Viscount St. Albans

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  • in reply to: How Central Banks Buy Growth #8057
    Viscount St. Albans

    A basic and probably stupid question, but here goes:

    If, as Steve Keen and others have noted, the vast majority of money in circulation is derived from unsecured private bank lending, then what constrains the magnitude of private bank lending? Is there any relationship or linkage between deposits and the magnitude of lending?

    If bank lending is entirely de-linked from deposits, then what prevents the local Mom-and-Pop bank with a single Main Street Branch and $1 million in total deposits from lending $50 billion to a start-up solar energy farm in Wales? Who or what sets the limits on private lending?

    in reply to: TAE 3.0: What do you want to see? #8002
    Viscount St. Albans

    Ask Ilargi & Stoneleigh.

    There are many online interviews of Stoneleigh, and a even a few snippets of Ilargi offering tears in the rain wisdom. But if you’re like me, you struggle to absorb these intertube exchanges with the wide-eyed squishy incredulity of a thoroughly befuddled Officer Deckard.

    The interviews disappoint me.
    Whilst dunking my Tostitos in great gobs of mild salsa, I try to temper my disappointment. But it’s getting tedious. The line of questioning is too formulaic. As the question mark drops into place, the pop-hiss of cracked aluminum and carbonated beverage puts me to sleep. Somebody needs to shake things up. Something. Anything. Smash the family crystal against the marble mantlepiece.

    Sandals or flip-flops?
    Do you enjoy shellfish?
    Are you afraid of Ferris Wheels?

    Ask anything. But keep it short. One sentence. No monologue, no commentary. Be original. After 4+ years, ask something that hasn’t been mentioned before. More importantly, have a good follow up. If you’re digging ruts in a well worn path, then the answer is one word, “Archives”, or maybe a link if one is feeling ambitious.

    Whose line is it anyway meets Frost-Nixon.

    in reply to: TAE 3.0: What do you want to see? #7989
    Viscount St. Albans

    Detroit — is it worth a gamble?

    Now that the bankruptcy boil has been lanced, could a savvy real estate gambler roll a lucky seven, or is this dice game still loaded?

    James Howard Kunstler has often illuminated Detroit’s strategic geographic advantages. Once the peripheral services (street lights, water distribution, sewers, police etc.) have contracted to a compact core, will it be possible for Detroit and its real estate values to rise from the ashes in our lifetime (next 30 years)?

    in reply to: Money. Religion. Power. #7970
    Viscount St. Albans

    Ballpark love.

    Two outs, bottom of the ninth, bases are loaded and the home team is down by 3. Three balls and Two strikes. The tubby, aging slugger, fast-on-the-fade digs into the batter’s box. Here’s the pitch: Crack! It’s a sharp line drive to center field; He’s going back, back, at the warning track. That ball is outtah here!

    My sweaty bottom leaves the seat. Feet in the air, I’m in love with 35000 people. For this moment, we’re brothers and sisters sharing a communal exorcism of grunting, growling, sputtering and howling. The fever is universal and ephemeral. Soon they’ll all be assholes, clogging the exits and making too much noise. I’ll want my gold, my barbed wire, my watchtowers stocked with flamethrowers. But not yet. Let’s can this moment and store it next to the dried beans.

    in reply to: QE, The Velocity of Money And Dislocated Gold #7950
    Viscount St. Albans

    When you’re betting with Mr. T as a spokesman for savvy market prescience, sleepless nights are warranted. I pity the fool. But the question lingers: Is it the fool who sells gold or the fool who accumulates it? Whom do you follow, the man wrapped in sparkling chains or his message? It’s typical of Bloomberg and all financial news. Carnival logic at play, complete with fireworks and a looping accordian waltz . Step right up; get your hot corn dogs; drop a dime in box, play a song about New Orleans.

    in reply to: QE, The Velocity of Money And Dislocated Gold #7927
    Viscount St. Albans

    @ Seychelles,

    So true! Gold is the pimply silent kid’s bedroom pin-up girl. Truth and Beauty condensed into a conveniently fondled shiny disk. You can lick it, you can bite it, you can hide it under your pillow, and for the past 40 years, the police didn’t ask any awkward questions.

    in reply to: TAE 3.0: What do you want to see? #7910
    Viscount St. Albans

    @ Variable

    The Transition Guelph Excel Spreadsheet is a very useful tool to bring some objective and quantitative analysis to the essentials of daily life.

