Warren Buffet is is not going to buy "Douglas national bank" ?

Neal If the geniuses at the big investment banks are in trouble, imagine the lesser informed brethren at the smaller banks.

Well - this is not entirely true. Some of the smaller banks are run much more conservatively. The "geniuses at the big investment banks" of later years have basically been the geniuses of ignoring reality.

Of the small banks I know, all that were not planning on selling out pulled back (especially on construction) far before the larger outfits. They changed practices in 2005 at the latest. However, their great vulnerability is going to lie in small commercial lending and the perils of a worsening economy.

Mind you, I'm talking not about regionals but about communities, and it all depends on the strength of the management. And frankly, the banks I know are going to be more conservative than the norm because of a self-selection process (I am more Tanta-ish in my lending and risk management approach).

If anyone would like to look at the differences between large banks and the others, you can look at the chargeoff and delinquency release put out by the Federal Reserve. The split between 100 largest and the rest is obvious.

Ah, sub the regionals for smaller - thanks MoM.

CONJURE'S FUN FACTS

Conjure and I think it appropriate to again share the following fun-filled graphs. Be sure you're sitting down before you look at them.

St. Louis Fed: Series: NFORBRES, Net Free or Borrowed Reserves of Depository Institutions 
St. Louis Fed: Series: BORROW, Total Borrowings of Depository Institutions from the Federal Reserve

In case you all missed: Fannie Mae changes its mission, from "we help families," to "we help lenders":

GSE Loan Limit And A Shift In Fannie Mae's Mission? - CNBC

energyecon, I think that a nice summary, without having to explain how the different dynamics are interacting perversely.

Let's not forget, shall we, that last week's debacle did not start in Europe with some silly little derivatives trader at Societe General. It started in Asia.

OT

The "rogue trader" has been taken into custody and is being questioned. It appears French govt. will not help SocGen cover up the truth and all facts will come out.

I believe "rogue trader" was one part of a team that lost track/control of equity derivatives hedging strategies and counterparty risks, and a counterparty may have reneged.

I believe SocGen offered or paid him money to take the fall. I think this will come out and SocGen may go the way of Enron and Worldcom.

Many experts don't believe SoGen's story. Too many holes.

mp-

I looked at the graphs and I think I understand a couple things.

1. Something very ugly is happening quickly, but what? I grasp that money is disapearing, yet why so fast?
2. Is it good, or at least a little better that they are borrowing more than they are losing?
3. At this rate of drop is not something bad just around the corner? But what?

I can't wrap my mind around what I am seeing...

MP last week's debacle did not start in Europe with some silly little derivatives trader at Societe General. It started in Asia.

Yup.

Also, on your other link - I have major questions about performance of variable rate munis. Should municipalities even have gotten into this type of thing? However it does indicate that the Fed might have to take interest rates down further than it normally would.

Munis get a high percentage of the revenue from property taxes and, in many areas, from some form of sales taxes. In the areas worst impacted by the RE boom, both streams of revenue are taking a hit.

MoM,

Tying that in with mp's link, then we have increasing financing costs (approaching 100% in some cases?!) supported by declining revenue streams...ouch.

mp, on the monster is evolving.

I gather you don't see a crisis at this moment, but rather the very real possibility of a crisis developing in the muni bond market and, from there, spreading to the broader financial markets.

The article you (and risk capital) linked on money market funds liquidating holdings insured by less than AAA monolines suggests that credit quality variations among municipalities is having an impact on borrowing costs with lower rated municipalities paying a higher rate.

Isn't that just a normal market response at this stage, much like the revaluation of the credit risk posed by an individual on an ordinary loan?

Why would this necessarily spiral out of control to the point where some munis would be illiquid?

Hey, people! Hello! We are on the cusp of a banking crisis. Don't you see that?

FFDIC alluded to it some time ago, by relating that some of his currently employed friends are expecting some 300 bank failures.

