Discussion of Housing Bubble, US Dollar, Debt, Trade Deficit, Oil, Gold, Consumer Spending, Central Banks, Inflation, Outsourcing and the Bleak Future of the US economy
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fofoa: I read the frightening new article and it was frightening it just seems best to make any protective moves well ahead of the fatal day. well it does but I am not going to borrow money to buy gold - that reminds me of the story of Peter and the Wolf. In the story the duck is swimming in a pond when the wolf comes up. The duck is so distraught that she jumps out of the pond and tries to run away. Immediately the wolf chases after the duck and eats her.
After sending out some "warning" type emails to friends about the banking situation during the past year, and the fact that it is much more serious than what the media leads on to, here is one of the replies I recently received:
"I don't recall anything this bad happening before in this country since the Great Depression. In those days, they didn't have the FDIC so everyone lost their shirts. [..so I guess the FDIC is supposed to be the savior?] The failing of the Savings and Loans in the 80's still wasn't this traumatic and amounted to some folks committing some crimes. Though some crimes have been committed here, those folks will be brought to justice one way or another. But the fact is, our Banking system just fell prey to good old American greed. Bankers thought they could ride the wave a little bit longer by getting the largest number of loans written possible. Now, the markets will have a correction. The companies who can survive their mistakes will survive. Those who can't survive will get bought out and will learn their lesson. It's really that simple."
I think this person is correct in most of the statements, but they just don't go far enough into rabbit hole to get it.
I always gasp at this chart... and it is what I think best sums up what has happened and how far over the edge the situation is. http://research.stlouisfed.org/fred2/series/BORROW
Could all of the "red alert" people be wrong? Could this pass just as the Savings and Loans debacle did, continuing the bubbles, lies and distortion of what real markets and sound money should be?
I don't think so, but who really knows. The Y2k Freakout didn't happen... although I think Y2k was created by the Empire to keep people focused on something other than the bursting of the dot com bubble.
I actually find solace and comfort when I hear the bad news, and I see many of the same types on the net. What we are wishing for is for the lies and the Empire system to end. We want the light to shine through.
One of the best, Mr. Chapman lays down a good one:
" Anything is better than what we have now, which is a military-industrial-financial complex run by satanic trillionaires who denude citizens of their earnings with rampant fraud and corruption, who slaughter our children, and what should be our foreign friends, with continual wars for profit and who are trying to make us all into serfs in the ultimate feudal system to be run by the would-be lords of the universe, but not until they wipe out billions of useless eaters with pogroms, plagues, wars, famine and eventually nukes, biochemical warfare and other weapons of mass destruction. Is this what our brave men and women are fighting for? Perish the thought!"
As usual, Christopher Laird didn't disappoint... Very well written, yet scary article from someone who really "gets it"
Tim, HA!
45North, Always good to hear your thoughts
Next Dimensions, Though I've seen that chart a dozen times it still sends a shockwave through my bones. This certainly ain't your typical credit problem and the painful outcome will likely be unprecedented.
Note: I haven't yet read your link (thanks for posting it), but will certainly take a look before calling it a night.
There is so much going on it just makes one's head spin.
If it isn't Russia, Georgia, and the Grand Ole Plunderers (GOP) rattling their sabers at one another, its the Fed and Treasury making sure their shorts on gold and precious metals get met, while collapsing commodity prices in order to negatively effect consumer confidence; or maybe it is the credit markets freezing up as the banks and financial institutions trade in their toxic assets for freshly printed Hewlett-Packard type dollars made up fresh by the big Banksta Gangsta Bernanke; or maybe it is knowing that the FDIC only has $39 billion in their trust fund to dish out to panic stricken depositors; or it's knowing that the printing press has to make more dollars after the FDIC runs out of cash after the depositors make their nationwide run on their bank accounts; or maybe it is watching a military buildup in the Persian Gulf for more saber rattling as Kuwait gets scared; or knowing that more homes will foreclose and a significant number of Jumbo ARMs are coming due.
No matter what, something has got to give out. You can only blow up a balloon so big before,,,well, you know. We are watching several balloons get blown up so big we hope they slip loose from those greedy lips and fingers before they blow. A spiraling fissile sounds good right about now.
The paper gold and silver shorting trades appears to be another bubble heading for a break. There is really very little collateral to back up those shaky trades. I mean, there is very little gold and silver in those vaults, which is supposed to be the collateral for those trades. HA, HA. Wishful thinking. The greedsters haven't learned a damn thing. And Beany Bernanke is in knee deep, too. We saw it in the housing bubble crisis, but those big Bankstas haven't learned anything. Prison might teach them something useful.
I believe, and I am no authority on much, that you better have a bunch of cash sitting around your house before the balloon breaks. Once the depositors storm their banks, it maybe a long wait before you get your bag full.
Randy, here's another good article from yesterday. I'm sure you've seen it but if not, here's the link. It lists a few of the "Dead Men Walking" banks.
