Elaine Meinel Supkis
The Washington Post's owners who are war mongers want to talk down this looming collapse. So their top neo con men are hard at work, twisting reality and history in a futile attempt to turn back the tide. One even dares to call this 'ONLY Bankruptcy'!!! Arrest him. Then there is the matter of the change of the day for resolving all the Credit Default Swaps in the epic Lehman collapse. It is being put off as I expected, by at least one day [forever]. LIBOR continues to soar even as all the G7 central bankers drop interest rates in concert. Blah! Nothing! All, eaten by the Derivatives Beast.
WP: By David Ignatius, It's Only Bankruptcy
If the global economy were a single company, it would be nearing the point of declaring bankruptcy. That sounds scary, but I actually take comfort from the analogy. Bankruptcy doesn't mean a company has run out of good people or ideas, or that it's going to stop making products. It means that it's out of money and must seek the protection of the government to continue operating. Bankruptcy, if properly managed, is a workout process that provides a pathway back to solvency.A company seeks protection from its creditors through bankruptcy court, which appoints a trustee to supervise an orderly unraveling of its debts and other obligations. Sifting through the claims can take years and creditors often receive less than full value, but there's a reliable process. Companies often reemerge from bankruptcy healthier than before; often, some assets are sold to other companies that can make better use of them.
This man's brain is bankrupt. Dishonest clowns like Mr. You Are Fired, Trump! goes bankrupt all the time and still gets bankrolled by foolish bankers who now probably regret doing this. In general, when places go bankrupt, heads roll, the business shrinks. Under new management, it may make a comeback. But more often, doesn't. Most of the corporations I have been involved with [towards the end when they are desperate], the ones that go bankrupt never come back at all.
One part of Century 21, when I noticed, was running deep in the red, I went to the President and said, 'We are running in the red! We have to do something! I have already, in the hotel, drawn up a series of proposals. Can we have a meeting with the rest of the people over this matter?'
He sat up and said, 'I'm surprised! Yes! I will call a meeting. Fly back to New York and we will contact you about the meeting in two days.'
His son called me two days later and said this, 'We have to postpone this meeting.' I pressed him as to why. He finally admitted that this was so he and his dad could try out their new yacht and go to a party! Effing gnomes, both.
I resigned then and there.
So it goes: there is a common thread. Companies and COUNTRIES going bankrupt are willfully unable to set things to right. They drive straight into hell because they want to party. Just as AIG is continuing its party-dudes! The US is still demanding the global banking system pour all savings into buying our debts so we can do what? Build a better world? Or go to more wars, sell more weapons to Taiwan, agitate for Tibet to break away from China? Or Xmas parties?
Obviously, yes. The collapse into bankruptcy by all empires is a terrible international mess. All empires from ancient Rome onwards, imagine, 'I am too big to fail! Everyone will keep giving me credit and I can still do as I please!' And always, this proves a false hope. A delusion.
Ignatius is a right wing neo con man who deserves to be put in prison for war crimes. Now, we should have a debtor's prison and park him there, too.
Libor Dollar Rate Jumps to Highest in Year; Credit Stays Frozen
(Bloomberg) -- The cost of borrowing in dollars for three months in London soared to the highest level this year as coordinated interest-rate reductions worldwide failed to revive lending among banks for any longer than a day.Attempts by policy makers to restore confidence to money markets are being stymied by almost daily crises among financial institutions. Iceland's government took over the nation's biggest lender today to keep the country's banking system working. American International Group Inc., the insurer taken over by the U.S. government, may need $37.8 billion of extra funds, the Federal Reserve Bank of New York said yesterday.
*snip*
Iceland's government today seized control of Reykjavik- based Kaupthing Bank hf, completing the takeover of a banking industry that has collapsed under the weight of its foreign debt. Late yesterday, the Fed said New York-based AIG can swap as much as $37.8 billion of its ``investment-grade, fixed-income securities'' for cash to ``replenish liquidity.''
The international banking system continues to collapse despite global attempts at re-energizing the credit circus:
U.K. May Own 30 Percent of Big Banks in Bailout Plan
(Bloomberg) -- The British government may own as much as 30 percent of four of the country's biggest banks as it doles out the 50 billion-pound ($87 billion) lifeline announced yesterday, according to analysts at Sanford C. Bernstein Ltd.Prime Minister Gordon Brown and Chancellor of the Exchequer Alistair Darling offered to buy preference shares to help boost capital at Royal Bank of Scotland Group Plc, Barclays Plc, Lloyds TSB Group Plc, HBOS Plc and four other lenders in the unprecedented rescue plan. It also guarantees about 250 billion pounds of loans and increases the amount the Bank of England makes available to at least 200 billion pounds.
