all of this jockeying around the past 6 - 8 months has left me getting bored. Let's let the markets go where they may so we can get on with the recovery in some fashion......
I recently read somewhere there is a better inflation protector than going long gold. Does anyone have any ideas about this? I thought PMs were the way to go. They've been good to me so far...
OT Dollar Overnight Libor Rate Gains by Most Since 2001
The London interbank offered rate, or Libor, surged 111 basis points to 3.61 percent, from 2.50 percent on June 27, the British Bankers' Association said today.
2001 is when they began tracking.
The public is not paying attention and has no idea what is happening. The political impact when the wreck unfolds will give the Democrats a sweep like 1932. That is not neccessarily good for the country or the Democrats.
randy writes:
I recently read somewhere there is a better inflation protector than going long gold.
Gold doesn't particularly do well in an inflationary environment. But it does much better in a deflationary environment.
However people perceive that it is an inflation hedge so i guess it should go up.
Not sure about inflation protection but long on commodities look good if you don't mind the wild swings.
Could our economic situation been prevented if Fed did not intervene at all, or was it inevitable?
Thanks.
The Federal Reserve was created in 1913.
The Great Depression followed soon thereafter.
Coincidence?
Can a institution really effectively manage and direct millions of different entities with different capital structures and different needs by changing a single number?
Hopefully while economists are stuck on the presumption the oil price must be based on fundamentals (key presumption-->market must "clear" (which needs examining, as oil producers can buy contracts in addition to selling contracts, but they don't have to take "delivery" of their own oil, etc, etc...)...
While economists are stuck with unexamined presumptions, hopefully Congress will pay attention to more than only economists and change the market rules and end the oil bubble before we see a world wide depression.
While economists are stuck with unexamined presumptions, hopefully Congress will pay attention to more than only economists and change the market rules and end the oil bubble before we see a world wide depression.
Well the one good thing you can say about it is it forces us to start actively looking at alternatives, which is probably something we're probably going to have to do anyway.
Maybe it's best to have an artificial crisis before the real thing. But the timing couldn't be worse, and it puts more money and power into the wrong hands.
People need to keep that one point in mind - the people that would do harm to society are gaining a great deal of wealth and power through these bubbles.
Their long-term plans for using that wealth and power might not be so pleasant.
The world needs higher interest rates to tackle a clear inflation threat, even though economic growth is likely to be hit harder than most observers expect, the Bank for International Settlements said on Monday.
I caught that article as well and the annual report. A very sobering analysis of our crisis. In a related post, in my chart of the day, I show the Dow from 1928 to 1932 leading up to the crash and down to the bottom.
What's interesting is that if you take a look at each of the six bear market rallies and the subsequent declines in isolation, they all look like big rises followed by steep falls.
What one needs to keep in mind is to not get sucked into a sucker's rally when home prices are falling and credit writedowns are still underway.
Inflation is a distraction from poor monetary and fiscal policy--and from the main problem, bad credit. Inflation will eventually be discussed as the cure, not the illness.
You say you got a real solution
Well, you know
We'd all love to see the plan
You ask me for a contribution
Well, you know
We're doing what we can
But when you want money
for people with minds that hate
All I can tell is brother you have to wait
Don't you know it's gonna be all right
all right, all right
Ah
Due to the fact that there are different views to what constitute an inflationary/deflationary environment. Some say inflation is a cause of an increased in money and credit supply and others are talking about price inflation.
I think it's best to look at history to see how gold performed(This does not mean it will perform in a similar way now, due to the changes in the markets, gold standard..etc)
These articles would give some insight:- http://www.gloomboomdoom.com/gbdreport/download/GBD0602.pdf Inflation & Deflation During Hyperinflation
"The World Food Program said the American ship that arrived Sunday [in North Korea] carried 37,000 tons of wheat, the first installment of 500,000 tons in promised U.S. aid that will be distributed by the United Nations."
I've not noted glod as being wedded either to inflation or to deflation. It's said to be tied to anxiety in the marketplace, and I suppose there's a case for that.
PMs are generally just commodities. In the case of glod and, to a lesser extent slivre, they tend to become a 'commodities speculative play of last resort' when you're running out of faith in absolutely everything else.
Both tend to spike before and up to the point at which short-term rates are raised. Whereupon they collapse as investors return to more familiar modes and conditions.
The runup in 1980 is the classic example, though it's useful to note that today's circumstances are not identical, and may well play out differently.
ac, you are 100% right IMO.
There was no Great Depression and no inflation before the FED was created, there was no national real estate disaster before Fannie was created, and BTW life was much better before Ted Kennedy got in office.(I wasnt here but thats what I heard)LOL
Yeah, the reason I went completely flat in my account Friday was that this downturn is overextended, esp. in the INDU. I'm not going long - but there could be programmed buying machines going off anytime, leading to a rally of 2%+.
