Do not forget where those "retained earnings" actually come from when the bank is getting near-zero interest loans from the Federal Reserve, issuing debt insured by FDIC, etc.
I am aware I am guilty of long quotes, but I have to do it again.
It may seem OT but IMO it is very relevant to the discussions of essentially all of the topics on this board in the past weeks.
An interview with David Simon by Bill Moyers was mentioned on this blog a couple of times (not by me), but it did not get any discussion.
I will simply copy below some of the quotes from David Simon that resonated the most with me.
The whole interview is available here Bill Moyers Journal . Watch & Listen | PBS
You show me anything that depicts institutional progress in America, school test scores, crime stats, arrest reports, arrest stats, anything that a politician can run on, anything that somebody can get a promotion on. And as soon as you invent that statistical category, 50 people in that institution will be at work trying to figure out a way to make it look as if progress is actually occurring when actually no progress is. And this comes down to Wall Street. I mean, our entire economic structure fell behind the idea that these mortgage-based securities were actually valuable. And they had absolutely no value. They were toxic. And yet, they were being traded and being hurled about, because somebody could make some short-term profit. In the same way that a police commissioner or a deputy commissioner can get promoted, and a major can become a colonel, and an assistant school superintendent can become a school superintendent, if they make it look like the kids are learning, and that they're solving crime.
[..] we are the jailing-est country on the planet right now. Two million people in prison. When I started as a police reporter, 33, 34 percent of the federal inmate population was violent offenders. Now it's like, seven to eight percent. So, we're locking up less violent people. More of them. The drugs are purer. They've not-- they haven't closed down a single drug corner that I know of in Baltimore for any length of time. It's not working. And by the way this is not a Republican/Democrat thing. Because a lot of the most Draconian stuff came out of the Clinton Administration. This guy trying to maneuver to the center, in order not to be perceived as Leftist by a Republican Congress.
[...] we would have to ask ourselves a lot of hard questions. The people most affected by this are black and brown and poor. It's the abandoned inner cores of our urban areas. And we don't, as we said before, economically, we don't need those people. The American economy doesn't need them. So, as long as they stay in their ghettos, and they only kill each other, we're willing to pay a police presence to keep them out of our America. And to let them fight over scraps, which is what the drug war, effectively, is. I don't think-- since we basically have become a market-based culture and it's what we know, and it's what's led us to this sad denouement, I think we're going to follow market-based logic, right to the bitter end.
[..] in Haymarket, they were fighting for the 40-hour work week. You know? So, it wasn't-- it sounds radical at the time, but it's basically a dignity of life issue. And you look at things like that. You look at the anti-Vietnam War effort, in this country which, you know, you had to threaten middle class kids with a draft and with military service in an unpopular war for people to rise up and demand the end to an unpopular war. I mean, it didn't happen without that. So, on some level, as long as they placate enough people. As long as they throw enough scraps from the table that enough people get a little bit to eat, I just don't see a change coming.
I feel that the republic is actually in danger. [..] There is no guard now on assessing anything qualitatively. Of pulling back the veil behind what an official will tell you is progress, or is valid, or is legitimate as policy. And-- absent that, no good can come from anything. Because there is an absolutely disincentive to tell the truth.
We are a country of democratic ideas and impulses, but it is strained through some very oligarchical structures. You know, one of which could be, for example, the United States Senate. You know, you give me the high-- higher house of a bicameral legislature. And you tell me that 40 percent of the people are going to elect 60 percent of the representatives. And I look upon that as being decidedly undemocratic. Or I look at the Electoral College as being decidedly undemocratic. You know, I don't buy into the notion that one-- one man, one vote is not the most fundamental way of doing business. And ultimately, when I look at you know, for example, the drug war. There are places were the majority of people are now aware that the drug war has been a fraud for 30 years. And yet, because of the dynamics that are put in place that are I think, to an extent oligarchical, because money speaks so strongly in politics...
I look at this and I think to myself, if only you stand up and say "I'm not going to be lied to anymore." That's a victory on some level, that's a beginning of a dynamic. And, listen, I don't think - can change happen? Yes. But things have to get a lot worse.
I decided to go ahead and do the hard work of identifying all of the financial institutions which are technically insolvent and need to be liquidated ASAP. I'll start with the public-traded ones:
BAC BBT UBSI SNV USB NTRS TFSL CMA FITB STT MTB VLY NAL FULT SBNY BNCL CM C JPM KEY OLCB OFG PNC RY STI TCB BK BNS TD UBOH and, of course - sorry, Warren - WFC
I'd also recommend that foreign regulators take the appropriate steps with:
AIB STD MTU MFG (ah, those two are really the elder statesmen amongst the zombies) BBV BBD BCH BMA CIB BFR CBIN BCA EUBK FBP HDB BPOP SHG IRE GGAL BLX SBP UBS BCS CS DB LYG and IRE
I see being a hero for the global taxpayer as a fun weekend hobby. You're welcome, guys!
volker the viking, Rajesh has raised good points. Unfortunately the more detail I get into, the more unreadable the posts.
One of the points he made was about equity vs. capital. This gets confusing ... I tried to make my usage clear as "Capital is the amount of money investors put into the bank plus any retained earnings." Debt, by definition, has to be paid back, and I've included that as a liability.
Hopefully everyone comes away with a few key points. Like in this post I tried to point out the difference between "balance sheet insolvent" and "business insolvent'. The difference is important. A zombie bank is balance sheet insolvent, but can still pay their obligations.
Byzantine_Ruins, yeah, I'm just ranting ... I guess we can all shout out our windows "I'm made as hell ...", or maybe flush our toilets at the same moment to signal displeasure - or something like that.
First we need transparency - something I doubt we will get.
MrM, I would second watching the David Simon interview. Though I missed the show The Wire, it's clear from the interview that, as I said to commenter fried, no one gets a free pass in his view of the world and no one should.
One of the problems we're having with politicians and bankers right now is that too many free passes are being handed out.
The more recent interview (4/24 vs. 4/17) with Perino and Johnson is right on point about the problems with bankers.
Carney confident in economic outlook
Prediction of 2009 rebound is contingent on a stabilization of global financial markets and a growth in demand for exports
KEVIN CARMICHAEL
Globe and Mail Update
April 25, 2009 at 6:43 PM EDT
WASHINGTON — Bank of Canada Governor Mark Carney is confident his outlook for Canada's economy is on the right track following a round of meetings with his global counterparts.
“Nothing I heard this weekend has made me less confident in our outlook,” Mr. Carney told reporters Saturday.
The greatest thing about "The Wire" is the fact that it was really an elaborate pay-back scheme to the management at the Baltimore Sun. The artistry that some folks put into shit-talking about ex-bosses can be truly staggering. Helen and the Trojan war comes to mind.
CR, your points are perfectly understandable as made. Thanks for the public education. I wish more had your commitment and influence.
In the prior post, you said that there was a limit to the amount of Fed liquidity that could be provided, but is that really true? Just by weakening the collateral requirements and/or weakening the valuation method for the assets, wouldn't it be possible to keep Zombie banks afloat for years and years, until wide interest spreads or other govt-engineered subsidies could bring most of them back to solvency?
I am not recommending it, but it is possible, and the Fed has shown they are willing to do anything if it would get to a specific end result they want.
Not really.. a lot is similar.. except the russians did a better job of evacuating casualties.
I wish it were so... Traditional May celebrations on May 1 and May 9 still took place across Belarus and Ukraine, radioactive wind be damned. Thousands of medical students were sent to the contaminated region for observations and record-taking in the year of the disaster and subsequent years. The Army was patrolling the area without much protection.
Nope. The NYFed sheet could have ten trillion or one trillion, and not a single American would notice it in their day-to-day life. That's the great thing about imaginary money that you print yourself.
MP,
I'd just rather talk about the proven conspiracies and facts surrounding them rather than all the mundane news stories about nothing significant like the human interest stories.
One of my favorite proven conspiracies to talk about is the chemical spray poisoning being dumped on our heads by our government.
First we need transparency - something I doubt we will get.
CR, I suspect there is some internal debate going on right now regarding the amount of information to be released on the stress tests.
I don't expect it all to come out on May 4th. I do expect more information will dribble out after that date.
Transparency is an issue on which Obama can be effectively criticized. He campaigned on it and promised it. He needs to deliver it and, if he doesn't, he needs to be called on that.
It isn't necessary for terrible things to happen before someone in power speaks truth.
Suppose a bank can lie about the valuation of its assets. (Impossible, of course, since they have to mark them to market. Oh, wait.)