The entire international banking system is being nationalized! Yet, no nation is invading the Cayman Islands to shut down that tax cheat pirate gnome banking cove. Until this is done or nations protect themselves from Queen Elizabeth's gang of looters, we will never see solvency. The state of insolvency of all the 'democracies' will get worse, not better. No matter how many tax-based IOUs are launched, this will all fail if we don't fix anything real! And this is a huge hole in the public bucket.
Japan is flailing about as the world drops interest rates to Japanese levels. The DOW is going up and up right now in anticipation of a flood easy credit from the world's taxpayers replaces the Japanese carry trade. The yen strengthened against the dollar this week leading to tremendous despair in Japan. Now, the yen is getting weaker so they are breathing easier: the status quo still might remain! They dread a 'correction'. Remember: corrections fix imbalances. And the last thing Japan wants is for anything to be set to rights or corrected. Continuing imbalances is vital here.
This is where intelligence comes in: we have to fend for ourselves. Our allies are not allies if they are killing us in the trade arena. So we have to tell Japan to accept reality and suffer the consequences of basing trade on one-way deals that benefit them, not us.
No Depression
This Time, Uncle Sam Has Got Our Back By Laurence J. Kotlikoff and Perry Mehrling
For starters, the biggest subprime mortgage gamblers have already failed, been nationalized or been married off, shotgun-style, to banks run by grown-ups. Yes, lots of small shoes may still drop, but the Paulson "buy-up" bill, and, ultimately, the Fed's ability to print money, provides the Treasury and Federal Reserve all the tools they need. The media don't seem to have noticed, but Section 113 of the bill authorizes government capital infusions into the banking system as necessary -- something the British government is now doing and the Swedish government successfully did in the recent past. That means any bank with a viable business will not be allowed to fail simply because it is temporarily undercapitalized.Second, Uncle Sam (a.k.a. Treasury Secretary Hank Paulson and Fed Chairman Ben Bernanke) is doing precisely what's needed to avoid the mistakes of the 1930s. With credit markets drying up, he's turning on the faucet by recycling our panic dollars back into the financial market.
*snip*
In short, Uncle Sam is becoming our new bank. He has also become our new insurance company with his effective purchase of the world's largest insurer -- AIG.
*snip*
This may sound like socialism or state capitalism, but it's simply rearranging the financial furniture. As Americans have freaked out, Uncle Sam has stepped up. He'll continue doing so until we realize the sky is not falling.
The sky isn't falling. Our EMPIRE is falling. Like in, 'The Decline and FALL of the Roman Empire' type of falling. The fact that our government has to 'rearrange the furniture' reminds all of us of one famous rearrangement of furniture: 'rearranging the deck chairs on the Titanic' sort. Yes, they are moving furniture but the tilting deck of our sinking empire rearranges all of this by having it all slide in one direction: towards that ocean of red ink we are sailing on.
The Washington Post's stable of stupid commentators willfully won't mention the bloody red ink losses of our two neo con wars. And how this contributes towards this sinking feeling. The bombs falling from the skies are cratering our own economy while it stirs the dust of remote mountains while the Taliban laugh at us and check another day off of their calendars. The ones that feature pictures of Soviet forces slowly bleeding Russia white.
Doctor Doom
Our Choice
Nouriel Roubini
Last week, I suggested the need for a coordinated monetary policy rate cut. That cut arrived yesterday, with the Fed, the European Central Bank and other central banks cutting their policy rates by 50 basis points (bps).This action is necessary, but only cosmetic, and it is too little too late. European central banks should have cut rates many months ago, before the recession and financial crisis became so virulent. Now, 50bps for the Eurozone is peanuts at a time when a minimum of 150bps is necessary to restart the economy and unclog frozen financial markets; 50bps is also too little in the U.S., given the damage to the real economy of the financial shocks of the last month. During the last recession, the Fed cut the Fed Funds down to 1%; we are still 50bps away from that level. But at the end of this cycle--as I have argued before--the Fed Funds will be closer to 0% than to 1%.
*snip*
--To reduce the counter-party risk in the money markets, a triage between insolvent banks that need to be shut down and a recapitalization of solvent banks is necessary, together with massive injections of liquidity in non-banks and the corporate sector. Direct lending by the government to small businesses--via the Small Business Administration--is also necessary to avoid the implosion of smaller businesses.--A generalized temporary blanket guarantee of all deposits is now necessary, both in the U.S. and in Europe, followed by a triage between insolvent banks to be closed rapidly and illiquid-but-solvent banks that deserve to be rescued to avoid the moral hazard of such blanket guarantee.