The last firewall here is the bond insurers, and they are melting fast. When they go, an enormous amount of money is going to be DESTROYED. IBs and commercial banks will be FORCED to take writedowns.

The monetary base, which has been shallowing, will begin to FALL.

The Fed will have to pump FASTER as the banks take the writedowns.

Rates in the muni market will go HIGHER as pension and money market funds dump paper that no longer has the AAA moniker.

Short term ratets will go lower, but this will induce inflationary expectations and rates on the long end of the curve go HIGHER.

Meltdown.

If this happens, the only way to re-start the economy is through FISCAL stimulus. You can lower the short rate to ZERO and nothing, absolutely nothing, will happen.

If this occurs, the $150 billion stimulus package will have ZERO effect. You would need several trillion dollars to re-start the economy.

ARE WE CLEAR NOW?

mp said:

If not for the TAF, the banking system would have seized up weeks ago.

Can the US gov. do this as long as needed? I would not think so, or is the plan, such as it is, to do this and hope things work out soon? From the graph the rate is really a free fall. They are just trying to buy time aren't they?

Would this not be happening in Europe?

Thanks for replying. This really at a level past serious now. People who have a clue must be freakin.

Oh, by the way: if this occurs, you won't be able to GIVE gold away.

mp, you're ruining my Saturday. )

Seriously, it's not so obvious to those of us who have no connection with banking/finance/economics that the end is near.

I've been railing against crazy financing for years, but it was only last spring/summer that I started following this board when it became obvious that things were deteriorating quickly.

I don't expect the current administration even understands the scope of the problem, much less that it has any solution. But I do have some faith that 'markets' and those who play in them will muddle through these problems.

The genius of CR and Tanta is that they cover these issues in language that ordinary folk can understand. So bear with us (using the plural because there must be others here who are trying their best to follow along).

Thanks for your contributions.

"the following fun-filled graphs"
mp | 01.26.08 - 10:52 am
Again, I want to thank you for your extra effort to explain this the other night, much less your Meltdown Clarification today.

I'm beginning to think about this as follows:
1) Commercial Banks have been squealing like my brakes for decades that they don't make any interest on non-borrowed reserves held at the Fed. A ludicrous and nefarious desire, I know. After all, they still get dividend payments (6%?) on the capital they are required to invest in their district Fed bank.

2) With TAF, they can now borrow money at or near the Fed Funds Rate on much weaker collateral. Pace! you inflation-mongers, after all, it is an auction, so some legitimate market forces are allowed to act on TAF borrowings. And the Fed can limit the amount loaned so they don't expand monetary base beyond their target growth.

"The monetary base, which has been shallowing, will begin to FALL."
Would you post that St. Louis Fed Research graph showing growth rate of the Monetary Base for us language literature majors?

mp, have a good trip. I fear for the market if conjure bag is unleashed on Wall Street Monday.

I also fear for our rogue trader if any of the more fanciful theories are close to true. He could find himself defenestrated a la Kid Twist.
Abe Reles - Wikipedia, the free encyclopedia

Anon, it'd be nice if you knew what any of what you cut n paste meant.

So over the summer Douglass got repackaged and Fannie Mae was one of the companies involved.

Show me the relevance of how a bank that went under for $5mm will somehow sink FNM, otherwise FOAD.

God forbid you just google Liberty Bank, you'll wind up with a list as long as Charlie Keating's rap sheet.

can we get an over/under on the effects of the state of the union speech monday?I will bet on a 200 plus point drop during the speech and 400 down for the day.OT,I know,just trying to cheer people up.

--
Disgustingly DISCRIMINATORY American econo-political system on full display – discrimination based on size, based on incomes, based on level of irresponsibility, based on sex and race (white women far more likely to vote for Hillary than other groups), etc. I knew a “right wing” Libertarian white woman, neighbor years ago, who voted for Boxer and Feinstein because they were women! We know why both Senators from CA are white women and why they can’t be challenged (Boxer is beyond disgusting). I doubt that this neighbor would have voted for two black women just because they were women.