Suppose the bank can then take those overvalued assets to the Fed's discount window or TSLF or TAF or TALF... Well, you get the idea. Suppose it can get a near-zero interest loan against those assets at will.
In such a scenario, could the bank ever become "business insolvent"? What is the long-term outcome of such an arrangement?
HollywoodHack (homepage, profile) wrote on Sun, 4/26/2009 - 6:02 pm
Nope. The NYFed sheet could have ten trillion or one trillion, and not a single American would notice it in their day-to-day life. That's the great thing about imaginary money that you print yourself.
Beg to differ. Blow that Treasuries market up and it will make a difference in your really real life real fast. It doesn't change anythng until it does. It doesn't mean the matter is immaterial, only that it's got a tipping-point type behavior. John Law's game has a singular and singularly well-known conclusion.
Well where do you think that tipping point is? I always thought it would come from the national debt, that it would get to a tipping point where there would no longer be buyers for it and then interest rates would go through the roof... But if the Fed can just absorb the tbonds, as long as the cash does not get into the hands of the masses there wont be any inflation...
CR writes:
Basically the goal is to replace the legacy assets with money from the MLEC, TARP (original plan) or the PPIP.
We need to keep in mind that all this replacement does is to compensate banks for losses they already incurred on the badly made capital allocation decisions in the past. This capital replacement is not going to create new jobs or produce goods or service. This is really replacement of sunk costs. These sunk costs represent losses for banks shareholders and debtholders, whom the government is so desperately trying to protect from realizing these losses.
The only reason to replace capital is because one hopes it will enable banks to start lending again. However, given the falling demand for credit that argument looks dubious at the aggreate level (exceptions always happen).
Besides, the good bank/bad bank solution achieves the same goal at a much lower cost as it does not require replacing bad sunk costs.
"Pavel - re your reference to Chernobyl on the previous thread - Is it really all that different from how Katrina was handled?"
I'm not sure, really. But the big difference is that there is a free press here, and there wasn't in the SU in 1986.
The free press in the US did not show much of the tragedy in New Orleans. Only HBO had some honest documentaries and is now, I believe, planning new series (incidentally with David Simon of The Wire). As for the official coverage and the official response, the government did a hekuva job, no?
Yes, there was some difference, but not a whole lot.
"Blow that Treasuries market up and it will make a difference in your really real life real fast."
Why would a massive expansion of that balance sheet (absolutely inevitable, BTW) make a difference? Almost none of this money circulates, aside from going straight through Stamford to the Caymans and Zurich, in any case.
Congress borrows, Treasury prints, Fed Bails. Easy peasy. There is no feedback. There are no bond vigilantes. There is only Bill Gross, the UES/Stamford crowd, and the magic of disaster capitalism. I doubt that we even need the East Asian CBs at this point to continue the game.
MrM, agree with most of your points, but there is a concern that if you allow the banks' equity and bonds to go to a zero value, then the institutions holding them will have problems that trigger yet another system crisis and another bailout. Eventually, someone will have to take the losses, and the current decision is that lots of those losses will be absorbed by taxpayers first, and then savers who put their money in fixed-dollar instruments (through future inflation), rather than people who invested in real assets, or used borrowed money. Sometimes the same people, sometimes not.
The piper always gets paid. The side product of subsidizing banking solvency will be Zombie Taxpayers. On the other hand, they're already braindead, so why not lobotomize them fiscally, too?
I think Michael is a government operative sent here to discredit the legitimate conspiracies that the commenters here are exposing. Can you think of anything as tired or manufactured as chemtrails, the jews, and the other crap he brings up? Can you think of anything which reeks more of a manufactured sideshow? I mean really, what's closer to the heart of their power; chemtrails, or discussing their banking scam aparatus in a forum where the media is known to be present and watching? The housing scams, or some tired, old, copy/paste about jewish overlords?
The more I think about it, the more apparent it becomes that Michael is himself in fact a plant from the government, sent here to distract and discredit us with their ready-stock of diversionary conspiracy theories.
Is there anything that would debase this forum and discredit its commenters more than someone coming around and spamming about aliens, abductions, jews, chemtrails, and the like? This is why he comes to push these things incessantly despite the fact that nobody really cares, they're off topic, and he has nothing to say except copy-pasted and extremely formulaic text and repetitive you-tube links, probably written and produced as diversionary chaff by the forces he serves.
"Pavel - re your reference to Chernobyl on the previous thread - Is it really all that different from how Katrina was handled?"
the major difference, we were aware within a week of the full scale of tragedy. In there, the Chernobil accident was denied for months to come. And full scale was made public only years later.
MP,
I'd just rather talk about the proven conspiracies and facts surrounding them rather than all the mundane news stories about nothing significant like the human interest stories.
One of my favorite proven conspiracies to talk about is the chemical spray poisoning being dumped on our heads by our government.
Toxic Sky part 2- CHEMTRAILS (NBC4.TV)
Classic diversionary tactic. We know that's your "favorite proven conspiracy" to talk about because it is so far removed from anything that truly matters to the powers that be. It's so far removed from their source of power that people like you are paid to spread it and discuss it wherever conversation starts to drift towards what's really going on.
Caught sleeping at a meeting with credit card industry executives last week, Larry Summers defended his White House nap on Sunday, saying that, with a topic "boring enough to put you to sleep," he was just trying to achieve his own American Dream.
Michael, what about them swine viruses being undetectable for weeks to come? WHat does CIA think about it?
Also, why did they stop showing TERROR/DANGER alert levels on CNBC?
Comrade de Chaos, excellent question to ask him. When we hear his answer, we'll know precisely what counter-intel rumors the powers that be have put him here to spread. That will help us guess their true motives.
Hoops: You may be onto something. He never gets offended by anything we say, like go away. Hide of a rhino, that one. No passion like a real ideologue. OK, so who's paying him to trash our blog?
Hoops,
You are partially right but you will never figure out who I really work with and the methods we are using to de-program society. All I can say is, it's working.
"This is why he comes to push these things incessantly despite the fact that nobody really cares,"
The fact that nobody gives a shit is irrelevant. Methods being employed by my groups are breaking down generational brainwashing and there is nothing you or anyone else can do about it.
Undoubtedly he is being paid by the real puppetmaster conspiracy running this country, the cabal of incredibly good looking white protestant rugby players from Yale.
there is a concern that if you allow the banks' equity and bonds to go to a zero value then the institutions holding them will have problems that trigger yet another system crisis and another bailout
The equity is supposed to go to zero, that is what it is for. The debt should be swapped for new equity.
The problem has to be acknowledged in order to be dealt with, whether it is addiction or economy.
By pretending that those pension funds that are holding bank bonds or preferred shares do no have a problem you would only by lying to both retirees, who depend on these funds, and to the currently employed, who are going to pay higher taxes to support those retirees as well as Wall Street.
It is better to deal with the actual problem of underfunded pension funds directly.
looks like uncle Sammy will continue to post collateral (dollars) for CDS buyers who are also shorting the zombie banks. The PPT can also continue to buy futures, and Bernie can engage a Quantitative Easing strategy to try and force rates lower...
Dollar Demand Destruction is an inside job. The wildcard right here is a foreign depositor Citibank electronic run. That'll blow the spreads out, street turns on Pandit....liquidity drawndown and a big messy ShittyBank blows-up. GM pension shareholders dumping, Chrysler debtor in possesion countdown to liquidation. Pandemic headlines..... looks like a short bucky kinda week.
Michael is looking for love, acceptance, and a good home. He wants to walk away from his dark fantasies of being tied up and beaten by women with flashing black eyes. His soul is surrounded by razor wire and this is his cry for help!
Michael. You know there are agents of the people who come in the night here. You are disturbing them. It is best to lie low, maybe change your Internet provider, and format your hard drive, wipe it, and reinstall. It will work for 3 months and then you will have to do it again. Do it! Come back stronger!
the major difference, we were aware within a week of the full scale of tragedy. In there, the Chernobyl accident was denied for months to come.
People who lived in the towns close to the nuclear plant were evacuated two days after the explosion. I agree, that is criminally late, but it is not months.
I do not have hard data, but I think the government made it public within 2-3 weeks.
And full scale was made public only years later.
Full long-term impact is still unknown
Michael is looking for love, acceptance, and a good home. He wants to walk away from his dark fantasies of being tied up and beaten by women with flashing black eyes.
It's the $12.8 trillion tally for the bailout so far. Bloomberg is far too optimistic, those figures will easily pass 30 trillion by this time next year.