    I’d like to expand upon this type of analysis. I’d like to explore where individuals can go to research basic facts about their local infrastructure. Real estate is generally the biggest financial transaction that any individual will ever make, and too often that decision is based on little to no understanding of local infrastructure and its related finances. The impending credit crunch will make the status and maintenance of basic local infrastructure very prominent in the minds of most people. The days when towns or counties could access global markets for financing infrastructure projects will be gone. Thus, it would be a great service to illuminate the sources of information about the state of one’s current local infrastructure. Questions such as: How old and derelict are the sewer and drinking water pipes and power distribution lines should be of far greater relevance than the local school district’s latest nation-wide standardized exam scores.

    Some background to explain my interest.
    I live in Palo Alto, CA. Epicenter of the Google, Facebook, Intel, Silicon Valley Universe. My neighborhood, College Terrace, on the Southern Edge of Stanford University is among the most expensive in the nation (a 2 bedroom 1 bathroom 1000 square foot home will easily cost more than $1 million). That being said, a local recently began to ask questions about the soil beneath our feet, and the deeper he dug, the more the soil stank of cookie dough (hint: That’s probably not a good sign). Long story short, we’re living next to one of the nation’s most extensive Superfund Sites and virtually nobody in the neighborhood realized this slightly relevant fact. And it turns out the EPA would strongly prefer that nobody knew or asked any questions about it.

    If you’re in the mood for a real humdinger of a story about the relevance of understanding local infrastructure, then please dig into my neighbor’s exhaustive research on the subject, and don’t rest your head on the feather pillow until you’ve applied the lessons to your own situation.

    in reply to: TAE 3.0: What do you want to see? #7887
    Viscount St. Albans

    Where do you live?
    How does the place work?

    Create a knowledge base of local infrastructure. Collaboratively pool information about your community and region that is widely dispersed in the far corners of the web.

    I propose a user generated (wiki) section in which readers contribute knowledge of their own communities. There is no resource on the web that provides basic information about the critical infrastructure of daily living at the local level. Since most folks visiting this site regularly think about this kind of topic, why not make TAE 3.0 a go-to source for information and discussion.

    A short list of questions that come to mind:

    — What are the finances for your town and county? How much revenue and how much debt? What is the debt maturity schedule and how much of the budget is dedicated to interest on debt? What are the unfunded liabilities?
    — What power plants supply electricity and how is that electricity generated (coal or natural gas or nuclear)?
    — How is the local utility financed and what does it debt structure look like?
    — How old is the local/regional power plant, what plant infrastructure upgrades are pending and how are authorities planning to finance them?
    — What are the sources of drinking water? How large is the watershed and what are potential sources of watershed contamination. Does the watershed overlap multiple conflicting local government boundaries?
    — How is drinking water distributed (the pipes) and how old is that infrastructure and is there any estimation of its state-of-repair (data regarding water leakage etc. What are plans for infrastructure updates and how will that be financed?
    — Where and how is the waste disposed (human, industrial, solid and liquid)
    — Is there local agriculture? Could it be expanded if necessary?
    — What industries support the local tax base? Are those industries shrinking or growing? Do any depend critically on certain specific one-off tax breaks from the local/regional government?
    — Does the region have natural resources (timber, soil for farming, fishing, minerals, coal, oil, natural gas)
    — What is the proximity to routes of transportation (rail, river, canal as well as roads)
    — What natural hazards present recurrent problems that are currently papered-over with federal disaster relief (floods, droughts, hurricanes, tornadoes, earthquakes).
    — Are there any long festering environmental hazards that pose medium or long-term threats threats to critical infrastructure (like drinking water). These threats include things such as moth-balled factories, military bases, mines, superfund sites, state environmental remediation sites.
    — Have local sites of soil contamination been mapped and are there any existing models for the movement of soil contamination plumes over time
    — How do local leaders envision the region in 10 years (are they staking the future on specific endeavors, like residential real estate development, or shale gas drilling, or university expansion, or fill-in-the-blank).

