of the bull market. But when asset markets started to turn down, they were screwed. The value of their assets had declined, whereas their liabilities remained at the same level. That’s why so many banks are insolvent.Q: Can America learn anything from Japanese stagflation, the “lost decade” as many people call it?MF: I think the Japanese had a peculiar situation. First of all, the stock market in Japan was probably more overvalued than the US market in the year 2000 or in the year 2007. Also, the real estate market was in “cuckoo-land” in Japan. The good thing about Japan after 1990, when the recession hit and a period of no-growth began, is that the typical household never suffered very badly, for the simple reason that prices for assets, things like golf course memberships, nightclubs, housing prices, etc., all went down. So, their salaries didn’t rise any more but stayed at the same level, and everything fell in price – we had deflation. So the typical household actually increased its standard of living.In the US, the problem is that the household sector is terribly indebted. That wasn’t the case in Japan. In Japan, the corporate sector was indebted and the banks and real estate companies were overleveraged, but not the household sector. And the household sector in Japan still had a savings rate of around 12 percent when the recession started. In the US, the household sector had stopped saving out of current income throughout the 1990s. In 1990, the saving rate was nine percent; then it went to zero. Now, the savings rate will have to go up. The household sector will realize that savings out of illusory asset price gains, like stocks and real estate, are not permanent; and therefore, if we want to have money for retirement, we have to save money from current income. And that has, of course, a negative short-term impact on the economy.Q: Marc, I’d like to ask you now a few investment questions. I assume that your investment philosophy flows directly from your economic point of view. If you were a US-based investor with a five-year investment horizon, how would you allocate your assets now, and might you make a change with them in a year or two?MF: It would depend obviously on the cash flow of that particular investor, his risk profile, if he has real estate or a pension account, or is he well-insured and this and that; so there are many different factors to consider.Q: Let’s assume he owns his own home, he’s not overly leveraged, and he has a job.MF: In general, I don’t like stocks. The Japanese market, as an example, is at the same level it was in 1981. So it’s 30 years behind. If the US just went down to the level of 1990, the S&P would be at 300. It indicates that the Asian markets are at either 20 year lows or 30 year lows. The dividend yields on Asian stock markets is about three times the bond yields in those countries. Relative to the US, Asia is quite inexpensive. So I think that, yes, emerging economies will be a place to look, and I would allocate probably now, ten to 20 percent into emerging economies.Also, the commodities have totally imploded. The shares of mining companies and exploration companies and resource producers have also totally collapsed. Since November 21st, however, some stocks like Freeport-McMoran and Newmont have roughly doubled in price. They’re not quite as attractive as they were two months ago. And I would still own some gold, say ten percent in gold.Q: Now, would that be in physical gold, or would that be in an ETF, or individual mining companies?MF: The mining companies are cheaper than physical gold, but the mining industry has its own set of problems. I would own physical just as insurance, because we cannot trust central bankers anymore – every person has to be his own central bank. I have a negative view of the US dollar in the long run, as I expect a revival of inflation. To some extent, I think real estate will protect you; in particular, I would prefer to have real estate in the countryside, rather than in the city.Q: Would you consider, as a US investor, real estate overseas? I know there are some REITs in Singapore and in Australia that have a terrific yield.MF: Yes, these yields will come down because they will have to cut the dividends. But say in Singapore you have REITs that yield 15 percent. So even if they cut the dividend, I think they will still be good, because the bond yield in Singapore is less than two percent. Even at five percent yield, in what I would consider a very solid currency in a very solid country, REITs would still be attractive. Singapore is probably the richest country in the world, everything considered.Q: Global equities ten to 20. So that adds up, if you figure about 20 percent for resource stocks, to about half of the portfolio. Would you have the rest of your money in cash?MF: Yes, in cash.Q: Which currencies?MF: Well, in the short term, I think the US dollar is okay. But obviously at some point it won’t be okay. But right now, I don’t see how the US dollar will totally implode.Q: Do you prefer the Asian markets in general over the US markets.MF: I ought to have mentioned this before: in Asia the valuations are more compelling, because the markets are back to 20 year lows or 30 year lows, and because the dividend yield is three times the bond yield. We have in Asia a lot of companies that serve the domestic markets. They produce cigarettes or beer or food. They’re not going to be affected that badly by the global slump. The valuation of the stocks may be affected, because obviously there is liquidation; but I think that their fundamentals are sound, and that they’ll survive under any environment; and that you will make money, and in the meantime, you’re receiving the high dividends.Q: In general, would you say that dividends in Asian companies are more sustainable than yields with US companies?MF: As I said about the Asian REITs, they will probably have to cut the dividends. But if you produce, say, food in Thailand, I don’t see that the global recession would have a huge impact on food sales in Thailand. It would have some impact, but not huge; so these dividends are relatively safe in many cases.Q: In terms of commodities, do you prefer any sector over another? Agriculture or energy or metals or…MF: Well, I think that oil is now again at a relatively low level and I would probably play the oil market by buying oil exploration companies. And I think agricultural commodities have come down a lot again, and maybe there are some opportunities there. But as I said, I’m not an expert on each commodity. I think sugar is quite attractive at this level. The problem is for the individual to play the commodity markets if he doesn’t have a commodity-trading account and he can’t buy and sell, he gets stuck because he has to stay the course. And so for individuals the best way to play commodities is to buy a good mining company, a good oil company, or a good exploration company, or just physical gold. I don’t believe that individuals are very successful at investing in commodities and commodity-related structure products.Q: Okay, Marc, I think this would wrap it up, but I’d like to ask you one question. If you had to leave one message with our readers to take away from all this, what would that be? What would be the big takeaway for them?MF: We live now in an environment of very, very high volatility, because on the one hand you have the private sector that has tightened lending conditions, and wealth has been destroyed, and households will save more and be more prudent financially than they’ve been; in other words, credit or liquidity is tightening.Then on the other hand you have these clowns in government that think that they can solve any problem. As Mr. Geithner said recently, “we know how to fix the problems.” Well if he knew so well how to fix the problems, why did he let the problems happen in the first place? He was the New York Fed Chairman when the conditions were created! And Mr. Bernanke was the Fed Chairman since, I think, 2005, and he was the architect of this ultra-expansionary monetary policy. They have no credibility at all, and in my opinion they’re going to make matters worse. And the worse the economic conditions will become, the more Mr. Bernanke will throw money at the system; and that will lead to huge volatility in the market. You can have rebounds in individual stocks, and in whole markets, of 30 percent in one month, then they can drop 20 percent in a month; don’t forget, between November and the end of the December, the 30-year Treasury ran at 20 percent; and from its peak at the end of December it dropped 20 percent.There is huge volatility and the same will happen in equities. And that’s why I think it’s very difficult to make long-term predictions. When you have a perfect free-market, it’s difficult to predict the future. But when you have a market that is disturbed by government manipulations and money-printing, it’s impossible to make any predictions.Q: Well said.

nice post! Again our short sighted leaders cave in to the oligarchs and do what is in their best interest, not the countrys. They will use every dirty little trick in the book and keep inventing new ones in order to maintain the elitist power structure: they just refuse to deal directly with this debt in an honest and fair manner. Just wait until the CDS for MBS on commercial real estate held by more corporations including the life insurance companies fail; of course, by then, it will be too late; not for the elites but for the rest of us!

PeteCA, thank you for your comments. Unfortunately, policy makers (and most practitioners and academics) fail to understand that the existence of the banks is guaranteed only with a productive economy. A bank ceases to exist due to borrower’s inability to pay the debts (assuming that the lenders would not withdraw their money for no reason). Borrowers can pay their debt if and only if there is a productive, thus value additive, economy. However, today, the policy makers are acting as though they were protecting the lenders rather than the borrowers. They are quite late in organizing a plan to improve the situation. In fact, their only plan is to keep the banks alive, and throw money to the consumers assuming that the “free market” would solve the problems.Furthermore, due to the lack of borrowers arising from the impaired monetary circulation in an economy, the only way for the banks to make money is to direct the liquidity into financial markets in some way (by causing moral hazard). That’s why, we see weird moves despite the bad news. Liquidity injections helped to slow the downward process; however, it opened a way for arbitrage gains by many financial institutions. This is simply nothing else than stealing. In my view,at least for this year, we will see a series of downward moves after non-sense rallies. If this keeps on going, the world may really face a situation that will cause a complete collapse.

Thank you for putting your thoughts down. You obviously have a great understanding.As the jobs moved off shore (that in itself can be a long discussion) there were a ever widening gaps left in our own economic structure. Lower taxes revenues were the fear, so our elite did what worked for a while and that was to pump up housing as that is home grown manufacturing. They did this with an increase in the money supply. It really wasn’t noticed or cared about because houses and stocks were both rising in value and everyone was happy as can be.The increase in the money also fueled hyper growth overseas. This did go into manufacturing other than houses and commercial building. But as inevitable, this lead to a glut of manufacturing capacity. The world was awash with products and the US was awash with houses and condos and retail space.And as you stated, this was all done on credit growth. The upside of hyper credit growth is increased asset values and as more money chases fewer real assets until the entire world reached the point where real income was insufficient to make the payments on all this debt.What frustrates me is that those in power, seems like through out most of the world, don’t really understand the dynamics of to much debt. Their answer to to much debt is to transfer it to someone else or try to transfer it into the future. This worked when the carrying capacity was under the limits of Zero Hour but once that was reached, trying to transfer it anywhere is less than a Zero Sum game because there are costs included with creating new debt to replace old debt. So even if the numbers were the same, you lose. When you refi your house, there is a 2 or 3% fee. Same with all debt. It isn’t free.I’m becoming to believe that what those in charge believe about economics is more like a religious belief. Blind faith so strong that they will not allow a contrary view into their thoughts. That they are no more capable of standing back and examining the consequences than the Royalty in Europe was 250 years ago or those who followed Hitler or Japan’s Emperor that lead up to WWII. Blind Faith is fanaticism. They believe what they believe and that is all they believe. All information gathered is used to justify what they already believe. After all it worked for 30 years.When you look at a chart of total debt in the US it is very obvious that we have an unsustainable bubble in debt. It is more severe than during the 1929-33 period. And worse in many ways as many more people are dependent upon the profits of industry these days than during the earlier time period. We have an over capacity, overly indebted situation where real profits are going to be declining until both debt is lowered and the over capacity situation corrects itself.Nouriel’s No. 1 solution response can not be achieved in this environment. We can not return to growth, even if that was advisable. Growth in what terms, more industrial capacity? More people? More demand on the environment and resources? Or just growth in the velocity of money?Even if that were possible, it would require a major paradigm shift in the efficient use of a clean energy. Anything else is just asking for eventual world wide ecological system failure. What is the end game? Just growth until?

