I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Posted: Wed Mar 05, 2008 11:45 pm Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
Can only hope mainstream media puts out more these stories, since AP is now the only reality for most people. _________________ People first, then things, then dollars.
There will be enslavement, cannibalism, & zombie invasions.
Posted: Thu Mar 06, 2008 12:14 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
Wait, if banks are going to fail in the near future, should they at least not be rediculously profitable right now? Looking at the list of the top 10 banks in North America, all of them declared post-write-off profits in the multi-billions last year.
So, again; if banks are still profitable, how can they fail?
To put it another way, which company is most at risk: General Motors, or Toyota?
Posted: Thu Mar 06, 2008 12:59 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
Haven't watched TV since Comca$t broke $600/year. Amazing how Cramer's style of yelling and screaming has become normal & everyone still talks 3x faster than real life even though most of the airtime is informercials.
History will recall that 9-1-1 was the cause of the largest decline in the developed world. Everything else is humans doing what humans R programmed to do, printing money, monetizing debt, sacrificing free will.
Thinking about getting a 9' Steinway. U can never have enough pianos during a massive loss of confidence in money. _________________ People first, then things, then dollars.
There will be enslavement, cannibalism, & zombie invasions.
Posted: Thu Mar 06, 2008 1:16 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
LoneSnark wrote:
Wait, if banks are going to fail in the near future, should they at least not be rediculously profitable right now? Looking at the list of the top 10 banks in North America, all of them declared post-write-off profits in the multi-billions last year.
So, again; if banks are still profitable, how can they fail?
To put it another way, which company is most at risk: General Motors, or Toyota?
1. You could ask the Fed chairman, he has gone on the record saying that banks are expected to fail. Link
2. If you are just talking about the large banks, I guess you would have to ask the heads of large investment groups that see risk in Citibank?
3. Beyond that I guess we would have to look around at how everyone has been sleeping with everyone else's risk through the credit derivitive swap, something I do not even pretend to understand. But Buffett (not some liberal arts geek on the internet)called them a "mega risk" Link
Quote:
Some derivatives contracts, Mr Buffett says, appear to have been devised by "madmen".
He warns that derivatives can push companies onto a "spiral that can lead to a corporate meltdown", like the demise of the notorious hedge fund Long-Term Capital Management in 1998.
Large amounts of risk have become concentrated in the hands of relatively few derivatives dealers ... which can trigger serious systemic problems
Derivatives also pose a dangerous incentive for false accounting, Mr Buffett says.
The profits and losses from derivates deals are booked straight away, even though no actual money changes hand. In many cases the real costs hit companies only many years later.
So I guess we are facing a risk that can stand up and kill you with little warning.
Quote:
This can result in nasty accounting errors. Some of them spring from "honest" optimism. But others are the result of "huge-scale fraud", and Mr Buffett points to the US energy market, which relied for most of its deals on derivatives trading and resulted in the collapse of Enron.
Berkshire Hathaway, the investment group led by Mr Buffett, is pulling out of the market, closing down the derivatives trading subsidiary it bought as part of a huge reinsurance company a few years ago.
_________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
Posted: Thu Mar 06, 2008 4:22 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
I feel sorry for Americans. You really do have a crap financial media. _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Posted: Thu Mar 06, 2008 4:46 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
MrBill wrote:
I feel sorry for Americans. You really do have a crap financial media.
As an American who earnestly wants to know more, help me out here Mr. Bill. Point me in a direction?
I do find the American media deficient and have to go to the BBC or the English papers, is that what you are referring to?
Sorry, i just have a hard time handling raw observations without the context to let me know what to do with them _________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
Posted: Thu Mar 06, 2008 6:39 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
I usually watch Bloomberg TV, which is nominally a US company, but I really notice a change in coverage as the time zones revolve. I get German Bloomberg all day, but the English coverage starts in Asia and the UK and then switches to America about midday.
As someone noticed here, the US reporters seem to talk about three times as quickly, and there is this sense of urgency in their voices like they are pumping shares? They cheer rallies and seem to be genuinely in disbelief as in something is wrong when markets fall? Just an observation.
I get CNN and CNBC, too, but I never watch them. The coverage is too poor. Shallow. Too many commercials. Business Week, Forbes and News Week are just The Economist-lite version of news and politics. I prefer the FT to the WSJ. Most of my hard news I get directly from Bloomberg or Reuters. Mostly, I watch the news in German. NTV. They do good coverage. Obviously not an option for anyone that does not have the right satelite.
The International Herald Tribune is good. I read the BBC online. Of course, The Onion is the only true source of news about America that I trust! ; - ) _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Joined: Feb 01, 2006 Posts: 502 Location: Northern US
Posted: Thu Mar 06, 2008 7:14 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
MrBill: On the topic of 'news' papers, what is your take on the IBD (Investors Business Daily)? _________________ "...the problem is today we have unknown unknowns."
Dominique Strauss-Kahn; IMF chief
Posted: Thu Mar 06, 2008 7:37 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
Mr. bill,
I have to agree. We live with out a TV so I find that the best news source is Bloomberg and BBC but get most of my information via newspaper websites. I would love to access to more but for a clog in the health care services machine, I do ok.
It is funny that you should mention how fast they talk on Bloomberg since I will sometime flip to CNBC and am bothered by how fast they talk compared to American Bloomberg. _________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
Posted: Thu Mar 06, 2008 8:05 am Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
topcat wrote:
MrBill: On the topic of 'news' papers, what is your take on the IBD (Investors Business Daily)?
