Debt Rattle Jan 25 2014: A Bank Run in London?


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    Lewis Wickes Hine for National Child Labor Committee Doffers in Pell City Cotton Mill Nov. 1910 It seems to come as a surprise to some, but when you t
    [See the full post at: Debt Rattle Jan 25 2014: A Bank Run in London?]


    “He said some $2 trillion of corporate cash is on the sidelines in the US, $700bn in the UK, and another $2 trillion in the rest of the world. “There is an investors strike. This is a problem of demand in our economies, they are comatose,” he said. [..]”

    While that quote and its numbers may be correct, the interpretation of the data is off. You see, those trillions in cash are not retained earnings, the cash is in fact borrowed money, aka more debt. You can read a good analysis of this at

    I want you guys and gal to know that I do love The Automatic Earth!



    Thanks for the kind words TRJ.

    I post Ambrose stuff because I like the data he has, and hope people will know who he is: not us. And you’re right: all that “capital” he talks about is a leveraged illusion, and fodder for the taperworm. Poof!


    It is more common than most people know for banks to limit withdraws of cash. Although those seem like smaller amounts. We all use checks and cards and the internet so much most don’t experience it. I took out $400 increments (atm limit) to get a sufficient store of cash in the house safe for a long emergency.

    Deflation. Heard it first here! (Had no idea back then what you were on about either…) Since about October it’s been cropping up in many economic articles. No one seems to want it, but I’m getting the feeling it’s coming anyway.

    Practical Question: If one is stock piling, will one be sorry later when prices go down? Should one simply save cash? (I do not see developed countries going total “Argentina”, they make a special hobby of that.) If only one knew what might be in short supply later!


    “Practical Question: If one is stock piling, will one be sorry later when prices go down? Should one simply save cash? ”

    I’ll throw out an answer for you, BOTH, as in some of both at least until you have 30, 60, or 90 days of essentials saved up. After 90 days I would continue to build my stock of emergency supplies, inching toward that Morman idea of a one-year supply, but I would mainly be going for cash. If you are worried about your cash getting burned up in a fire, think about getting some $1 coins if you have the space to store them, after all no one seems to want to use those coins in circulation.



    Only “fire risk” for cash I see here is devaluation, as I cook this 15% more costly than last year ham, with this more expensive Natural Gas.

    Seems all the things I need are going up in price, while the things I don’t need are getting cheaper.

    I can agree, though, that pre ’65 coins might meet “dual” fire loss prevention needs going forward.

    And this, “When there is deflation, debt becomes a much more serious problem,”

    Ah, yes! And what is it that makes Centrally Planned economies go ’round, as well as grants monopoly power to the planners?

    Oh, and this one, ” Europe has to live with the fact that we’re struggling to find the right path.”

    Right on, there, Senior Planner, you certainly must know more than all the worlds market players about the “right path.” How else could your ilk have created such chaos as we are experiencing today?

    Green Peace? Alternative Fuels. Sure, OK, I just got a bid on a grid tie solar system. Seems the Quasi Government local utility will see clear to buy my excess power for 2 cents a kilowatt hour. In return, they will ‘only’ charge me 14 cents per Kwh for what I use nights and with heavy load appliances like dryers and AC’s.

    Damn, I could have the 15 year productive life junk on my roof paid off in 30 years or so. Then I can try and figure out how to dispose of the heavy metal toxic waste, along with all those “green” mercury laden cfl bulbs I converted to a few years back.

    Clean? Dirty?

    John Day

    It is the buffering capacity for solar which is so very expensive, not the panels or inverters. The buffering capacity is above 75% of the long term cost.
    Your utility company takes a conservative financial position with you. If you want to have solar on your roof, they will buffer for you at a cost where they make a risk-free profit for that service. You might price your buffering capacity in nickel-iron “Edison cell” batteries. has good deals on Chinese made nickel iron batteries. They last essentially forever if you change the potassium hydroxide electrolyte each decade, and use distilled water.
    I put together a modest system with these, for Hawaii, where the sun shines and you never need air conditioning. It was educational.
    Lead acid batteries are a temporizing measure, not really a plan.
    It looks like a long energy descent.
    Conservation is the low hanging fruit, huh?

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