Given the central role of the bondholders in this mess, I'd suggest a part III to discuss their role, CDSs, who is holding these bonds, what happens in BK, etc. Part II was excellent, with the exception of the paragraph on bondholders, which seemed to suggest any outcome was possible, but gave no detail as to why each outcome might happen, or what reasons we might have to desire or avoid any particular one.
MrM, Yes, I too prefer a solution that lands the consequences squarely on the people who should have responsibility. Investors get a huge hit, and even bank depositors get a clipping, to teach them to be more choosy in the future. But that means 90% of voters feel real pain, and Congress will not allow that to happen. It's just not politically feasible.
"You must have read 1984. We were at war with Oceania or is it Eurasia.."
I think it was 1987. A lady from the USSR said "We don't have sex in Soviet Union" on the one of the first virtual TV exchanges between opposite cold war powers.
Investors get a huge hit, and even bank depositors get a clipping, to teach them to be more choosy in the future. But that means 90% of voters feel real pain, and Congress will not allow that to happen. It's just not politically feasible.
I agree. Politically it is much better to inflict this pain slowly, via higher taxes and inflation
"And full scale was made public only years later.
Full long-term impact is still unknown"
I saw a description of a study recently that said that the genetic impact on wildlife in the area around the reactors is ongoing, and there is evidence that the fauna are less robust than they would have been.
"I do not have hard data, but I think the government made it public within 2-3 weeks."
IIRC it was days, and that Gorbachev either personally issued a a statement or had it issued. There were also repercussions at the place I was working, and as I said in another comment they were ugly.
The USSR lady said "We don't have sex in Soviet Union" on the one of the first virtual TV exchanges between opposite cold war powers.
It was a funny moment, but in the same sense 'funny' as the recent gift from Hillary to Lavrov with a mistranslated word in Russian.
The word sex ("seks") in the Russian language in those times had the connotation of "free love" , which certainly did not exist among the population present at those TV bridges. 'Sex' should have been translated as 'polovye otnoshenia'
re: rails--Family member is engineer for Chessie. He's on vacation recently. He said everything died just after January. Layoff lists run up to six years seniority. He hasn't seen it this bad since he got his card 25 years ago. The real old timers are worried too. His wife is low level management for UPS. They are "...in the shitter''..." as well.
This is an amazing online map. Ships name, speed, and current course. Includes where it is flagged. Updated every 14 sec.
The Bluesky is inbound to Savannah right now at 15.6 knots on course 050. Not a lot of shipping off the north Atlantic coast right now. The smaller ports are also looking empty. Only 1 ship in Savannah.
They didn't have sex. We don't have insolvent banks. At least we have an option to rant about credit crunch in here. I am glad for that.
Wait, someone is knocking on the door.
I do not have hard data, but I think the government made it public within 2-3 weeks."
IIRC it was days,
Pavel I am pretty sure it was at least 2 weeks as the May celebration were not affected, people went on demonstrations in Minsk and Kiev without any knowledge of the disaster.
"It was a funny moment, but in the same sense 'funny' as the recent gift from Hillary to Lavrov with a mistranslated word in Russian."
Do you remember when Jimmy Carter's interpreter in Warsaw told a huge crowd that the US sympathizes with the sexual aspirations of the Polish people? The crowd roared - I think it was with howls of glee.
Poor lad, he was back to Washington on the next flight.
Poor lad, he was back to Washington on the next flight.
Those are the moments. That said, I have utmost respect for professional interpreters - switching back and forth between languages without messing up is very hard.
Hoops writes,
"Classic diversionary tactic. We know that's your "favorite proven conspiracy" to talk about because it is so far removed from anything that truly matters to the powers that be. It's so far removed from their source of power that people like you are paid to spread it and discuss it wherever conversation starts to drift towards what's really going on. "
In reality Hoops, this subject is being proliferated to give TPTB another thing on their plate to be concerned the masses will scream about, and screaming the masses are beginning to do. Overwhelming TPTB is key to our tactics.
Legacy assets. Give me a break. And we even discuss propping up bond and even more bizarre, equity holders. All while we ignore the unsustainable aggregate debt. Any predictions on when our financial system blows up? To answer this question is to answer when it becomes obvious to a critical mass that the perpetual bubble blowers are out of suds. Not looking forward to that day.
I suppose that we can hope that they realize their errors and focus on cushioning the inevitable collapse. Not looking very promising.
PatientRenter. It looks like it is the worlds shipping. They do not cover the entire globe though. It depends probably on closeness to landfall. I was just looking at San Francisco. There should be more traffic I would think. I am going to look at Long Beach. Savannah and Charleston should be busier also. I have been to both and counted, and watched, inbound and outbound traffic.
Michael writes:
In reality Hoops, this subject is being proliferated to give TPTB another thing on their plate to be concerned the masses will scream about, and screaming the masses are beginning to do. Overwhelming TPTB is key to our tactics.
And the precise moment when you decide to come along and proliferate this conspiracy is when other, more essential and sensitive schemes are being exposed. Makes perfect sense. If you're a government plant. Otherwise it sounds like an excuse for disrupting a gathering before it reaches an epiphany and consensus.
Discredit. Distract. Distort. If they start threatening the bankers, bring up chemtrails, jews, rosicrucians, aliens, anything on the approved list. If they question you, tell them you're one of them, and you're there to help. No matter what, you're always there to help. If exposed, return to bankerdome for instructions.
How much are they paying you to betray the human race, Michael?
Are the powers that be printing up fresh reserve notes? Paying in fiat notes is a sweet way of guaranteeing that your agents are fully bought into the system of power you construct and they protect. Michael, how do you find out which fake conspiracies you're supposed to pump for distraction purposes? Are you allowed to go off script? Get creative? Do you have a direct chain of command or are you managed as an independent agent?
Normally I lurk, been lurking here for years, but I so strongly agree with Hoopajoops on what a dump on the discussion boards credibility all that Chemtrails nonsense is. Michael, anybody interested already has seen that nonsense and has not risen up because, well, its just to stupid to fathom. Don't you have a forum for paranoid types you can post that stuff to?
Ditto that poster a while back with all the anti Mexican racist stuff.
Maybe we need more than an ignore button. Are you listening Ken? Pretty please? I'll promise to double my Hoocoodanone chip in the day it shows up.
Long Beach (both halves) more or less IS American shipping. The other ports are miniscule sideshows. Same with Rotterdam in Europe and Singapore in Asia AFAIK.
The most basic fact is that the money originally spent by the bank went toward "productive" investment like the mass of excess capacity and consumer spending. Thus on the most basic level replacing "capital" however it is constructed is a shell game. That "capital" was never real anyway. It was malinvestment. THerefore as the hole is filled there is no productive place for it to go. Thus, you end up with an asset bubble or massive inflation in things you need. This is really the only outcome and the game will go on until someone outside the system - likley overseas - imposes the discipline that the Fed and the Treasury are incapable of doing. One suspects the world knows that the debt laded bailout of a debt problem is looked oon by the rest of the world not as the US "showing leadership" rather a continuation of the profilgacy that got us here in the first place. The story of the Chinese telling the IMF to sel its gold and the FT story this week about the 75% increase in the stockpile tells you all you need to know. When the US and its PR outlet CNBC cheer these programs it must be acknowledged that it is the sound of one hand clapping. In the end, the US will print until they can't and one suspects the US is on a collision course with its own Suez moment.
The debat about risk assets or whatever you call them presupposes that the amount of capital floated into the system represented an equilibrium. You simply can not recap the banks and deleverage without someone taking the haircut. This scheme is not only puts the screw to the taxpayer via the backdoor rate hike (at some point), but the consumer also feels it as the banks shrink the portolfio to show better capital ratios (denominator). The problem for the banks is that they simply can't replicate their profitability in a deleveraged world. If they try to you have a rinse wash repeat cycle whcih we are told is not to be tolerated. Therefore, the adminstration has chosen the worst of all worlds. The fatal beginning point is assuming there uate "investment" opportunities to consume this refreshed capital. There simply are not. Henc eyou get the botom callers but always with the cvaveat that it will be an L. A healthy bank showing discretion may be the worst possible outcome for the US.
The banks have siezed the high ground in this debate and analysis like this is like cover fire. It is the same thinking that has made the Lehman demise something of a catalyst as oppose to a sympton. Hussman, MIsh and other get it exactly right. The soltuion is to liquiate the bondholder and re-equitize the companies. WHile that would alleviate an overhang it does nothing to address the growth problem. The banks are yet again a mere sympton, not the problem. The probolem is the same as it has been for a decade - how to organically grow without excess lubrication.