Leftys Liquors writes: We're open.
BB writes: I'll drink to that.
randy writes: let the chips fall where they may.....
Priced corn, grains or energy lately? You can have some drink or you can have some chips but you cannot afford both.
As my friend, Joe the fund guy, says, "when almost everything you buy goes up in price and almost everything you sell goes down in price, your currency is no good".
Oh yea Paulson in Russia.....needs some new source of money after the chinese told him they had this little problem of a natural disaster and needing to look good in about a month's time.
4. Food consumption is more of a constant than not - the demand for food essentially never goes down.
Animal consumption is volatile. As grain prices rise livestock is slaughtered which reduces demand.
Feed lots bidding for "beef on the hoof" generally do so with PDA in hand. Fed is bought on the futures market at the same time the animal is bought at auction. So the impact of higher grain prices on herd size is lagged by a few months.
Last year many of the feed lot operators would have booked more profit by selling grain instead of feeding it to animals.
Kind of odd that many animals were better hedged against for rising food prices than a large number of the worlds poor.
I've heard talk that cattle are being brought to market earlier (and smaller) right now since it costs too much to feed them. thus, the cattle herders might as well cash in now.
this is causing a relative 'glut' of beef right now keeping beef prices relatively low.
come fall/winter, the herds will have already been whittled down, so there will be a relative shortage of beef, and thus we are likely to see beef prices explode.
i'm not an expert here, this is just my understanding of the issue... so YMMV
Steak on the plate is concentrated grains plus energy inputs. After the inventory reductions the inputs are going to seriously impact the price. You can already see it in chicken and even pork products which have much short production cycles. Look also for a leg up for fish as they are especially sensitive to fuel prices for the fleets and transport.
Could our economic situation been prevented if Fed did not intervene at all, or was it inevitable?
the fed can exacerbate or alleviate financial crisis and smooth or aggravate the business cycle.
sometimes the fed has failed as in the 1930s...the fed like sec treasury Melon believed the best way to restore the system was to bleed out the poison so they made things worse.
but financial crisis and bank runs etc existed long before the fed
JP Morgan (the man and his bank!) acted like a fed during the banking crisis and panic of, um i think 1907...and there were several trainwrecks between the war in 1812 and the Woodro Wilson administration.
a properly administered AND PROPERLY OWNED FED is probably a good idea.
as currently constituted the Fed leaves much to be desired.
I am repeatedly astounded that all of our major institutions are controlled by morons. Educated, maybe, but morons nonetheless. Not a lick of common sense.
Fact: The economy is FUBAR and out of control. There will be no good outcome to our current economic predicament.
It was a rickety contraption, at best. No wonder it crashed and burned.
I always find it intriguing that people fail to remember the THOUSANDS of bank runs in the 1800's.
and also that people always say "every fiat currency eventually goes to zero" but FAIL to mention that "every gold backed currency eventually goes to fiat".
I also am 100% against the Fed as-is. but to imagine that Pre-Fed life was utopian is naive at best.
if I had to choose
1) get rid of Fed
2) get rid of fractional reserve lending and leverage
I am repeatedly astounded that all of our major institutions are controlled by morons. Educated, maybe, but morons nonetheless. Not a lick of common sense.
what's moronic about what they did? They came up with useless innovations that made them billionaires. now it's all collapsing and they stay billionaires.
It was funny that they needed three different people to field Faber. He's an interesting guy and his shot at BB about "textbooks" was hilarious. Not sure about his views on gold, though.
What will they do with their billions? Trade it among themselves? They have killed their own golden goose. Henry Ford understood the need for balance between wages and profit margins. Too bad the current crop of lowbrow idiots don't.
tj & the bear writes:
Kunstler (a Dawg favorite) put it this way: Our chances of mitigating this, and of continuing our current way-of-life is about zero.
He's been wrong for a dozen years and now that the stopped watch has something right we are supposed to think he can tell time?
The problem is Kunstler's idea of way-of-life changes is fleeing back to the ghettos to live in 6 story cold water walkups to toil by day in sweatshops to pay for the food that will be sporadically arriving by rail and distributed on bicycles when it isn't too hot due to global warming and unchecked pandemics.
Kunstler is a Club of Rome acolyte who's worldview is fixed such that he only sees those events that support his conclusions. This is one of those times.
fractional reserve banking is how banks and especially central banks fuel growth, increasing money supply in line with the increased production of goods and services of a growing economy.
without fractional reserve banking growth is likely to be retarded.
fractional reserve banking, like nuclear energy, the internet, cars, guns, pesticides, antibiotics...you name it can be for the good or be disasterous if mis-used.
maybe like other inventions humankind just can't handle the power.
but if we could...fractional reserve banking has it's place...must be REGULATED
There was a record 2325 NOTs issued is June 2007. As of last Frday, there were 6668 NOTs issued in Maricopa County for the month of June, and there is still one business day left. At the height of the S&L crisis in the 1980s, the record month for NOTs was March 1988 when 1431 NOTs were issued.