Randy, please explain that chart. Is "depositary institutions" another name for banks? Why are they borrowing all this money? Where did that money go? Are they supposed to pay that money back?
--Regarding depository institutions. Here is the Wikipedia definition for you. -----
In financial economics, a financial institution acts as an agent that provides financial services for its clients or members. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, asset management firms, and similar businesses.
Banks are included in the definition. Why are they borrowing? Because they did not have enough collateral in their possession to cover the losses they took when the loans they carved up into derivatives, or basically bonds, which began to lose their value. These bonds were insured by dedicated insurance underwriters to cover if the loan holder defaulted. The lender was covered on both ends--if the loan paid off or if it did not. But too many loans began to collapse. The dedicated insurance underwriters could not pay out the massive losses they were to cover because there were so many. in other words, if you hold a dollar, and then, you take a match to it, at some point it will begin to burn away and disappear into thin air. That is what happened to the value of those bonds. These loans were all made on paper. They virtually sat in computer hard drives all over the world.
Remember, on the one side, those loans, such a mortgage backed loans, credit card loans, car loans, student loans, corporate loans, etc began to default, or go into foreclosure. That value began to go up in smoke.
These loans were made by banks and financial institutions to many who could not pay a ballooning mortgage. Those mortgages foreclosed or were taken back by the bank and were unable to get resold. And if they were sold, if the bank was lucky enough, it was, no doubt, for a fraction of the original value. The original value went up in smoke.
Because these "bonds" that contained bad debt, were so rotten and worth-less, that the banks and such went to the Federal Reserve for a 2% loan basically swapping the bad stuff for good money to help shore up the bank's diminishing bottom line. The bank was sinking and needed an infusion of healthy money to shore themselves up, otherwise they would go broke, or get bought up by a bigger institution, either here in the US or from overseas for a fraction of what they were worth.
In many cases, the bank decided to sell off their bad debt to another investor who could pay 5 cents on the dollar in hopes that someday in the future their investment may grow in value. There is always someone willing to take a gamble for the right price.
If I left anything out or stated it incorrectly, PLEASE correct me. I hope this helped you, Virgo.
Randy, thanks for posting the Fed charts again, especially the second one that shows the decline in borrowing. Is this the Fed tightening the liquidity? The inflation/deflation argument has had me spinning around for a year now, and I just don't know what to think. "Mr. Fed" as he is known on YouTube has these videos, and I have seen a lot of arguments on both sides of deflation vs. inflation. Maybe you could follow up with a post on this topic with your own thoughts? People also tend to lump the 2 forces together as if they are all encompassing, but should realize that deflation could be taking effect in one area while inflation in another. Thanks again.
I think we'll see new record gold prices by the end of this year.
Next Dimensions,
Appreciate the links -- I haven't yet viewed, but will check them out tonight.
Jerry,
Once again, your comments illustrate the fact that you have a keen knack for simplifying very complex matters, and I really like the way you think/express yourself. Please, keep up the fine work!
Fofa -- that was a great article. Read it last night. Thanks
Justin, I hope you don't mind if I chime in on the "speculation-talk" that was woven throughout the link you posted.
I read through it quickly and have basically one thought on it, and that is one has to keep an eye on the very broad picture. To focus on the question "are the gold and silver markets being manipulated or not" is an important question, but not the entire question. No doubt, there is not enough regulation and transparency to be completely sure one way or another.
The blackjack player may or may not be memorizing the cards as he or she takes down the house with big winnings. It may be all a great guess.
The issue for me is the entire global picture. How is the great financial credit bubble going to unwind. When will the central banks stop draining the Treasury swamp (assets) in order to give the junkies (the banks) more fix? What are the banks doing with all the Bernanke money? Supposedly, there is a credit freeze going on? Who is in the big banker lender/borrower loop? Where is all that healthy money going?
At some point, the great American and global consumer ride will come to a halt. The banks will likely have depositors pounding on the door. The waits will be long. Currencies will likely deflate, and precious metals, yes a commodity but also a currency, will be shining once again.
That is the big picture to me. My question to Bush and Rice is, "Are you suddenly offering a timetable not because you want to offer one, but because you and Bada Bing Bernanke and Hank "the Paulie" Paulson see the financial great unwind a dozen months down the road and the $12 billion per month will come in handy to bailout bank depositors?
Remember, even the rich folks have money tied to monthly paper bank and financial statements. They may just be standing in line to get their share with the blue collar guy.
Unless they have a safe full of cash in their basement, it really won't make their shit smell any better than mine.
Thanks for your opinion. The one thing (concerning the crisis) I know is that it is going to be the worse economic/monetary disaster ever known to man. My head spins when I try to understand the great unwind that has began. The great unwind will not be pretty. I am fully convinced that the Great Depression was small potatoes compared to the present situation. Researching all of this is a lot like reading a great thriller. The pages continue to come alive.