    James Howard Kunstler has discussed topics like these ones on his podcast. For the most part, his discussions revolve around regional analyses such as Southwestern US, Northwestern US, Southeastern US etc. Some of my favorite podcasts are the ones where he discussed the pros and cons of different cities like Detroit, Baltimore, Seattle, and Atlanta.

    in reply to: TAE 3.0: What do you want to see? #7856
    Viscount St. Albans

    Re: A proposed discussion topic — Don’t Prepare for Collapse

    By prepare, I refer to material preparation: Collecting canned goods, can openers, silver coins, mini-whiskey bottles, generators, hammers etc.

    Hoarding stuff frames the future incorrectly.

    The most useful preparation is psychological rather than material. The future is about adaptation to deprivation. So start that project now. Identify the goods and services that give you pleasure, and take them away — one by one. Practice acceptance.

    The scale can be grand or modest. Turn off your air conditioner and feel the summer heat, or limit yourself to a single flashlight battery per week after sundown. The name of the game is recognizing our elastic standards of comfort. The tent dwelling Syrian children trapped in a summer oven desert refugee camp might be happier than you are. Practice deprivation until that profound incongruity makes sense.

    My idol: The political prisoner locked in a sensory deprivation cell who nevertheless entertains himself by gliding his fingertips over the abstract pattern of millimeter deep ridges and valleys in the rough concrete floor. If you can get there imaginatively, then your life raft is ready to cross oceans.

    in reply to: Deflation By Any Other Name Would Smell As Foul #7833
    Viscount St. Albans

    Markets, mistaken priorities and misallocated time.

    A box full of double eagles will pay the salary of a home health care aide (just as it did 1000 years ago) when you’re too weak to walk to the bathroom and wipe your rear. But unless you’re paying a second inspector to monitor the performance of your aide, chances are you’re not going to get much in the way of tender loving care. The same applies for the guilt of not “being-there” for a loved-one when being-there is required. Sure, the market will provide geriatric facilities to landfill the elderly (out-of-sight and out-of-mind), but that same market has not yet provided a pill to assuage the guilt.

    Wall Street/Bloomberg/Zero Hedge/etc. offer little guidance on the appropriate allocation of time and energy. If nothing else, they provide a timeless reminder of the constant struggle to see what is in front of our noses: We’re only here for a short time and we don’t own anything.

    in reply to: TAE 3.0: What do you want to see? #7817
    Viscount St. Albans

    Things I’d like to see:

    A video tour of Stoneleigh’s Ontario Compound.
    Use the audio and visual walk around chit-chat as a jumping off point for lectures on:
    1) The merits of urban vs. rural setting
    2) The mechanics of alternative heating/cooling/cooking/electric generation
    3) The value of community connection
    4) An example of analyzing a region’s (in this case ex-urban Ottawa farmland) pros and cons and adapting one’s living conditions to maximize benefits within that niche……..Explore optimal adaptive living arrangements in other settings (ones more suburban and ones more urban).

    in reply to: Deflation By Any Other Name Would Smell As Foul #7813
    Viscount St. Albans

    @ Dave,
    It’s a comment on the non-existent distinction between investing and gambling. I recently had a friend tell me that she never gambles, but she loves to invest in the outcomes of horse races. She explained: It’s not vulgar betting because she does a lot of research on the horses’ health and their race histories under varying track conditions.

    in reply to: Deflation By Any Other Name Would Smell As Foul #7809
    Viscount St. Albans

    Mish lost 25% of his money in 2 weeks.