According to modern economic theory, an economy reaches its "tipping point" when there's no money to pay salaries any more, and everyone starts working for tips.
While spending some quality time(prisoner) in St. Helen (1815-1821)Napoleon wrote some interesting things in regard to a united Europe. I tend to agree with him. To make a long story short, it will not work.
Every time a house goes back to the bank four neighbors lose their equity. Phoenix has a double whammy of low rents to deter investors and massive recent building that lowers general equity positions. Phoenix and Las Vegas are two places that are in danger of slipping over the "event horizon" wrt homeowner equity.
Oil is off it's highs, dollar is strengthening and market rallying.
Makes me look bad that i called for a negative close.
We'll see in a couple of hours though.
As for global warming - well, nothing like an ice free North Pole to do a number on all those inaccurate models that predicted climate change would happen decades further along than is currently occurring, right now. Not sure if this is a plus or a minus for Kunstler - basically, everyone has been wrong in their models compared to what is actually occuring, at least in the Arctic. - rent_to_own
Ummm. No. There's a massive volcanic rift causing the sea ice thinning at the North Pole. Beyond that there is accretion of Ice in the Artic and no discernable climate warming for a decade.
Ummm. No. There's a massive volcanic rift causing the sea ice thinning at the North Pole. Beyond that there is accretion of Ice in the Artic and no discernable climate warming for a decade.
Did I miss the snark tag or is somebody parodying Rob? Does anybody bother to calculate the amount of lava needed to produce observed ocean warming? (Hint: we're talking major new islands.) And the last 10 years has something like 7 of the hottest years on record but somehow that's not getting warmer?
"Kunstler's vision is small town America, essentially the style that existed in New England and New York until somewhere around the 1930s."
Yes, like where he lives, Saratoga Springs, NY, as lovely as a town as you'll find in the US. Problem is it makes its living from tourists who come for the races, ballet and concerts in the summer. Most of its residents commute (by car) down I-87 to the Albany area. Saratoga is a great model for itself, but not much else.
The idea that we can't possibly adjust to $ 4 or $5 or $6/gallon gas is simply unproven hooey. Gas has only been over $4 for a few months and we're already seeing less driving and more public transit ridership. Nor is the economy doing that badly, considering the shock. It just takes time; we will adjust and be better off for it. Humans are nothing if not adaptable. But you have to look forward, not back to some mythical past that wasn't so great either. Those small towns were hotbeds of intolerance and petty jealousy.
"The scientists say the heat released by the explosions is not contributing to the melting of the Arctic ice, but Sohn says the huge volumes of CO2 gas that belched out of the undersea volcanoes likely contributed to rising concentrations of greenhouse gases in the atmosphere. How much, he couldn't say."
The FR system was created in 1913, two decades before the depression and seven decades before anyone really understood monetary economics. The FRB was indeed partially to blame for the Depression, although its failure was the failure to do enough, not doing too much.
Actually, the Depression was the result of a -shortage- of cash, exactly the opposite of what Greenspan and Bernanke have been repeatedly accused of perpetrating. People started hoarding in fear of a bank run, and that made banks insolvent, which caused bank runs. Now, we have the FDIC, so (consumer) bank runs are basically a thing of the past.
In fact, the advice many on this blog and elsewhere are giving might well perpetrate another Depression, if Bernanke were to take it. Raising interest rates to stop "inflation" in the face of a slowing economy is precisely what would ause a serious "depression", especially if coupled with wasteful "stimulus" from the government running up debt and preventing idle resources from accumulating for the use of private enterprise.
What is happening right now is a tight market in energy and food; a slowing worldwide economy will loosen these markets, given time, but right now that hasn't happened yet. So prices are rising, and since you have to use energy for everything, people think that the minor general price rises are "inflation" rather than just a temporary commodity market hiccup.
[Caveat: Oil prices -are- trending higher over time. That doesn't necessarily mean that in teh last twelve years, they should be up by a factor of eight or ten or more. I agree with, and am impressed by, Krugman's oil market analysis on his blog.]
The "inflation" we are seeing now is not a monetary problem, and does not require a monetary solution.
It is possible to argue that negative real interest rates are always bad - but it is just an argument - and at any rate the idea that negative real interest rates encourage leverage is in my mind fallacious (different issue for a different time, though).
Bottom line: Rising energy prices and food prices are not evidence that there is too much money. They are evidence that there is not enough food and energy.
el presidente-My compliments on a salient analysis. Too bad you are not the occupant of the White House instead of the current occupant who should not be presiding over anything more complex than a Delta Tau beer bash.