This is a very well put perspective. However I disagree with his delusional full recovery closing. http://www.prudentbear.com/index.php/commentary/guestcommentary?art_id=10098
"Department reported that personal incomes fell by 0.7 percent in July -- well beyond the drop of 0.1 percent that analysts polled by Thomson IFR had predicted on average. That reflects the waning impact of tax rebate checks that Americans received this spring.
As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending actually fell by 0.4 percent in July. Wall Street has been particularly concerned about Americans' ability to help the economy grow, since rising prices for gas and food have strapped many household budgets," as reported on Yahoo finance.
These figures will not be getting better for a very long time, if ever! It shows that consumer spend, in spite of it being very modest, was still beyond income growth. This does not bid well for Xmas retail sales for most, except for an increase in consumer debt growth.
I read the Wharton School article posted by Justin. I believe he was right-on. I accepted his view that "the storm will be arrive, be painful and destructive. And for many, the good life will be washed out to sea. Yet it will eventually pass. We will rebuild and the nation will move forward." I agree only if we end up with a new president who radically reform the damage that has occurred. Our nation's future will require an alternative energy and green Marshall Plan put into place.
Justin, PLEASE keep posting those great links you read!! I need to read them, too! Thanks for your due diligence.
You are welcome Jerry. Bye the way check out this link. This guy posts some rather humorous funnies. http://economicrot.blogspot.com/2008/08/weekend-funnies_30.html#links
I just read your Dec 2005 opening blog article...dude it reads like a history of 06,07,08. Bravo! you and others like Norial Rubini saw this mess coming and sounded the alarm. (where was I?)
I am new to your blog site and i am all ears as far as what you think comes next, what can we do personally to protect our finances, but also, what we can do politically to make changes that will improve the structure of our economy
Thanks - I'm glad you like the cartoons and I'm sorry I haven't had the chance to reply regarding the conspiracy issue.
ALL,
I try to read every link posted up, but often don't have time to comment in detail... but don't let that issue prevent you from posting em! There is lots of valuable info in them (for all the readers here), but not enough time in a day for me to reply... My apologies.
Delegate WV,
Welcome and thanks. I suggest you start by trying to digest the link below and then read some of the articles/watch the videos on the right side of my blog
Regarding politics: Useless ATT. We need leaders who aren't owned by the corporations and special interest groups - but that ain't going to happen utill we undergo very hard times and the masses revolt against the existing system.
"Regarding politics: Useless ATT. We need leaders who aren't owned by the corporations and special interest groups - but that ain't going to happen utill we undergo very hard times and the masses revolt against the existing system."
I couldn't agree more Randy. That is why the Constitution was written in such a way as to not only allow but beg for the overthrow of any governing body by means of election and if necessary by force via a well regulated(as in calibrated) militia. However such a thing happening with the American populous of today is but a pipe dream. The populous has been dumbed down beyond measure. This was and is a methodical dumbing down. If it wasn't then the education system's most fundamental priority would be a clear understanding of our constitution and it's purpose. This would start at the very beginning of our education and be seared into the conscious of every young American by the time they graduated the education system. It would in turn breed a watchful and intelligent eye towards those who govern our Republic. Just the opposite is what we see today.
This lady of kingdoms has dwelt carelessly. Inundated by consumption and entertainment she gives no serious intellectual consideration to the methods and motives of the government that is suppose to be for her. She dwells so carelessly that her mindset is "I am and no one else will be". She continues to be looted and raped and she accepts it just as she accepts death and taxes. Could this be because as a whole those who govern her mirror her?
The lobster is nearly boiled without ever noticing the increase in temperature. The wolves are wide awake and driving while the sheep nap in the back seat. They are to wearied to notice. They have become fat, dumb, and lazy. They would rather kick back and be entertained than face difficult TRUTH.
I am fully persuaded that any revolt will be put down with a mighty hand. A revolt will come and it will be smashed. The presidency has assumed tyrannical powers. We've watched the current administration thumb it's nose at "checks and balances" while congress sits on it's hands. A government by the people for the people? I've got some ocean front property I'll sale you here in south central Illinois.
Do the research my friends. Why are there FEMA concentration camps erected around the country side? Why is there so much secrecy in our government?
They preach peace and safety as they take away the remaining liberties. Take away is a bad choice of words. They simply walk about with their bag of tyranny open as the people willingly deposit their remaining liberties.
My biblical views walk hand in hand with all of my views. I know that makes a lot of people scoff and run. I understand why. Christendom has made a joke out of the Law of GOD. It's no wonder many simply laugh at the scriptures. Nevertheless I stand firm in that regard.
When they say "peace and safety, peace and safety" sudden destruction will come upon them from which they shall not escape. The Kingdom of GOD will not be some mundane ritualistic church service. It will be a time of true and all encompassing peace and safety. A time for HIS people to enjoy the creation and the cool stuff within it. That is my hope and expectation.