    On June 13th he announced:
    “Last week I bought a basket of miners with a significant amount of money.”

    Now, after watching a huge fraction of his liquid capital vanish, he states:
    “am I selling? Of course not, and it seems silly to even ask.”

    Even the smart money is penny wise but pound foolish.
    Mish, you didn’t invest. You gambled and you lost.

    The only true investments involve people and relationships. Everything else is Vegas.

    in reply to: Spain Has A Long Way To Go Down #7061
    Viscount St. Albans

    Why is the stock market making all-time highs?

    My short positions are hemorrhaging. I’m going to bleed-out if this keeps up.

    How can everything be so bad if the market is so good? Is Stoneleigh going to update things sometime? At some point, the disconnect is so blazing hot, your brain gets third degree burns just for thinking in the gutter.

    I look around and I see cars accelerating, and I hear jets soaring overhead, and I smell burgers and steaks sizzling at the cafes. I pinch my skin and I learn two things: I’m getting fat and no, I’m not dreaming.

    I’ve started watching Jim Cramer again.

    in reply to: Deflation Arrives In The Eurozone #6977
    Viscount St. Albans

    Re: Bulgarian Government Collapse

    Two things strike me:

    1) Just as Greece is part of EU periphery (with Germany at the center), Bulgaria is part of the South Eastern Europe Periphery (with Greece at its Center). Prior to the Greek sovereign debt crisis, Greek banks lent heavily to banks and businesses throughout Serbia, Bulgaria, Romania, Macedonia, etc. One might expect to see a collapse of Greece’s peripheral trading colonies before an outright Greek collapse. The unrest in Bulgaria fits.

    2) Bulgaria becomes a cautionary tale regarding the dangers of selling off / privatizing critical national infrastructure to companies in foreign nations.
    Bulgaria is a net electricity exporter throughout Southeastern Europe. Its electricity generation and distribution assets are more than sufficient to supply the Bulgarian population with enough left over for export. In 2004, Bulgaria privatized most of its electrical distribution assets by selling them to several foreign companies including the Czech company CZE. Net result: domestic Bulgarian electricity bills have skyrocketed precipitating mass protests (the largest since the fall of Communism in 1989) and a demand to re-nationalize the electricity distribution assets.

    in reply to: Deflation Arrives In The Eurozone #6929
    Viscount St. Albans

    Dave, This is a great resource. Thank you for sharing your data analysis. Does this data include credit from the shadow banking system (pension funds, insurance companies, sovereign wealth, and money market mutual funds)? I’ve read that shadow banking has grown to the point that it dwarfs traditional bank lending, but my understanding is qualitative. Making this our understanding of credit at least a bit more quantitative is greatly appreciated.

    in reply to: The Automatic Earth Is 5 Years Young #6886
    Viscount St. Albans

    Wishing you all the best, Ilargi,

    I hope you have better luck with your new hip than Jim had with his. Systemic cobalt fragments sounds like some kind of intro to Spanish Inquisitorial hospitality. I imagine one can place greater faith in the Dutch health care system vs. the U.S. (Perhaps the topic of a future discussion with Jim).

    In any case, many thanks for 5 years of TAE. I&S&A and friends have opened my eyes and broadened my thinking. I discovered TAE through a comment on Jim’s CF blog some 4.5 years ago, so I’m very happy to see Jim’s KunstlerCast interview with Stoneleigh featured on the 5-year TAE anniversary.