Cool grab on the real-time shipping, nova. I wonder if there is anything like that for US rail?
ps- Michael measures success by the amount of disruption he creates, so until we get an ignore feature, just do the best you can to ignore him on your own.
Although the bank is balance sheet insolvent, the bank will never be business insolvent because the government will continue to provide money to cover losses.
It is actually a little more subtle than this, because you have a continuum of obligations at these banks, between things such as debt service and collateral calls.
But with capital replacement, now the bank has cash where before it had a toxic asset - so now it could loan out the cash again - and thus create inflation.
well put, S. I would add that this is inevitable in a fiat system, and that only the once-in-a-century serendipitous confluence of demographics, aggressive policy and technological advances made this less than obvious in the era from '81-'98 (while it was somewhat obvious in the first decade of the post-BW regime and has been somewhat obvious since the LTCM bailout).
zero hedge has been hammering the point that as liqudity receds you end up with a game of musical chairs few players and the music dying. Capital alone is an insufficent condition as liquidity recedes - playing amongst themselves with all the capital in the world accomplished approx zero but a date with the oncoming train. In the meantime I think they call it looting.
...still not an easy trick when we're losing a quarter million non-farm payroll jobs each and every month like clockwork. not exactly a climate for wage-earner leverage, or of 'sticky' commodity costs.
though i do like natural gas at these prices. as far as equities go, wake me when we hit 120 mil on that non-farm payroll number.
Appears any inflation will be highly conentratd and likely cost push from the commodity complex as the the yield curve remains perverted and those buying TIPS find themselves realizing the inflation in things you need is offset by the delfation in things you want. A very tasty recipe for Bernanke to claim the low rates are sustainable as they grind ou that next Trillion dollar stimulus under the guise of political will. Ongoing debt deflation is a certainty. Thst coupled with higher basics will be a deathly cocktail.
but a cocktail eagerly imbibed by the middle classes - guess they didn't notice that 'cyanide' part on the ingredient list on the bottle right below the food dye...
I'm not sure how that is a problem when the government is providing the money to keep an even keel (but I haven't been reading his posts). They are going to keep running their books as if nothing has changed until something does change.
in zeitgeist and their other videos the narrator starts off with truths about the system, throws in some populist agitation, does a fine job of deconstructing religion,indicts the financial system, basically says a lot of undisputed things about the world's problems. then he goes WAY off to conclude that centrally controlled work camps laid out in concentric circles with idyllic cement domes using computers to ration resources is our hope for happiness and harmony after we end scarcity with technology and somehow end "money". Huh?
i can't get behind that. by that logic why don't we just all get subdermal tracking chips linked to our transactions, do away with cash and end crime?
i really enjoyed the Zeitgeist video but felt it was trying to hypnotize me. i guess it didn't work because i still smelled the rotten egg at the end. shillery like this amuses me way more than popular entertainments. some of the best story lines are in conspiracy stories. don't believe me just look at how many conspiracy stories were made into hit movies.
anyway, i'm calling bullshit on these people. they are shills for one world order types. they show all the signs. it is a carefully crafted thought progression and the production level is very high but their conclusions are mismatched.
the amount of media manipulation and outright propaganda is increasing exponentially. it would scare my eyeballs out if it wasn't so funny most of the time.
If you are wrong, does that discredit you? I recognize that mumbo jumbo as the language of bullshit and prophecy.
//Appears any inflation will be highly conentratd and likely cost push from the commodity complex as the the yield curve remains perverted and those buying TIPS find themselves realizing the inflation in things you need is offset by the delfation in things you want.//
If there are too many zombies, we need to insist on preprivatization.
One zombie bank is one too many.
I am humbled...
Calculated Risk,
How can something be 'toxic' as well as an 'asset'?
Lucifer, toxic asset is like jumbo shrimp! It makes you laugh ...
best to all.
I would find it more hilarious if timmy and ben did not want to buy them..
//It makes you laugh ...//
Do not forget where those "retained earnings" actually come from when the bank is getting near-zero interest loans from the Federal Reserve, issuing debt insured by FDIC, etc.
SEND MORE COPS
start the clock for the rajesh rebuttal
"Jumbo Shrimp?"
A better non-sequitur might be "Honest Banker".
I would not mind banks having 'toxic assets' if we could bury the culpable banksters in those toxic assets.
Nemo,
Don't forget where your earnings are coming from. Check the signatures on your dollar bills.
Send more cops.
Hey, we can solve the unemployment problem; just make everyone an FBI agent and set them to investigating the fraud over the last few years.
I would add "Caring Doctor", "Honest Intellectual", "Deserving ivy leaguer", "Ethical MBA", "Objective Scientist" to that list..
//A better non-sequitur might be "Honest Banker".//
Rajesh --
Non sequitur. Unlike financiers, I actually do honest work for a living.
CR:
If there are too many zombies, we need to insist on preprivatization.
I'm kind of curious who "we" are and how "we" will "insist" on this -- do you have any specifics in mind, CR?
I am aware I am guilty of long quotes, but I have to do it again.
It may seem OT but IMO it is very relevant to the discussions of essentially all of the topics on this board in the past weeks.
An interview with David Simon by Bill Moyers was mentioned on this blog a couple of times (not by me), but it did not get any discussion.
I will simply copy below some of the quotes from David Simon that resonated the most with me.
The whole interview is available here Bill Moyers Journal . Watch & Listen | PBS
You show me anything that depicts institutional progress in America, school test scores, crime stats, arrest reports, arrest stats, anything that a politician can run on, anything that somebody can get a promotion on. And as soon as you invent that statistical category, 50 people in that institution will be at work trying to figure out a way to make it look as if progress is actually occurring when actually no progress is. And this comes down to Wall Street. I mean, our entire economic structure fell behind the idea that these mortgage-based securities were actually valuable. And they had absolutely no value. They were toxic. And yet, they were being traded and being hurled about, because somebody could make some short-term profit. In the same way that a police commissioner or a deputy commissioner can get promoted, and a major can become a colonel, and an assistant school superintendent can become a school superintendent, if they make it look like the kids are learning, and that they're solving crime.
[..] we are the jailing-est country on the planet right now. Two million people in prison. When I started as a police reporter, 33, 34 percent of the federal inmate population was violent offenders. Now it's like, seven to eight percent. So, we're locking up less violent people. More of them. The drugs are purer. They've not-- they haven't closed down a single drug corner that I know of in Baltimore for any length of time. It's not working. And by the way this is not a Republican/Democrat thing. Because a lot of the most Draconian stuff came out of the Clinton Administration. This guy trying to maneuver to the center, in order not to be perceived as Leftist by a Republican Congress.
[...] we would have to ask ourselves a lot of hard questions. The people most affected by this are black and brown and poor. It's the abandoned inner cores of our urban areas. And we don't, as we said before, economically, we don't need those people. The American economy doesn't need them. So, as long as they stay in their ghettos, and they only kill each other, we're willing to pay a police presence to keep them out of our America. And to let them fight over scraps, which is what the drug war, effectively, is. I don't think-- since we basically have become a market-based culture and it's what we know, and it's what's led us to this sad denouement, I think we're going to follow market-based logic, right to the bitter end.
[..] in Haymarket, they were fighting for the 40-hour work week. You know? So, it wasn't-- it sounds radical at the time, but it's basically a dignity of life issue. And you look at things like that. You look at the anti-Vietnam War effort, in this country which, you know, you had to threaten middle class kids with a draft and with military service in an unpopular war for people to rise up and demand the end to an unpopular war. I mean, it didn't happen without that. So, on some level, as long as they placate enough people. As long as they throw enough scraps from the table that enough people get a little bit to eat, I just don't see a change coming.
I feel that the republic is actually in danger. [..] There is no guard now on assessing anything qualitatively. Of pulling back the veil behind what an official will tell you is progress, or is valid, or is legitimate as policy. And-- absent that, no good can come from anything. Because there is an absolutely disincentive to tell the truth.
We are a country of democratic ideas and impulses, but it is strained through some very oligarchical structures. You know, one of which could be, for example, the United States Senate. You know, you give me the high-- higher house of a bicameral legislature. And you tell me that 40 percent of the people are going to elect 60 percent of the representatives. And I look upon that as being decidedly undemocratic. Or I look at the Electoral College as being decidedly undemocratic. You know, I don't buy into the notion that one-- one man, one vote is not the most fundamental way of doing business. And ultimately, when I look at you know, for example, the drug war. There are places were the majority of people are now aware that the drug war has been a fraud for 30 years. And yet, because of the dynamics that are put in place that are I think, to an extent oligarchical, because money speaks so strongly in politics...