在 倫 敦 舉 行 的 20 國 集 團 金 融 峰 會 閉 幕 。與 會 國 同 意 動 用 數 以 萬 億 美 元 去 挽 救 環 球 經 濟 ， 包 括向 國 際 貨 幣 基 金 組 織 注 資 5 千 億 美 元 ， 又 會 增 加 2500 億 美 元 的 特 別 提 款 權 (SDR) ， 又 會 以 另 外 2500 億 美 元 加 強 全 球 貿 易 。 中 國 會 承 擔 當 中 的 400 億 美 元 ， 日 本 、歐 盟 及 美 國 各 自 承 擔 1000 億 美 元 。 與 會 領 袖 又 同 意 國 際 貨 幣 基 金 組 織 售 出 黃 金 ，以 協 助 窮 困 國 家 。與 會 國 同 意 在 2010 年 前 ， 動 用 5 萬 億 美 元 去 刺 激 經 濟 ， 又 承 諾 增 加 發 展 中 國 家 的 在 全 球 經 濟 政 策 有 更 大 的 話 事 權 。另 一 方 面 ， 與 會 領 袖 首 次 同 意 加 強 監 管 全 球 金 融 系 統 ， 包 括 對 沖 基 金 、 國 際 會 計 準 則 及 評 級 機 構 ， 並 取 締 避 稅 天 堂 。 與 會 領 袖 又 同 意 為 企 業 薪 酬 及 花 紅 設 新 的 限 制 及 對 抗 貿 易 保 護 主 義 。法 國 總 統 薩 爾 科 齊 說 ， 今 次 峰 會 的 成 果 比 大 家 預 期 的 多 ， 峰 會 稍 後 會 公 布 避 稅 天 堂 的 名 單 。

my , oh my… you dont have to get all nasty on us… your shirts will be done by tomorrow.

Seen this before. No big deal.

Real affordability depends on real incomes. Most people just want to know the monthly payment.

Stop political pressure on accounting standard settersPublished: April 2 2009

Costs of the International Monetary Fund are a real but hidden cost on US taxpayers. And now Dr. Roubini and his colleagues want the G20 to up the ante, even with the European Union’s recent IMF pledge of $100 billion as a “step toward stablizing the teetering global financial system.”Back in 2003, the United States was supplying $27 billion of funds to the IMF at an annual cost to the taxpayer of $1.9 billion—an expenditure growing year after year and conspicuous by its absence in the Federal budget, according to the Carnegie Mellon Quarterly International Economics Report, November 2003. Carnegie called it “a hidden element in US deficit and debt.”Under the IMF’s Special Drawing Rights (SDR) Department, rich countries are compelled to lend on demand to poor counties in the currency of their choice, such as to Zimbabwe that currently is seeking $5 billion from the IMF to “kick-start” its economy. The SDR is the unit of account of the IMF and is a weighted average of the US dollar, Euro, Japanese yen and Pound Sterling. These are open-end and unconditional loans and appear nowhere in the Federal budget.At a growing annual expense, the U.S. exposure then was 50% of the program (2003), at the same time credit risks and interest subsidy costs were increasing, and the balance of negotiation power was held by “emboldened developing nations.” And, according to the report, the Treasury was pushing for more US exposure.The IMF, headed by Socialist Dominique Strauss-Kahn, and the World Bank, headed by Goldman’s Robert B. Zoellick, denies any risk.http://www.house.gov/jec/imf/11-18-03.pdfThe US budget deficit will reach a $1.845 trillion in fiscal 2009 that ends in September, equivalent to 13.1 percent of economic output, the budget arm of Congress forecast in March.http://www.individual.com/story.php?story=98221582If America sports the deepest of the world’s deep pockets, then this worldwide, tax-funded billionaires’ gala is over. America is broke.

Perhaps the economic agenda has been politicized……as has man-made climate change. What a joke. Everything is “for sale” to the dumbest bidder and dumber sheeple that follow along blindly with this crap.

may i coin a term for this latest rally today?:DEAD CAT SPLAT

Dear Professor Roubini,It is sad to see your name listed along with people representing the most corrupted, fraudulent and abusive institutions.

More reason for a Pan Asian Regional Bond Fund….Financial Hegemony by the West is a con game and the G20 is the funeral of this Hegemony. NR can criticize decoupling but as economies continue to contract there isn’t going to be much hand holding going on despite all the rhetoric….

Commercial Real Estate is the next wave that will fuel the printing presses in the U.S.Obama and Geithner like you say are trying to ensure that the U.S. is first among equals. Too bad as a debtor nation they are like the ugly girl at the prom hoping somebody will ask them to dance again. Unfortunately, the music stopped for the U.S. and the musical chairs have new occupants. These are the creditor nations who now have a voice and clout.

I love the way political economists use the term over capacity. It is as if no one needs housing, food, clothing, health care, etc. The workers have produced so much there is not enough.This is what is called class-speak. As long as you have enough there is an “over capacity”.

I know I’m being cynical here, but I know we’re in trouble when world leaders come out of a G-20 conference saying things like this:French President Nicolas Sarkozy, who earlier had threatened earlier to walk out if unsatisfied with the outcome, also praised Obama for helping to create consensus and persuade China to agree to publish lists of tax havens.”There were moments of tension,” Sarkozy said. “Never would we have thought to get as big an agreement.”Angela Merkel: “a very, very good, almost historic compromise” that will give the world “a clear financial markets architecture.”Gordon Brown: “”For the first time we have a common approach to cleaning up banks around the world to restructuring of the world financial system. We have maintained our commitment to help the world’s poorest,” Brown said. “This is a collective action of people around the world working at their best.”And of course, our own fearless leader: “We have agreed on a series of unprecedented steps to restore growth and prevent a crisis like this happening again… We have created as fundamental a reworking of resources to these international financial institutions as anything we’ve done in the last several decades.”I’m just waiting for the YouTube video of these world leaders singing “Kumbaya” to come out. These words sound an awful lot like the things my parents said while they were in therapy, contemplating a divorce: “We made a lot of progress today”, “I think we really had a breakthrough”. Of course, my parents are still together, so maybe there really is hope…

There are rumors that part of the G20 meeting has a side agenda and is doubling as a forum for unknown legal prosecutors. It is being driven by UST bond creditor nations, who have been raped in the trillions by US sponsored bond fraud. They want justice before losses are compounded with USTBonds and USAgency Bond damage. Quite frankly I think this is the stuff of Peter Pan…

And Angela Merkel playing his flute…(sorry, couldn’t resist)

too bad you short have no chance to cover by today. come back tomorrow. make sure get ready to cover by morning. or rally will run higher high and leave you behind. oh dont fight the FED and dollar the world reserve currency.

good observation – I heard one commentator suggest that all twenty leaders were in the same sinking boat and that lack of an agreement (or appearance thereof) would be political suicide.I think the negative preamble leading up to the G20 was designed to to manage expectations down so as to surprise on the upside.A lot of rhetoric and self congratulations with a fawning media to reassure the sheeple.Media chorus is calling the March 9 666 on SPX a bottom – I would suggest the sleight of hand with the FDIC lending its balance sheet (over and above TARP) to the tune of $500bn to $1 Trn to the banks and the FASB rigging of the game (effectively providing capital forbearance to the banks).And now for endless loops of Obama and other leaders declaring that the G20 meeting was a turning point in the financial crisis.Today’s market action will of course underline that … market manipulation???

Jevons Paradox > I love this blog. I learn something new all the time. I just never thought about this aspect. Thanks MarkSo according to this paradox, technology may save human time and energy but can cause the underlying resource to be utilized at a faster pace. Makes sense. So if we want to put people to work, we need to reduce technology and that will give people useful employment and save the environment at the same time… Only problem are the humans who will not want to go back to doing things the hard way, even if it is healthier and better for all. Another Paradox.

Soros: “(G20) meeting was Gordon Brown’s finest hour”I rest my case

Pertaining to our discussion a couple of threads back, and for your enjoyment, may I suggest you watch THIS (unfortunately realplayer…) stream about the scale of the energy problem from the JPL von Kármán Lecture Series. It is a 2/2008 presentation on global energy issues.

The market can remain irrational much longer than what you can stay solvent. – Lord KeynesErnst

G20:Analyze that which has been agreed.Bottom line: imo – nothing much – nothing relevant – nothing in real terms!The photo shoot was good though, Did you real expect much more?A “leadership” survival PR exercise.Ho hum

Rich — please stop spamming these threads with repetitive summaries of your posts. What if multiple other RGE blog authors did the same thing? These threads would become unreadable.Willing participants will find you by themselves.