Only a morally bankrupt American can support the current system. Immorality and corruption are fully institutionalized. It is normal for an American to be morally corrupt because he, or she, is in tune with the rest and not disliked. Americans like to be popular than be good. What is different now is very high level of individual irresponsibility and moral corruption. Whites were prejudiced in the past but not as irresponsible and corrupt in their personal conduct as today. I have observed a big change in the past 32+ years that I have been in the US. Until 1994 I was reasonably pro-American system. The Twin Bubbles have changed everything for the bad and for "good." There is no going back for a morally corrupt society until it suffers greatly as a result of that immorality.

Jas

"can we get an over/under on the effects of the state of the union speech monday?I will bet on a 200 plus point drop during the speech and 400 down for the day.OT,I know,just trying to cheer people up."
Tom Stone

If he tells the people the truth, we'll know things have gotten too bad to ignore.

Also, it is possible to put several series on the same graph at the St. Louis Fed, might have been more interesting to look at both lines together on the same graph

Energyecon:
I'm not sure if this has been posted yet (my phone and internet is going on and off today), but the liquidity crisis seems to be developing. If you look at H.3 and H.8 which you can find at the Fed's website http://www.federalreserve.gov/releases/ 
you see non-bank borrowed reserves collapsing and the SA deposits rising significantly on an SA basis. Especially large time deposits. NOT a good sign.

I have been worried about money pooling at the banks and now I think it is happening. Very scary. People laughed last year when I wrote about the coffee can businessmen!!!

This has nothing really to do with subprime. It's a systemic failure to deal with risk. Subprime is just the first beam to give way.

You are going to see these segments of risk blowing up one after another. Each beam that buckles places more pressure upon the rest of them. So second liens buckled subprime mtg, leading to Alt-A and ABS, which blew monoline. Monoline blows dicey munis.

Then there's another line which goes commercial retail, commercial mtg, C&I midline.

Then there's another tree which goes large commercial mtg > takes out another ABS segment, & blows up another lending line.

This is why I am so upset about the proposal to get GSEs into jumbos. We have to now support what's viable, and the GSEs can currently recover even though they are hard hit. In the current circs, far too much of that jumbo was Alt-A in origination and now is poisoned. If they try to get into it they will end up taking too much risk. Since their liquidity stream is desperately needed, the last thing you want to do is mix this in.

--
Mike in AZ,

Is the truth so painful for you personally? I bet you suffer from popularity syndrome.

Truth is very unpopular among corrupt Americans, who feel the need to defend the American System, because it is like showing them the mirror.

Sorry, if I hurt your feelings, Mike.

Jas

Misean

after the whores and shills for the bog boyz on wall are done pushing on the string gold is a good bet to go up, along with a lot of other things.

so i agree with you about gold and respectfully disagree with mp on this onee point.

this is not to say there can't be interruptions. the recession will drag a lot of demand driven prices down but some commodities will be sticky on the way down or refuse to drop and gold will be among the list.

eventually as we go weimar republic, my bet is gold soars.

Aheadofthecurve...what you were talking about was a WPA driven economy like Roosevelt used to start our exit from the GD. The war added to his fiscal policy.

we already have our wars...eventually we will get an energy "Manhattan Project" (hydrogen economy plus wind solar clean coal and maybe nuke and geo therm)

it will take the party that isn't afraid to blend some socialism in with their capitalism to make that happen.

"it will take the party that isn't afraid to blend some socialism in with their capitalism to make that happen.
mock turtle"

It will take a party--and a people--that is ready to get past theological debates on economic policy, to focus on WHATEVER WORKS.

(how do you guys get italics in haloscan?)

John Stark

you make a good point, and i should be less partisan...a few years ago i was, now i'm a little bitter...sorry

--
GCW: “Interesting article by Stiglitz..."

I like Stiglitz and David Rosenberg among economists. Most of the rest are below par.

"SO , what would America's second civil war look like?”

Uglier than the first one.

“Who would start it?”