I look at this and I think to myself, if only you stand up and say "I'm not going to be lied to anymore." That's a victory on some level, that's a beginning of a dynamic. And, listen, I don't think - can change happen? Yes. But things have to get a lot worse.
P.S. "Jumbo Shrimp" is an oxymoron, not a non sequitur.
With the taxpayers keeping the insolvent bank afloat, the bank employees have become government employees and have little incentive to work...
What about employing the unemployed to put banksters in some of our deeper mineshafts.
Whew. Looks like the asteroid missed us completely.
Here I was expecting a disaster and I learn that the much maligned stress tests are important after all.
MrM,
I agree with a lot of that..
Pavel - re your reference to Chernobyl on the previous thread - Is it really all that different from how Katrina was handled?
Not really.. a lot is similar.. except the russians did a better job of evacuating casualties.
//Is it really all that different from how Katrina was handled?//
I decided to go ahead and do the hard work of identifying all of the financial institutions which are technically insolvent and need to be liquidated ASAP. I'll start with the public-traded ones:
BAC BBT UBSI SNV USB NTRS TFSL CMA FITB STT MTB VLY NAL FULT SBNY BNCL CM C JPM KEY OLCB OFG PNC RY STI TCB BK BNS TD UBOH and, of course - sorry, Warren - WFC
I'd also recommend that foreign regulators take the appropriate steps with:
AIB STD MTU MFG (ah, those two are really the elder statesmen amongst the zombies) BBV BBD BCH BMA CIB BFR CBIN BCA EUBK FBP HDB BPOP SHG IRE GGAL BLX SBP UBS BCS CS DB LYG and IRE
I see being a hero for the global taxpayer as a fun weekend hobby. You're welcome, guys!
volker the viking, Rajesh has raised good points. Unfortunately the more detail I get into, the more unreadable the posts.
One of the points he made was about equity vs. capital. This gets confusing ... I tried to make my usage clear as "Capital is the amount of money investors put into the bank plus any retained earnings." Debt, by definition, has to be paid back, and I've included that as a liability.
Hopefully everyone comes away with a few key points. Like in this post I tried to point out the difference between "balance sheet insolvent" and "business insolvent'. The difference is important. A zombie bank is balance sheet insolvent, but can still pay their obligations.
best to all
To another zombie bank that then pays it to another zombie and so on.... quite a circle jerk.
//A zombie bank is balance sheet insolvent, but can still pay their obligations.//
Byzantine_Ruins, yeah, I'm just ranting ... I guess we can all shout out our windows "I'm made as hell ...", or maybe flush our toilets at the same moment to signal displeasure - or something like that.
First we need transparency - something I doubt we will get.
best wishes.
I think CR is aiming for the PowerPoint level. That is not a bad thing, at least for people like me.
CalculatedRisk,
We will get transparency, but only after a lot of unnecessary and horrible things happen.
// we need transparency - something I doubt we will get.//
MrM, I would second watching the David Simon interview. Though I missed the show The Wire, it's clear from the interview that, as I said to commenter fried, no one gets a free pass in his view of the world and no one should.
One of the problems we're having with politicians and bankers right now is that too many free passes are being handed out.
The more recent interview (4/24 vs. 4/17) with Perino and Johnson is right on point about the problems with bankers.
Bill Moyers is definitely on a roll.
""I'm made as hell ...""
CR, would that I could shout that....
Thanks for all you do!
He could just have called it a prayer..
Carney confident in economic outlook
Prediction of 2009 rebound is contingent on a stabilization of global financial markets and a growth in demand for exports
KEVIN CARMICHAEL
Globe and Mail Update
April 25, 2009 at 6:43 PM EDT
WASHINGTON — Bank of Canada Governor Mark Carney is confident his outlook for Canada's economy is on the right track following a round of meetings with his global counterparts.
“Nothing I heard this weekend has made me less confident in our outlook,” Mr. Carney told reporters Saturday.
The greatest thing about "The Wire" is the fact that it was really an elaborate pay-back scheme to the management at the Baltimore Sun. The artistry that some folks put into shit-talking about ex-bosses can be truly staggering. Helen and the Trojan war comes to mind.
CR, your points are perfectly understandable as made. Thanks for the public education. I wish more had your commitment and influence.
In the prior post, you said that there was a limit to the amount of Fed liquidity that could be provided, but is that really true? Just by weakening the collateral requirements and/or weakening the valuation method for the assets, wouldn't it be possible to keep Zombie banks afloat for years and years, until wide interest spreads or other govt-engineered subsidies could bring most of them back to solvency?
I am not recommending it, but it is possible, and the Fed has shown they are willing to do anything if it would get to a specific end result they want.
Dow futures down 117. I say we close up tomorrow, for no other reason than that is what always happens.
Not really.. a lot is similar.. except the russians did a better job of evacuating casualties.
I wish it were so... Traditional May celebrations on May 1 and May 9 still took place across Belarus and Ukraine, radioactive wind be damned. Thousands of medical students were sent to the contaminated region for observations and record-taking in the year of the disaster and subsequent years. The Army was patrolling the area without much protection.
"but is that really true?"
Nope. The NYFed sheet could have ten trillion or one trillion, and not a single American would notice it in their day-to-day life. That's the great thing about imaginary money that you print yourself.
MP,
I'd just rather talk about the proven conspiracies and facts surrounding them rather than all the mundane news stories about nothing significant like the human interest stories.
One of my favorite proven conspiracies to talk about is the chemical spray poisoning being dumped on our heads by our government.
Toxic Sky part 2- CHEMTRAILS (NBC4.TV)
YouTube - Toxic Sky part 2- CHEMTRAILS (NBC4.TV)
Now down only 15. Like I said. oi vey
First we need transparency - something I doubt we will get.
CR, I suspect there is some internal debate going on right now regarding the amount of information to be released on the stress tests.
I don't expect it all to come out on May 4th. I do expect more information will dribble out after that date.
Transparency is an issue on which Obama can be effectively criticized. He campaigned on it and promised it. He needs to deliver it and, if he doesn't, he needs to be called on that.
It isn't necessary for terrible things to happen before someone in power speaks truth.
Suppose a bank can lie about the valuation of its assets. (Impossible, of course, since they have to mark them to market. Oh, wait.)
Suppose the bank can then take those overvalued assets to the Fed's discount window or TSLF or TAF or TALF... Well, you get the idea. Suppose it can get a near-zero interest loan against those assets at will.
In such a scenario, could the bank ever become "business insolvent"? What is the long-term outcome of such an arrangement?
Speaking purely hypothetically, of course.
The lying sack of shit Lawrence Summers is on Fox news.
This is a good one from krugmans blog.
- NY Times
HollywoodHack (homepage, profile) wrote on Sun, 4/26/2009 - 6:02 pm
Nope. The NYFed sheet could have ten trillion or one trillion, and not a single American would notice it in their day-to-day life. That's the great thing about imaginary money that you print yourself.
Beg to differ. Blow that Treasuries market up and it will make a difference in your really real life real fast. It doesn't change anythng until it does. It doesn't mean the matter is immaterial, only that it's got a tipping-point type behavior. John Law's game has a singular and singularly well-known conclusion.
"Pavel - re your reference to Chernobyl on the previous thread - Is it really all that different from how Katrina was handled?"
I'm not sure, really. But the big difference is that there is a free press here, and there wasn't in the SU in 1986.
Well where do you think that tipping point is? I always thought it would come from the national debt, that it would get to a tipping point where there would no longer be buyers for it and then interest rates would go through the roof... But if the Fed can just absorb the tbonds, as long as the cash does not get into the hands of the masses there wont be any inflation...
Ron Paul explains what capitol really is.
Ron Paul's opening statement 2009.02.25
YouTube - Ron Paul's opening statement 2009.02.25
Ron Paul to BenBernanke: What If You Are Wrong? 2009.02.25
YouTube - Ron Paul to BenBernanke: What If You Are Wrong? 2009.02.25
CR writes:
Basically the goal is to replace the legacy assets with money from the MLEC, TARP (original plan) or the PPIP.
We need to keep in mind that all this replacement does is to compensate banks for losses they already incurred on the badly made capital allocation decisions in the past. This capital replacement is not going to create new jobs or produce goods or service. This is really replacement of sunk costs. These sunk costs represent losses for banks shareholders and debtholders, whom the government is so desperately trying to protect from realizing these losses.