Interesting commentary by Stratfor:I read this link and have done so for many years: I find their analysis very biased sometimes:Red Alert: Redefining the Global System (Open Access)You mileage will varyHo hum

A very interesting defense to fraud is building in the USA around Mr Madoff:”In a statement, Fairfield Greenwich said it would vigorously contest the charges, which it described as “false and misleading”. The fund said that it was hardly alone in failing to spot Madoff’s fraud, pointing out that it was also overlooked by the SEC and hundreds of other investors.”http://www.guardian.co.uk/business/2009/apr/01/hedge-fund-madoff-fraud-chargeSo will the defense be- ‘how could we be expected to detect the fraud when the SEC and other US financial regulators not only did not detect fraud but gave the industry a clean bill of health for Mr Madoff’s operations?’.The prosecutor (I am not a lawyer) will may have to prove complicity to fraud to get a conviction… for fraudLOLand a Ho hum

April 2 (Bloomberg) — “The U.S. Senate rejected a proposal by President Barack Obama to finance an overhaul of the nation’s health-care system by limiting the ability of the well-to-do to take tax deductions for charitable contributions.The chamber unanimously approved an amendment to a pending budget plan that rejects the proposal to limit the size of itemized deductions that can be taken by those earning more than $250,000.Obama proposed using the estimated $318 billion such a change would generate to help finance a health-care overhaul, which he says will cost at least $630 billion. Lawmakers said they feared the effect of such a tax change on charities.”Of all the things that could be done, this was Obama’s bright idea? Less money to charities = more money from government. To me this proves he doesn’t get it.

Hmm, maybe I won’t subscribe to Stratfor after all PJB.

Much appreciated text. NR seems to have softened his tone over past couple of weeks.This (and stocks going up all over the world) leads to confusion and more people being sucked in, buying equities, in the fear of missing out.Nothing fundamentally has changed for Main St. and with fewer consumers each week being eligible for loans (ie more unemployed), its difficult to see a revival for at least 24 months, then low growth but with that will come higher energy costs and inflation.

I’ll have spam, spam, baked beans, and spam.Not me. I love spam. I’ll have spam, spam, spam, spam, and spam.

NBC nightly news -4 minute opening segment on Obama “the deal maker / diplomat” at G20 -followed by a3 minute segment on the star power of Michelle Obamanext segment60 seconds on the third day in a row of big point gains on Wall Street(note we are back to about where we were last Thursday)IMHO the full force of the Obama machine is doing everything possible to talk up this economy and (to the cynic) manipulate this economy with such instruments asFASB, PPIP/FDIC etc. and by using its media handmaidens such as NBC to deliver the message.

The more I listen to the news lately, the more it feels like I’m being talked into buying a car from a used car salesman!

imho The impact of technology may be easily observed by watching how those around us are using/abusing it, and then watching one’s self.There is an argument to be made that personal technologies, while seemingly productive from one perspective, are from another perspective enabling extreme personal behaviors that ultimately bring into question whether or not real productivity is being achieved.Take this simple and obvious example involving mobile phones:A typical scenario these days in the USA (maybe not everywhere) has you in line to order your coffee and perhaps a sweet. The person in front of you is (loudly speaking) on their mobile phone while simultaneously submitting an order to the barista/o who cannot tell what the person is saying or to whom the person is actually talking. This all takes more time and causes unnecessary delay and frustration as seen on the faces of those in line.On one end, it might be argued that the mobile phone technology is a production tool as it is enabling a conversation to occur that otherwise might not and that the talker in this case is achieving personal productivity by multi-tasking (talking and ordering).Another argument might be that while the talker is doing what he/she wants to do, the productivity of the cafe and those in line is being impaired due to the talker’s pre-existing behavior as enabled by the mobile phone.Perhaps the appropriate application and smart usage of technology is more the point, generally.Regarding the idea that technology will some how be the savior – quite a leap from the simple example – begs the question of realistically identifying the defects, both human and systemic, that have led to and are still fostering the crises.If there is a place for technology in moving us forward is certainly away in the distance, but clearly might be considered in enabling our most positive and productive character traits.Best wishes,

Unfortunately, the average American doesn’t know any better. Maybe they’ll go out and start charging on their credit cards again (just to get laid off a week later). I don’t have anything in the market, so I’m not bias. We could rally through the end of the year for all I care, but IMO, fundamentals will win out eventually – even if it’s after our next bubble. And for the long term, our fundamentals suck. I don’t watch the news at all any more because I feel like everything has separated itself from reality and I just get too pissed off.

It is the era where laws are made for the banks (govt), by the banks (govt), the era of bankhood. Where banks and govt know best and everyone else, the common people and the market, don’t know anything.Mark-market accounting is just fine. If not, then how do you value assets?I can say my PC is worth 30000 dollars and write it in my books but it doesn’t make it 30000 dollars. Unless I find a buyer and determine its true worth. I could say it was once 3000 dollars but that still will have no relevance to how much it is worth now. Mark-to-market accounting is the only way that free markets runs, and this is another step in the direction of making the banks all-powerful and too-big-to-fail.

They’ve already purchased the car in your name. They’re just trying to convince you that it’s a good idea to keep it.

Wow, SP500 will bust thru 900 upside in coming days. Shorts are screwed.

G20 ends Anglo-Saxon erahttp://blogs.reuters.com/great-debate/2009/04/02/g20-ends-anglo-saxon-era/#comment-12045

– Paul Taylor is a Reuters columnist. The opinions expressed are his own –Thursday’s G20 summit may not mark the end or even the beginning of the end of the global recession. It did mark the end of the ascendancy of the unfettered, Anglo-Saxon model of capitalism.What comes next is far from sure, but it will be different from the headlong dash for individual enrichment, short-term profit and financial acrobatics that began with the dominance of U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher in the 1980s. The widespread acceptance of increased regulation would have been anathema for U.S. President Barack Obama’s predecessors…

So who’s gonna fall for the mark-to-fantasy numbers?I can’t imagine that anyone will.It only hurts the situation.I guess what the market is so giddy about is the sense that the G20 leaders are on the same page and they’re going to fix everything. I’m afraid Mr. Market will be sorely disappointed soon enough.Of course the G20 leaders were going to put on a good show of solidarity. They had no choice. If they didn’t, the markets would tumble and no one wanted that. But it was just that, a show.More regulation and transparency are good (although I doubt they’ll be implemented wisely) but we must still recover from the credit binge. Much more fallout still to come. To be papered over with freshly printed funny money, eventually causing high inflation.I wonder if other worlds are as screwed up as ours.

that looks like the rows of characters from one of those old Space Invaders games…

and it three months whhen the market is it 4500 and 400 he will go on TV, cry and say he was wrong… and say he is leaving stocks forever as they have no more relevance

That, too, is true!

Thank you Phil!And this is exactly the point- technology is purely neutral. What matters is how we use it. And if you look around you will see that we are employing it quite efficiently in dirtying our environment/nest.In response to Incognito’s post:As far as I understood, based on your claims, humans should have a limit for innovation since the natural resources can be depleted. I believe that the inefficient use of the natural resources may cause depletion. However, a correct use of technology (such as alternative energy) may help further improvement. At the end of the day, humans not only live based on what has happened or happening but also live based on what is going to happen. Such a structure implies that humans set expectations.I am not implying anything really. All I wish to express is that we thoroughly examine all technological “solutions,” that we don’t push/market them for money’s sake.As to whether technologies _may_ result in depletion of resources, it’s a fact. Efficiencies (as suggested by Jevons Paradox) create greater depletions: yes, I know, technologies aimed at “renewable” applications are intend to reduce exhaustion, but no matter how close they come they always seem to come up short: externalizations are what capitalism is good at. Think about “economies of scale,” that it means pushing greater volumes; this hardly results in producing the necessary amounts of a thing as marketing comes into play and instructs people to buy the very thing that they probably don’t need.As to humans’ expectations, these are, and always will be, tempered by the natural world. Mother Nature is the final arbiter. I strongly recommend the excellent video posted in the previous thread by subgenius: http://www.youtube.com/v/JBETqjlDMNcMark

you are correct in one way about over capacity. Especially in housing. It is the ability to effectively pay for the man hours and resources that go into a house that has given us a large inventory of vacant dwelling units. It takes a lot of production hours and resources to build a modern 2500 sf house. Add granite counter tops and upscale amenities plus a swimming pool. This is cost. Of course this all is dependent upon the cost of land and labor and these are all variable. Then the cost of money and down payments factor in to the affordability.What an average dwelling should cost is what an average worker can can afford to pay including taxes, maintenance, insurance, plus utilities. What happens in a bubble is that the value rises way above these levels.Then this more or less false demand drives up the cost of land and drives builders to want to build more than could normally be assimilated by newly formed households and then even more to take advantage of the high prices.So more inventory is built than can be assimilated. At the same time the prices go so high that fewer and fewer can afford them.. Then the stupid government and financial institution, in order to perpetuate this bubble to higher levels, lowered the qualifications down to levels that if you could walk and chew gum, one or the other, you qualified for a loan to buy one… A stated income loan which didn’t even reflect the buyer’s real income.And we got to levels where there really were NO new buyers. And builders were still building… thus OVER CAPACITY!If you don’t like my term, find an more appropriate one. Sure there is always someone who would live in the house. But NOT at the current value plus upkeep and taxes. So you end up in a deflationary cycle and prices fall until you wipe out enough value so that buyers with less income can then afford to own. In the middle there is over capacity or excess inventory….This happened with cars and computers and lots and lots of things. Over capacity results in excess inventory… It is a function of high cost vs. ability to purchase while at the same time production levels are increasing…We did this. They did this is more accurate.

here.the variation of the green revolution that resultedin patricide.what happens..? Wernher von Braun and Fritz Haber.the natzi connection! rockets and chemistry and foodsupply. so much fun in one hour. not to mentionpoison gas…… nitrogen capture from theatmosphere and then into your body.explorations!.Wednesday, April 1, 2009 5:00 pmPublic Affairs.http://archive.wbai.org/.not to mention the societal direction of finance toward military concerns and related personalincestuous ( cousin love ) affairs. dashing!.and this for haber…..Haber’s wife, Clara Immerwahr, who also held a PhD in chemistry, opposed his work on poison gas and committed suicide with his service weapon in their garden, possibly in response to his having personally overseen the first successful use of chlorine at the Second Battle of Ypres on 22 April 1915…..science, technology and history.. and here we are.