Who else? The latest empire.

“Where would it start?”

In the ghettos of America.

“Could IT be contained?”

NO.

“Whay problems would it solve?”

Get rid of democracy! – a front for the capitalist Crooks. Yes, democracy will be fully discredited because of America’s Crooks’ gross abuse. It was always a front to keep dopes in line while the Crooks run the show from behind the scenes.

Democracy = Domination of Money (Spengler)

Jas

MOM-

"This has nothing really to do with subprime. It's a systemic failure to deal with risk. Subprime is just the first beam to give way.

You are going to see these segments of risk blowing up one after another. Each beam that buckles places more pressure upon the rest of them. So second liens buckled subprime mtg, leading to Alt-A and ABS, which blew monoline. Monoline blows dicey munis.

Then there's another line which goes commercial retail, commercial mtg, C&I midline.

Then there's another tree which goes large commercial mtg > takes out another ABS segment, & blows up another lending line."

MOM, I STOPPED PACKING LONG ENOUGH TO READ THIS. THAT'S IT. WELL DONE.

Alec- "I believe that mp is of the opinion that gold could go down violently due to any number of reasons (except secular) before turning around and heading up."

Yes.

--
mock turtle: “so i agree with you about gold…”

Here is what I wrote few hours ago in a reply...

George Ure: “Thanks to Ben & the Printers, I'm expecting to see silver over $50 and gold well over $2,000 long before April and maybe as early as my birthday in late February.”

UrbanSurvival | Financial News of the Second Great Depression 

Are you feeling OK, George? Maybe, an icepack on your head might cool it down. You must not believe in price changing the supply-demand equation. We are NOT in 1970s environment as far as the Longwave is concerned. Gold is just a currency play and most of the weak dollar has already played out.

BTW, I sold naked December 1,500 Calls on gold at $981 (after $9 per contract commission) a pop on Friday (I had GTC orders for two weeks). I have been short December 700 Puts for the past 6 months.

"Ben’s Printers" are not working, George, and that is why he went to the politicians to do something in a hurry to give one positive quarter in a long recession during 2008-09.

Jas

Jas,If you could get down from your high horse,and stop treating everyone else like they missed the short bus because they couldn't tie their shoelaces people might pay a little more attention to your posts.

I've been spending too much time on CR lately, to the detriment of other kinds of news reading. Would you guys mind adding sports and weather, just to make it all more convenient?

Hello Tom Stone,

What makes you think that others know how to communicate and I don't? You mean that the majority is right?! Could it be that the problem lies with all the brainwashing Americans have received from birth?

Please feel free to point out where I am wrong on facts and conclusions and I will take your inputs into consideration.

I was raised differently than most here were. Is that a problem? You prefer to communicate with those who are more like you?

BTW, I have no problem whatsoever with others. If they take shots at me I occasionally shoot back but mostly I ignore.

Tolerance is NOT an American value! We use force to bring people into submission. Only a disgusting group of people would spread democracy (their religion) by force and even on false pretexts. Americans have a serious problem and I like to point out some of the problems. Don’t most here talk about problems? I look at the root-cause levels than the saucy detailed others prefer.

Sincerely,

Jas

John Stark

no problem...i was being self critical and reading between lines that were not there.

I think you, aheadofthecurve, and i agree the country needs a couple of :real" solutions working side by side.

this little 150 billion stimulus package is a joke...too little too late.

I'm gonna call this plan from Bush and Pellossi "the HDTV" stimulus package because as analogue tv goes away this year, new flat screens is where a lot of this money is gonna go... and other consumer goods...more drugs for our "gotta have it now" economy.

Son of Jas Jain - best of luck. Consider protective institutionalization.

Mock Turtle - H.8 shows a statement of bank liabilities and assets. Remember that in the banking world, loans are assets and deposits are liabilities.

If you look at H.8's SA liabilities and look at non transaction deposits:
Dec 2006: 5,520.0
Dec 2007: 6,070.3
This is in billions, so that is about half a trillion dollars extra in non-transaction deposits. And although that total has dropped slightly since Dec, the large time deposits keep growing.