--The flawed $700 billion Troubled Asset Relief Program (TARP) legislation will have to be modified in three ways to: a) allow for direct government injection of public capital in banks in the form of preferred shares, matched by private capital contributions by current shareholders (via suspension of all dividend payments and matching Tier 1 capital provided by private shareholders); b) implement a clear plan to reduce the face value of mortgages for distressed homeowners and avoid a tsunami of foreclosures; c) do a rapid and radical triage between solvent banks and insolvent banks that need to be rapidly closed.
I used to argue with Roubini. He told me to go off and start my own blog. HAHAHA. Good grief! People actually listen to him! When he said, two years ago, we should have zero interest rates, I was enraged. 'Who is going to save money? We need SAVERS not more borrowers!'
Oh, but he told me, that doesn't matter! Who needs savings when running banks! Just make them all red ink machines that can hand out infinite loans at 0%. Why, debt can balloon forever this way! Right! This is why NO system like this lasts more than 50 years. At the end, any empire doing this DIES.
Japan has plumbed this system to over 10 years and note how global banking is now dying. Instead of forcing Japan to raise rates to 2.5% or more [inflation] instead, everyone is imitating Japan. This is fatal. The fake 'savings glut' is gone. We need to raise rates not to kill a bubble but to CREATE MORE SAVINGS. Savings are now flowing into gold! This is not good for banks. They have to be more attractive than gold and gold is mostly a commodity now, not a money! But it is the last refuge of desperate, battered savers.
But no, Roubini things we need more debt. This, on top of the sea of red ink, he wants to fill the hold of the Titanic with more sea water, not pump it out. This illness is across the board. Everyone screams for more credit while the goddesses tell us in no uncertain terms, they will give us only two choices: Inflation or Depression. There is no middle road. One last desperate gasp for another bubble will only make the following CORRECTION more painful.
Two years ago, I thought that Dr. Doom, Roubini, understood this simple equation. But he obviously does not. This is too sad. His fears of change cause him to wish for the very thing that will kill us.
The NYT letters to the editor page: After the Showdown in Nashville
To the Editor:Our definition of patriotism seems to have significantly degraded since 1776, when our founders said, “We mutually pledge to each other our lives, our fortunes and our sacred honor.”
Now Gov. Sarah Palin tells us: “You said recently that higher taxes or asking for higher taxes or paying higher taxes is patriotic. In the middle class of America, which is where Todd and I have been all of our lives, that’s not patriotic.”
Enough said! Martin E. Cobern
This letter writer is smarter than an entire boatload of professional pundits! The US has been turned into infantile idiots by Reagan and his tax-cutting lunatics. To this day, we are stuck in this 'Read my lips, no new taxes' nightmare. We are obviously unable to increase our national debt to over 100% of the collective value of America. All empires that do this are bankrupt and NEVER come back unless through some sort of luck. Japan and Germany lucked out. The US rebuilt both and allowed both to run constant trade surpluses with us because we wanted to surround Russia and China with powerful enemies.
Now, this function is gone. The trade deficits that brought both defeated nations back into power and glory are our own destruction. We cannot ignore this. We must realize that this function has weakened us at home which is totally unacceptable, even treasonous.
Just as Germany and Japan look after their own affairs, so must we! This is one alliance that is definitely killing us. Incidentally, Germany with its high interest rates and trade surplus and Japan with its low interest rates and high trade surplus have us caught between two contrary forces that have the same effect: roaring trade deficits. Figuring out why this is and how it works is life and death. The US can't pull both Germany and Japan along any longer. Note how all the bail outs are being SHOVED onto the US! The last place on earth that can afford more red ink? This isn't accidental.
Oh, and about the Derivatives Beast: he is supposed to finally be tamed and the counter parties are supposed to settle accounts, not today, but tomorrow. For 'Tomorrow,' as Miz Scarlett O'Hara liked to say, 'Is another day.'
The hope is, the bad news will come out after 3 pm tomorrow. Just in time for a three day weekend. And during that weekend, just like all the other weekends from hell, the traitors running America will cook up some kooky rescue plan. And they will do the absolutely wrong thing. Again and again. They can't help it. They want to keep the ill-gotten gains of the bubble years.
Secession anyone?
As California lines up for a bail-out, one must wonder when other states will follow. The states that ran good financial budgets and spending will be victimized by those that don't.