Oil is rising partly because of real supply/demand issues and partly because money is flowing out of other areas into the commodities. Msrs. Bernanke and Trichet are powerless against the first unless they oqn secret oil wells; the authorities can act against the second by restoring confidence in the equity and credit markets. When they do, watch the money pour out of commodities and into stocks and bonds.
There's a massive volcanic rift causing the sea ice thinning at the North Pole. Beyond that there is accretion of Ice in the Artic and no discernable climate warming for a decade.
Rob Dawg | Homepage | 06.30.08 - 1:09 pm | #
Hey Rob Dawg..you got a lot of good ides that you share with us all here...
but your down playing climate change is just wrong. the science does not support your view.
look you and i could argue convincingly on both sides for years and not soon resolve this debate.
suffice it to say that since the industrial revolution carbon dioxide in the earths atmosphere has increased by 30%
CO2 is the number one climate change gas
but we dont have to argue...
the changes will be quite evident in a year or two.
of course failure to act in the past several years means we are going to suffer.
Ouch. So tin foil hats on then?
We're open.
I'll drink to that.
let the chips fall where they may.....
all of this jockeying around the past 6 - 8 months has left me getting bored. Let's let the markets go where they may so we can get on with the recovery in some fashion......
I recently read somewhere there is a better inflation protector than going long gold. Does anyone have any ideas about this? I thought PMs were the way to go. They've been good to me so far...
OT Dollar Overnight Libor Rate Gains by Most Since 2001
The London interbank offered rate, or Libor, surged 111 basis points to 3.61 percent, from 2.50 percent on June 27, the British Bankers' Association said today.
2001 is when they began tracking.
Dollar Overnight Libor Rate Spikes Most Since 2001 - The Tree Of Liberty
CR or anyone,
Could our economic situation been prevented if Fed did not intervene at all, or was it inevitable?
Thanks.
The public is not paying attention and has no idea what is happening. The political impact when the wreck unfolds will give the Democrats a sweep like 1932. That is not neccessarily good for the country or the Democrats.
Maybe they need a stimulus check over in Europe.
randy writes:
I recently read somewhere there is a better inflation protector than going long gold.
Gold doesn't particularly do well in an inflationary environment. But it does much better in a deflationary environment.
However people perceive that it is an inflation hedge so i guess it should go up.
Not sure about inflation protection but long on commodities look good if you don't mind the wild swings.
Bob writes:
Maybe they need a stimulus check over in Europe.
They bailed out banks to the tune of 500B already. But stimulus, i am guessing they have some savings as opposed to...
James Howard Kunstler, love him or hate him, hits the nail on the head with a 10lb steel drivin' hammer today.
Clusterfuck Nation by Jim Kunstler
Its gonna be an interesting week.
Consumption dropping everywhere but commodities prices rising? Hmmmm....
"could prove to be much greater and longer-lasting than would be required to keep inflation under control."
In other words:
Get ready to fire up the printing presses guys!
I'll drink to that.
Ok, how many of you jokers used to hang out on the SI "Waiting For The Big Kahuna" and "All Clowns Must Be Destroyed" threads? 'Fess up!
Could our economic situation been prevented if Fed did not intervene at all, or was it inevitable?
Thanks.
The Federal Reserve was created in 1913.
The Great Depression followed soon thereafter.
Coincidence?
Can a institution really effectively manage and direct millions of different entities with different capital structures and different needs by changing a single number?
Absolutely!
As you can see around you it works like a dream.
Hopefully while economists are stuck on the presumption the oil price must be based on fundamentals (key presumption-->market must "clear" (which needs examining, as oil producers can buy contracts in addition to selling contracts, but they don't have to take "delivery" of their own oil, etc, etc...)...
While economists are stuck with unexamined presumptions, hopefully Congress will pay attention to more than only economists and change the market rules and end the oil bubble before we see a world wide depression.
wally writes:
Consumption dropping everywhere but commodities prices rising? Hmmmm....
In case you missed it, here's a good summary of things to come methinks. :-
Video - CNBC.com
While economists are stuck with unexamined presumptions, hopefully Congress will pay attention to more than only economists and change the market rules and end the oil bubble before we see a world wide depression.
Well the one good thing you can say about it is it forces us to start actively looking at alternatives, which is probably something we're probably going to have to do anyway.
Maybe it's best to have an artificial crisis before the real thing. But the timing couldn't be worse, and it puts more money and power into the wrong hands.
People need to keep that one point in mind - the people that would do harm to society are gaining a great deal of wealth and power through these bubbles.
Their long-term plans for using that wealth and power might not be so pleasant.
