Wednesday, December 24, 2008

New Open Forum

Feel free to post up your links, comments, hold a discussion etc.



After todays rate cut, I couldn't help but to post this great cartoon.


With ZIRP now in place, Debt Monetization is all that is left in the Fed's "Bag-o-tricks"... See link for more On ZIRP - Our Future

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39 Comments:

At 12/14/2008 4:01 PM, Anonymous Anonymous said...

Fed to press rates toward zero Tuesday

WASHINGTON (Reuters) - The U.S. Federal Reserve is expected to drop interest rates close to zero on Tuesday, but anticipated remarks on unconventional methods to dispel a year-old recession are what will really matter.

Economists forecast a clear statement that the U.S. central bank will aggressively deploy so-called quantitative easing measures to shelter the economy from a steepening downturn, but do not expect details of what steps it will actually take.

Those words would accompany a decision by the Fed to lower its target for overnight rates by at least a half-percentage point, economists believe.

A half-point cut would take the bellwether federal funds rate to just 0.5 percent, the lowest on records dating to July 1954, as the central bank battles a recession many think will stretch well into next year.

The announcement is expected around 2:15 p.m. on Tuesday at the end of a two-day meeting. The gathering had initially been scheduled for a single day, but was extended so policy-makers could study options for unusual steps to spur the economy with little room left to lower borrowing costs.

"From here on out, monetary policy has to rely primarily on non-traditional tools, tools other than the funds rate, to try to stimulate the economy," said former Fed Governor Lyle Gramley, who expects the Fed to spell this out.

"They are certainly going to have to acknowledge that non-traditional methods are going to be employed aggressively to try to provide assistance to the economy," he said.

A U.S. housing collapse panicked credit markets and has hammered the rest of the economy since the failure of investment bank Lehman Brothers in September. Many economists predict economic activity will shrink by an annualized 6 percent or more in the fourth quarter as unemployment climbs.

 
At 12/14/2008 4:04 PM, Anonymous Anonymous said...

Comex said warning brokers about December gold squeeze



From "Midas" Commentary
by Bill Murphy
LeMetropoleCafe.com
Friday, December 12, 2008

I received a call this morning from a commodities broker who told me that the Comex is alerting various futures firms about the potential of a squeeze on the December contract and is advising the $840 December shorts to exit their positions. That is the remaining open position.

There have been 12,636 notices of delivery. The shorts have until December 31 to make delivery. Normally they deliver early to take in cash and earn the interest. They must be delaying. As I understand the situation, that represents about 40 percent of the gold available at the Comex, and of course someone could enter the scene late, buy February gold, and then spread into December, which would stun the shorts.

My broker friend said his back office said this sort of alert is highly unusual and that the concern is real, not only for gold, but for other commodities too, like copper and palladium, as there is a good deal of talk of taking deliveries there too. But gold is the one for which the advice to cover went out.

This is an extremely productive development and could spur the price of gold up quickly as word spreads. As we all know, buying Comex gold and silver (the cheapest way to buy precious metals) makes all the sense in the world in this financial environment.

 
At 12/15/2008 10:51 AM, Blogger skymetalsmith said...

I believe the Oil Companies should bail out the auto industry.

 
At 12/15/2008 7:16 PM, Anonymous Anonymous said...

Here's a hilarious take on the bailouts by one Fred Thompson

Fred Thompson Explains Bailouts

enjoy!!!

 
At 12/15/2008 9:23 PM, Blogger Randy said...

Great Video!

Thanks Anon

 
At 12/15/2008 10:09 PM, Anonymous jerry said...

Here is what the world bank is saying about commodities prices.

http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTDECPROSPECTS/GEPEXT/EXTGEP2009/0,,contentMDK:22002357~pagePK:64167689~piPK:64167673~theSitePK:5530498,00.html

 
At 12/15/2008 10:15 PM, Blogger Randy said...

Jerry,

After reading, I personally think the world bank analysts are smoking crack. When the dollar tanks, all hell will break loose on the G7 inflation front.

 
At 12/15/2008 10:24 PM, Anonymous jerry said...

http://www.mybudget360.com/gross-domestic-product-40-percent-of-the-united-states-gdp-comes-from-5-states-california-texas-new-york-florida-and-illinois/

Check this out!!! Maps show the states that make up the greatest % of our GDP, which are close to bankruptcy, unemployment rates.

