Debt Rattle April 20 2015

 

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  • #20597

    DPC Broad Street lunch carts, New York 1906 • World Braces for Taper Tantrum II Even as Yellen Soothes Nerves (Bloomberg) • Caveat Creditor As IMF Chi
    [See the full post at: Debt Rattle April 20 2015]

    #20598
    Dr. Diablo
    Participant

    “The world has benefited enormously from this work by meteorologists over the last half century.”

    Except the part where they still can’t predict the weather 3 days ahead of time, even with worldwide coverage of IR satellites, doppler radar etc (a huge advances that should make predictions easy in itself)?

    And the part where, even if their complex models are wonderfully translating to the economic world, and work, then apparently no one is paying any attention to them? I.e. We still have, and deny, every economic shock we’ve had since 1987?

    Call me not wowed by the math or the science. At least as concerns its application by men.

    #20599
    John Day
    Participant

    Global reset when one of the critical bluffs fails, like EU or China, then war with Russia to enable reset?
    How totally insane is this for anybody without a 30 year reservation in a deep, hardened bunker?
    Grow food. Collaborate with other humans.
    Meditate/Pray. Become spiritually conversant. It’s in us all.

    #20601
    Raleigh
    Participant

    Jim Quinn:

    “Central bankers in the U.S., Europe and Asia have created another massive bubble. This time it is a bubble in stocks, bonds and real estate simultaneously. There is no place to hide. We are now in the blow-off stage. Markets are totally disconnected from reality, amateurs and muppets have been lured into the fray, margin debt is off the charts around the globe, and confidence in the infallibility of Yellen, Draghi, and the Asian central bankers couldn’t be higher. These bankers have been tasked by their .1% masters to elevate markets across the globe so they can extract the remaining wealth of the clueless plebs. We are now in the death throes of this latest tulip mania. It may go on for many more months or today may be the peak, but one thing is for sure – it will crash and burn. What happens next is anyone’s guess. But I’d put my money on war, chaos, and revolution. There will be no impunity for our gambling.”

    #20602
    Raleigh
    Participant

    This is a very good video: “Money For Nothing”. When I started watching it, I almost quit because the first 30 minutes almost seemed apologetic towards the Federal Reserve, but the last hour is really worth a watch. It details the hands at work that caused our problems, all of the Federal Reserve and government engineering/manipulation that has taken place. Peter Fisher from the U.S. Treasury said:

    “Now, there a lot of people who want to criticize the American household for being dumb.”

    Geithner says:

    “Americans borrowed too much, in part because they did not understand how to save prudently, how to borrow responsibly, and they did not understand fully that pension values and house prices will not always rise.”

    Fisher responds:

    “I think that’s mistaken. I would never short the intelligence of the American consumer. The collective wisdom is usually pretty good. We gave them really low interest rates in 2003/2004 and guess what, they borrowed a lot of money.

    The Great Coincidence Theory: “I think there are several strands to understanding how we got in this deep a financial mess. And I’d like to be clear – I’m not a subscriber to what I call the Great Coincidence Theory, that every individual facet of our financial system seems to have fallen apart at the same time as part of a great coincidence: the accounting was all wrong, the bonuses were all wrong, the capital was all wrong, the risk management was all wrong, the regulation was all wrong, each and every one of these things was all wrong. I think when a boiler explodes, that’s a little like blaming each individual rivet. No, something fundamental connected all of these things: monetary policy was just way too easy and the concepts underpinning financial regulation were flawed. […] We had negative two-year interest rates. That means that to borrow money for two years is free. […] And then we look back at the overall effect and say, “Gee, we don’t like this, there’s something wrong with the market. But they’re actually following the incentive structure the Fed set up.”

    The big banks borrowed money at 1% and lent it out at 5 to 6% – quite a nice spread. “Able to borrow money for nothing and earn huge fees for lending it out, Wall Street began simply giving money away.”

    “Banks at the peak of this crisis were levered from 30 to 50:1; so 2% equity, 98% debt. With that kind of leverage, it’s money for nothing, chicks for free.”

    This video is a scathing attack on the Federal Reserve/government. With the incentive structure that was set up, is it any wonder we ended up where we did? Same as China is doing right now in their stock markets, pushing people towards equities. It’s all engineered, all of it.

    The last time I posted this video, it was taken down soon after. If you can, watch it. It’s well done. For me, it started getting good at about the 30 minute point. Skip the first 30 minutes if you don’t have time. By the 45 minute/one hour point it’s very, very good.

    #20603
    Dr. Diablo
    Participant

    Thanks Raleigh. We might also call it by another name: the failure of central planning. Or success! Depending on where you’re sitting.

    #20605
    Raleigh
    Participant

    Dr. Diablo – yes, a success it certainly was to the engineers and those close to the engineers who knew where the train was heading, when to get off, when to get back on. Totally engineered and manufactured – what we have could not be otherwise. The market is clearly not in control; all it’s been doing is following the lead.

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