Now that the economy tanking (see frightening new article), now the US is playing chicken with Russia, so that makes things more interesting.
As a former Fire Marshal (and 30 years in the fire service), I have always tried to prepare fo whatever, but one of the things I recently acquired (used them many times in the fire service) are radiation dosimeters and CDV-717 Radiation Survey Meters. I wanted them because of the cold war heating up again, and this time I do think there will be a World War down the road. For your information these surey meters are used Civil Defense ones still in immaculate shape and can be purchased at various locations. If you get them, go on the internet and download instructions and print out, and practice. These can be purchased on EBAY also. Just another tool in your prepardness inventory.
I absolutely detest the main stream media and for that matter 99% of that which comes from the T.V. screen. So I thought I would share this video. http://www.youtube.com/watch?v=Wewf3lQjCPQ
"Continuing on our present course will eventually precipitate an economic calamity of unprecedented proportions as it will be global, not local". http://www.jbs.org/index.php/jbs-news-feed/1653-the-twilight-of-irredeemable-debt
Recent gains in the dollar are mainly due to 1) G-7 central bank intervention - trying to fight the inflationary impacts of a falling dollar 2) significant issues that have recently come to light with other currencies and 3)liquidity contraction caused by banking system inability to loan new money.
Personally, I think it's unsustainable over the longer haul. Let's see: The Gvt is going to bail out Fannie and Freddie within 6 weeks, FDIC will require a lifeline, the Big Three Auto industry will require the same,a major financial institution will require support soon and the stock markets will all need propping up. Additionally, we'll probably see a new stimulus economic package soon - as this one wears off... So, where will this money come from? The printing press of course... Inflation is caused by the increase in money supply, therefore the dollar has only one way to go over the longer run.
Oil is cheaper due to decreased demand/consumption and a stronger dollar.
Bottom line: No, the US economy is as bad as ever and we're likely to see very bad economic news and market conditions over the coming weeks/months.
I don't wanna clog up your blog Randy but if I failed to share this a couple of months back here is a sample along with the link.
6. America's new 'pushers:' Banks feeding consumer addicts Trader's Daily captured it perfectly: "Never underestimate the power of the superpsycho, hyper-spending American consumer. Where there is no cash, they will sell their soul. Or just charge it. Let's just not think about what it all means for credit-card debt down the road." Meanwhile, the credit meltdown is making banks desperate for money. A recent Chase credit-card commercial fuels consumer addictions: Wife wants bigger television. Husband smiles. They shop to the pounding drumbeat of Queen's hit 80s song: "I want it all, I want it all, I want it all ... and I want it now!" Tag line: "Chase what matters!" Yes, Chase debt, all you addicts. Forget saving, spend like there's no tomorrow.
P.S. Some friends and I were discussing the plight of America. We decided that "in GOD we trust" on currency should be replaced with "in usury we trust".
"Well placed" sources told the paper that a top agent had been recalled recently "because the US was thought to be making a decision within weeks to attack Iran with unmanned aircraft".
Hey Justin, They don't call it an October Surprise for nothing!.
Seymour Hersh, from the New Yorker magazine, has been saying for a year or more that Iran was going to get hit before the election. The build up in the Persian Gulf has been thick with our warships and supportive naval vessels for two years. Cheney has been wanting his last chance for blood for sometime now. All we can hope for is that "The Worst Case Scenario" that has been outlined following a US strike into Iran will not come true. A full blown military explosion with the Iranians launching their Soviet missiles at our sitting duck naval fleet in the Gulf would result in a significant spike in oil prices, while pushing our economy into free fall. No doubt, the price of gold will leap to new highs.
In the very first comment on this page I linked a "frightening new article" by Christopher Laird of the Prudent Squirrel. That was 11 days ago. Today he came out with a new one.
I'm curious if anyone else finds the two articles a little inconsistent.
40 comments:
The Prudent Squirrel has a frightening new article out today.
Wamu offering %5 online CD, 12 months. Any takers?
https://online.wamu.com/apply/startapplication.aspx?appType=CD
fofoa: I read the frightening new article and it was frightening
it just seems best to make any protective moves well ahead of the fatal day. well it does but I am not going to borrow money to buy gold - that reminds me of the story of Peter and the Wolf. In the story the duck is swimming in a pond when the wolf comes up. The duck is so distraught that she jumps out of the pond and tries to run away. Immediately the wolf chases after the duck and eats her.
After sending out some "warning" type emails to friends about the banking situation during the past year, and the fact that it is much more serious than what the media leads on to, here is one of the replies I recently received:
"I don't recall anything this bad happening before in this country since the Great Depression. In those days, they didn't have the FDIC so everyone lost their shirts. [..so I guess the FDIC is supposed to be the savior?] The failing of the Savings and Loans in the 80's still wasn't this traumatic and amounted to some folks committing some crimes. Though some crimes have been committed here, those folks will be brought to justice one way or another. But the fact is, our Banking system just fell prey to good old American greed. Bankers thought they could ride the wave a little bit longer by getting the largest number of loans written possible. Now, the markets will have a correction. The companies who can survive their mistakes will survive. Those who can't survive will get bought out and will learn their lesson. It's really that simple."