The United States has become a cesspool of corruption and the hatching nest for the new world order vipers. Why should the many states fall to the tyranny of the few?
Arizona has a bill to secede upon certain conditions...
"Be it resolved by the House of Representatives of the State of Arizona, the Senate concurring:
1. That when or if the President of the United States, the Congress of the United States or any other federal agent or agency declares the Constitution of the United States to be suspended or abolished, if the President or any other federal entity attempts to institute martial law or its equivalent without an official declaration in one or more of the states without the consent of that state or if any federal order attempts to make it unlawful for individual Americans to own firearms or to confiscate firearms, the State of Arizona, when joined by thirty-four of the other fifty states, declares as follows: that the states resume all state powers delegated by the Constitution of the United States and assume total sovereignty; that the states re-ratify and re-establish the present Constitution of the United States as the charter for the formation of a new federal government, to be followed by the election of a new Congress and President and the reorganization of a new judiciary, similarly following the precedent and procedures of the founding fathers; that individual members of the military return to their respective states and report to the Governor until a new President is elected; that each state assume a negotiated, prorated share of the national debt; that all land within the borders of a state belongs to the state until sold or ceded to the central government by the state's Legislature and Governor; and that once thirty-five states have agreed to form a new government, each of the remaining fifteen be permitted to join the new confederation on application.
2. That the Secretary of State of the State of Arizona transmit copies of this Resolution to the President of the United States, the President of the United States Senate, the Speaker of the United States House of Representatives and each Member of Congress from the State of Arizona."
http://tinyurl.com/3fbtxe
_________________________________________
Glenn Beck summed things up well last night on his show, "the country I grew up in is gone."
http://revolutionarypolitics.com/?p=192
Posted by: DrKrbyLuv | October 09, 2008 at 11:32 AM
I'm listening to a Bob Marley tune just now --- "Bad Boys". You know.... "what you gonna do when they come for you"...and....
"Why you have to be so mean, don't you know your a human being?"
I'm not now going to post the "Joke-Poem" I came up with earlier today except here is the title: How Many Bankers Does it take to screw in a light bulb?
I'd imagine it taking some sort of banker-pyramid that would likely be very vulnerable for failure causing injury. Better to use someone with common sense or even an engineer or someone who could tell there is a safer way than the "goofy, twisted-and-bound, now flipping & flapping around, previously sort-of upside-down, pyramid-scheme. Please, I think there are many better ways that don't involve schemes really and some of the ideas I've been reading and sites I've been visiting sound and seem awesome to me. This is an opportunity even though perhaps it is a bit disturbing. Oh well, who said anything was going to be easy - not me. Simple perhaps, but I doubt anything is going to be easy for awhile. I don't mind working hard. I think its kind of fun, but that just me. Still I think perhaps there are many in my generation who feel similarly, but I could be wrong.
Peace,
Ken
Posted by: Buffalo Ken | October 09, 2008 at 12:55 PM
Ok, let me get this straight, we are paying
so many cents on the dollar for this
Bailout? Rescue? Nationalized? or what-ever
name you give it. Every Week it changes !! Something that bothers me: Has any one
of Wall Streets Famous come forward with
a true APPRAISAL of the derivative market
and books? I guess deregulation isnt all
that cracked up to be: Right Bill-Banks,
and Jimmy-Airlines and Trucking. Next up,
the Govt will take Social Security and ruin it. Democracy at its best...................
Posted by: don | October 09, 2008 at 12:56 PM
"...the derivatives market now estimated to be over $1 quadrillion (that is 1,000 trillion) in global derivatives holdings."
http://tinyurl.com/3ewqce
Posted by: CL | October 09, 2008 at 01:18 PM
Elaine,
I admire your independance of mind in opposing Roubini's solutions, particularly as he has proved spot on in his analysis and resulting predictions over recent years. I suppose we are all only as good as our last prediction, and this applies to the good professor, just as it applies to you and I.
I understand that Roubini, along with the majority of the commentators I follow, sees deflation as the end game. I see only temporary deflation in the short term today followed by raging inflation further down the road as the monetary authorities throw everything they have to keep their system afloat a little longer. Their game is not over yet. Commodities, and gold, will rise from the ashes again over the next couple of years, to be followed by the final deflationary collapse (or WW3) in 2010-2011....
....but I will still keep respect for Roubini, and follow his developing arguments as best I can, because his track record has earned him this respect.
Keep up the good work, epecially your ability to think for yourself.