EXCELLENT video! Thanks genius!Mark

G-20 Shapes New World Order With Lesser Role for U.S., MarketsApril 3 (Bloomberg) — Global leaders took their biggest steps yet toward a new world order that’s less U.S.-centric with a more heavily regulated financial industry and a greater role for international institutions and emerging markets….A lot was at stake. If the leaders had failed to forge a consensus — Sarkozy this week threatened to quit the talks if they didn’t back much tighter regulation — it might have set back the world’s economy and markets just as they’re showing signs of shaking off the worst financial crisis in six decades.That’s what happened in 1933, when President Franklin D. Roosevelt torpedoed a similar conference in London by rejecting its plan to stabilize currency rates and in the process scotched international efforts to lift the world out of a depression.More ConciliationSeeking to avoid a repeat of that historic flop, President Barack Obama junked the at-times go-it-alone approach of his predecessor, George W. Bush, and adopted a more conciliatory stance toward his fellow leaders…”http://www.bloomberg.com/apps/news?pid=20601087&sid=axEnb_LXw5yc&refer=home

The economy and the market are not linked.. You’d think they should be but money created by the FED has to go somewhere. It is going into stocks…Call it what you want. If you are short the market, get out. This is a rally. It has some legs. Volume at swing points. Big ABC pattern UP.

The money the FED is printing has to go somewhere. It is going into stocks.Take advantage of this rally, keep loose stops.

do you think you can short the market to 0? told you dont fight the FED and big governments. QE, easier M2M, and global QE at G20 cards have been dealt. They will continue to deal mega-punching card to fight this so called deflation-scare.

LOL! Brilliant statement/analogy!Mark

Right you are, Mark: these really are “capitalist” banks in that they specialize in grabbing other people’s capital. Goldman-Sachs free market capitalism is where we all get to play and when the night is over, Goldman goes home with all the chips. Goldman-style capitalism is where Goldman makes the rules, picks the politicians, punishes the competitors, swamps and buys out other “capitalists,” and steals the tax money and mites of the widows and orphans.

I’m sorry M Munigant, but that is idiocy. How can you not applaud what MA, and more generally the BrainTrust, are trying to accomplish? The American public is far too apathetic and aloof for its own good–any call to action is commendable in my book. We all can do more, and I put myself at the top of that list.And that is exactly why I am glad MA has posted this update.

So, economicminor, “this is a rally. It has some legs. Volume at swing points. Big ABC pattern UP”? Ahhhh, but on closer look, are those muscular bull legs, or hairy bear legs? Or…a waddling bear’s bottom …or firey red, patterned bull bottom pants? Abelson, in this week’s UP AND DOWN WALL STREET gives a “fair warning” on rallying junk… In Dante’s Footsteps | March 28, 2009By ALAN ABELSONTHE STOCK MARKET, IN CASE you’ve been too busy trying to book passage on the space shuttle to notice, has been on a roll. It started to go perpendicular on March 10 and, until last Friday, anyway, barely paused to look back. As intimated above, Tim Geithner’s latest gambit detonated a new burst toward heaven last Monday.Whether what we’ve been witnessing is a bear-market bounce or the forerunner of something much more exhilarating and sustainable — perhaps even the beginnings of a new, gulp, bull market — became a matter of intense speculation among certified Street sages, most of whom embody that special quality common to investment seers and political pundits of being rarely right but never in doubt.Once stocks started their upward sprint early this month, it didn’t take long for the optimists, their ranks and the value of their portfolios both seriously shrunken, to crawl out of their bunkers, blink their eyes in the sunlight and give voice to their-long suppressed joyous convictions. And, Wall Street being Wall Street, their numbers have steadily swelled with every uptick in stock prices.They rediscovered all manner of proof, or at least hope, in support of their resurrected bullishness. Sentiment — that once reliable but lately flaky contrary indicator — was way down in the dumps, a sure sign this time, they insisted, that the market was headed for bigger and better things. Those of a technical bent, moreover, rushed to unearth other “evidence” that the planets were in proper alignment for an extended market surge.And the blessed bulls espied, however hidden from those of us with less penetrating vision, that the economy was bottoming. Besides, the stock market is an anticipatory beast (who knew?) and always moves up in advance of a recovery.Skeptics, grouchy types like us, haven’t been able to let the poor souls who have endured so much have their moment. No denying this has been one really big bear-market rally. But, given that this has been one really big bear market, why should any one expect an attendant pee-wee rally?Contributing to the sharp gains in equities have been a tide of short-covering (shorts after a steep decline, like longs after a sharp swing higher, have a tendency to press their luck and overload their positions). And, after two miserable opening months, portfolio managers of funds large and small were feeling the heat of their investors’ displeasure. Fearful of withdrawals, desperate for performance and with quarter’s end drawing ever nearer, these stalwarts piled into stocks, and typically into severely beaten-down shares which promised the biggest bang for their buck.On this score, the jolly commentator of First Global notes that the big winners have been “the banks, the brokers, the autos, the insurers, the home-builders…all sectors given up for dead and brought to temporary life on hopeful chatter…Quality has suffered. Junk has rallied.” And that dichotomy is true, he says, not only in our fair land but also in the irrational exuberance exhibited in bourses around the world. Alas, this almost universal investor feeding frenzy, he warns, “is looking extremely treacherous. There’s every chance you’ll be let down badly in this little fling.”Fair warning.http://tickerforum.org/cgi-ticker/akcs-www?post=89074

… During most of the past decade, the Financial Stability Forum has laboured in obscurity. For while the group has long been a crucial place for central bankers and supervisors to meet, these discussions have been so discreet they were barely known in the wider world.No longer. Yesterday the G20 issued a communiqué that renamed the FSF the “Financial Stability Board”, with an elevated mandate to monitor global financial stability and promoting med-ium-term reform, alongside the International Monetary Fund. The G20 also confirmed an earlier announcement that the FSB would expand its membership to include representatives from all the G20 nations for the first time – in effect turning the group into the nearest thing the world has to a prototype of a an overarching global financial regulatory group…

Entire FT article => Forum emerges from shadows to take wider role, By Gillian Tett, Published: April 3 2009

and with easier M2M card being dealt. Hehe, bank toxic waste write up card will be comming. Imagine bankers now can M2M their toxic waste 100c on dollar to PPIP (90c on dollar TAXPAYER QE card). Quick, long the market before you are left behind.

Mad Money Recap ArchiveThursday, August 14, 2008: Cramer believes the worst is behind us. He made a case for the bulls and offered several reasons why he feels the market bottomed on July 15. The financials, consumer stocks and even housing stocks can begin to rally as it appears inflation has finally peaked and as oil and gas continue to decline and stabilize.

The reason why this recession is so much harder in USA than Europe has to do with Americans aversion to the United Nations. Europeans are generally more willing to accept UN decisions, and for that reason do not need a heavy recession to push for ‘world wide solutions’.Yes I do know that this easily classifies as a conspiracy theory. Apologies for that.

Unintended consequences:Obama Banking Policy Signals $1 Trillion Writedowns From LoansBy Mark PittmanApril 3 (Bloomberg) — U.S. regulators may force lenders including Citigroup Inc. and Wells Fargo & Co. to sell assets and write down as much as $1 trillion in loans, twice what they’ve already recorded, based on Federal Deposit Insurance Corp. auction data compiled by Bloomberg.http://www.bloomberg.com/apps/news?pid=20601087&sid=aylbeokVZaWo&refer=home

Seeing as 30% of the shares on NYSE are phantom, all I can say is: SUCKERS.

And… some more of that Ho-hum but in terms of a more reasoned approach:Obama’s Ersatz Capitalismhttp://www.nytimes.com/2009/04/01/opinion/01stiglitz.htmlWhat can I say?Well, okay then – it is time to drag the subject and study of ‘economics’ (and practice) out of the dark and dank cave (Plato’s) where is ferments in its own rottenness brew of superstition and faith and where the hierarchical priests and professors rule by their own unique specialized hoary opine and the young, loyal and ever faithful ‘true-believers’ – soon-to-be-mindless believers in pious mantra through rituals of rote er,out into the bright and scrutinous light of reality and to be scrubbed of its feralous vermin and purged in its guts of false belief and unfounded theory that demands that the natural capitalistic system of human exchange, known as civilization at the roots of the real economy, be manipulated and tormented through the distortions of convenient political rape and personalized moral hazard – for those that ould be kings over men.Into the light of day with thee I say and be purged of sin and tormented by the inquisition of scientific integrity; begone the secrecy; begone the opinion; and, begone its priests of darkness.Okay? >Ho hum

They could buy up the toxic assets and, according to their models, combine them with other assets the government guarantees and create securities and tranches that can get AAA rated and sell them to investors.I’m getting a wierd feeling of deja vu.