The world needs higher interest rates to tackle a clear inflation threat, even though economic growth is likely to be hit harder than most observers expect, the Bank for International Settlements said on Monday.
BIS-WRAPUP 1-World needs tough monetary policy to cool inflation
| Reuters
Benny I think they are talking to your dumb ass.
Gold doesn't particularly do well in an inflationary environment. But it does much better in a deflationary environment.
Really now? Did the real purchasing power of an ounce of gold do better during the 30's or the 70's?
In case you missed it, here's a good summary of things to come methinks. :-
Marc Faber is so awesome he should have a cape and wear his underwear over his pants.
Marc is a very kind gentleman.
I caught that article as well and the annual report. A very sobering analysis of our crisis. In a related post, in my chart of the day, I show the Dow from 1928 to 1932 leading up to the crash and down to the bottom.
What's interesting is that if you take a look at each of the six bear market rallies and the subsequent declines in isolation, they all look like big rises followed by steep falls.
What one needs to keep in mind is to not get sucked into a sucker's rally when home prices are falling and credit writedowns are still underway.
Chart of the day: Dow 1928-1932
Ed H
Well, that was an interesting interview all right...
Inflation is a distraction from poor monetary and fiscal policy--and from the main problem, bad credit. Inflation will eventually be discussed as the cure, not the illness.
You say you got a real solution
Well, you know
We'd all love to see the plan
You ask me for a contribution
Well, you know
We're doing what we can
But when you want money
for people with minds that hate
All I can tell is brother you have to wait
Don't you know it's gonna be all right
all right, all right
Ah
ah, ah, ah, ah, ah...
"Stocks Take Mildly Bullish Tilt" says MarketWatch.
At over $140 oil and declining dollar, bullshit tilt maybe...
yogurt:
Due to the fact that there are different views to what constitute an inflationary/deflationary environment. Some say inflation is a cause of an increased in money and credit supply and others are talking about price inflation.
I think it's best to look at history to see how gold performed(This does not mean it will perform in a similar way now, due to the changes in the markets, gold standard..etc)
These articles would give some insight:-
http://www.gloomboomdoom.com/gbdreport/download/GBD0602.pdf
Inflation & Deflation During Hyperinflation
Draw your own conclusions.
It's quiet today.
Maybe ... a little TOO quiet.
rent_to_own
You neglected to mention:
"The World Food Program said the American ship that arrived Sunday [in North Korea] carried 37,000 tons of wheat, the first installment of 500,000 tons in promised U.S. aid that will be distributed by the United Nations."
Randy,
I've not noted glod as being wedded either to inflation or to deflation. It's said to be tied to anxiety in the marketplace, and I suppose there's a case for that.
PMs are generally just commodities. In the case of glod and, to a lesser extent slivre, they tend to become a 'commodities speculative play of last resort' when you're running out of faith in absolutely everything else.
Both tend to spike before and up to the point at which short-term rates are raised. Whereupon they collapse as investors return to more familiar modes and conditions.
The runup in 1980 is the classic example, though it's useful to note that today's circumstances are not identical, and may well play out differently.
ac, you are 100% right IMO.
There was no Great Depression and no inflation before the FED was created, there was no national real estate disaster before Fannie was created, and BTW life was much better before Ted Kennedy got in office.(I wasnt here but thats what I heard)LOL
It's quiet today.
Maybe ... a little TOO quiet.
Yeah, the reason I went completely flat in my account Friday was that this downturn is overextended, esp. in the INDU. I'm not going long - but there could be programmed buying machines going off anytime, leading to a rally of 2%+.
BB: In case you missed it, here's a good summary of things to come methinks. :-
Thanks for the breath of fresh air.
ac: Marc Faber is so awesome he should have a cape and wear his underwear over his pants.
Add me to what ac says. LOL. (That grizzly dude in a super-suit.)
Anonymous Bosch writes:
Thanks for the breath of fresh air.
Most welcome, I absolutely like the way he demolishes the FED and in particular good old Ben.
Trichet Still Hawkish On Inflation..
Trichet Backs Inflation Hawks, Risking Weaker Growth (Update1) - Bloomberg.com
Leftys Liquors writes: We're open.
BB writes: I'll drink to that.
randy writes: let the chips fall where they may.....
Priced corn, grains or energy lately? You can have some drink or you can have some chips but you cannot afford both.
The world needs to kick the dollar as a world currency that is being debased by it's government to pay for wars and other such nonsense off the cliff.
My humble prediction.
Dead markets accross the board.
The meme that there is always a bull market somewhere is BS
When the equity markets roll over the commodity markets will follow a few months later.
Then the markets will just linger for several years.
Rob Dawg writes:
Priced corn, grains or energy lately? You can have some drink or you can have some chips but you cannot afford both.
You can have everything, it just comes in smaller packages now.