MP is right. We are very near a systemic crisis, because this to me indicates a collapse in confidence. It also indicates that banks are scrabbling for money to shore up their reserve positions, but as you can see that is not going too well overall. Some banks seem to have the money but obviously some others are short. That's why you have TAF - Treasury is intervening to keep money flowing. Banks aren't really willing to lend to some parties, so the Treasury is becoming the counterparty.

Solar and wind power, tidal and geothermal, and MASS TRANSIT.
Gary

Yes, especially the last part: transit. Here in the Northwest, we got our Amtrak service restored after a few years of nothing, and the train that goes from Vancouver to Seattle (and Portland) is made in SPAIN.

The hard sell on all this is the hard reality: Even with alternative energy, mass transit and so forth, we are gonna need to REDUCE CONSUMPTION. That doesn't mean hardship. It does mean living in denser communities, closer to stores and jobs, fewer electronic toys, smaller cars, etc. etc.

To put it another way--take a stroll through your favorite mall or big box store and pretend you are stocking a cargo container full of stuff to sustain you for a year on a desert island. HOw much of the stuff on display would be remotely useful in that situation?

Countrywide just stuck a fork in several markets:
(basically 5-10% down payment increases for all the bubble markets)

I forsee a really interesting 4Q earnings statement. I think we can all understand why Countrywide isn't having a conference call on this one.

@ MOM: Yeah, the government is taking absolutely the wrong approach to the GSEs. They could be very valuable in the coming storm as the only way to do mortgages. The are in danger already, at their capital limits and facing large unrecognized losses (as that Countrywide earnings statement will reinforce). But rather than thinking how to secure them, the government is hoping to milk them to prop up the bubble market. These cows need care, not exploitation.

I hasten to add that I don't want to have to live in survival mode. But would it be so bad to go back to 1950s or 1960s levels of personal consumption? No. I remember those levels. We were fine.

IN any event, we may find ourselves being FORCED back to those levels, if some of our seers on this thread are correct.

Personally, the thought of a Depression doesn't scare me. It's what comes after that scares me.

The banking system is a mess and pretty soon they start having to write down their pier loans. Reports have the good stuff trading @ 91 cents which implies a 4-5 cent loss.

Being conservative, at $200b outstanding(amongst the big banks like JPM, Citi & BofA), that's between $8-$10b in losses at a minimum, because they haven't sold the crummy stuff yet, just the best.

Now if the CDO insurance fails to pay out...turn out the lights, the party's over.

Announcer: "Meltdown Man, you've just gotten a government check for thirty grand, what are you doing?"
Meltdown Man: "I'm gonna short the dollar!!"
Meltdown Man

LOL ! Meltdown man read my mind.

OT: but I have a second thesis as to how to speculative attack on the Fed ( IF it exists ) is taking place. It was staring me in the face, carried out in the open all along - Speculators are buying short term treasuries, to bring the yields wayy down and bringing down Fed Funds Rate futures !

OK, I've waited for the collective "DUH" to die down - to continue : the Fed would rather take a more measured pace at getting down to 2%, thus maintaining a fig leaf of "keeping an eye on inflation" and thus stopping the decline of the dollar. The Speculators are forcing a much faster pace and making money by stepping ahead of the Fed, using the Fed's announced policy of using incoming data to guide them and regarding market data ( FFR futures, treasury prices ) as actual PRICE data; game the data - fool de man.

This has implications: for money I MUST keep in US $, I go out to 1 and 2 years CDs, for the rest I increase my US$ shorts.

Nope, I don't know what they will do on Wed. If the Fed believes that they are under speculative attack, they might lash back to show they have some balls - On the other hand, they DON'T have any balls else they wouldn't be under speculative attack !

The above all assumes they are under speculative attack. One of many theories I flip in and out of as I navigate these treacherous short term waters - white water kayaking for sure.