PhilT, thank you for providing an example that shows how technology fails to improve productivity. That’s why, I said that technology does not explain every sociological phenomenon assuming that your example is a good one.Another example would be the Internet, although it comes with many advantages. I think one of the disadvantages is the ease in achieving information without checking the reliability of the reference.Mark, thank you for your comments too. I tried to provide a mathematical example for a case where technology fails by claiming that as humans we may always be able to match all the derivatives of exponential growth. I also believe the technology should be used in the correct way. I am not some cornucopian who believes that technology solves everything or it is always good. However, I think that it helps a lot and today’s crisis is the result of incorrect use of technology (i.e. pushing technology to build more houses for the sake of earning more money by using credit in inefficient manner. If this is what you meant, then, you are correct by telling that it was the technology that pushed us into this mess). An incorrect use of our resources (including technology) causes bubbles and the system (the Mother Nature) adjusts the bubbles based on its no-arbitrage rule (Nothing is made out of nothing idea i.e. conservation of energy by Lavoisier.). When the bubble bursts the best option is to reorganize the production strategy to reduce the impact of the bubble to have the monetary system backed with real goods and services, this is where the efficient use of technology comes into play. This is easier in a market that benefits from increasing returns to scale activities in line with good governance (institutions) and innovation.In my view, increasing returns to scale does not necessarily imply the depletion of our resources. In fact, one can obtain more output for the same input by technological improvements. The paradox provided by Jevons claims that via efficiency the prices will be lowered by increasing the demand. Increased demand will, in turn, cause the depletion of the resources. This is true for a perfectly competitive economy (a major assumption of neo-classical economics); this is what Jevons implicitly assumes. However, the story changes the other way around when one relaxes the competitiveness assumption. That is, when the producers are price makers rather than price takers, the depletion of our resources may be controlled. It is a fact that without any controls (such as conservation of energy) resources can easily be depleted. That’s why, I said in my first post that there should be trade protection for each country and the main aim should be the maximisation of the real wage and that the invisible hand of the free markets don’t resolve everything by magic. Moreover, some of the controls (for example for the energy) may be achieved by investing into various different substitutes (renewable resources) or complementary goods (machinery consuming less energy, public transportation, recycling). For the part that falls short we may use the judiciary system to reduce consumption.I provided the expectation example to make a point about the structure of the system we are living in. The system is incomplete; that is, it doesn’t allow all people to act as they desire given the limitation of the resources and the rule of the Mother Nature (no arbitrage). This, in turn, implies that we should use our resources via innovative ideas to minimise the risks. Innovation does not necessarily imply more, it may as well imply sufficiency. In sum, I meant that we should use technology to control our own existence. Otherwise, we will end in many other bubbles that may end in catastrophic scenarios as today.

In the third paragraph the statement should have been …technology fails by claiming that as humans we may “not” always be able to match all the derivatives of exponential growth…I am sorry for the confusion.

ps when they tweak this program and move it along and it proves powerful then you essentially turn the AI on itself (w/ human aide at first) and let it come up w/ some of the leaps and solutions. again i’m not running the sw but that’s the general idea here for me at least.

Murky thoughts in murky times. But hey, what to expect from people wanting to live out in the sunshine but finding themselves in this Platonic society of light shunning cavedwellers?

…Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets to be sold by rivals under the Treasury’s $1,000bn (£680bn) plan…+FASB rule change allowing banks to use their own valuation models for assets in illiquid markets.+FASB rule change under which banks will only have to recognize a part of any impairment in their profits.=A Big Circle

“Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase, are considering buying toxic assets”??? wow, i thought they suppose to shed toxic assets? the change to M2M really made difference, now these institutions want to get more toxic waste?

Also didn’t Obama beg bankers to keep TARP during Obama lunch? bankers are in a really well capitalized situation. cuz they can M2M, no no no not Mark to Market, but Mark to Model. that means no loss for them. and they already got TARP from Obama. everything is good for banks

My response:Is your question relevant?For example: Your question is based on the assumptions that: 1. human life is linear – it is not linear – try studying fish stocks 2. that human main function is civilization in a single collective – I doubt that this is true because our attributes suggest that we excel as pioneers and embrace hardship, a priori, or we create more problems for ourselves than those that exist naturally in Nature, and 3. we don’t know what the point of human life is – or for that matter, all life – and we don’t even have a decent description of life itself.So, is your question valid? I don’t believe so otherwise we would have some hint of that which tomorrow brings – and we never do… we don’t know so we fix the race (economics) – and that cycles to hardship.We, man, will do whatever is necessary but we could shorten the odds and bring less uncertainty through scientific process and reduce the chances of structural deficiencies through manipulation distortion embedded in moral hazard. Incognito calls this constant equilibrium (above) but essentially it is a flexible standard: x +/-So we must envisage that anything can come to challenge us and for this we must prepare – not on faith and prayer but in science – real science) and faith and belief in ourselves. We must prepare for the future.Ho hum

G20 : Much Adoe About NothingCharactersDon Barack, prince of WashingtonGordie, of London, companion of Don BarackHarpie, of Ottawa, companion of Don BarackDon Sarko, “The bastard prince”, the main vilainDonna Angela, sister of Don SarkoDon Medvie, governor of RussiaDon Jintao, the grand constable in chargeFriar Lula, a priest…etcWhere great fuss is made of insignificant things.

I’m not saying this is a new bull market but it is a rally. I personally think it will fail around 50% retracement but that will depend upon buyers and sellers. I do use stops.

good job in navigating through the misinformation released by Washington so that people at least have a chance to make a fair assessment of the economy and govt policies.

Current programs in place are broke…. they dont even last a year. And all becuase we the govt continues to isist on proping up the Banks and Stock market. Mortgage and Forclosures are in the second inning. this will go on for 4 more years. Housing values will continue to decrease by at last an avg of 15% a year for the next 4 years. We have a long way to go folks before this housing mess is stabilized. They need to address the 20 million unoccupied housing units that currently exist.Failure Rate Rises on Mortgages Revised in Late 2008, U.S. Says http://www.bloomberg.com/apps/news?pid=20601087&sid=a2t62x0yDW84&refer=home

Nationwide Madoff in the making! But can we jail the entire Congress?

These people are going to party hardy right down to the final meltdown.PeteCA

Amen.

Thank you for the link and your great comments PhilT.

They pay the jailers! About the only way of resolving this is to walk away from the System and leave them all dangling.Mark

Keynesianism should be reclassified as a psychological theory rather than an economic theory. Just read Paul Krugman’s “The Return of Depression Economics.” Beginning on page 8 he discusses his “Monetary Theory and the Great Capital Hill Baby-Sitting Co-op Crisis.” Without retelling the tale, essentially, this co-op had issued scrip and couples began hoarding scrip which caused too much to go out of circulation…which resulted in “the co-op went into a recession”. “Couples who felt their reserves of coupons to be insufficient were *anxious* to baby-sit and *reluctant* to go out. But one couple’s decision to go out was another’s opportunity to baby-sit; so opportunities to baby-sit became hard to find…” This is the psychological part. The solution of course is to print more scrip a la Bernanke.To think that our throwing trillions of dollars at banks is based on a psychological theory. But there are people out there who think Keynesianism is as well-established as General Relativity. The id, ego and the superego of psychology are as solid as e=mc^2. We taxpayers are going to backstop these ideas with what remains in our retirement plans.The trouble with Wall Street, Congress, Obama, the Fed, etc. is that its just play money for them. For us it’s our blood.

Some 660,000 people lost their jobs last month and this idiot WASN’T one of them?Mark

Ultimately it all comes down to whether we can obtain enough energy. And if you’ve watched this video you’ll find that this is in fact looking less and less likely…Mark

And as time goes forward (does it ever go backward?) homes will deteriorate, which means that people will be having to spend more of their income on repairs (there will be a LOT more “deferred maintenance” going on, but there will be a lot more money as a percentage of income going toward keeping things propped up). To accommodate this housing prices will have to go even lower… and given enough time, houses will be so degraded that their prices will be even less!Mark

I think it happened when they all realized that we not longer are able to make anything other than dollars Mark

Who knew, that instead of slop, pigs really prefer money. Piggy banks do, anyway, as an extensive ongoing public service announcement (PSA) campaign tells us.The PSA audio and visual spots have a commendable purpose, to educate “young” people (ages 25 to 34!) on the benefits of saving via Sesame Street juvenile style methods.Unfortunately, the “Feed the Pig” theme of the campaign is hardly appropriate in light of the purposeful erosion of savers’ money through inflation. The real pig in this saga is the Federal Reserve System.The PSA announcements do give web site references for “young” people to find ways to budget, get a 401(k), etc. But the childish inferences in the spots provide the impression that if one just foregoes purchasing a 52-inch TV for a 27-inch, a big pickup truck for an efficiency car or a daily latte or coke that the money will be there to grow and provide future prosperity.Feed the pig, indeed.What this advertising campaign teaches, sublimally, is that there’s no such thing as inflation, that money is money, and savings means earning money, that putting latte pennies into that little piggy until you’re out of college will buy that little house.What it means to me is that if everyone shuts down on his standard of living, drinks water instead of cokes, eats beans instead of scones, Goldman Sachs can throw more million dollar yacht parties and buy more guns for its worldwide plantation.Feed the pig, indeed.

ALAN ABELSON: “The administration seems obsessed by the idea that the best way to deal with the financial wreckage is to hire the wreckers, not surprising, we guess, since people like Summers and his protégé, Geithner, did their part back in the 1990s, while laboring for Team Clinton, to open the gates to the predators.”Thus, prominent among the privateers the government hopes to enlist are gargantuan hedge funds and the old LBO mob (which, its nomenclature sanitized, is now known as “private equity,” but the odor lingers on), many of whom were ringleaders in creating the mess we’re in. To entice their participation, they’re getting a sweetheart deal festooned with goodies and guarantees that offers a heap of upside and a modicum of downside.”The bottom line, as we read it, is that should calculations go awry, the taxpayer ends up swallowing the losses. And since the official price tag on this latest effort could run to $1 trillion, the losses might add up to quite a tidy sum.” March 28, 2009

Difficult to comment without access to the code, but it looks to be a system for teasing out relationships in numerical data.This provides the first clue that it is more likely to be a powerful search/parse system than what a layperson would consider “intelligence”. The fact they use a GA to find relationships is also telling – GAs are loosely based on evolution, not what is normally considered intelligence, and are another kind of massive search technology. They also suffer certain weaknesses in dealing with some data “shapes”. This can, to some extent, be overcome with clever programming, but this is not how intelligence appears to work in the real world.This leads into the issue that there is a deep problem in AI research that there is no definition of intelligence.It is hard to model what one cannot define…AI is full of seemingly-intelligent devices (chess players like the IBM series, for example), but these operate on massive search rather than “intelligence”. I have seen earlier “AI” systems that have “proved” scientific/mathematical laws, written music and created paintings – but all were clever programming and not intelligent.There is a huge difference between how these systems and how biological intelligence – our only model – works. The arguments are kind of long and technical for an economics blog, but a nice (relatively non-technical )reference if you have interest:What Computers Still Can’t Do: A Critique of Artificial Reason, Hubert L. DreyfusDon’t get me wrong – I think this is interesting work, but I am tired of people claiming “artificial intelligence” when what they mean is “hey, look at my cool programming tricks” – and “cool programming tricks” are the mainstay of the field, while intelligence has yet to emerge…. There are actually a whole slew of issues in the AI endeavor that are glossed over by the players in the game (I discovered that very few AI researchers had even bothered to take more than a cursory look at neuroscience, for example) but explaining them requires (at a minimum) a pretty hefty dissertation.