As my friend, Joe the fund guy, says, "when almost everything you buy goes up in price and almost everything you sell goes down in price, your currency is no good".
"buying programs"
With what money??
Oh yea Paulson in Russia.....needs some new source of money after the chinese told him they had this little problem of a natural disaster and needing to look good in about a month's time.
Waiting for the whoosh up out of nowhere......
Ciao
MS
4. Food consumption is more of a constant than not - the demand for food essentially never goes down.
Animal consumption is volatile. As grain prices rise livestock is slaughtered which reduces demand.
Feed lots bidding for "beef on the hoof" generally do so with PDA in hand. Fed is bought on the futures market at the same time the animal is bought at auction. So the impact of higher grain prices on herd size is lagged by a few months.
Last year many of the feed lot operators would have booked more profit by selling grain instead of feeding it to animals.
Kind of odd that many animals were better hedged against for rising food prices than a large number of the worlds poor.
We also have a pick your payment plan like WaMu. Everything is good.
Kicker, interesting you bring up meat prices.
I've heard talk that cattle are being brought to market earlier (and smaller) right now since it costs too much to feed them. thus, the cattle herders might as well cash in now.
this is causing a relative 'glut' of beef right now keeping beef prices relatively low.
come fall/winter, the herds will have already been whittled down, so there will be a relative shortage of beef, and thus we are likely to see beef prices explode.
i'm not an expert here, this is just my understanding of the issue... so YMMV
Steak on the plate is concentrated grains plus energy inputs. After the inventory reductions the inputs are going to seriously impact the price. You can already see it in chicken and even pork products which have much short production cycles. Look also for a leg up for fish as they are especially sensitive to fuel prices for the fleets and transport.
Cooking ramen in my percolator wrote 9:17 am | #
Could our economic situation been prevented if Fed did not intervene at all, or was it inevitable?
the fed can exacerbate or alleviate financial crisis and smooth or aggravate the business cycle.
sometimes the fed has failed as in the 1930s...the fed like sec treasury Melon believed the best way to restore the system was to bleed out the poison so they made things worse.
but financial crisis and bank runs etc existed long before the fed
JP Morgan (the man and his bank!) acted like a fed during the banking crisis and panic of, um i think 1907...and there were several trainwrecks between the war in 1812 and the Woodro Wilson administration.
a properly administered AND PROPERLY OWNED FED is probably a good idea.
as currently constituted the Fed leaves much to be desired.
Economy Near "Tipping Point"?
Ya' think?
The tipping point was months, if not years, ago.
I am repeatedly astounded that all of our major institutions are controlled by morons. Educated, maybe, but morons nonetheless. Not a lick of common sense.
Fact: The economy is FUBAR and out of control. There will be no good outcome to our current economic predicament.
It was a rickety contraption, at best. No wonder it crashed and burned.
mock:
good points.
I always find it intriguing that people fail to remember the THOUSANDS of bank runs in the 1800's.
and also that people always say "every fiat currency eventually goes to zero" but FAIL to mention that "every gold backed currency eventually goes to fiat".
I also am 100% against the Fed as-is. but to imagine that Pre-Fed life was utopian is naive at best.
if I had to choose
1) get rid of Fed
2) get rid of fractional reserve lending and leverage
I would get rid of #2.
I am repeatedly astounded that all of our major institutions are controlled by morons. Educated, maybe, but morons nonetheless. Not a lick of common sense.
what's moronic about what they did? They came up with useless innovations that made them billionaires. now it's all collapsing and they stay billionaires.
sounds smart to me.
The tipping point was months, if not years, ago.
The tipping point was in 1995. That's when we walked off the edge of the cliff.
Now we've merely reached the tipping point in awareness.
That Wile E. Coyote moment Krugman likes to refer to.
It was funny that they needed three different people to field Faber. He's an interesting guy and his shot at BB about "textbooks" was hilarious. Not sure about his views on gold, though.
Can anybody explain how EU can have 4% CPI while USA with the dollar in the toilet just 4.2%? Economagic?
Say what you will about the FED, the bottom line is that it's unconstitutional. We were warned repeatedly about the dangers of central banking.
We ignore the wisdom of our founding fathers at our own peril.
How goddamned stupid are we to let such good guidance be tossed aside?
Yeah, the tipping point's long past.
Kunstler (a Dawg favorite) put it this way: Our chances of mitigating this, and of continuing our current way-of-life is about zero.
poszi writes:
Can anybody explain how EU can have 4% CPI while USA with the dollar in the toilet just 4.2%? Economagic?
FEDtistics.
Um Pete, the Constitution's sort of got the battered wife syndrome at the point in the game. And that's if were lucky. She may have left the building.
Obligatory Good News Portion of this post. Puppy dogs are cute and fuzzy.
They have no idea, no idea, how bad out there....