 
At 12/17/2008 8:07 AM, Anonymous Next Dimensions said...

latest Alan Watt radio show:

"The Rape of Things to Come"
http://tinyurl.com/64zcwn

 
At 12/17/2008 1:34 PM, Anonymous Anonymous said...

Check this out.

http://www.safehaven.com/article-5824.htm

Great read on predicting Peak Debt.

 
At 12/17/2008 3:41 PM, Anonymous jerry said...

Anonymous--thanks for the link!!! WOW--that article was written in 2006 and the graph done in 2004. That article could have been written yesterday. It speaks to what is going on right now.

What was a bit confusing was that first he wrote about rising debt, ie. peak debt, then later, under Consequences of Peak Debt, was falling debt and how it would lead to a collapse of corporate profits. Oh, as I write this I get it!!!! This is what is occurring right now!!! Bada Bing Bernanke is so committed to try and increase debt so corporate profits might once again rise through increased production, consumer buying and stock price values increasing. It has not worked thus far, yet he is so busily trying to get borrowing going again when the consumer ain't buyin' it.

Incredible reading.

 
At 12/17/2008 5:41 PM, Anonymous jerry said...

US dollar Index Chart

http://www.fxstreet.com/rates-charts/usdollar-index/

 
At 12/17/2008 8:08 PM, Blogger MogwaiHunter said...

USA is preparing to starve (control) its own people...

See the total collapse of food reserves over the past 6 years...

http://www.fsa.usda.gov/FSA/webapp?area=home&subject=coop&topic=rpt

Compare May 2002 http://www.fsa.usda.gov/Internet/FSA_File/wid2a0205cor.pdf

With present
http://www.fsa.usda.gov/Internet/FSA_File/wid2a.pdf

Henry Kissinger stated the premise succinctly in 1970: "Control oil and you control nations; control food and you control the people."

 
At 12/18/2008 2:07 PM, Blogger Ellen said...

Randy,

This is a fascinating perspective on the auto bailout by a very articulate insider, Gregory Knox, who is to be commended for his courage and insight.

Ellen

Abridged letter from Troy Clarke, President of General Motors - followed a response from Gregory Knox:

*******************************************************************

Dear Employee,

Next week, Congress and the current Administration will determine whether to provide immediate support to the domestic auto industry to help it through one of the most difficult economic times in our nation's history. Your elected officials must hear from all of us now on why this support is critical to our continuing the progress we began prior to the global financial crisis......................As an employee, you have a lot at stake and continue to be one of our most effective and passionate voices. I know GM can count on you to have your voice heard.
Thank you for your urgent action and ongoing support.

Troy Clarke
President
General Motors North America
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From Gregory Knox,

In response to your request to call legislators and ask for a bailout for the United States automakers please consider the following, and please also pass this onto Troy Clark, the president of General Motors North America for me.

You are both infected with the same entitlement mentality that has bred like cancerous germs in UAW halls for the last countless decades, and whose plague is now sweeping the nation, awaiting our new "messiah" to wave his magical wand and make all our problems go away, while at the same time allowing our once great nation to keep "living the dream"... The dream is over!

The dream that we can ignore the consumer for years while management myopically focuses on its personal rewards packages at the same time that our factories have been filled with the worlds most overpaid, arrogant, ignorant and laziest entitlement minded "laborers" without paying the price for these atrocities...and that still the masses will line up to buy our products. Don't tell me I'm wrong. Don't accuse me of not knowing of what I speak. I have called on Ford, GM, Chrysler, TRW, Delphi, Kelsey Hayes, American Axle and countless other automotive OEM's and Tier ones for 3 decades now throughout the Midwest and what I've seen over the years in these union shops can only be described as disgusting.

Mr. Clark, the president of General Motors, states: "There is widespread sentiment in this country, our government and especially in the media that the current crisis is completely the result of bad management. It is not... "

You're right - it's not JUST management...how about the electricians who walk around the plants like lords in feudal times, making people wait on them for countless hours while they drag ass...so they can come in on the weekend and make double and triple time...for a job they easily could have done within their normal 40 hour week. How about the line workers who threaten newbies with all kinds of scare tactics... for putting out too many parts on a shift...and for being too productive (mustn't expose the lazy bums who have been getting overpaid for decades for their horrific underproduction, must we?!?) Do you really not know about this stuff?!?