Guest 1 : it’s all a question of timing ! When the Paulson plan came out in September, the country was under shock, the country was told that if nothing was done the entire economy would collapse, and as you well know, after a shock, a country swallows anything.Today is different, there are tens of thousands of people who have started reeducating themselves and have tried to dig more profoundly in these matters by reading hundreds of blogs that discuss these matters in details. The shock has slowly faded and now is the time to get the action going and certainly not to give up.

This was the plan from the start. Bid the prices up among each other and stick the public with the tab.

http://finance.yahoo.com/news/Bailedout-banks-eye-toxic-rb-14840542.html?sec=topStories&pos=6&asset=TBD&ccode=TBD

They’re in charge and they’re running the train into the ditch. But we can turn the lights on the dark closets of this problem, as you do CLake and Guest 12:14:55. For the first time in a long time, we’re identifying the actual people who created this calamity, the people who are profiting from the calamity, and the people actually suggesting we continue the calamity. To actually identify on the worldwide web, for the first time, who they are, is a considerable thing to do.The way the American system is set up with the voluntary support by its people, these criminals operate with the support of the people though the US Congress. In the end, that support will be withdrawn when the people realize that by voluntarily supporting these investment thieves they are poisoning and destroying themselves.For the first time in the Fed’s 100-year history, light is being shown on who they are. They are the private shareholders of Goldman Sachs and the top investment banks. These are the people. Their published salaries are meaningless. What are their private stakes? Jim O’Neill, above, probably is worth several billions. Who owns the 88% of Goldman Sachs that isn’t public (see wikipedia note)?What we are witnessing is new and it’s because of the web and the crisis. It’s like a war and all of a sudden you’re not fighting some army you can’t see; all of a sudden you can see the whites of their eyes. The secret is to keep this ball rolling; name them, report the figures, shine the light of day on what they’re doing.This is important stuff – and it’s happening here.WIKIPEDIA: One of the largest events in the firm’s [Goldman's] history was its own IPO in 1999. The decision to go public was one that the partners debated for decades. In the end, Goldman decided to offer only a small portion of the company to the public, with some 48% still held by the partnership pool.[7] 22% of the company is held by non-partner employees, and 18% is held by retired Goldman partners and two longtime investors, Sumitomo Bank Ltd. and Hawaii’s Kamehameha Activities Assn (the investing arm of Kamehameha Schools). This leaves approximately 12% of the company as being held by the public. (fyi, check out Sumitomo from the wikipedia link, et al, for the long reach of GS tenacles)http://en.wikipedia.org/wiki/Goldman_Sachs

What risk does FDIC take in PPIP? In the worst case, what would happen to FDIC due to its gauranteed “loans” (giveaways) in PPIP? Would this be a more interested point to the mass?

which article ?I’ve read several articles (Krugman, Stiglitz, Yves Smith, etc…) denouncing this with concrete numerical examples, but nothing that’s crisp enough, didactic enough to pass on a prime time audience programme such as John Stewart’s.We need to do this better. That’s the work we can contribute and brainstorm together. Then we need to get a group of blogs to sign onto this and send it to a few top notch media guys.It needs to be a simple DUMMIES GUIDE HOW THE GEITHNER PLAN WILL RIP YOU OFF !And something that is based on rock solid technical and numerical calculations so that Geithner/Summers and their clique of bean counters are forced to admit that we are correct in our exposé.We cannot let them get away with this. This must be OUR victory.

Geebus! Don’t believe that the rest of the world is really sold on the US being able to fix things, most European, Chinese or Japanese polic makers don’t believe this bullshit “flight for safety”. That’s not the reason why they keep accumulating dollar reserves, it’s more perverse than this, it’s the legacy trap :Countries that have alread accumulated dollar reserves know that the quickest way to an accelerated depreciation of their current dollar reserves is to stop accumulating dollar reserves.So they know damn well that their dollar reserves will eventually depreciate because nobody in his right fuckng mind thinks that the US will ever be able to reduce its debt without recurring to inflation and currency deprecation, but because that’s longer in the time horizon they rather choose that evil than the immediate depreciation of their current reserves.The legacy trap, not easy to get out of it, and a very nice advantage for the US of having the capacity to endlessly print the world’s reserve currency.

I was surprised by the tough-on-banker image bestowed on Barack Obama by the Politico article, especially in light of Obama’s banker-ridden cabinet. As usual, Wikipedia tells us why:The Politico’s “publisher, Robert L. Allbritton, 37, scion of the banking and media family that once owned the defunct Washington Star, said in an interview that he would finance The Politico for ‘the foreseeable future’ and has committed to paying for expensive campaign travel. He has hired a staff of about 50 people, almost half of them journalists,” Kara Rowland reported January 22, 2007, in The Washington Times…Allbritton “is best known for following his father, Joe L. Allbritton, as chief executive of the Riggs Bank, which was sold in 2004 after a Senate investigation found that Gen. Augusto Pinochet, the late Chilean dictator, had kept millions of dollars in secret accounts at Riggs. Robert Allbritton has been chairman and chief executive of Allbritton Communications, which owns television stations in Washington and a half dozen other markets, since 2001,” Rowland wrote.”Politico will generate its revenue through an advertising-supported business model, with many of the ads coming from trade associations, lobbyists, government contractors and other companies looking to attract the attention of Congress, said Albritton President Frederick Ryan Jr…http://www.sourcewatch.org/index.php?title=The_Politico

It’s not that the reins of financial power and the fed have suddenly become Keynesians, it’s that they’ve ALWAYS been completely dominated by neoclassical economists. And within the neoclassical synthesis, when the efficient free-market ideology breaks down, Keynesian approaches are the only solutions. The assumption of a rational Homo Economicus has always and still dominates, and there are no heterodox economists in the reigns of financial power in the US.

The natural forces may as well cause inequalities among the societies given differing geographical regions. Thus, if the neutrality assumption of the technology were to hold true, some societies would be doomed to failure since the beginning due to natural forces. So, would it be better that they sit down and did nothing (given that the technology is neutral)? Would sitting down and doing nothing be the natural way to deal with the problems given that survival instinct is natural?You’re narrowing down the scope, while I’ve been arguing based on ALL of mankind. Sure, there are winners and losers, and technology (for some time anyway) makes some groups “winners” (though usually at the expense of others- refer to my comment about externalizations), but on the whole one cannot say/prove that technology has caused there to be a net gain. This begs the question: what do we define as a “gain?”Is the gain based on something as esoteric as lifestyle? More cars, toasters? What?Perhaps longevity. While it seems that this might be the case, for how many generations will this hold up? Do we feel confident that all those toxins produced from our technological prowess isn’t going to eventually smack us back down?Again, I’ll refer to the Green Revolution. I very much doubt that many here understand the history and ramifications with this. Most would have claimed it a positive. This is a great demonstration of why we should never feel smug about our actions, that we should never be premature in our “final” assessments.We can no more project the final results of what we do than the butterfly can know what effects the flapping of its wings have on the other side of the globe.Intentions are one thing, final conclusions another. And final conclusions for mankind are likely not known for quite some time (and we’ll never really know what became, in total, of our experiment/experience).ALL societies WILL fail. It’s really a matter of how long. And those that practice greater self sufficiencies tend to last the longest: and they also tend to be the least technologically dependent.I have not, nor will I ever, advocate sitting down. Nor will I advocate jumping up and down in a non-stop way.In the final analysis the argument comes down the the ability of the planet to support a given population size: there are nominal energy/food requirements, which, however, cannot be sidestepped (and as we cram more people into tighter places, usually places also more habitable to growing food, we place our food further away, which requires more energy to deliver).Mark

What risk does FDIC take in PPIP? In the worst case, what would happen to FDIC due to its gauranteed “loans” (giveaways) in PPIP? Would this be a more interested point to the mass?Reply to this comment By TfT on 2009-04-03 13:19:38 ___________The FDIC will guarantee the loans, which are non-recourse – since they (FDIC) are leveraging their balance sheet @ 6/1 and the TARP is going in along side the Hedgie on a 50/50 basis – the hedgie who puts up 5 bucks for a toxic asset is matched by the TARP for a total of $10 and then it is leveraged courtesy of the FDIC to the tune of $60.So the toxic asset is purchased for $70 by a hedgie who risks $5 — the owner of the toxic asset gets the $70 – the hedgie and the TARP get the asset and if it goes up in value the hedgie and TARP split the profit but if it goes down the most the hedgie can lose is their initial $5 investment with the TARP and FDIC eating the rest.Effectively the hedgies are buying an option on a toxic asset, the bank that sold it gets their $70 (perhaps it had a face value of $100 and a market value of just $22.)The bank wins instantly as it offloads toxic assets, the hedgie is simply gambling with 6 parts FDIC money a half part their own money and a half part TARP money (from the PPIP. With brilliant sleight of hand, Turbo is leveraging / laundering TARP money at 6/1 through the FDIC.But what is really really brilliant is that not only hedgies will be playing – some of the banks that own toxic assets and who have benefited from TARP will also play the game – so for example Goldman can take $5 of TARP money they received back in the fall and put it alongside $5 of TARP money courtesy of the PPIP and then leverage it 6 times courtesy FDIC – In that example what we have is the government buying Toxic assets yet sharing the profit 50/50 with Goldman and Goldman has no downside risk at all since they are gambling with money they were given last fall.And that’s why the banks took off when word of this plan “got out” back on March 9, a full 11 days before it was officially leaked on March 21 and formally announced March 24.Put another way this is an evil version of the Paulson plan that the good professor lambasted back in an article he wrote in September – but this is actually far worse because the assets will be bought at artificially high prices (especially now that M2M has been suspended) and any upside will be shared with the hedgies and even some of the banks that caused the problem.The PPIP is sinister beyond belief.