"Yeah? Is this Yahoo HQ? I heard you are running low on people" - Mit - Gawker
Can anybody explain how EU can have 4% CPI while USA with the dollar in the toilet just 4.2%? Economic?
They lie, just like all governments do when they debase their currency no magic to it.
wag, BB...
because EU counts food and fuel
in CPI and we don't? 
Yearning to Learn | 06.30.08 - 11:05 am
what's moronic about what they did?
What will they do with their billions? Trade it among themselves? They have killed their own golden goose. Henry Ford understood the need for balance between wages and profit margins. Too bad the current crop of lowbrow idiots don't.
tj & the bear writes:
Kunstler (a Dawg favorite) put it this way: Our chances of mitigating this, and of continuing our current way-of-life is about zero.
He's been wrong for a dozen years and now that the stopped watch has something right we are supposed to think he can tell time?
The problem is Kunstler's idea of way-of-life changes is fleeing back to the ghettos to live in 6 story cold water walkups to toil by day in sweatshops to pay for the food that will be sporadically arriving by rail and distributed on bicycles when it isn't too hot due to global warming and unchecked pandemics.
Kunstler is a Club of Rome acolyte who's worldview is fixed such that he only sees those events that support his conclusions. This is one of those times.
Puppy dogs are cute and fuzzy.
scav | 06.30.08 - 11:19 am | #
and we're fixin' to find out what they taste like.
"Can anybody explain how EU can have 4% CPI..."
Ask yourself: what would the EU be looking at today if the dollar had not fallen?
I think the Euro needs some more rate raises.
I would love to see airbus go out of business.
WOW!
Look at this trustee sale graph from Housing Doom for Phx:
Phoenix Area Sees Record Notice Of Trustee Sales- And The Month’s Not Over - Housing Doom
yearning to learn
fractional reserve banking is how banks and especially central banks fuel growth, increasing money supply in line with the increased production of goods and services of a growing economy.
without fractional reserve banking growth is likely to be retarded.
fractional reserve banking, like nuclear energy, the internet, cars, guns, pesticides, antibiotics...you name it can be for the good or be disasterous if mis-used.
maybe like other inventions humankind just can't handle the power.
but if we could...fractional reserve banking has it's place...must be REGULATED
There was a record 2325 NOTs issued is June 2007. As of last Frday, there were 6668 NOTs issued in Maricopa County for the month of June, and there is still one business day left. At the height of the S&L crisis in the 1980s, the record month for NOTs was March 1988 when 1431 NOTs were issued.
According to modern economic theory, an economy reaches its "tipping point" when there's no money to pay salaries any more, and everyone starts working for tips.
Rob dawg,
Your above post sounds like the republican party platform, with the starvation and sweatshops!
While spending some quality time(prisoner) in St. Helen (1815-1821)Napoleon wrote some interesting things in regard to a united Europe. I tend to agree with him. To make a long story short, it will not work.
Petey Wheatstraw wrote: "There will be no good outcome to our current economic predicament."
Hmmm, how about affordable house prices?
Every time a house goes back to the bank four neighbors lose their equity. Phoenix has a double whammy of low rents to deter investors and massive recent building that lowers general equity positions. Phoenix and Las Vegas are two places that are in danger of slipping over the "event horizon" wrt homeowner equity.
@and we're fixin' to find out what they taste like.
Hopefully we're not in Francis Parkman/Oregon Trail territory yet.
FDIC Enforcement Decisions and Orders
FDIC: FDIC: Enforcement Decisions and Orders
Bernankie wasn't cutting the mustard now they have the Bank of international bullshit jawboning.
Summary of meltdown predictions -http://mrmortgage.ml-implode.com/2008/06/28/what-do-fleck-fortis-rbs-and-barclays-have-in-common/
So what is the Fed going to do with the TAF next month?
Oil is off it's highs, dollar is strengthening and market rallying.
Makes me look bad that i called for a negative close.
We'll see in a couple of hours though.
This is totally "it."
Best investment: bags of rice and beans, a shotgun, and lots of shells.
RIP America.
As for global warming - well, nothing like an ice free North Pole to do a number on all those inaccurate models that predicted climate change would happen decades further along than is currently occurring, right now. Not sure if this is a plus or a minus for Kunstler - basically, everyone has been wrong in their models compared to what is actually occuring, at least in the Arctic. - rent_to_own
Ummm. No. There's a massive volcanic rift causing the sea ice thinning at the North Pole. Beyond that there is accretion of Ice in the Artic and no discernable climate warming for a decade.
Ummm. No. There's a massive volcanic rift causing the sea ice thinning at the North Pole. Beyond that there is accretion of Ice in the Artic and no discernable climate warming for a decade.