How about this great sentiment abridged from Mr. Clarke's sad plea: over the last few years ...we have closed the quality and efficiency gaps with our competitors. What the hell has Detroit been doing for the last 40 years?!? Did we really JUST wake up to the gaps in quality and efficiency between us and them? The K car vs. the Accord? The Pinto vs. the Civic?!? Do I need to go on?

We are living through the inevitable outcome of the actions of the United States auto industry for decades. Time to pay for your sins, Detroit.

I attended an economic summit last week where a brilliant economist, Alan Beaulieu surprised the crowd when he said he would not have given the banks a penny of "bailout money". Yes, he said, this would cause short term problems, but despite what people like George Bush and Troy Clark would have us believe, the sun would in fact rise the next day... and something else would happen...where there had been greedy and sloppy banks new efficient ones would pop up... that is how a free market system works...it does work...if we would let it work... But for some reason we are now deciding that the rest of the world is right and that capitalism doesn't work - that we need the government to step in and "save us"...save us, hell - we're nationalizing...and unfortunately too many of this once fine nations citizens don't even have a clue that this is what's really happening...but they sure can tell you the stats on their favorite sports teams...yeah - THAT'S important... Does it occur to ANYONE that the "competition" has been producing vehicles, EXTREMELY PROFITABLY, for decades now in this country?... How can that be??? Let's see... Fuel efficient... Listening to customers... Investing in the proper tooling and automation for the long haul... Not being too complacent or arrogant to listen to Dr W Edwards Deming 4 decades ago. Ever increased productivity through quality, lean and six sigma plans... Treating vendors like strategic partners, rather than like "the enemy"... Efficient front and back offices... Non union environment...

Again, I could go on and on, but I really wouldn't be telling anyone anything they really don't already know in their hearts I have six children, so I am not unfamiliar with the concept of wanting someone to bail you out of a mess that you have gotten yourself into - my children do this on a weekly, if not daily basis, as I did at their age. I do for them what my parents did for me (one of their greatest gifts, by the way) - I make them stand on their own two feet and accept the consequences of their actions and work them through. Radical concept, huh...

Am I there for them in the wings? Of course - but only until such time as they need to be fully on their own as adults I don't want to oversimplify a complex situation, but there certainly are unmistakable parallels here between the proper role of parenting and government.

Detroit and the United States need to pay for their sins. Bad news people - it's coming whether we like it or not the newly elected Messiah really doesn't have a magic wand big enough to "make it all go away" I laughed as I heard Obama "reeling it back in" almost immediately after the vote count was tallied..."we might not do it in a year... or in four..." where was that kind of talk when he was RUNNING for the office. Stop trying to put off the inevitable ...That house in Florida really isn't worth $750,000...People who jump across a border really don't deserve free health care benefits... That job driving that forklift for the big 3 really isn't worth $85,000 a year...

We really shouldn't allow Wal-Mart to stock their shelves with products acquired from a country that unfairly manipulates their currency and has the most atrocious human rights infractions on the face of the globe... That couple whose combined income is less than $50,000 really shouldn't be living in that $485,000 home...

Let the market correct itself people - it will. Yes it will be painful, but it's gonna be painful either way, and the bright side of my proposal is that on the other side of it is a nation that appreciates what it has...and doesn't live beyond its means...and gets back to basics...and redevelops the work ethic that made it the greatest nation in the history of the world...and probably turns back to God.

Sorry - don't cut my head off, I'm just the messenger sharing with you the "bad news"

Gregory J Knox
President
Knox Machinery, Inc.
Franklin, Ohio 45005

 
At 12/18/2008 5:21 PM, Blogger Justin_n_IL said...

Just wanted to say hey. My internet is down until Monday. I miss you guys. Great bunch of people on here.

Bye the way what's up with all the snow Randy? LOL

Sincerely,

Justin_n_IL

 
At 12/18/2008 7:03 PM, Anonymous jerry said...

Just a point regarding the auto bail-out. It really is not a bail-out--an exchange of worthless debt in return to receive trillions of crisp treasury dollars to hand over to the top 10% of the income earners for a trickle down economic stimulus. GM and Chrysler are asking for a bridge loan, for what it is worth.

The Republicans in the Congress have handed out to Toyota, Nissan, Subaru, VW, and Honda $3.60 Billion in tax abatements, infrastructure handouts, school, municipal and state tax breaks and abatements, national income tax PORK grants, and grants for educational as well as in-service trainings, among other taxpayer freebees. In addition, all the profits from those corporations located here in those states leave the country and go back to their country of origin adding to the trade deficit.