Wow!Leakage of key information 11 days before public disclosure.11 whole days … that’s well outside of historical norms.Somebody was really screaming along with those moves.Gotta’ tell ya’ … I for one am impressed.The efficiency of these scams is just moving ahead by leaps and bounds.PeteCA

Hayes,Thank you very much for the detailed explanation. So is it safe to say that FDIC may fail because it guarantees the ‘loans’ in PPIP? If that is the case and also to respond to CLake’s comments above, would it be eaiser for the mass to understand that:PPIP equates to bankrupt FDIC, which in turn means deposits at FDIC-insured banks are actually without any “insurance” (reason: if FDIC bankrupts, who is coming to rescue the ‘failed’ banks?). So either support Turbo’s PPIP or better to get your money out of banks??!!

Here is my take on how to put this. Needs more concrete examples, but I targeted it at a level I think most can understand.NOT ANOTHER DIMEIt is time to say to the big bankers – NOT ANOTHER DIME. The Treasury department has given big banks around the world bailout after bailout, in different forms. They are bailing them out by guaranteeing their losses. They are bailing them out by allowing the Fed to print money to lend at low rates so they can charge you and I higher rates. They are bailing them out by funneling billions of dollars to AIG so AIG can pay off insurance claims on the banks bad bets. And they are now talking about the mother of all bailouts – the Treasury’s toxic asset plan. It’s time to say NOT ANOTHER DIME to the bankers. NOT ANOTHER DIME to the Wall Street gamblers who took the money and lost.The feds and the banks and the financial media try to confuse the issue, by wrapping it in terms they think will confuse you. Terms like mark-to-market accounting, and CDS, and CDO. Terms like credit freeze, LIBOR, underperforming assets. All they are is terms to confuse you about the truth of the casino they have created. But the truth is this. They have made loans, sold them, marked them up, borrowed against the loans, made more loans, and bought insurance that can never be paid on it all. They have sold bonds and stock shares, around the world, based on their seemingly healthy balance sheet. And its all a giant pile of bad debt. And the pile is collapsing.As the pile of debt is collapsing, these giant banks are playing a game of hot potato. They are trying to get rid of their part of the pile before it becomes clear that it is all worthless. They cannot let their shareholders or the bondholders or the executives take the loss for their bad debts. Something has to be done. And this is where the Treasury’s new plan is a gift.For, under this plan, the banks can all offer their steaming debt piles at an auction. The rules go like this. Imagine an asset being sold for $100. The buyer puts in $7. The Federal government puts in $7. The Federal government loans the rest of the money to the bidder, guaranteeing it with the FDIC. Everyone bids. The winner gets the asset. But here’s the catch. If the asset proves to be worthless, the Federal government is on the hook. Because the terms of the loan are that the government cannot come after the bidder for the loss. It is a non-recourse loan. In other words, there is no incentive to bid low for assets everyone knows is worthless, because the government takes the loss in the end anyway. And who are the bidders? Why the big banks, of course. They will all bid in an effort to unload their toxic assets. But not on to each other, though that is what they are pretending. The assets are being unloaded onto you, the taxpayer. That’s the catch they don’t want you to understand.So there you have it. The Treasury’s plan is game of hot potato, where you and I and your children and my children get stuck with the potato when it explodes. All wrapped up in a package that is designed to make you think it is a good thing. Because, the tell you, the banks will be able to ‘lend’ again. Or, rather, they can borrow money at %2 from the government and loan it to you at %10. That is their concept of lending – to keep you in debt for life.Its time to say NOT ANOTHER DIME to these banks. If the government wants to lend, let it lend to you and me. Let it find a way to bypass these big banks, and let them take their losses. We have already given away the future of at least one generation to these banks. NOT ANOTHER DIME.

almost like they are reading from a playbook. maybe they game these scenarios years ahead, like the military?

I support you 100% I’m sure a lot of other Americans will too. Maybe you need to start a campaign. Seriously!But let me also add …According to my reasoning, these banks are still headed for big losses in the future. They may have found a way to offload a lot of toxic assets at higher prices (maybe). But that’s by no means the end. And the future problems are not just limited to the Credit Default Swaps. I think these banks are also open to some pretty big losses on their interest rate derivatives. At least as far as I can see … they could be more vulnerable than they think.All of which means that they are going to keep going back to the Fed & Treasury with more sob stories and more bailout requests. And judging by their success so far … there’s every reason for them to expect to get paid.It’s gotta’ stop somewhere.PeteCA

I think it’s a good start.Also, we should have a concrete range of numbers, order of magnitude, of how much this is going to end up costing Americans. What’s the exposure for the tax payer ?The plan calls for the PPIP buying up to $1 trillion of toxic assets, what would this result as loss for the tax payer ?Can we make an estimate ?I’ve seen various numbers floating around, from as low as 12% to as high as 70% of the total. It seems impossible to give a definitive number as the amount of over-bidding by the different operators will vary and we still don’t have a clear idea how much these assets are really going to end up being worth, as it will also depend on the future evolution of the recession, unemployement numbers, house prices, etc…But a range of numbers would be nice to give.With the AIG bonus fiasco, people reacted because they heard $ 160 million reward to people who didn’t deserve it, paid for by the tax payer.Here we need to show that we are talking about a much bigger number, explain who will be those who benefit from it, why they don’t deserve it and it’s unfair, and that the tax payer will end up paying for it.Then people will react.

Why Man is mainly technology driven, a priori, and intellectually effected. Your mileage may vary.http://www.guardian.co.uk/science/2009/apr/02/eureka-laws-nature-artificial-intelligence-aiHo hum

CLake,Do you want to take a stab at putting something together? There have been so many good posts, like the one above from ex VRWC, that I think we could get something pretty good put together. I will definitely help distribute it. This is the worst scam/game that threatens the tax payer thus far. It’s just so blatant! That’s why I don’t think it would take much to open the eyes of the masses and start some public outrage. I also want it to be pointed out to people that they shouldn’t fall for all the b/s encouraging people to spend through more debt – we’ll be enslaved enough via taxes. ex VRWC touched on this with “Or, rather, they can borrow money at %2 from the government and loan it to you at %10. That is their concept of lending – to keep you in debt for life”.

squealing, pete. squealing.

intended to reply to ex VRWC on 2009-04-03 16:00:36

Willem Buiter at FT described this very eloquetly last week. Transfer of wealth from our children and from holders of reserves (savers) to banks et al. And the precise mechanism doesn’t depend on things. The precice mechanism is occuring now. Paybacks are hell. And you are on the hook to make that payback.I should look up the reference. Really worth reading.

And so what? We are to expect more “easing”? Already known. Just wait. We will eventually define “multiplier effect” differently.

here was the set up:Monday February 2 – (can’t find a link to the letters, but it’s referred to in the WSJ article below) Geithner and Bernanke sent letters to Dodd encouraging a shoring up of the FDIC for systemic reasons._______________Tuesday March 3 – FDIC’s Bair Says Insurance Fund Could Be Insolvent This Year

March 3 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said the deposit insurance fund could dry up if the agency doesn’t impose additional fees on the industry amid a surge in bank failures.

______________Thursday March 5 – FDIC May Cut Emergency Fee on Banks, Group Says

March 5 (Bloomberg) — The Federal Deposit Insurance Corp. will cut in half an emergency fee it plans to charge the banking industry to replenish its reserves if Congress agrees to expand the agency’s borrowing authority with the Treasury Department, the American Bankers Association said.

______________Thursday March 5 – FDIC chairwoman Sheila Bair agrees to trim new bank fees

AP March 5 – WASHINGTON – The head of the Federal Deposit Insurance Corp. in the United States has agreed to halve a new emergency fee on banks in exchange for Congress more than tripling the agency’s borrowing authority to tap federal aid if needed to replenish the deposit insurance fund.

______________Friday March 6 – Bill Seeks to Let FDIC Borrow up to $500 Billion

WSJ March 6 – 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.______________SATURDAY March 7 – FDIC Bill Dodges a New TARP Fight

WSJ March 7 WASHINGTON — A three-page bill designed to bolster the Federal Deposit Insurance Corp. could let the Obama administration sidestep a huge political problem: securing more financial firepower without opening a debate over the Troubled Asset Relief Program.The legislation, introduced late Thursday by Senate Banking Committee Chairman Christopher Dodd, would temporarily allow the FDIC to borrow $500 billion to replenish the fund it uses to guarantee bank deposits, if the Federal Reserve and Treasury Department concur.

______________March 24 The Process for Purchasing Assets Through The Legacy Loans Program Treasury Dept- March 24 – Banks Identify the Assets They Wish to Sell: To start the process, banks will decide which assets – usually a pool of loans – they would like to sell. The FDIC will conduct an analysis to determine the amount of funding it is willing to guarantee. Leverage will not exceed a 6-to-1 debt-to-equity ratio. Assets eligible for purchase will be determined by the participating banks, their primary regulators, the FDIC and Treasury. Financial institutions of all sizes will be eligible to sell assets.

~$100K in exchange for 30B?: Good work when you can get it – I wonder about that attractor:”April 3 (Bloomberg) — Lawrence Summers, director of President Barack Obama’s National Economic Council, took in more than $2.7 million in speaking fees paid by organizations that included Citigroup Inc., Goldman Sachs Group Inc. and Bank of America Corp., among other companies now receiving taxpayer funds in the economic bailout.”http://www.bloomberg.com/apps/news?pid=20601087&sid=amujoxo_s_EA&refer=homeHo hum

to quibble with your post which leads this threadToxic assets of par 100 held on books at 80 and market at 22 might not be sold at (you said 70) I’ll just say 50 – but whatever – because the banks might not go for it. If they sell at anything less than 80 they have to mark it down now and suffer the consequences to capital. If they hold they can live to fight another day (they hope). And taking even a 7 loss to an investor isn’t too attractive. I would think the 5 PIMCO’s of the world might do OK on the fees.