    Huzzah and all that and wishing for another 5-years of enlightening writing and discussion.

    in reply to: France Is Dead Broke, But At Least Its GDP Came In Positive #6871
    Viscount St. Albans

    Re: The lower end of the Treasury Yield Curve

    It amazes me that, despite new highs in the S&P, the yield on pretty much all US Treasuries from 1-month through 2-year duration is still trending lower. A tiny downturn in equities could easily push 1-month and 3-month US Treasuries into negative yield territory. The Fed alone can’t do that. It means that there is still tremendous fear among institutional money managers. Much of global liquidity is still seeking a very safe haven.

    I don’t think the implications for negative yields on 1-month and 3-month Treasuries have been sufficiently highlighted. A negative yield on the short end of the Treasury market would have immediate ramifications for the entire US financial system. Yields on Consumer Checking and saving accounts would need to closely mirror those Treasury yields into negative territory, either that or banks will immediately need to create new fees and surcharges. The psychological impact of paying for deposits could be huge.

    in reply to: France Is Dead Broke, But At Least Its GDP Came In Positive #6870
    Viscount St. Albans

    @ rapier

    Re: oil price limits equity prices

    The upper 20% of the wealth distribution owns about 95% of all equities. Stock market pumping becomes an exercise in string pushing; The lower 80% of the pop. doesn’t see any gain. But they do feel the commodity price squeeze. And since discretionary income is so thin for the lower 80%, it doesn’t take much of an uptick in gas and grocery prices before discretionary income vanishes entirely. And that shows up immediately in auto sales, and home sales, and consumer durables etc. The noose around Best Buy’s neck tightens with every uptick in oil.

    I’m very surprised the CFTC hasn’t regulated commodity speculation more tightly. My speculation: Until the CFTC enforces are harder disconnect between equities and commodities, then Oil and Agriculture will put a hard ceiling on the Apples and the Googles.

    in reply to: The Last Remaining Store Of Real Wealth – 1 #6812
    Viscount St. Albans

    A reminder the WSJ once asked tough accounting questions.
    By far, the best documentary on the financial crisis. Note that it was produced in 2002 (that’s 6 years before the current mess started).

    It rang the alarm bell long before the tidal wave hit the beach. While dissecting the 2002 Enron and Arthur Anderson cadavers, it opened the door to a whole freezer full of Wall Street bodies.

    Watch the final 6 minutes (45 min — 51 min)

    This Frontline Masterpiece dug to the roots of the accounting weed, and it revealed a messy web of entanglements so intricate, if the government yanked a single creeping sprout, it would uproot the entire garden.

    in reply to: Tim Geithner, the King of Cloud Cuckoo Land #6808
    Viscount St. Albans

    @ Rapier…..Nice commentary. I like the emphasis on the importance on GDP growth rates vs. debt growth rates. Regardless of whether or not GDP is an insane measurement, the disconnect between borrowing and growth can’t be sustained. 6 months, 2 years, 5 years. Who knows? In 2008, we thought we had a year. Now we know we had 5. How much fuse remains?

    @ I&S. I come regardless of whether you post.

    But, in this internet age, I don’t think this site can survive much longer with such infrequent updates. For good or for bad, the web demands new news. Like the economy, you grow or you die. There’s no such thing as treading water. Ash found religion and I haven’t heard from him in months. What are your thoughts and plans? Should I keep myself busy saving the archives before you two vanish in the night?

    in reply to: Scale Matters #6798
    Viscount St. Albans

    Scale Matters ……
    Several Million Square Miles of Sahara and Jet Fuel is Pricey

    As mentioned earlier in the week with regard to France’s colonial Malian intervention: What’s the EROEI and who pays for all that very expensive Jet Fuel?

    A Hilarious article From this Sunday’s NYTimes

    Money Quote:
    “In Paris, French officials said the United States, while willing to help ferry African troops, wanted to bill France for the use of transport aircraft, which officials said would not go down well with the French. The Pentagon favors providing rapid help with transport and even with air-to-air refueling, but the White House is more reluctant, the officials said.”

    in reply to: Tim Geithner, the King of Cloud Cuckoo Land #6787
    Viscount St. Albans


    It would seem to be like the deck passengers of the Titanic screaming at the clueless corporate ship owners, the skipper, the ship designers, the lousy structural steel, the lack of a better iceberg patrol and even the berg itself for destroying their travel plans.