Posted by: john east | October 09, 2008 at 02:11 PM
Deflation means that prices fall. Hmmm sounds like the computer industry. What would have cost you $3000 three years ago costs you $300 today. See the thing about deflation is that the dollar goes farther if you are a spender, or you can save more if you are a saver; without your paycheck having to increase. Why is this scary? Because if everyone can save, they can pay off their debts. When you are not in debt, fear loses some of its sting. Why do central banks hate deflation? Because deflation takes away their power. Nobody needs more fiat currency if they are not in debt. But CK you say, in deflationary times don't the workers wages fall ... and I answer thusly: as long as each workers productivity increases faster than his wages rise, deflation is the natural course of affairs. As long as demand is not falling, in a deflationary economy there is no need for workers wages to fall. And what happens to interest rates in a deflationary economy, they reflect the expectation of future individual failures and general natural disasters and the true time value of money to both the borrowers and the lenders. In other words, interest rates become a reflection of reality not a tool to try to manipulate reality for the benefit of the bankers and whoever is the current administrations special clientelle. For the mathematically inclined, interest rates are a dependent variable not an independent variable in societies without central banks, floating currencies and state monopolies and monopsonys.
Posted by: CK | October 09, 2008 at 02:45 PM
Article Title I saw on Yahoo: "Stocks mostly lower as GM declines"
I wonder if perhaps some of this derivative mess is tied into many company pension plans. I don't think anyone really knows - this makes it hard to know the risk if you are a stock investory for example. This is not good because the risk could be extreme for those corporations that "played or are still playing at the casino".
Maybe there aren't any of these corporations but I doubt it. If I was a corporate entity exec I'd ask my accountants to check, and then, if this risk was not there, I make a public announcement to this effect. If the risk is there, I'd want to find out what the risk is. Just a friendly suggestion.
Peace,
Ken
Posted by: Buffalo Ken | October 09, 2008 at 02:48 PM
Warning - Rambling somewhat kooky-shaped message follows....
Of course, the accountants would need to check REAL close. They would need to dig deep. I suspect many questions might arise for which only a few "computer-programming and/or mathamatical-dreaming, sometimes a scheming, whiz-kids would know the answer, but maybe not even them. Well, that speaks to the problem I suspect. I could be wrong, buy I think "Funny Money" is "flying" all over the place in all sorts of "funky-string-type-instruments" (mainy in bits and bytes) connected in ways that have become so complex, nobody can unravel the mess.
Well, the more periphery and other-type connections to this "black-hole/box-sort-of-web" the easier it will become to find some common connections. These common connections might even have names and addresses associated with them for which it would be worthwhile to gain some additional understanding about how the connections came to be. As more is discovered, I suspect it will end up looking nothing different than a witless attempt at "history repeating amended version 2", but history can never really repeat now can it? When something happens its a one time deal in its contextual framework. But after it happens, we ought to be smart enough to learn something and not make the same mistakes twice, or heaven forbid, three times.
Anyhow, sorry for all of this rambling, but if something has been made it can be unraveled eventually.
Peace.
Ken
Posted by: Buffalo Ken | October 09, 2008 at 03:01 PM
How can any country in the world (or all of them together) possible unwind the (1 quadrillion) derivative beast? How can this play out any other way except for a long hard global depression?
Posted by: TMB | October 09, 2008 at 03:17 PM
Thanks for another great article and bringing people like me who have only been reading on investments for a year, up to date on the 0% madness of Roubini.
It's interesting to see how dangerous iceburg ideas sometimes emerge from the sea and mist of economic understanding to sink whole nations.
Posted by: Richard | October 09, 2008 at 03:19 PM
last post for today, buy it seems to me that once "the mess" is better understood, it will become evident (maybe even relatively clear) where there is value amongst corporate entities (remember they are NOT alive) and where there isn't with respect to capital, employee skill level, "fiscal-soundness", and other measurable indicators.
For those with little value as a single corporate entity, I'm sure there is value in many of the parts. This value should be utilized shouldn't it? This may provide some good opportunities for new-type mutually beneficial arrangements to be established.
Maybe, maybe not, I suppose, but it is possible.
One thing though that I think is basically irrefutable is that LABOR holds key value and LABOR needs to recieve a fair wage for other "values" to manifest. Labor is essential and no damn robot will ever be able to do what a human can especially when we work together as we are capable of when push comes to shove.
I really think an investment in a New Railroad Infrastructure would so be money well spent. Real investment and real results.
Peace,
Ken
Posted by: Buffalo Ken | October 09, 2008 at 03:23 PM
Oww! -633 on the DOW! I think the shorts are getting even.