I think this person is correct in most of the statements, but they just don't go far enough into rabbit hole to get it.
I always gasp at this chart... and it is what I think best sums up what has happened and how far over the edge the situation is.
http://research.stlouisfed.org/fred2/series/BORROW
Could all of the "red alert" people be wrong? Could this pass just as the Savings and Loans debacle did, continuing the bubbles, lies and distortion of what real markets and sound money should be?
I don't think so, but who really knows. The Y2k Freakout didn't happen... although I think Y2k was created by the Empire to keep people focused on something other than the bursting of the dot com bubble.
I actually find solace and comfort when I hear the bad news, and I see many of the same types on the net. What we are wishing for is for the lies and the Empire system to end. We want the light to shine through.
One of the best, Mr. Chapman lays down a good one:
" Anything is better than what we have now, which is a military-industrial-financial complex run by satanic trillionaires who denude citizens of their earnings with rampant fraud and corruption, who slaughter our children, and what should be our foreign friends, with continual wars for profit and who are trying to make us all into serfs in the ultimate feudal system to be run by the would-be lords of the universe, but not until they wipe out billions of useless eaters with pogroms, plagues, wars, famine and eventually nukes, biochemical warfare and other weapons of mass destruction. Is this what our brave men and women are fighting for? Perish the thought!"
http://tinyurl.com/46owjp
Fofoa - appreciate the link
As usual, Christopher Laird didn't disappoint... Very well written, yet scary article from someone who really "gets it"
Tim, HA!
45North, Always good to hear your thoughts
Next Dimensions, Though I've seen that chart a dozen times it still sends a shockwave through my bones. This certainly ain't your typical credit problem and the painful outcome will likely be unprecedented.
Note: I haven't yet read your link (thanks for posting it), but will certainly take a look before calling it a night.
Regards to all
Randy
There is so much going on it just makes one's head spin.
If it isn't Russia, Georgia, and the Grand Ole Plunderers (GOP) rattling their sabers at one another, its the Fed and Treasury making sure their shorts on gold and precious metals get met, while collapsing commodity prices in order to negatively effect consumer confidence; or maybe it is the credit markets freezing up as the banks and financial institutions trade in their toxic assets for freshly printed Hewlett-Packard type dollars made up fresh by the big Banksta Gangsta Bernanke; or maybe it is knowing that the FDIC only has $39 billion in their trust fund to dish out to panic stricken depositors; or it's knowing that the printing press has to make more dollars after the FDIC runs out of cash after the depositors make their nationwide run on their bank accounts; or maybe it is watching a military buildup in the Persian Gulf for more saber rattling as Kuwait gets scared; or knowing that more homes will foreclose and a significant number of Jumbo ARMs are coming due.
No matter what, something has got to give out. You can only blow up a balloon so big before,,,well, you know. We are watching several balloons get blown up so big we hope they slip loose from those greedy lips and fingers before they blow. A spiraling fissile sounds good right about now.
The paper gold and silver shorting trades appears to be another bubble heading for a break. There is really very little collateral to back up those shaky trades. I mean, there is very little gold and silver in those vaults, which is supposed to be the collateral for those trades. HA, HA. Wishful thinking. The greedsters haven't learned a damn thing. And Beany Bernanke is in knee deep, too. We saw it in the housing bubble crisis, but those big Bankstas haven't learned anything. Prison might teach them something useful.
I believe, and I am no authority on much, that you better have a bunch of cash sitting around your house before the balloon breaks. Once the depositors storm their banks, it maybe a long wait before you get your bag full.
http://eye-on-washington.blogspot.com
Randy, here's another good article from yesterday. I'm sure you've seen it but if not, here's the link. It lists a few of the "Dead Men Walking" banks.
Randy, please explain that chart. Is "depositary institutions" another name for banks? Why are they borrowing all this money? Where did that money go? Are they supposed to pay that money back?
Virgo, you asked some important questions.
--Regarding depository institutions. Here is the Wikipedia definition for you. -----
In financial economics, a financial institution acts as an agent that provides financial services for its clients or members. Financial institutions generally fall under financial regulation from a government authority. Common types of financial institutions include banks, building societies, credit unions, stock brokerages, asset management firms, and similar businesses.
Banks are included in the definition. Why are they borrowing? Because they did not have enough collateral in their possession to cover the losses they took when the loans they carved up into derivatives, or basically bonds, which began to lose their value. These bonds were insured by dedicated insurance underwriters to cover if the loan holder defaulted. The lender was covered on both ends--if the loan paid off or if it did not. But too many loans began to collapse. The dedicated insurance underwriters could not pay out the massive losses they were to cover because there were so many. in other words, if you hold a dollar, and then, you take a match to it, at some point it will begin to burn away and disappear into thin air. That is what happened to the value of those bonds. These loans were all made on paper. They virtually sat in computer hard drives all over the world.