The only reason to replace capital is because one hopes it will enable banks to start lending again. However, given the falling demand for credit that argument looks dubious at the aggreate level (exceptions always happen).
Besides, the good bank/bad bank solution achieves the same goal at a much lower cost as it does not require replacing bad sunk costs.
"Pavel - re your reference to Chernobyl on the previous thread - Is it really all that different from how Katrina was handled?"
I'm not sure, really. But the big difference is that there is a free press here, and there wasn't in the SU in 1986.
The free press in the US did not show much of the tragedy in New Orleans. Only HBO had some honest documentaries and is now, I believe, planning new series (incidentally with David Simon of The Wire). As for the official coverage and the official response, the government did a hekuva job, no?
Yes, there was some difference, but not a whole lot.
In reviewing section I (one) I went to the new collateral haircuts (advance ratios) from the fed to the banks.
Unless I am mis-reading something, the collateral advance from the Fed decreases dramatically on Monday 27 April.
My understanding of how the world works suggests that such changes in collateral advance percentages will drastically haircut the banks.
They will be required to cut lending or seek alternative financing elsewhere.
This is a big deal!
"Blow that Treasuries market up and it will make a difference in your really real life real fast."
Why would a massive expansion of that balance sheet (absolutely inevitable, BTW) make a difference? Almost none of this money circulates, aside from going straight through Stamford to the Caymans and Zurich, in any case.
Congress borrows, Treasury prints, Fed Bails. Easy peasy. There is no feedback. There are no bond vigilantes. There is only Bill Gross, the UES/Stamford crowd, and the magic of disaster capitalism. I doubt that we even need the East Asian CBs at this point to continue the game.
MrM, agree with most of your points, but there is a concern that if you allow the banks' equity and bonds to go to a zero value, then the institutions holding them will have problems that trigger yet another system crisis and another bailout. Eventually, someone will have to take the losses, and the current decision is that lots of those losses will be absorbed by taxpayers first, and then savers who put their money in fixed-dollar instruments (through future inflation), rather than people who invested in real assets, or used borrowed money. Sometimes the same people, sometimes not.
The piper always gets paid. The side product of subsidizing banking solvency will be Zombie Taxpayers. On the other hand, they're already braindead, so why not lobotomize them fiscally, too?
I think Michael is a government operative sent here to discredit the legitimate conspiracies that the commenters here are exposing. Can you think of anything as tired or manufactured as chemtrails, the jews, and the other crap he brings up? Can you think of anything which reeks more of a manufactured sideshow? I mean really, what's closer to the heart of their power; chemtrails, or discussing their banking scam aparatus in a forum where the media is known to be present and watching? The housing scams, or some tired, old, copy/paste about jewish overlords?
The more I think about it, the more apparent it becomes that Michael is himself in fact a plant from the government, sent here to distract and discredit us with their ready-stock of diversionary conspiracy theories.
Is there anything that would debase this forum and discredit its commenters more than someone coming around and spamming about aliens, abductions, jews, chemtrails, and the like? This is why he comes to push these things incessantly despite the fact that nobody really cares, they're off topic, and he has nothing to say except copy-pasted and extremely formulaic text and repetitive you-tube links, probably written and produced as diversionary chaff by the forces he serves.
Own up Michael. WHO DO YOU WORK FOR
WHO SENT YOU
"Pavel - re your reference to Chernobyl on the previous thread - Is it really all that different from how Katrina was handled?"
the major difference, we were aware within a week of the full scale of tragedy. In there, the Chernobil accident was denied for months to come. And full scale was made public only years later.
Who do I email for renewing my application to the secret part of CR? For some reason I am being refused acceptance again.
Michael writes:
MP,
I'd just rather talk about the proven conspiracies and facts surrounding them rather than all the mundane news stories about nothing significant like the human interest stories.
One of my favorite proven conspiracies to talk about is the chemical spray poisoning being dumped on our heads by our government.
Toxic Sky part 2- CHEMTRAILS (NBC4.TV)
Classic diversionary tactic. We know that's your "favorite proven conspiracy" to talk about because it is so far removed from anything that truly matters to the powers that be. It's so far removed from their source of power that people like you are paid to spread it and discuss it wherever conversation starts to drift towards what's really going on.
By the way I have had my nap and am feeling a lot better. Feeling in top shape to expose Michael as the tool of the illuminati elite!
Chutzpah..
Summers On Falling Sleeping: It Was My American Dream
Summers On Falling Sleeping: It Was My American Dream
April 26, 2009 09:51 AM
Caught sleeping at a meeting with credit card industry executives last week, Larry Summers defended his White House nap on Sunday, saying that, with a topic "boring enough to put you to sleep," he was just trying to achieve his own American Dream.
Hoops, there really are some people who actually believe that 'stuff'.
Some people are just defective, for whatever reason.
They reproduce, too.
"Michael is a government operative"
I knew it!
Michael, what about them swine viruses being undetectable for weeks to come? WHat does CIA think about it?
Also, why did they stop showing TERROR/DANGER alert levels on CNBC?
Could the administration make Summers disappear? I hope so..
Comrade de Chaos, excellent question to ask him. When we hear his answer, we'll know precisely what counter-intel rumors the powers that be have put him here to spread. That will help us guess their true motives.
Hoopajoops LTD (homepage, profile) wrote on Sun, 4/26/2009 - 5:32 pm
* reply
By the way I have had my nap and am feeling a lot better. Feeling in top shape to expose Michael as the tool of the illuminati elite!
Good for you!
OH GO TO HELL!
Hoopajoops LTD,
If you read a bit about how totalitarian countries or the USA deal with dissidents.. you can better understands michael's role.
LOL!!
I'm a bit concerned about the wifey. She's been acting piggish all day.
OT: Obama OK ... Swine Flu incubates in 24-48 hours ...
Obama has no flu symptoms after Mexico visit - Los Angeles Times
Hoops: You may be onto something. He never gets offended by anything we say, like go away. Hide of a rhino, that one. No passion like a real ideologue. OK, so who's paying him to trash our blog?
Hoops,
You are partially right but you will never figure out who I really work with and the methods we are using to de-program society. All I can say is, it's working.
"This is why he comes to push these things incessantly despite the fact that nobody really cares,"
The fact that nobody gives a shit is irrelevant. Methods being employed by my groups are breaking down generational brainwashing and there is nothing you or anyone else can do about it.
Undoubtedly he is being paid by the real puppetmaster conspiracy running this country, the cabal of incredibly good looking white protestant rugby players from Yale.
I could say something along the lines of.. never mind
"I'm a bit concerned about the wifey. She's been acting piggish all day."
interesting:
a) Reuters: "Summers says U.S. economy's freefall has ended."
b) Bloomberg: "Summers says U.S. economy pain is not over."
Don't you hate that meaningless half-empty/half full expression? ROFL
there is a concern that if you allow the banks' equity and bonds to go to a zero value then the institutions holding them will have problems that trigger yet another system crisis and another bailout
The equity is supposed to go to zero, that is what it is for. The debt should be swapped for new equity.
The problem has to be acknowledged in order to be dealt with, whether it is addiction or economy.
By pretending that those pension funds that are holding bank bonds or preferred shares do no have a problem you would only by lying to both retirees, who depend on these funds, and to the currently employed, who are going to pay higher taxes to support those retirees as well as Wall Street.
It is better to deal with the actual problem of underfunded pension funds directly.
looks like uncle Sammy will continue to post collateral (dollars) for CDS buyers who are also shorting the zombie banks. The PPT can also continue to buy futures, and Bernie can engage a Quantitative Easing strategy to try and force rates lower...
Dollar Demand Destruction is an inside job. The wildcard right here is a foreign depositor Citibank electronic run. That'll blow the spreads out, street turns on Pandit....liquidity drawndown and a big messy ShittyBank blows-up. GM pension shareholders dumping, Chrysler debtor in possesion countdown to liquidation. Pandemic headlines..... looks like a short bucky kinda week.
nice posts today CR !
Comrade de Chaos,
You must have read 1984. We were at war with Oceania or is it Eurasia..
"I really work with and the methods we are using to de-program society."
omg, did the sim city producer come out with the new game called: "Politica?"
OH Yeah lets get Hoops worked up.
Good for you Hoops.
Michael is looking for love, acceptance, and a good home. He wants to walk away from his dark fantasies of being tied up and beaten by women with flashing black eyes. His soul is surrounded by razor wire and this is his cry for help!