Posted by: CEO Nutcracker | October 09, 2008 at 03:46 PM
ELAINE: you were right all along.
When you have an economy and financial
instruments based on CREDIT, you dont
know where the HOLE or the bottom is.
Posted by: don | October 09, 2008 at 03:51 PM
I wonder where the DOW would be if the Plunge Protection Team hadn't been bailing in out for the past year and a half? I suppose we will find out very soon.
Posted by: CEO Nutcracker | October 09, 2008 at 03:52 PM
Came across this...
http://www.containercity.com/
Good site this,worth a look around...
http://tinyurl.com/4owlos
Posted by: Tell | October 09, 2008 at 04:56 PM
Is it at all possible, that Greenspan, the one time gold proponent, has pulled off the biggest coup in history. Intentionally creating the biggest bubble in recent memory in order to kill off the Federal Reserve once and for all? It is most certainly more exposed than ever before, as being a socialist cartel beast ready to devour anything it so chooses. The question remains open, as the demise of the Federal Reserve will either culminate in a more competitive banking system, or, as most media lap dogs will clamour for, a global banking solution, starting first with collaboration, and ending with World Bank/IMF ultimate control .... exciting times, to say the least.
Posted by: goldgreenspan | October 09, 2008 at 05:05 PM
Elaine,
You and I have discussed how the many-trillion-dollar CDS market represents not only the clearest symbol of the insanity of American financial greed, but the biggest theromonuclear bomb that could (and probably would) go off in the financial world.
TOMORROW WE BEGIN TO FIND OUT JUST HOW BAD IT MIGHT GET
There are $400 billion in Lehman Bros Credit Default Swaps (CDS) that have to get settled tomorrow. That's right - tomorrow, Friday 10/10/08, starting at 9:45 A.M. Eastern Time. The CDS have to get settled because Lehman has defaulted on its debt, which is precisely the event the CDS are supposed to insure against losses from.
Current projections are that $.10 on the dollar is recoverable from Lehman-derived sources. If true, that leaves $.90 on the dollar for the CDS "insurers" (e.g., JP Morgan, Morgan Stanley, etc.) to come up with. THAT WOULD BE $360 BILLION IN HARD CASH PAYABLE TOMORROW.
Maybe they'll conduct an auction for Lehman debt and mayble there'll be more than $.10 on the dollar recovered. No one knows.
Today, Paulson announced he will interpret the spirit (it sure ain't in the language) of the $700 billion TARP to let him give hundreds of billions of dollars (the number "$300 billion or so" is being bantied about) "directly to banks" in exchange for some preferred stock options. Coincidence? I think not.
No matter what else you have planned for tomorrow, watch this CDS settlement carefully, as it proceeds. It will either get manipulated successfully to spare the "insuring banks" the real cost of the risks they have taken; or Paulson will "make good" their losses (also called "re-capitalization") with up to half the TARP money; or Armaggedon will no longer be a figure of speech.
Posted by: Michael | October 09, 2008 at 05:08 PM
Thank-you Michael for so much and I hope you know what I mean. I remember so many months ago when you said to me "be at peace" and this meant something to me.
I think there is a way out of this quandary but one thing for sure is "flash" decisions (particularly the unitary type) made in moments of passion are undesirable. Undesirable in general. Undesirable for all of us. There needs to be discussion.
Peace,
Ken
Posted by: Buffalo Ken | October 09, 2008 at 05:16 PM
"Is it at all possible, that Greenspan, the one time gold proponent, has pulled off the biggest coup in history. Intentionally creating the biggest bubble in recent memory in order to kill off the Federal Reserve once and for all?"
This has always been a constant suspicion of mine also. I think of it every time I see his reptilian face and that weird smile.
So far, he hasn't tipped his hand. Maybe he will on his deathbed.
Posted by: DeVaul | October 09, 2008 at 05:17 PM
I think we could basically all agree on that can't we. Talking at the table is best? It happens small-scale for sure and the scale increases. It can happen on all sorts of levels.
Sorry for the additional posts, but when I hear such dire talk I understand that it is based on history, but I just don't think history can repeat. Plus, you know what I think about learning. I love it.
Peace,
Ken
Posted by: Buffalo Ken | October 09, 2008 at 05:18 PM
Maybe if we waterboard Greenspan, he will tell us...heh.
The DOW collapse is the pre-Derivatives Beast Bust tremors. We can afford exactly 9 days of this sort of mess then it is all zeroed out.
This is a classic Gordian knot. An interesting mythology behind the Gordian knot. It was how the Goddess of Inflation tied the yoke of King Midas' ox team. You see, he wasn't a king but this made him a king.