    That’s very good. Thank you for sharing.
    Gallows humor is always welcome.

    in reply to: Scale Matters #6765
    Viscount St. Albans

    Gold, Sand and Jet Fuel

    Scale Matters.
    One million square miles of Sahara vs. A squadron of Dassault Rafales

    Bamako, Mali.
    For a city of almost 2 million people, Mali’s capital doesn’t offer much of a skyline. Apart from a single, imposing brownish concrete-clad edifice, not a single secular structure competes with the minarets.

    The picture made me wonder: Who owns that tower? The ministry of security?

    I should have known better. It is the BCEAO Tower, and it belongs to none other than Banque Centrale des États de l’Afrique de l’Ouest (France’s banking arm for its NorthWest African possessions).
    As with La Cote D’Ivoire only 18 months ago, I wonder how many loans for Malian roads, mines, bridges, etc. sit on the books of BNP Paribas and Societe Generale. At some point, the EROEI in France’s West African colonies will turn negative. Paris will certainly burn up plenty of pricey jet fuel attempting to patrol roughly 1 million square miles of Sahara. That’s quite a steep input cost. I wonder: What are the true outputs here (For Paris, of course, not the Malian people)? Justice for the victims of medieval law doesn’t pay for jet fuel. I suspect the fruits of the labor are shiny and gold-colored.

    Then again, since the oil for the jet fuel probably flows from Gabon and Cameroon (France’s Central African possessions), with financing provided by BEAC, better known as Banque des États de l’Afrique Centrale (France’s banking arm in central Africa), perhaps the whole package is one virtuous circle.

    Colonialism in all its permutations will always be with us. It’s the moralistic sophistry about justice and constitutional order that makes me laugh and grimace at the same time. Let’s not forget about the yellow metal…….

    (from wikipedia):
    “In 1991, following the lead of the International Development Association, Mali relaxed the enforcement of mining codes which led to greater foreign investment in the mining industry.[4] From 1994 to 2007, national and foreign companies were granted around 150 operating licences along with more than 25 certificates for exploitation and more than 200 research permits. Gold mining in Mali has increased dramatically, with more than 50 tonnes in 2007 from less than half a tonne produced annually at the end of the 1980s.”

    in reply to: One Inch Below The Surface (America, You're Being Punked) #6742
    Viscount St. Albans

    A review of the news:

    California balances its budget and sees a surplus in 2013.

    Nikkei 225 index surges ~ 20% in 2 months.

    S&P 500 is at 5 year high

    Yield on peripheral European debt is low and on a downward trend.

    It seems these factors would merit some kind of commentary.

    in reply to: One Inch Below The Surface (America, You're Being Punked) #6732
    Viscount St. Albans

    Glutton: I’d like to order a cake for my birthday.

    Baker: I’d be happy to bake one, but you never paid for last year’s cake, or the one before that.

    Glutton: Details! Mix that batter before I get angry.

    Baker: I couldn’t even if I wanted to. There isn’t enough sugar left in the pantry.

    Glutton: Then make it with Splenda and tell me it’s sugar.

    Baker: Only if you promise not to burn down my store.

    Glutton: I’ll pretend to enjoy it and you pretend we’re even.

    Baker: Deal.

    in reply to: Obama Has Once Last Chance To Become A Great President #6724
    Viscount St. Albans

    Obama is expected to announce Jack Lew as Geithner’s replacement at Treasury Dept.

    Lew is a Citigroup man.