We need numbers, but big numbers are becoming meaningless. Need a way to bring it home. Thinking caps on, troopers!

I think that it should be framed EXACTLY like the AIG bonus story. How about:If you were outraged at $160 million of your hard earned tax dollars to incompetent AIG execs, then surely you should be outraged at $1 trillion of your hard earned tax dollars to incompetent banks!Mark

We’re really jumping the gun here…”If they are correct” somehow suggests/implies some sort of 50/50 chance. I’d suggest that it’s more of a long shot than that, much more of a long shot. These folks seem awfully shifty; I wouldn’t feel comfortable investing my heard earned money with them.http://newenergytimes.com/v2/blog/?p=19Maybe all of the patent offices in the world ARE in collusion, I don’t know…Mark

quibble, please do… I was only trying to convey the concept (e.g. I spent more time on formatting the post and resurrecting the links than on the specifics of the example) – lots and lots of nuance vis a vis M2M and holding the assets vs. PPIP – bottom line is that the Fed/Treasury/WH are gaming the (complicit?/willing?)congress and enabling those who wish to game it for profit – a nasty deal for the taxpayer and a nasty deal for the economy.I would love to see copies of the Bernanke, Turbo letters from Feb 2/09cheers

looking at ABX indices on markit, bankers probably already forgot how bad 2005 – ’08 vintage are priced at all tranches. with FASB rule changed, bankers can mark 2 model, but who will pay for mark 2 model price?bottomline:1> bankers continue to keep their m2m toxic waste on their balance + lending contraction2> bankers take loss + lending contraction3> taxpayer take loss in PPIPshowtime for taxpayer to step up to take loss off bankers’ balance sheet.

and from Macromamhttp://macro-man.blogspot.com/2009/04/is-it-may-yet.html”Well, the latest edition of policy “shock and awe” was released yesterday, with FASB adjusting the mark to market rules and the G20 promising a Dr. Evil-esque “one triiilllliiioonnnn dollars!” for the world economy. Markets were so excited that they barely noticed the disappointment from the ECB.Well, that’s not entirely true…”

pjb,.light! no tunnel.

Marc:Thank you for the link – I had been reading the technical papers on the site over the past and must admit I had not bothered to inquire at all of the blog-sphere; and I admit that there have been some fairly elaborate scams in the past.But saying that, there have been some fairly elaborate disinformation efforts running in the same race.I keep an open mind and of course, my own theories for energy creation.Ho hum

Bill Moyers dialog with William Black. It makes me sick the degree of corruption and collusion in our financial system.http://www.pbs.org/moyers/journal/04032009/watch.html

Time for the BB helicopter drop

a better idea is to use them and max them out on things like food and paying bills then default on them.

I think the people who control things are about as Keynesian as the Renaissance popes were religious. Having some sort of economic theory that they are “applying” is just cinema for the proletariat–us. The purpose is to give them cover for robbing us blind. Keynesianism works very well because it requires enormous sums in the trillions of dollars to be thrown at the very people mentioned above who operate in total secrecy. It’s really hard to believe this crisis (for who?) was not engineered explicitly considering *cui bono*, the most important words in the world today.I’ve often wondered if people like Hank Paulson, who is an ardent environmentalist, feel morally justified because, in impoverishing the country, he is saving the environment. If there were just a tiny kernel of superwealthy and everyone else using cow dung as fuel to cook their tortillas, well, you get the picture. We’d all be happy campers. Also just think about the benefits to culture as we use all our talents to embellish the lives of the aristocrats. Stone masons for their houses, composers for their parlors, etc. Happy Breughelesque scenes of peasants working the hay below the manor house… It is *good* that Hank wanted non-reviewability in proposing his $700 trillion Tarp.

PROMPT CORRECTIVE ACTION LAW

They don’t want well-informed, well-educated people capable of critical thinking. They’re not interested in that. That doesn’t help them. That’s against their interests.

But there’s hope : if only we can leverage the power of the blogs, make them more efficient as a means of self-education and political influence that escape completely the diktat of the manufacturers of consent, we will prevail !Carlin rocks !

hey, no one understand Obamanomic $3.5+ Trillion budget too, but do we demand explanation? Face it, Geithner works for Obama, and no explanation and no accountability from both.

Whenever we find a clear and evident example of collusion between Govt and the interest of a few (as here the bank shareholders and bondholders) aganst the interest of the people, we should do everything we can to stop it, this is OUR civic duty.That there are most probably many other such examples of collusion or corruption within the $3.5 trillion budget should not be a reason to refrain from doing our utmost to stop those that we can alreadyy clearly pin-point. If you can find a another concrete example of corruption or collusion within the proposed budget, please do your civic duty and try to stop it. If you can’t do that, than help work on those concrete examples that have been identified.This has nothing to do with “Obamanomics”, republican or democrat (republicans have been responsible so far for much higher deficits than democrats).This has to do with exercising our common civic responsbility of stoping collusion between Government, corporations and the banksters whenever we can identify it.Please let’s stop with the partisan bickering, it really isn’t constructive at all. Let’s work together and stop this nonsense Geithner plan which is obviously against our interests and only serves the interest of a few bank shareholders and debtholders.

a must read from Yves + Washington PostAdministration Seeking to Circumvent Restrictions Imposed on Bailout Recipients“One of the disturbing trends of the financial crisis hasn’t simply been the willy-nilly shifting of costs onto the taxpayer, even when there were investors in risk capital, aka bondholders and stockholders, who properly should take the hit first. As distressing is the repeated, flagrant disregard for the rule of law, starting with the Treasury Secretary being put outside the reach of the courts in his oversight of the TARP, the use of the Fed and FDIC to circumvent budgetary requirements, failure to resolve banks in danger of being insolvent as required under the law, and rampant signs of cronyism (for instance, participation in the legacy securities program being limited to a few large players).In a further sign of an imperial Presidency in action, the Washington Post describes how the Obama administration is circumventing bailout legislation by channeling fund through various entities, then contending the the end recipients aren’t subject to Congressional requirements. Huh?Notice that the Chairman of the House Oversight Committee, a Democrat, is none too happy.From the Washington Post …

I’m with M. Munigant.

If the William Black interview was on prime time network like 60 minutes, we would have a revolution of investigation the next day. The problem is that George Carlin was right. Bill Moyers has been creating a stir by bringing us these great interviews. We need to bringthis kind of information to the masses! The brainwashedneed to be woken up! After watching William Black, it is imperative that we find a NEW WAY FORWARD!http://www.anewwayforward.org/demonstrations/

a must see program including the second half with Glenn Greenwald and another guest!

this the way to run a banl…Great Read!!!!!!!! It’s no wonder things wont get fixed with attidudes like the Treasury and shiela Baird….http://www.forbes.com/2009/04/03/banking-andy-beal-business-wall-street-beal.html

Our Debt Problem, Explained- Charts, Data and morehttp://www.businessinsider.com/henry-blodget-our-de-2009-4

Another nice set of charts. Stories like these are the best way of understanding the current problem. And what’s going on.Note the following things from these charts:1. Financial debt (as a % of total debt) absolutely exploded since 1995. Is there any wonder, then, why we are seeing constant bailouts for the banks and financial sector?2. After financial debt, the next biggest explosion was household debt. American families are now struggling to pay this off – the so-called household deleveraging process. BUT, and I do say BUT, all the Gov’t stimulus programs have probably benefited Main Street by 5 cents on the dollar (or less). Meaning that all the stimulus went to the banks. So it follows that Americans are basically on their own, as they struggle with credit overload, lower wages, and unemployment. What fun!3. During the 1929-1933 depression the debt sector that was hit the hardest was corporate debt. We’re headed there again now. Corporate debt will shrink enormously, taking a lot of jobs and capital spending with it. Government debt will grow ever larger.4. Unlike the 1929-1933 process, the world didn’t walk away on America. This time they will. The dollar will get dumped as the global currency, interest rates and inflation will soar to horrible levels. And the rest of the world will bypass us – once they find an alternative form of financial security to T-Bills and UST’s.PeteCA

The share of the U.S. population with a job is now at 59.9 percent, which is lower than any time since 1985. This is especially striking since so many women have entered the labor market since then. The fall off in the employment rate has been larger among men than women, and there are fewer men at work than at any point since the BLS began tabulating this data after World War II: 68.2 percent of U.S. men age 20 and over had a job in March, down 4.1 percentage points from a year ago.

Did you say CRAMER? lol.We all better run in the opposite direction!

CNBC: Lawrence H. Summers, the top economic adviser to President Obama, earned more than $5 million last year from the hedge fund D. E. Shaw and collected $2.7 million in speaking fees from Wall Street companies that received government bailout money, the White House disclosed Friday in releasing financial information about top officials.GM former executive earned 20 millionHow many new packages with fresh new (printed/electronic) money?Money Supply expansion is a hidden tax!Repeat with me: “Lets debase your money american people because we need to save our “sad” rich friends from their money game”

Simply, dead cats injected with latex bounce pretty high. This is a run up, the sharpies can DUMP their crap over the next few months, then short everything when the s**t really hits the fan.Just like being on a roller coaster-getting sodomized on the way up and then again on the way down. Don’t get anxious, there will be a number of these over the next few years. I don’t think many on this site believe that the SM is a predictor of anything these days, this is simply a cognitive disconnect.GeorgeNYCUSA

DO NOT WORRY! THERE IS NO DANGER THAT THE RUBLE WILL BE MADE A RESERVE CURRENCY! CALM DOWN, IT JUST WON’T HAPPEN. RELAX!GH NYCUSA

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