And then Alexander cut it in two and then went off to die, fighting in Afghanistan and Iraq. He died! And was cremated.
The Law of the Goddesses are not easily set aside. They take revenge.
Frankly, the attempts at evading a correction that balances our books is turning into a bloody, awful mess. We can't short-shrift these celestial, natural systems. They WILL correct no matter how hard we work to keep these things all out of balance.
Posted by: Elaine Meinel Supkis | October 09, 2008 at 05:47 PM
Balance is undeniable and inherent. No doubt.
Peace,
Ken
Posted by: Buffalo Ken | October 09, 2008 at 05:56 PM
Elaine and Ken,
After the inevitable fall, there will be a period of silence (shock and awe) followed by screams and cursing on all sides. Stop looking at this spectacle as this is like the tsunami waters going out at Phuket with fishes stranded on the beach. The mother of all waves is coming in fast.
I believe we have about 2 weeks most to stock up. Shipments of grains are probably going to stop due to payment issues from this global mess. Anything from JIT (just in time) deliveries is going to get hit. Get ready for a harsh winter without power as this will kill those unprepared. Don't count on any services or backup from aid agencies. It will all be gone. We are on our own.
Posted by: OC | October 09, 2008 at 06:17 PM
I have been almost exclusively posting my comments on your blog because I like your style and even though we disagree about the centrality of gold and the effects of fractional reserve banking (me against, you for), your attack on pirate coves and corruption in the financial "industry" (what do they produce again?) is spot on.
As a final gift to you and your readers, I say this one more time: This is it, and it is now. Buy physical gold, and farmland if you have the $$$s.
I have never been more serious.
Posted by: Karmaisking | October 09, 2008 at 06:23 PM
Ken - I think that's Human Bean (Little Big Man - if you'll recall).
Watching the ticker today was too upsetting. Susie Ormand (SP?) was on Larry King Live last night (again) relating stories of her listeners calling in telling her they're living in their cars. And she says, expect a lot more of that. Expect bread lines. This will take years to get out of.
This is momentum. Like a mud slide.
Why the HELL are we bailing the bastards out? Either way we're screwed. Why lighten THEIR load? And the McCain hooey about buying distressed mortgages - now there's a great bargain for the taxpayer/rescuer. Relieve the libertine, devil-may-care bankers of non performing assets and dump them in the government's lap - - - except I don't think they can tell us where the bad debt is - they CAN'T separate it, because they have no idea where it is. Whoops. Call the Queen.
Thanks, Hank. And Greenspin.
Posted by: D. F. Facti | October 09, 2008 at 06:41 PM
Karmaisking,
Don't forget to include the means of protecting your investments. Ha! Ha! Ha! Them boys from the hood and the suits will be calling once they realize the currency will have to be backed by gold.
More mundane things like food, medicines and skills will be just as critical once this period of madness is over. Put your house in order first - I mean make sure your property is in good physical condition like good thermal insulation and heating (without relying on electric grid or gas as in good old fashion way). Be prepared to work at home as jobs and payments will be difficult to come by. Cut all useless expenses and debts asap. Improve on security as crime rate is definitely going to go up everywhere in the world.
Posted by: OC | October 09, 2008 at 06:41 PM
Well, I produce my own heating energy. And have guns and lots of live game that forage on my lands. And I know how to gut large mammals as well as deal with their hides.
Useful life skills. But then, I lived in a tent complex for ten years in a very hostile climate. We live if we want to live. We go up and we go down. I have lived in mansions and slums.
The main thing is to be ALIVE, AWARE and to deal with neighbors however they are since rich people are much bitchier than poor, I frankly enjoy the non-rich more than the rich, frankly!
Communities matter when our 'choices' are limited. Some of the best communities I lived in were poor.
Posted by: Elaine Meinel Supkis | October 09, 2008 at 07:35 PM
Excellent silverbear posting! Absolutely amazing! Inflation the 'hidden tax'. That is oh so true.
Three can keep a secret if two are dead.
Benjamin Franklin
Posted by: Dutch | October 09, 2008 at 09:08 PM
Inflation is a raid on SAVINGS and worse, prevents even any chance of saving money.
Posted by: Elaine Meinel Supkis | October 09, 2008 at 09:10 PM
“We are in danger of being overwhelmed with irredeemable paper, mere paper, representing not gold nor silver; no sir, representing nothing but broken promises, bad faith, bankrupt corporations, cheated creditors and a ruined people.”
Daniel Webster, speech in the Senate, 1833
Here we go again......different generation, same old congame and conmen.