    From wikipedia: “In June 2006, Lew was named chief operating officer of Citigroup’s Alternative Investments unit, a proprietary trading group. The unit he oversaw invested in a hedge fund “that bet on the housing market to collapse”

    At least Lew knew how to place his housing bets correctly. Nominating a housing bull would be even more discouraging. I guess this puts Lew in the select few who saw the tidal wave forming and bought flood insurance on his neighbors’ beachfront condos.

    He’s a realist. But he clearly has lots of friends in high places on Wall Street. I guess we can close the book on the 2nd term.

    in reply to: Quote Of The Year. And The Next. #6693
    Viscount St. Albans

    The trouble with E. coli, rodents and reindeer: they never evolved the brains for loan sharks and street corner bruisers.

    Bless the bankers. If we’re lucky, 30% interest and busted-kneecaps will buy our species an extra generation.

    in reply to: Impotence, Leverage and Central Banking #6600
    Viscount St. Albans

    The Telegraph reports: Connecticut Shooter’s Mother was a Survivalist Preparing for Economic Collapse.

    [obvious editorial subtext]
    Now we see where all this incessant doomsday thinking leads. It’s time for the government to examine dark unfounded rumors of economic collapse propagating on the internet. Regulation is necessary. These dark visions are twisting the minds of citizens and their children.

    Question: Why are they reporting this in Britain? Economic Doomerism = Extremism = Violence. A useful message for control.

    in reply to: Is it time to write off Europe for the next decade? #6551
    Viscount St. Albans

    The more I look at the situation, the more I realize that
    illegal immigration is part of Lloyd Blankfein’s master plan.

    in reply to: NY Fed Mortgage Debt Data Says No US Recovery #6523
    Viscount St. Albans

    Money quote from articles linked below:
    “the resale marketplace for deficiency judgments is growing, with the debt being packaged, chopped up and sold to investors just like mortgages once were.”

    Question of the day:
    How many Insurance companies are investing in S&P rated triple-AAA debt built from sliced and diced mortgage deficiency judgements?

    Anyone looking for a job in this economy? Here is your growth industry.

    Article Bar Graph Analysis — where are the numbers?

    Sorry to beat a dead horse (see my comment above), but just in case:
    Looking at that bar graph, mortgage debt seems to start falling after Q3 2008. I wonder: How was that mortgage debt reduction calculated?
    If banks have 5 years post mortgage default to sue for deficiency (i.e. loss) then we really won’t know how much mortgage debt was eliminated until we factor in the number of banks that are allowing their right to sue to expire. Everyone who defaulted anytime after 3rd quarter 2008 is not out of the woods, debt-wise, until 3rd quater 2013. The same 5 year delay holds for everything else going forward. I just don’t see how the numbers underlying this graph were calculated.

    Given all the accounting shenanigans that have transpired since the financial crisis in ’08, I wouldn’t be surprised if many banks are counting mortgage losses as assets, based on their plan to sue for the deficiency. Thus, the mortgage losses aren’t even realized. The losses (unpaid debts) simply became bank assets that are sold to the street corner knee-capper/debt collector.

    When you view the issue from this perspective, the fall in mortgage rates and the enticement to refinance (along with the conversion of non-recourse to recourse loans) the whole issue takes on a much more sinister hue.

    in reply to: NY Fed Mortgage Debt Data Says No US Recovery #6508
    Viscount St. Albans

    Re: Mortgage Debt Reduction and Deficiency Judgements

    How much of that reduction in Household Mortgage debt is really an illusion? If a house is sold for less than the debt owed (through short-sale or foreclosure auction), then banks have 5 years to decide whether or not to sue homeowners for the loss (the deficiency). If the judge agrees with the bank, then homeowners, who think they’ve shucked off the ball-and-chain, will soon find the shackles re-applied through a deficiency judgement.

    Type the words “deficiency judgement” into google. You’ll see that this sneaky dog is beginning to snarl, bark-at, and bite the moms and pops who thought they’d moved-on to better days.