Remember, on the one side, those loans, such a mortgage backed loans, credit card loans, car loans, student loans, corporate loans, etc began to default, or go into foreclosure. That value began to go up in smoke.
These loans were made by banks and financial institutions to many who could not pay a ballooning mortgage. Those mortgages foreclosed or were taken back by the bank and were unable to get resold. And if they were sold, if the bank was lucky enough, it was, no doubt, for a fraction of the original value. The original value went up in smoke.
Because these "bonds" that contained bad debt, were so rotten and worth-less, that the banks and such went to the Federal Reserve for a 2% loan basically swapping the bad stuff for good money to help shore up the bank's diminishing bottom line. The bank was sinking and needed an infusion of healthy money to shore themselves up, otherwise they would go broke, or get bought up by a bigger institution, either here in the US or from overseas for a fraction of what they were worth.
In many cases, the bank decided to sell off their bad debt to another investor who could pay 5 cents on the dollar in hopes that someday in the future their investment may grow in value. There is always someone willing to take a gamble for the right price.
If I left anything out or stated it incorrectly, PLEASE correct me. I hope this helped you, Virgo.
jerry
Randy, thanks for posting the Fed charts again, especially the second one that shows the decline in borrowing. Is this the Fed tightening the liquidity? The inflation/deflation argument has had me spinning around for a year now, and I just don't know what to think. "Mr. Fed" as he is known on YouTube has these videos, and I have seen a lot of arguments on both sides of deflation vs. inflation. Maybe you could follow up with a post on this topic with your own thoughts? People also tend to lump the 2 forces together as if they are all encompassing, but should realize that deflation could be taking effect in one area while inflation in another. Thanks again.
http://www.youtube.com/watch?v=ndVsVyleguU
http://www.youtube.com/watch?v=FqCNc0K6Fwo
http://www.youtube.com/watch?v=OTKAB1vvmmk
randy where d yu think gold is going by december
Tarun,
I think we'll see new record gold prices by the end of this year.
Next Dimensions,
Appreciate the links -- I haven't yet viewed, but will check them out tonight.
Jerry,
Once again, your comments illustrate the fact that you have a keen knack for simplifying very complex matters, and I really like the way you think/express yourself. Please, keep up the fine work!
Fofa -- that was a great article. Read it last night. Thanks
Can I get your opinion on the following piece Randy?
http://globaleconomicanalysis.blogspot.com/2008/08/great-gold-silver-conspiracy-explained.html
Justin, I hope you don't mind if I chime in on the "speculation-talk" that was woven throughout the link you posted.
I read through it quickly and have basically one thought on it, and that is one has to keep an eye on the very broad picture. To focus on the question "are the gold and silver markets being manipulated or not" is an important question, but not the entire question. No doubt, there is not enough regulation and transparency to be completely sure one way or another.
The blackjack player may or may not be memorizing the cards as he or she takes down the house with big winnings. It may be all a great guess.
The issue for me is the entire global picture. How is the great financial credit bubble going to unwind. When will the central banks stop draining the Treasury swamp (assets) in order to give the junkies (the banks) more fix? What are the banks doing with all the Bernanke money? Supposedly, there is a credit freeze going on? Who is in the big banker lender/borrower loop? Where is all that healthy money going?
At some point, the great American and global consumer ride will come to a halt. The banks will likely have depositors pounding on the door. The waits will be long. Currencies will likely deflate, and precious metals, yes a commodity but also a currency, will be shining once again.
That is the big picture to me. My question to Bush and Rice is, "Are you suddenly offering a timetable not because you want to offer one, but because you and Bada Bing Bernanke and Hank "the Paulie" Paulson see the financial great unwind a dozen months down the road and the $12 billion per month will come in handy to bailout bank depositors?
Remember, even the rich folks have money tied to monthly paper bank and financial statements. They may just be standing in line to get their share with the blue collar guy.
Unless they have a safe full of cash in their basement, it really won't make their shit smell any better than mine.
Please forgive my tap on your shoulder.
Jerry,
Thanks for your opinion. The one thing (concerning the crisis) I know is that it is going to be the worse economic/monetary disaster ever known to man. My head spins when I try to understand the great unwind that has began. The great unwind will not be pretty. I am fully convinced that the Great Depression was small potatoes compared to the present situation. Researching all of this is a lot like reading a great thriller. The pages continue to come alive.
And now a shortage of Krugerrands?
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=acH4WhPh1WJ0
24karat
This is a very well put perspective. However I disagree with his delusional full recovery closing.
http://www.prudentbear.com/index.php/commentary/guestcommentary?art_id=10098
"Department reported that personal incomes fell by 0.7 percent in July -- well beyond the drop of 0.1 percent that analysts polled by Thomson IFR had predicted on average. That reflects the waning impact of tax rebate checks that Americans received this spring.