Did I miss the snark tag or is somebody parodying Rob? Does anybody bother to calculate the amount of lava needed to produce observed ocean warming? (Hint: we're talking major new islands.) And the last 10 years has something like 7 of the hottest years on record but somehow that's not getting warmer?
"Kunstler's vision is small town America, essentially the style that existed in New England and New York until somewhere around the 1930s."
Yes, like where he lives, Saratoga Springs, NY, as lovely as a town as you'll find in the US. Problem is it makes its living from tourists who come for the races, ballet and concerts in the summer. Most of its residents commute (by car) down I-87 to the Albany area. Saratoga is a great model for itself, but not much else.
The idea that we can't possibly adjust to $ 4 or $5 or $6/gallon gas is simply unproven hooey. Gas has only been over $4 for a few months and we're already seeing less driving and more public transit ridership. Nor is the economy doing that badly, considering the shock. It just takes time; we will adjust and be better off for it. Humans are nothing if not adaptable. But you have to look forward, not back to some mythical past that wasn't so great either. Those small towns were hotbeds of intolerance and petty jealousy.
No country for old denialists, dawg...
And the correct terminology is "Arctic".
"The scientists say the heat released by the explosions is not contributing to the melting of the Arctic ice, but Sohn says the huge volumes of CO2 gas that belched out of the undersea volcanoes likely contributed to rising concentrations of greenhouse gases in the atmosphere. How much, he couldn't say."
Study finds Arctic seabed afire with lava-spewing volcanoes
yogurt:
Due to the fact that there are different views to what constitute an inflationary/deflationary environment
I see. You are defining "inflation" and "deflation" to make your claim tautological, rather than using the normal definitions.
yogurt writes:
rather than using the normal definitions.
One man's food is another man's poison. What is normal to you may not be normal to others, as for tautology, the articles speak for themselves.
Aheadofthecurve: Right on.
In defense of the Federal Reserve:
The FR system was created in 1913, two decades before the depression and seven decades before anyone really understood monetary economics. The FRB was indeed partially to blame for the Depression, although its failure was the failure to do enough, not doing too much.
Actually, the Depression was the result of a -shortage- of cash, exactly the opposite of what Greenspan and Bernanke have been repeatedly accused of perpetrating. People started hoarding in fear of a bank run, and that made banks insolvent, which caused bank runs. Now, we have the FDIC, so (consumer) bank runs are basically a thing of the past.
In fact, the advice many on this blog and elsewhere are giving might well perpetrate another Depression, if Bernanke were to take it. Raising interest rates to stop "inflation" in the face of a slowing economy is precisely what would ause a serious "depression", especially if coupled with wasteful "stimulus" from the government running up debt and preventing idle resources from accumulating for the use of private enterprise.
What is happening right now is a tight market in energy and food; a slowing worldwide economy will loosen these markets, given time, but right now that hasn't happened yet. So prices are rising, and since you have to use energy for everything, people think that the minor general price rises are "inflation" rather than just a temporary commodity market hiccup.
[Caveat: Oil prices -are- trending higher over time. That doesn't necessarily mean that in teh last twelve years, they should be up by a factor of eight or ten or more. I agree with, and am impressed by, Krugman's oil market analysis on his blog.]
The "inflation" we are seeing now is not a monetary problem, and does not require a monetary solution.
It is possible to argue that negative real interest rates are always bad - but it is just an argument - and at any rate the idea that negative real interest rates encourage leverage is in my mind fallacious (different issue for a different time, though).
Bottom line: Rising energy prices and food prices are not evidence that there is too much money. They are evidence that there is not enough food and energy.
el presidente-My compliments on a salient analysis. Too bad you are not the occupant of the White House instead of the current occupant who should not be presiding over anything more complex than a Delta Tau beer bash.
Oil is rising partly because of real supply/demand issues and partly because money is flowing out of other areas into the commodities. Msrs. Bernanke and Trichet are powerless against the first unless they oqn secret oil wells; the authorities can act against the second by restoring confidence in the equity and credit markets. When they do, watch the money pour out of commodities and into stocks and bonds.
There's a massive volcanic rift causing the sea ice thinning at the North Pole. Beyond that there is accretion of Ice in the Artic and no discernable climate warming for a decade.
Rob Dawg | Homepage | 06.30.08 - 1:09 pm | #
Hey Rob Dawg..you got a lot of good ides that you share with us all here...
but your down playing climate change is just wrong. the science does not support your view.
look you and i could argue convincingly on both sides for years and not soon resolve this debate.
suffice it to say that since the industrial revolution carbon dioxide in the earths atmosphere has increased by 30%
CO2 is the number one climate change gas
but we dont have to argue...
the changes will be quite evident in a year or two.
of course failure to act in the past several years means we are going to suffer.
we deserve it so let the games begin.
you will see, and soon. mark my words.