Michael. You know there are agents of the people who come in the night here. You are disturbing them. It is best to lie low, maybe change your Internet provider, and format your hard drive, wipe it, and reinstall. It will work for 3 months and then you will have to do it again. Do it! Come back stronger!
the major difference, we were aware within a week of the full scale of tragedy. In there, the Chernobyl accident was denied for months to come.
People who lived in the towns close to the nuclear plant were evacuated two days after the explosion. I agree, that is criminally late, but it is not months.
I do not have hard data, but I think the government made it public within 2-3 weeks.
And full scale was made public only years later.
Full long-term impact is still unknown
nova (profile) wrote on Sun, 4/26/2009 - 5:46 pm
* reply
Michael is looking for love, acceptance, and a good home. He wants to walk away from his dark fantasies of being tied up and beaten by women with flashing black eyes.
uh, is that such a bad thing?
This is almost a month old, but worth revisiting occasionally:
http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4&refer=home
It's the $12.8 trillion tally for the bailout so far. Bloomberg is far too optimistic, those figures will easily pass 30 trillion by this time next year.
Appreciation and kudos to CR. It's good to have an overview of what has been happening internal to the banks.
Given the central role of the bondholders in this mess, I'd suggest a part III to discuss their role, CDSs, who is holding these bonds, what happens in BK, etc. Part II was excellent, with the exception of the paragraph on bondholders, which seemed to suggest any outcome was possible, but gave no detail as to why each outcome might happen, or what reasons we might have to desire or avoid any particular one.
MrM, Yes, I too prefer a solution that lands the consequences squarely on the people who should have responsibility. Investors get a huge hit, and even bank depositors get a clipping, to teach them to be more choosy in the future. But that means 90% of voters feel real pain, and Congress will not allow that to happen. It's just not politically feasible.
"You must have read 1984. We were at war with Oceania or is it Eurasia.."
I think it was 1987. A lady from the USSR said "We don't have sex in Soviet Union" on the one of the first virtual TV exchanges between opposite cold war powers.
p.s. "There is No Sex in the Soviet Union...."
This is very cool. A little slow but very interesting.
They display real time shipping info. You want to know what ships are off Kuwait? How many? Where they are headed?
Oh, it seems that someone(s) is buying oil and stockpiling it. It looks to be traders in SIngapore. Perhaps bound for China?
Hellenic Shipping News Worldwide - Online Daily Newspaper on Hellenic and International Shipping
@Byzantine Ruins
If I recall correctly, you follow freight car loadings.
Any thoughts on the spike in activity during Week 10 of both 2008 and 2009?
Thanks in advance.
"The USSR lady said "We don't have sex in Soviet Union" on the one of the first virtual TV exchanges between opposite cold war powers."
!
; )
Investors get a huge hit, and even bank depositors get a clipping, to teach them to be more choosy in the future. But that means 90% of voters feel real pain, and Congress will not allow that to happen. It's just not politically feasible.
I agree. Politically it is much better to inflict this pain slowly, via higher taxes and inflation
"is buying oil and stockpiling it. "
funny how hoarding and shorting look the same if you can't see the books
Oh, and CR, thanks for channeling Tanta with these long UberNerd posts... I've missed this format! Kudos.
"And full scale was made public only years later.
Full long-term impact is still unknown"
I saw a description of a study recently that said that the genetic impact on wildlife in the area around the reactors is ongoing, and there is evidence that the fauna are less robust than they would have been.
"I do not have hard data, but I think the government made it public within 2-3 weeks."
IIRC it was days, and that Gorbachev either personally issued a a statement or had it issued. There were also repercussions at the place I was working, and as I said in another comment they were ugly.
The USSR lady said "We don't have sex in Soviet Union" on the one of the first virtual TV exchanges between opposite cold war powers.
It was a funny moment, but in the same sense 'funny' as the recent gift from Hillary to Lavrov with a mistranslated word in Russian.
The word sex ("seks") in the Russian language in those times had the connotation of "free love" , which certainly did not exist among the population present at those TV bridges. 'Sex' should have been translated as 'polovye otnoshenia'
re: rails--Family member is engineer for Chessie. He's on vacation recently. He said everything died just after January. Layoff lists run up to six years seniority. He hasn't seen it this bad since he got his card 25 years ago. The real old timers are worried too. His wife is low level management for UPS. They are "...in the shitter''..." as well.
This is an amazing online map. Ships name, speed, and current course. Includes where it is flagged. Updated every 14 sec.
The Bluesky is inbound to Savannah right now at 15.6 knots on course 050. Not a lot of shipping off the north Atlantic coast right now. The smaller ports are also looking empty. Only 1 ship in Savannah.
Further: he said he's hauling coal, but the mixed loads have disappeared.
"Who do I email for renewing my application to the secret part of CR? For some reason I am being refused acceptance again."
Mr.M., Remember Blue TASS?
MrM - you read Russian?
They didn't have sex. We don't have insolvent banks. At least we have an option to rant about credit crunch in here. I am glad for that.
Wait, someone is knocking on the door.
Later all, best luck.
I do not have hard data, but I think the government made it public within 2-3 weeks."
IIRC it was days,
Pavel I am pretty sure it was at least 2 weeks as the May celebration were not affected, people went on demonstrations in Minsk and Kiev without any knowledge of the disaster.
you read Russian?
I do
"It was a funny moment, but in the same sense 'funny' as the recent gift from Hillary to Lavrov with a mistranslated word in Russian."
Do you remember when Jimmy Carter's interpreter in Warsaw told a huge crowd that the US sympathizes with the sexual aspirations of the Polish people? The crowd roared - I think it was with howls of glee.
Poor lad, he was back to Washington on the next flight.
"Pavel I am pretty sure it was at least 2 weeks"
I bow to your superior memory.
Nova, I am not sure I like the idea of public dissemination of all our shipping.
I remember once when a Kremlin translator said, "Mr. Andropov is as well as a violin."
Poor lad, he was back to Washington on the next flight.
Those are the moments. That said, I have utmost respect for professional interpreters - switching back and forth between languages without messing up is very hard.
Hoops writes,
"Classic diversionary tactic. We know that's your "favorite proven conspiracy" to talk about because it is so far removed from anything that truly matters to the powers that be. It's so far removed from their source of power that people like you are paid to spread it and discuss it wherever conversation starts to drift towards what's really going on. "
In reality Hoops, this subject is being proliferated to give TPTB another thing on their plate to be concerned the masses will scream about, and screaming the masses are beginning to do. Overwhelming TPTB is key to our tactics.
"That said, I have utmost respect for professional interpreters - switching between languages without messing up is very hard."
Extremely difficult. They have a strange and wonderful talent.
"Anonymous posters, we're being deluged right now by a spam bot network, and it's threatening to fill up the database."
guys, you could try setting up daily TEMPORARY password for anonymous posters.
MrM, please check your contact email when you have a chance. Thx
Legacy assets. Give me a break. And we even discuss propping up bond and even more bizarre, equity holders. All while we ignore the unsustainable aggregate debt. Any predictions on when our financial system blows up? To answer this question is to answer when it becomes obvious to a critical mass that the perpetual bubble blowers are out of suds. Not looking forward to that day.
I suppose that we can hope that they realize their errors and focus on cushioning the inevitable collapse. Not looking very promising.
So the Fed uses their infinite balance sheet to absorb all the loser loans from the banks, and all the Tbonds that no one else wants....
What could possibly go wrong?
The Shadow Knows...
PatientRenter. It looks like it is the worlds shipping. They do not cover the entire globe though. It depends probably on closeness to landfall. I was just looking at San Francisco. There should be more traffic I would think. I am going to look at Long Beach. Savannah and Charleston should be busier also. I have been to both and counted, and watched, inbound and outbound traffic.
Michael writes:
In reality Hoops, this subject is being proliferated to give TPTB another thing on their plate to be concerned the masses will scream about, and screaming the masses are beginning to do. Overwhelming TPTB is key to our tactics.
And the precise moment when you decide to come along and proliferate this conspiracy is when other, more essential and sensitive schemes are being exposed. Makes perfect sense. If you're a government plant. Otherwise it sounds like an excuse for disrupting a gathering before it reaches an epiphany and consensus.
Discredit. Distract. Distort. If they start threatening the bankers, bring up chemtrails, jews, rosicrucians, aliens, anything on the approved list. If they question you, tell them you're one of them, and you're there to help. No matter what, you're always there to help. If exposed, return to bankerdome for instructions.
How much are they paying you to betray the human race, Michael?