There are ways to fix the domestic auto manufacturing problems. Unfortunately, congress, nor Bush, or Obama are talking about them.

 
At 12/18/2008 10:42 PM, Blogger Randy said...

Thanks for the charts, links and comments folks. Haven't had the chance to look at all the links yet, but will when time is available.

Ellen, Great read from Mr. Knox - I like that guy!

Jerry, as you know, I've been following the dollar closely and I think we'll see a new ALL TIME LOW soon.

Justin, Good to hear from ya! Yup, Saw Vegas made it to the national news on account of our snow. It was beautiful, but messy for traffic. Hell, people here can't even drive in the rain, much less snow!

Next Dimension and Mogwai. Appreciate the links - will read them before calling it a night.

Best regards to all of you

Randy

 
At 12/18/2008 10:49 PM, Blogger Randy said...

Mogwaihunter - Holy Shit! Looks like the pantry is completely empty!

 
At 12/19/2008 12:44 AM, Blogger MogwaiHunter said...

Combine the lack of food reserves with economic collapse and you have a horror show in the making.

Im frightened.

 
At 12/19/2008 8:08 AM, Anonymous jerry said...

It is a wake-up call for everyone to buy a rototiller and get to it. My garden is 400 sq. feet, and it is a near full-time job to care for it, but there are tricks.

Interesting debate on what to do about home interest rates, and a comparison between the US and Japan of the late 90's.

I hate to say it for all of you carnivores, there are way too many giant feedlots in the central plains mid-west taking up valuable farmland for livestock and their grains. These feedlot cities could be used for growing nutritious vegetables and beans for consumers, which would give us an ample supply of food and keep the price affordable. It is time to get back to small local farmers and local livestock producers.

http://seekingalpha.com/article/111530-krugman-s-return-of-depression-economics-what-if-the-dollar-doesn-t-fall?source=email

I must say that what i read on Seekingalpha does not always make sense. It seems to be a trickle down website. One piece was talking about the US becoming the world's private equity group and then, funding new industries in other countries. HUH? That is what has been going on for the last 30 years and see where it got us.

The dollar falling----small manufacturing, such as the one my family has, has had a boom year as a result of being able to sell abroad. For all of us other folks, it has been bad.

I agree with you Randy, the dollar will fall, and continue to do so until the US has things to export that the rest of the world can use to improve their lives and quality of life. In addition, if the US can lower the trade deficit, as Dr. Peter Morici, of the Univ. of Maryland School of Business has so easily outlined, the dollar will stay low. But remember, we are the world's biggest market place, and many nations feel that the US is still, in the long term, the place to put their investment currencies, in spite of our recession and coming near or on the mark depression. Such hypotheses are difficult to formulate.

 
At 12/19/2008 8:17 AM, Anonymous Dave said...

Does anyone else find the abrupt rise of the dollar in the last couple of days odd?

It was trending down before and after the Fed reduced the target rate. Then all of a sudden it turned around, as if the hand of god...

Has the news really improved that much for the dollar in the last couple of days?

Dave
http://daveeriqat.wordpress.com/

 
At 12/19/2008 4:38 PM, Blogger Justin_n_IL said...

Excellent article from Nyquist this week.

The Final Absurdity

 
At 12/19/2008 5:25 PM, Blogger Justin_n_IL said...

The Fallen Natures of Men Took Control Of The Economy And Destroyed It

 
At 12/19/2008 5:36 PM, Blogger Justin_n_IL said...

This comment has been removed by the author.

 
At 12/19/2008 5:40 PM, Blogger Justin_n_IL said...

For those who are blind to "Republicrats". I have a book titled "Year of the Rat". It details how Gore and Clinton let go of highly sensitive military technology to China just so the snakes could raise campaign money. Rotten to the core they are. Power truly corrupts and absolute power corrupts absolutely. The stage is set for an American Dictator with absolute power.

Saudis, Indians among Clinton foundation donors

 
At 12/20/2008 12:47 PM, Blogger Sir Max Higgins said...

Bank of America and Mr. Higgins missing $millions, It can happen to you, my fellow Americans


More info: http://www.maxhiggins.com/blog

 
At 12/20/2008 2:58 PM, Blogger Justin_n_IL said...

Global warming fear-monger selected as Puppet Obama’s top science adviser


U.S. debt approaches insolvency

Economic crisis: US, China and the coming monetary storm

 
At 12/20/2008 3:19 PM, Blogger Justin_n_IL said...