Sorry I am not familiar with it at all? I will have to take a look at it. I also read MarketWatch and a few other websites. They're not always good, but you never know where you will get a good idea from. I like Brad Setser at RGE Monitor. And quite often I will check-out what is on The Capital Spectator. Canadian news at CTV.ca. Plus I get a lot of research direct from the investment banks. Some of which I repost here if it is not too long and is of interest. I am probably a borderline copy right violator! But I always give my source, so its like free advertising! ; - )
Quote:
The Big Pullback
What makes this credit crunch more severe than the one following the dot-com bubble is the dramatic turnabout from the days of easy-to-access credit. Prior to 2001, banks had been in credit-tightening mode for 9 straight quarters. Banks then pulled back drastically the next 10 quarters. But prior to 2008, banks had been easing or remaining neutral on commercial and industrial loan underwriting for almost four years. That suggests corporations have a lot of sweating to do before the credit markets find some kind of historical equilibrium. Indeed, more than 83 percent of bankers expect the quality of business and commercial real estate loans to weaken in the months ahead, according to the Fed.
Here is some well-deserved criticism of the Fed, and their obsession with core inflation excluding food and energy, which surprise, surprise are no longer simply volatile components that can be ignored, but are a critical part of real inflation as they trend higher versus fluctuating up and down.
Quote:
Federal Reserve policy makers cannot overlook rising oil and food prices and are wrong to dismiss a widely followed indicator of inflation expectations, Bear Stearns Cos. economists say.
``When is the Fed going to recognize that trends in energy and food prices, in part, have a U.S. monetary policy component?'' John Ryding, chief U.S. economist with Bear Stearns in New York, writes in a March 4 commentary. He describes as ``Core Craziness'' the Fed's focus on so-called ``core'' inflation, minus food and energy.
Ryding, writing with colleagues Conrad DeQuadros and Meghna Mittal, takes particular issue with comments made by Governor Frederic S. Mishkin yesterday concerning the recent rise in one indicator of inflation expectations, the five-year, five-year forward implied inflation breakeven.
Speaking before the National Association for Business Economics yesterday in Arlington, Virginia, Mishkin said: ``Does this rise in forward inflation compensation indicate that long- run inflation expectations have risen by a similar amount? My best guess is that much of the rise in inflation compensation reflects other factors.''
Ryding disagrees.
The chart of the day shows the five-year, five-year forward breakeven inflation rate as constructed by economists Refet S. Gurkaynak, Brian Sack and Jonathan H. Wright. The series shows the difference between nominal and inflation-indexed yields of the five-year forward rate, five-years from now. Note the persistent rise in inflation expectations, and the abrupt surge beginning early this year.
`Troubling' Indicator
``In dismissing what is perceived as an important and potentially troubling inflation indicator, the Fed could lose the bank end of the treasury yield curve and actually push the long-term yields higher -- thus raising mortgage rates,'' writes Ryding.
In his speech, Mishkin said he expects ``inflation pressures to wane over the next few years, as product and labor markets soften and the rise in food and energy prices abates.'' He forecasts core inflation will ``move back to around 2 percent'' from the current 2.3 percent.
Source: March 5 (Bloomberg)
Many posters here have been saying as much for years! ; - ) _________________ The organized state is a wonderful invention whereby everyone can live at someone else's expense.
Joined: May 27, 2007 Posts: 1719 Location: The Post Peak Oil Historian
Posted: Tue Mar 18, 2008 7:15 pm Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
New Accounting Rules Hasten the End
Many on Wall Street are complaining about Mark-to-Market, but no one is talking about what the problem actually is. The problem is new accountancy rules which took effect this year that will force companies to mark their assets in line with reality.
The new accounting rules force companies to mark-to-market and keep on their books all those derivitives. They also make the accountancy that signs off on those books financially reponsible for the accuracy of those books. This is a very profound accounting rule change that has taken effect 1st quarter this yr. These companies are about to report 1st quarter.
The Fed massively created money out of thin air to halt the collapse of the entire financial system this weekend, triggered by Bear Stearns. It didn't solve anything. It mearly postponed the collapse for a brief while longer, and gave the frantic denialist an opportunity mindlessly rally today, and an opportunity for some late players to get out.
The Fed cut interest rates 75 basis points today, the anticipation of which sparked the mindless rally. Already, the treasury auctions are failing because foreign investors are not willing to purchase anymore US debt. This cut will just accelerate the dumping of US Dollars and ensures no one will be loaning the US any more money. This is forcing the Fed to monetize debt internally, the equivalent of frantically printing money.
We are so far down the path to a Wiemar type hyperinflation, there is no way to avoid it. As a matter of fact, it is already happening. Notice the massive rise in commodity prices?
Joined: Sep 29, 2005 Posts: 456 Location: I heard we are not the real America..Eugene, Oregon.
Posted: Tue Mar 18, 2008 7:36 pm Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
I'm just happy that some people on the idiot box are actually admitting to and spouting that we're Fark.
TV sucks in general but it's something the masses seem to understand.
Posted: Tue Mar 18, 2008 8:01 pm Post subject: Re: CNN Discusses Inflationary Depression With Bank Failures
LoneSnark wrote:
...
So, again; if banks are still profitable, how can they fail?
...
Whoever said banks were failing? I keep on telling people banks are too "smart" to fail. It's just you and I who aren't smart enough. They have a backup plan to unload their losses and it's called the taxpayers!
I agree with you, it must be very profitable to be able to dump a bag of crap onto someone else when things get bad.
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