CR: Does "business insolvent" = illiquid so unable to pay on time
Bronte Capital went into UberNerd mode on this issue:
Bronte Capital: Liquidity and banks – a primer
Bronte Capital: Voodoo maths and dead banks
Bronte Capital: Felix Salmon misrepresents me...
Are the powers that be printing up fresh reserve notes? Paying in fiat notes is a sweet way of guaranteeing that your agents are fully bought into the system of power you construct and they protect. Michael, how do you find out which fake conspiracies you're supposed to pump for distraction purposes? Are you allowed to go off script? Get creative? Do you have a direct chain of command or are you managed as an independent agent?
Good links, NorkaWest, thanks
Preprivatization or bankruptcy! Why not the latter, CR?
PS Coordinated toilet flushing? Love it! That has a certain South Park ring to it...
More for UberNerds
The Aleph Blog » Blog Archive » Nonidentical Twins: Solvency and Liquidity
Why Do Businesses Go Bankrupt? A Crisis of Liquidity
FT.com / Columnists / Wolfgang Munchau - Central bankers cannot stop this contagion
RockyR, I think that was an old Smothers Brothers bit (coordinated flushing). I'm definitely dating myself ...
best to all.
Normally I lurk, been lurking here for years, but I so strongly agree with Hoopajoops on what a dump on the discussion boards credibility all that Chemtrails nonsense is. Michael, anybody interested already has seen that nonsense and has not risen up because, well, its just to stupid to fathom. Don't you have a forum for paranoid types you can post that stuff to?
Ditto that poster a while back with all the anti Mexican racist stuff.
Maybe we need more than an ignore button. Are you listening Ken? Pretty please? I'll promise to double my Hoocoodanone chip in the day it shows up.
CR, thanks for this. If I read the last two posts four more times, it may well sink in.
Long Beach (both halves) more or less IS American shipping. The other ports are miniscule sideshows. Same with Rotterdam in Europe and Singapore in Asia AFAIK.
Coordinated toilet flushing
This is the famous stress test for city plumbing system - its ability to handle the coordinate flush during the Super Bowl halftime
Later all
CR
The most basic fact is that the money originally spent by the bank went toward "productive" investment like the mass of excess capacity and consumer spending. Thus on the most basic level replacing "capital" however it is constructed is a shell game. That "capital" was never real anyway. It was malinvestment. THerefore as the hole is filled there is no productive place for it to go. Thus, you end up with an asset bubble or massive inflation in things you need. This is really the only outcome and the game will go on until someone outside the system - likley overseas - imposes the discipline that the Fed and the Treasury are incapable of doing. One suspects the world knows that the debt laded bailout of a debt problem is looked oon by the rest of the world not as the US "showing leadership" rather a continuation of the profilgacy that got us here in the first place. The story of the Chinese telling the IMF to sel its gold and the FT story this week about the 75% increase in the stockpile tells you all you need to know. When the US and its PR outlet CNBC cheer these programs it must be acknowledged that it is the sound of one hand clapping. In the end, the US will print until they can't and one suspects the US is on a collision course with its own Suez moment.
The debat about risk assets or whatever you call them presupposes that the amount of capital floated into the system represented an equilibrium. You simply can not recap the banks and deleverage without someone taking the haircut. This scheme is not only puts the screw to the taxpayer via the backdoor rate hike (at some point), but the consumer also feels it as the banks shrink the portolfio to show better capital ratios (denominator). The problem for the banks is that they simply can't replicate their profitability in a deleveraged world. If they try to you have a rinse wash repeat cycle whcih we are told is not to be tolerated. Therefore, the adminstration has chosen the worst of all worlds. The fatal beginning point is assuming there uate "investment" opportunities to consume this refreshed capital. There simply are not. Henc eyou get the botom callers but always with the cvaveat that it will be an L. A healthy bank showing discretion may be the worst possible outcome for the US.
The banks have siezed the high ground in this debate and analysis like this is like cover fire. It is the same thinking that has made the Lehman demise something of a catalyst as oppose to a sympton. Hussman, MIsh and other get it exactly right. The soltuion is to liquiate the bondholder and re-equitize the companies. WHile that would alleviate an overhang it does nothing to address the growth problem. The banks are yet again a mere sympton, not the problem. The probolem is the same as it has been for a decade - how to organically grow without excess lubrication.
Cool grab on the real-time shipping, nova. I wonder if there is anything like that for US rail?
ps- Michael measures success by the amount of disruption he creates, so until we get an ignore feature, just do the best you can to ignore him on your own.
Although the bank is balance sheet insolvent, the bank will never be business insolvent because the government will continue to provide money to cover losses.
It is actually a little more subtle than this, because you have a continuum of obligations at these banks, between things such as debt service and collateral calls.
Yep, that was my point uptread, too. Capital replacement refills sunk costs but does not provide for new investments.
But with capital replacement, now the bank has cash where before it had a toxic asset - so now it could loan out the cash again - and thus create inflation.
well put, S. I would add that this is inevitable in a fiat system, and that only the once-in-a-century serendipitous confluence of demographics, aggressive policy and technological advances made this less than obvious in the era from '81-'98 (while it was somewhat obvious in the first decade of the post-BW regime and has been somewhat obvious since the LTCM bailout).
bond girl,
zero hedge has been hammering the point that as liqudity receds you end up with a game of musical chairs few players and the music dying. Capital alone is an insufficent condition as liquidity recedes - playing amongst themselves with all the capital in the world accomplished approx zero but a date with the oncoming train. In the meantime I think they call it looting.
"and thus create inflation. "
...still not an easy trick when we're losing a quarter million non-farm payroll jobs each and every month like clockwork. not exactly a climate for wage-earner leverage, or of 'sticky' commodity costs.
though i do like natural gas at these prices. as far as equities go, wake me when we hit 120 mil on that non-farm payroll number.
Appears any inflation will be highly conentratd and likely cost push from the commodity complex as the the yield curve remains perverted and those buying TIPS find themselves realizing the inflation in things you need is offset by the delfation in things you want. A very tasty recipe for Bernanke to claim the low rates are sustainable as they grind ou that next Trillion dollar stimulus under the guise of political will. Ongoing debt deflation is a certainty. Thst coupled with higher basics will be a deathly cocktail.
I have to agree with him.. though he is still talking about a "better case" scenario.
I Am Dr. Realist'
The bottom is still a year off, says the economist who warned of the plunge.
Economist Nouriel Roubini: 'I Am Dr. Realist' | Newsweek Business | Newsweek.com
Lally Weymouth | NEWSWEEK
Published Apr 24, 2009
From the magazine issue dated Apr 24, 2009
but a cocktail eagerly imbibed by the middle classes - guess they didn't notice that 'cyanide' part on the ingredient list on the bottle right below the food dye...
Could we stress test "banks" by waterboarding their management?
I used "banks" as I do see our current crop of "banks" holding anything of value.
S,
I'm not sure how that is a problem when the government is providing the money to keep an even keel (but I haven't been reading his posts). They are going to keep running their books as if nothing has changed until something does change.
micheal is in with this utopian sideshow:
Research Center
in zeitgeist and their other videos the narrator starts off with truths about the system, throws in some populist agitation, does a fine job of deconstructing religion,indicts the financial system, basically says a lot of undisputed things about the world's problems. then he goes WAY off to conclude that centrally controlled work camps laid out in concentric circles with idyllic cement domes using computers to ration resources is our hope for happiness and harmony after we end scarcity with technology and somehow end "money". Huh?
i can't get behind that. by that logic why don't we just all get subdermal tracking chips linked to our transactions, do away with cash and end crime?
i really enjoyed the Zeitgeist video but felt it was trying to hypnotize me. i guess it didn't work because i still smelled the rotten egg at the end. shillery like this amuses me way more than popular entertainments. some of the best story lines are in conspiracy stories. don't believe me just look at how many conspiracy stories were made into hit movies.
anyway, i'm calling bullshit on these people. they are shills for one world order types. they show all the signs. it is a carefully crafted thought progression and the production level is very high but their conclusions are mismatched.
the amount of media manipulation and outright propaganda is increasing exponentially. it would scare my eyeballs out if it wasn't so funny most of the time.
Futures sagging. About time.
If you are wrong, does that discredit you? I recognize that mumbo jumbo as the language of bullshit and prophecy.
//Appears any inflation will be highly conentratd and likely cost push from the commodity complex as the the yield curve remains perverted and those buying TIPS find themselves realizing the inflation in things you need is offset by the delfation in things you want.//
CR, that was a great post. I like taking a break from the news stories to cover some of the relevant concepts. Thanks for all the graphs.