As expected, the government also said consumer spending rose a modest 0.2 percent. That was below the 0.6 percent increase seen in June and, accounting for rising prices, spending actually fell by 0.4 percent in July. Wall Street has been particularly concerned about Americans' ability to help the economy grow, since rising prices for gas and food have strapped many household budgets," as reported on Yahoo finance.
These figures will not be getting better for a very long time, if ever! It shows that consumer spend, in spite of it being very modest, was still beyond income growth. This does not bid well for Xmas retail sales for most, except for an increase in consumer debt growth.
I read the Wharton School article posted by Justin. I believe he was right-on. I accepted his view that "the storm will be arrive, be painful and destructive. And for many, the good life will be washed out to sea. Yet it will eventually pass. We will rebuild and the nation will move forward." I agree only if we end up with a new president who radically reform the damage that has occurred. Our nation's future will require an alternative energy and green Marshall Plan put into place.
Justin, PLEASE keep posting those great links you read!! I need to read them, too! Thanks for your due diligence.
You are welcome Jerry. Bye the way check out this link. This guy posts some rather humorous funnies.
http://economicrot.blogspot.com/2008/08/weekend-funnies_30.html#links
Randy,
I just read your Dec 2005 opening blog article...dude it reads like a history of 06,07,08. Bravo! you and others like Norial Rubini saw this mess coming and sounded the alarm. (where was I?)
I am new to your blog site and i am all ears as far as what you think comes next, what can we do personally to protect our finances, but also, what we can do politically to make changes that will improve the structure of our economy
Delegate WV
Justin,
Thanks - I'm glad you like the cartoons and I'm sorry I haven't had the chance to reply regarding the conspiracy issue.
ALL,
I try to read every link posted up, but often don't have time to comment in detail... but don't let that issue prevent you from posting em! There is lots of valuable info in them (for all the readers here), but not enough time in a day for me to reply... My apologies.
Delegate WV,
Welcome and thanks. I suggest you start by trying to digest the link below and then read some of the articles/watch the videos on the right side of my blog
US Economic Outlook 2008-11+
Regarding politics: Useless ATT. We need leaders who aren't owned by the corporations and special interest groups - but that ain't going to happen utill we undergo very hard times and the masses revolt against the existing system.
Randy
"Regarding politics: Useless ATT. We need leaders who aren't owned by the corporations and special interest groups - but that ain't going to happen utill we undergo very hard times and the masses revolt against the existing system."
I couldn't agree more Randy. That is why the Constitution was written in such a way as to not only allow but beg for the overthrow of any governing body by means of election and if necessary by force via a well regulated(as in calibrated) militia. However such a thing happening with the American populous of today is but a pipe dream. The populous has been dumbed down beyond measure. This was and is a methodical dumbing down. If it wasn't then the education system's most fundamental priority would be a clear understanding of our constitution and it's purpose. This would start at the very beginning of our education and be seared into the conscious of every young American by the time they graduated the education system. It would in turn breed a watchful and intelligent eye towards those who govern our Republic. Just the opposite is what we see today.
This lady of kingdoms has dwelt carelessly. Inundated by consumption and entertainment she gives no serious intellectual consideration to the methods and motives of the government that is suppose to be for her. She dwells so carelessly that her mindset is "I am and no one else will be". She continues to be looted and raped and she accepts it just as she accepts death and taxes. Could this be because as a whole those who govern her mirror her?
The lobster is nearly boiled without ever noticing the increase in temperature. The wolves are wide awake and driving while the sheep nap in the back seat. They are to wearied to notice. They have become fat, dumb, and lazy. They would rather kick back and be entertained than face difficult TRUTH.
I am fully persuaded that any revolt will be put down with a mighty hand. A revolt will come and it will be smashed. The presidency has assumed tyrannical powers. We've watched the current administration thumb it's nose at "checks and balances" while congress sits on it's hands. A government by the people for the people? I've got some ocean front property I'll sale you here in south central Illinois.
Do the research my friends. Why are there FEMA concentration camps erected around the country side? Why is there so much secrecy in our government?
They preach peace and safety as they take away the remaining liberties. Take away is a bad choice of words. They simply walk about with their bag of tyranny open as the people willingly deposit their remaining liberties.
My biblical views walk hand in hand with all of my views. I know that makes a lot of people scoff and run. I understand why. Christendom has made a joke out of the Law of GOD. It's no wonder many simply laugh at the scriptures. Nevertheless I stand firm in that regard.
When they say "peace and safety, peace and safety" sudden destruction will come upon them from which they shall not escape. The Kingdom of GOD will not be some mundane ritualistic church service. It will be a time of true and all encompassing peace and safety. A time for HIS people to enjoy the creation and the cool stuff within it. That is my hope and expectation.
Superbly stated Justin!