And as you plan those spring and early summer vacations, let me plug my current state CO, and this place ( nope I don't get a cut):
Upper Arkansas river around Salida white water rafting
Colorado Rafting on the Arkansas River: Plan your Arkansas River rafting vacation on a Colorado white water rafting adventure with Whitewater Encounters

-K

--
""A great civilization is not conquered from without until it has destroyed itself from within" -- W Durand"

I began my education, years ago, by reading all that Durants wrote. W Durant was one of the at most 100 educated Americans in America's history. There is a reason why America is full of dopes (well-trained dopes, for sure) who claim to know when they know next to nothing about human institutions.

I realize that pointing out the general ignorance of Americans doesn't make me popular here. It has to do with the gross ignorance that Americans support the current system of the Crooks.

America has been destroyed from within and the next twenty years will simply bring that to everyone’s attention. American system WILL collapse before 2030.

Jas

So would it be preferable to be in a deflationary situation with gold, or inflationary without it?

A link to HousingWire on CR's front page mentions that New York is expanding the Countrywide Fraud suit to 26 underwriters. But the link doesn't mention which underwriters. Look at this list from the article:

ABN AMRO Inc.; A.G. Edwards & Sons, Inc.; Banc of America Securities LLC; Barclays Capital Inc.; BNP Paribas Securities Corporation; BNY Capital Markets, Inc.; Citigroup Global Markets Inc.; Countrywide Securities Corporation; Deutsche Bank Securities Inc.; Dresdner Kleinwort Wasserstein Securities Inc.; Goldman, Sachs & Co.; Greenwich Capital Markets, Inc.; HSBC Securities (USA) Inc.; J.P. Morgan Securities Inc.; Lehman Brothers Inc.; Merrill, Lynch, Pierce, Fenner & Smith Inc.; Morgan Stanley & Co. Inc.; RBC Capital Markets Corporation; RBC Dominion Securities Inc.; RBC Dain Rauscher Inc.; Scotia Capital Inc.; SG Americas Securities TD Securities Inc.; UBS Securities LLC; Wachovia Capital Markets LLC; Wachovia Securities, Inc.; Grant Thornton LLP; and KPMG LLP.

To a first approximation, New York is now suing the entire Western financial system for fraud. I assume they've got a case because DiNapoli is a pol and doesn't want to look like a fool.

F demitrius

WOW i followed your link

i'm gonna have to log off now to get a drink,

average citizen

i'm not an economist or a professional investor..i follow economics because of my involvement in community issues.

but... my answer to your question,,, i'd rather have gold or silver coins (recognizable and easy to exchange) rather than be without during a crisis.

this entire mess could go 1929 or something like that only different

or maybe not, and here is the scary thing...the best and the brightest minds don't know how this plays out, and for sure that is scary.

On picosec's blip, pico the reserves don't look so good, even with your new chart parameters:

Graph: Net Free or Borrowed Reserves of Depository Institutions (NFORBRES) - FRED - St. Louis Fed

It looks to me like the borrowing would tend to spike up (they aren't going to go to the trough in a constant, ever increasing way)

But I am no chart wizard -- MP, MOM, care to weigh in?

--
Real trolls like to feed on other trolls and complement each other for how wonderful the troll is.

They are threatened by anyone who doesn't feed them the troll. Trolls can't handle substance. They need a non-stop supply of trolls from fellow trolls. How sad.

Jas

average citizen

one more thing if i may, while im pretending to be smart without a license

i'm not barracading myself in or buying lots of ammo (although a little might be nice)

but i did move all my investments into bonds, CDs and hard tangible assetts i can hold in my hand... as of last july.

if it aint fdic or ncua insured or a us gov security or a precious metal, i'm too fearfull to touch it for now.

a rototiller and a garden might be a good idea on a piece of land you own outright!

Bailout him?

and it is continuing?

vous ne parlez pas les tres misserables?

you caught me im a pretender

now off to shovel snow so the ones who deserve the band width can have it back
bye

--
mock turtle & shy,

Now, that is a fine example of troll. You guys are way too entertaining. Keep up the good work!