Posted by: rockpaperscizzors | October 09, 2008 at 09:38 PM
“I sincerely believe ... that banking establishments are more dangerous than standing armies, and that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.”
Thomas Jefferson to John Taylor, 1816
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."
Frederic Bastiat, The Law
"Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.
George Washington, in letter to J. Bowen, Rhode Island, Jan. 9, 1787
"You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out."
Andrew Jackson: To delegation of bankers discussing the Bank Renewal Bill, 1832
"You can fool some of the people all of the time, and all of the people some of the time, and that's good enough."
Dr. Edwin Vieira
Posted by: rockpaperscizzors | October 09, 2008 at 09:45 PM
Yes, rockpapersizzors. I just finished reading
an article by Bob Chapman about the lengths and machinations the bankster's are using to keep gold and metals suppressed. It is AMAZING how desperate and fearful they are of losing this credit ponzi scheme to gold.
This article is worth it's weight in gold.
http://www.theinternationalforecaster.com/International_Forecaster_Weekly/Massive_Gains_Wiped_Out_in_Markets_Despite_Everyone_Being_Warned
Posted by: CEO Nutcracker | October 09, 2008 at 09:50 PM
Sorry. It got cut off.
http://www.theinternationalforecaster.com/
International_Forecaster_Weekly/
Massive_Gains_Wiped_Out_in_
Markets_Despite_Everyone_Being_Warned
.
Posted by: CEO Nutcracker | October 09, 2008 at 09:55 PM
If the derivatives are only $500 trillion (only???) that would be around 10 times the global GDP. Let's face it, if the derivatives unwind, it will vaporize everything in it's path.
The fact that most people have no idea it's coming is a testament to the power of the MSM...those bastards!
Posted by: DrKrbyLuv | October 09, 2008 at 10:20 PM
Japan is openly talking about no longer using the US dollar to settle international trade and commerce accounts.
THIS IS THE END OF THE FIAT DOLLAR. Kiss it goodbye. I bet the US will rush to placate Japan tomorrow. Like, make the dollar strong against the yen again. Already, the yen has risen from 127 to the dollar to 98 this night. They are struggling like hell to inch it up to 99 yen to a dollar. But this is killing them, big time.
Read my next story. It is a doozy.
Posted by: Elaine Meinel Supkis | October 09, 2008 at 10:38 PM
Elaine: While agreeing on the interest rate argument in principle, I think you're giving Roubini much too raw a deal here. He has often admitted that further interest rate cuts are not desireous as they will pave the way for inflation in the long run - and that they have been already too low for a long time. See also the CFR debate the other day: http://www.cfr.org/publication/17365/financial_crisis.html
At the same time, his view - which I find to be correct and guides his latest recommendations - is that no matter that lots of banks and financial institutions have to fall while assets find a realistic bottom and derivatives are settled, there HAS to be an operational banking sector in place, because otherwise the damage arrests even the solvent and profitable companies in the real economy. Not just in the US, but worldwide. Moral hazard or not, and as much as it would pain me to see only JP Morgan and the likes survive, we HAVE to have some modicum of a functioning banking sector, because otherwise everything stops (even if recession/depression is unavoidable in any case).
The rate cuts Roubini suggests are not due to ideological preference for low rate regimes. Fundamentally, you can hardly find an economist who is gaining main stream attention (belatedly) who is agreeing with you more.
Posted by: Glen Mikkelsen | October 10, 2008 at 01:16 AM
If you think the private sector (banking) should control the price (interest rate) and creation of money (fractional reserve banking) instead of Congress, as defined by the US Constitution, you are a CORPORATIST and GUILTY OF TREASON.
http://antifascist-calling.blogspot.com/
A more accurate term for the system that erases the boundaries between Big Government and Big Business is not liberal, conservative or capitalist, but corporatist. Its main characteristics are huge transfers of public wealth to private hands, often accompanied by exploding debt, an ever-widening chasm between the dazzling rich and the disposable poor and an aggressive nationalism that justifies unlimited spending on security. For those inside the bubble of extreme wealth created by such an arrangement, there can be no more profitable way to organize a society. But because of the obvious drawbacks for the vast majority of the population left outside the bubble, other features of the corporatist state tend to include aggressive surveillance (once again, with government and large corporations trading favors and contracts), mass incarceration, shrinking civil liberties and often, though not always, torture. (The Shock Doctrine: The Rise of Disaster Capitalism, New York: Metropolitan Books, 2007, p. 15)
Posted by: GK | October 12, 2008 at 01:49 PM