Now that the economy tanking (see frightening new article), now the US is playing chicken with Russia, so that makes things more interesting.
As a former Fire Marshal (and 30 years in the fire service), I have always tried to prepare fo whatever, but one of the things I recently acquired (used them many times in the fire service) are radiation dosimeters and CDV-717 Radiation Survey Meters. I wanted them because of the cold war heating up again, and this time I do think there will be a World War down the road. For your information these surey meters are used Civil Defense ones still in immaculate shape and can be purchased at various locations. If you get them, go on the internet and download instructions and print out, and practice. These can be purchased on EBAY also. Just another tool in your prepardness inventory.
If you are buying gold and silver right now, and you don't know the story of the Hunt Brothers, you might find this interesting.
I absolutely detest the main stream media and for that matter 99% of that which comes from the T.V. screen. So I thought I would share this video.
http://www.youtube.com/watch?v=Wewf3lQjCPQ
Good one Justin - I'll post it up
Oil prices going soft and Dollar strengthening, what is the reason. Are the oil futures trading less or is it that the U.S. economy going good again.
Tyranny
http://www.jbs.org/index.php/jbs-news-feed/2085-imprisonment-by-executive-order
All of those FEMA concentration camps will be put to use in due time.
Greenspan's opinion 40 years ago.
http://www.jbs.org/index.php/jbs-news-feed/1722-middle-east-countries-about-to-abandon-sinking-dollar
"Continuing on our present course will eventually precipitate an economic calamity of unprecedented proportions as it will be global, not local".
http://www.jbs.org/index.php/jbs-news-feed/1653-the-twilight-of-irredeemable-debt
mahalinga,
magandang gabi sa inyo. komasta?
Recent gains in the dollar are mainly due to 1) G-7 central bank intervention - trying to fight the inflationary impacts of a falling dollar 2) significant issues that have recently come to light with other currencies and 3)liquidity contraction caused by banking system inability to loan new money.
Personally, I think it's unsustainable over the longer haul. Let's see: The Gvt is going to bail out Fannie and Freddie within 6 weeks, FDIC will require a lifeline, the Big Three Auto industry will require the same,a major financial institution will require support soon and the stock markets will all need propping up. Additionally, we'll probably see a new stimulus economic package soon - as this one wears off... So, where will this money come from? The printing press of course... Inflation is caused by the increase in money supply, therefore the dollar has only one way to go over the longer run.
Oil is cheaper due to decreased demand/consumption and a stronger dollar.
Bottom line: No, the US economy is as bad as ever and we're likely to see very bad economic news and market conditions over the coming weeks/months.
Salamat.
Randy
Justin,
Just got in from work and it's time for dinner. I'll check out your links tonight. Thanks for posting them up.
Randy
I don't wanna clog up your blog Randy but if I failed to share this a couple of months back here is a sample along with the link.
6. America's new 'pushers:' Banks feeding consumer addicts
Trader's Daily captured it perfectly: "Never underestimate the power of the superpsycho, hyper-spending American consumer. Where there is no cash, they will sell their soul. Or just charge it. Let's just not think about what it all means for credit-card debt down the road."
Meanwhile, the credit meltdown is making banks desperate for money. A recent Chase credit-card commercial fuels consumer addictions: Wife wants bigger television. Husband smiles. They shop to the pounding drumbeat of Queen's hit 80s song: "I want it all, I want it all, I want it all ... and I want it now!" Tag line: "Chase what matters!" Yes, Chase debt, all you addicts. Forget saving, spend like there's no tomorrow.
http://njhousingbubble.blogspot.com/2008/02/paul-b-farrells-american-expose.html
P.S. Some friends and I were discussing the plight of America. We decided that "in GOD we trust" on currency should be replaced with "in usury we trust".
Iran bombing?
"Well placed" sources told the paper that a top agent had been recalled recently "because the US was thought to be making a decision within weeks to attack Iran with unmanned aircraft".
http://www.telegraph.co.uk/news/worldnews/europe/netherlands/2656680/Dutch-withdraw-spy-from-Iran-because-of-impending-US-attack.html
Hey Justin,
They don't call it an October Surprise for nothing!.
Seymour Hersh, from the New Yorker magazine, has been saying for a year or more that Iran was going to get hit before the election. The build up in the Persian Gulf has been thick with our warships and supportive naval vessels for two years. Cheney has been wanting his last chance for blood for sometime now. All we can hope for is that "The Worst Case Scenario" that has been outlined following a US strike into Iran will not come true. A full blown military explosion with the Iranians launching their Soviet missiles at our sitting duck naval fleet in the Gulf would result in a significant spike in oil prices, while pushing our economy into free fall.
No doubt, the price of gold will leap to new highs.
In the very first comment on this page I linked a "frightening new article" by Christopher Laird of the Prudent Squirrel. That was 11 days ago. Today he came out with a new one.
I'm curious if anyone else finds the two articles a little inconsistent.
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