Jas

--
Gary" "All the racists constantly bashing on the Mexicans . . . well, I'll take a dozen of the illegal mexican immigrants I've met over this pathetic shell of a man."

You are right, Gary, but would you be kind enough to tell me who are really behind feeding these irresponsible miscreants? Did you notice the smug smiles?

Are Bankrupters and Fraudsters of New York City (BFNYC) not the ultimate feeders of this behavior? Does the Fed have anything to do? Where is the fountainhead of bad lending that is so common in America?

Can anyone here tell me of a period in American history when bad lending to households/consumers as at the recent, or current, levels?

Jas

I have this feeling that CR and Tanta are going to shut down this blog soon given the deteriorating quality of the discussion.

I find the apocalyptic tone off-putting and the logic loosey-goosey. For example, why would a repricing of munis to reflect their value without insurance necessarily imply a total banking collapse?

--
revro: " i am not a gold bug. gold is now just a comodity, it will never become currency."

I disagree. You need to read Rothbard. You may find free copies of his books on Internet.

How many bridges were built in America during the gold standard? An honest currency backed by gold can multiply. It is only when dishonesty creeps in that the problem begins.

Jas

Dr N- "...why would a repricing of munis to reflect their value without insurance necessarily imply a total banking collapse?"

You didn't read what I wrote. If you did read what I wrote, you didn't understand it.

I suggest that you go back and read it again, Doctor.

test

about gold:

my feeling is that the deflationary effect of what we're seeing leading to a drop in the price of gold has already been disproven. look at the price of gold over this last yr ever since the first subprime quake last Feb with all its subsequent deflationary effects on the housing mkt and knockon effects on other mkts.

equally telling is golds disconnect from crude oil price which was firmly linked up until about a month ago. gold price rise will only accelerate as the gov't continues its irresponsible policies. gold will probably tick up further after Wed FOMC rate cut altho some of the price move has already occurred.

That's why you have TAF - Treasury is intervening to keep money flowing. Banks aren't really willing to lend to some parties, so the Treasury is becoming the counterparty.
MaxedOutMama

then why is Libor beneath FFR? can US banks borrow overseas?

--
MTHood: "If the Great Depression II does come, then I'm a dupe."

The Greater Depression is a certainty to begin within the next few years. It should become obvious to many during 2009-10.

I hope that you remember your comment and admit to it. You need not feel bad, though, because vast majority of “educated” Americans and the rest are bred to be dopes. One part of the doping in denial of the repeat of the Great Depression let alone worse. Another obvious part is faith in democtacy.

Jas

well if you look at gold from USD view, it looks nice, but since i live in eastern europe and hopefully in 11 months in euro zone, from my view gold is not such a performance. -revro

Kitco Gold/Currency Charts

r u kidding me?

aotc

i've heard u make that argument before but its like me sayin if u compare the s&p now to 2000 ur underwater. depends on ur measuring pts.

mp wrote:
Gold is hedge against inflation, not DEFLATION.

Marc Faber, Fred Sheehan, and Roy Jastram have some interesting observations about this:

The Performance of Gold during Inflation and
Deflation
http://www.gloomboomdoom.com/gbdreport/download/GBD0504.pdf

..."The rule-of-thumb goes that gold
will appreciate during an inflation
and lose value in a deflation.
Empirical evidence shows quite the
opposite — but the problem may lie
in the question being answered. Is
the question one of absolute return,
or of the purchasing power of the
metal over a period of ’flation?"...

CONJURE'S FUN FACTS

Conjure and I think it appropriate to again share the following fun-filled graphs. Be sure you're sitting down before you look at them.
NFORBRES
BORROW 

mp,
That chart is up thru the end of November (dec 1st actually) and was last updated on Jan 4th (first friday in Jan). Would Feb 1st be the date for the next update (to include the Dec data thru Jan 1st) ?