    Most homeowners don’t know that a deficiency judgment has been activated until the debt collectors begin to knock at the door and ring the phone. The provision to seek debt collection for the mortgage loss is often buried deep in the legal fine print of short sale and foreclosure documents, and banks or loan sharks who buy the distressed debt have 20 years to collect.

    in reply to: Optimism Bias, #6443
    Viscount St. Albans

    Delicious. May I have a second helping of this dish?

    Viscount St. Albans

    @ Stoneleigh

    Why risk it all?

    The crushing penury of the future will bring horrific recriminations from TPTB. Central authorities will look for scapegoats at all layers of society. Yelling fire in the crowded theater with a web megaphone will make you low hanging fruit for the coming blame game. Aren’t you putting everything you’ve worked so hard to build in Canada at risk?
    The web doesn’t forget. Do you ever think or worry about that?

    I hope this doesn’t sound like some kind of veiled threat on my part. It certainly isn’t meant to be one. It’s just a nagging question. Today’s civil society norms probably won’t survive in a world with a 90% collapse in real estate, commodity and stock markets.

    Viscount St. Albans

    Waiter: Good evening Madame. It’s so good to see you again. Our special this evening is a scrumptious juicy prime rib.

    Madame: Thank you, but no. You may recall that I’m a vegetarian.

    Waiter: Of course Madame, then surely you’ll want to try the Lamb.

    Madame: Well….You know, since I don’t eat meat, I think I’ll simply have the steamed asparagus.

    Waiter: Ah, Excellent choice Madame! And will you be having that with a side of pork loin or roast chicken?

    in reply to: US Hyperinflation Is A Myth #6098
    Viscount St. Albans

    @ JZ
    Mortgage Debt forgiveness is very much on track…..
    Ireland just proposed easing of bankruptcy laws and forcing banks to lower mortgage principal on overburdened households…..
    I expect mortgage principal forgiveness is in the cards in the US as well

    Of course, it’s all a bit circular, because your debts are my assets, so the Irish State Bad Bank will absorb the losses on Irish Mortgage reductions (just as FHA will absorb the losses in the US). So Irish folks will have lower mortgage principal payments but lose pensions etc. as the Irish Bad Bank sinks deeper into the peat bog. Same in US.

    in reply to: US Hyperinflation Is A Myth #6094
    Viscount St. Albans

    Then by that definition….

    We’ve been experiencing inflation (i.e. “inflationary mode”) since 2009?
    What’s the difference between inflation and an “inflationary mode” ? This language sounds dangerously close to cookie inflation.

    I thought it was an either or proposition. Deflation or inflation. You don’t do both at the same time. The rise in stock and commodity markets was due to temporary return to suspension of disbelief…..not an actual change in the dynamics of credit creation.

    The central banks were pissing into the wind of a larger hurricane force trend…..etc.

    in reply to: US Hyperinflation Is A Myth #6091
    Viscount St. Albans

    @ Stoneleigh.
    Can you define Reflation?

    We have been in a counter-trend reflation since 2009, and prices have risen as a result. They may continue to do so for a while after the reflation is clearly over

    I know what deflation is.
    I know what inflation is.
    No idea what reflation is.

    in reply to: US Hyperinflation Is A Myth #6069
    Viscount St. Albans

    The terror of the crowd.

    The first 30 seconds is all you need.

    The charisma has not yet arrived. But the train has left the station.

    in reply to: US Hyperinflation Is A Myth #6055
    Viscount St. Albans

    Feeling tense? There there, let out those tears. Feeling better? Good, Let me offer a you an oily rub along with a nip and tuck.

    This recovery will be long and slow. I know you’re still sore, but rest assured that you’re getting better.

    It’s really up to the media.
    You don’t change the subject during August vacations (see 2008).
    And you don’t change the subject during the run-up to a re-election.

    The power of mass media to guide public behavior has been stunning.
    Sumner R. works the lights, Rupert M. plays the music, and Barry D. paints your toenails. Now then, who’s ready for a bit of blackjack?

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