Biden: U.S. Economy in Danger of 'Absolutely Tanking'

 
At 12/21/2008 4:29 PM, Anonymous jerry said...

Justin,

I thought you would be out their in the frozen midwest shoveling snow. Tuesday, Chicago is supposed to get hit with several inches more on top of your below zero temperatures. It is a good night for a woodstove!!! I bet Chicago will have a record December.

Good articles you posted. Biden "testifying" to Steph. is saying something no one in our current White House is willing to admit. Biden has Jared Bernstein as his top economic advisor. The guy is brilliant and has his finger on the pulse of the working American. He is an advocate for working America. His choice of Bernstein beats all of Obama's choices combined.

 
At 12/21/2008 7:11 PM, Blogger Justin_n_IL said...

Jerry,

Brrrrr.....it's cold here. I'm 4.5 hours south of Chi town but we had -20 wind chill factor today along with 20-30 mph wind gusts all day and so far tonight as well. Not sure if I mentioned before or if it's just a case of irony but I do in fact use wood heat. It's got a glass door on it as well which makes for a nice space out object lol.

Interesting about Biden. I'll have to check Bernstein out. Brrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrrr, when I let my dog out or have to grab a stick of wood lol. Take care everyone.

Justin p.s. my word verification is "equal". hmmmmmmm

 
At 12/21/2008 7:28 PM, Anonymous jerry said...

i just spent the last 58 minutes listening to Paul Krugman's talk at the National Press Club. For what it is worth, he talks about the economic crisis, his evaluation of it, and where we might be headed. I was doing other things while it was going on so I would not think my time was wasted; yet, nevertheless, it was worth listening to his opinions. I guess what makes me more sick when listening to such talks are the disgusting elitists who take light of his grim viewpoints and laugh, and act overly intellectual.

http://cspanjunkie.org

Rave on Justin--more than likely, this December will go down in the history books. My woodstove was cranked up on Thursday, here in Pittsburgh, for the first time this winter, and will continue through tonight, Sunday. The week here looks warmer, but your week looks tough.

 
At 12/22/2008 5:05 PM, Blogger Justin_n_IL said...

Our 2009 Predictions

 
At 12/22/2008 5:06 PM, Blogger Justin_n_IL said...

Jerry,

I'm just now regaining feeling in my toes and fingers. Rough day of cutting and splitting wood.....oh what fun. But hey I made some monopoly money though.

 
At 12/22/2008 8:10 PM, Blogger Justin_n_IL said...

Pass it along.

Creating a Nation of Zombies

 
At 12/22/2008 10:01 PM, Blogger Randy said...

Justin - DUDE, You figured out the hyperlink thing - Congrats!

Appreciate the links and it's good to see you back in action.

 
At 12/23/2008 6:21 AM, Blogger Justin_n_IL said...

Randy,

Thanx a milllion

 
At 12/23/2008 5:24 PM, Anonymous jerry said...

Justin---There is nothing better than those coveralls that the linemen wear when splitting the wood. It is interesting how many people around me now are burning wood!!!! Although, I sure am getting used to keeping the place around 50-55 degrees much of the time when the fire burner has gone out. The woodpile has become an economically precious commodity. You have two young kids, which makes it hard to keep it too cold.

Two updated stats:

According to First American LogicCore--

7.6 million homeowners were underwater beginning in October, with 2 more million on their way. They predict near 20 million by 2010.
-------------------------------------

Unemployment will be 10% of population by 2009. Dr. Morici has been saying that if the trade deficit is not fixed, 10% unemployment by 2009.

 
At 12/25/2008 4:04 AM, Blogger Caren said...

Hi,
My name is Caren.

I find your site http://economicrot.blogspot.com/
and the selection of resources there very interesting.
I have a good credit card website that contains much useful information for your readers. There's a fine set of articles that reveal all pros and cons of credit cards, give tips how to avoid credit card debt and establish good credit with minimum efforts. During the current financial crisis this can't but attract more visitors to your site.

If it agrees with your policy, I would like to place some links to my website at your site.

Please let me know if you are interested via email caren@acclaimnetwork.com
Thank you for your time,
Regards,
Caren.

 
At 12/25/2008 7:35 PM, Blogger Justin_n_IL said...

Merry Christmas everyone. May GOD open and bless your eyes. GOD speed for those who are mindful.

Justin

 

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