Like the illusion of Wall Street, with its vast and powerful investment banks, now shuttered, China too is an illusion perpetuated by the Globalists that gave us the 15,000 mile Caesar salad, poisoned cat food and lead based paint on babies' pacifiers. Like the illusion that money would come from thin air to always push housing prices higher, China has spent a generation pursuing its illusion. Pursuing an unattainable dream to be like the West, while 6000 years of its carefully shepherded top soil blows into the sea.
Posted: Thu Aug 14, 2008 9:56 am Post subject: Re: They're Picking up Fish; Tsunami Curling Over
Karl is also a deflationist. He's really good with his technicals but that's were it ends. His Macro understanding is pretty poor and his Geopolitical is non-existent (Basically the USA is the world)
Listen to what he says technically, but throw away everything else. Credit yields may skyrocket and securities may collapse, but how many of those securities can be bought/transferred/renegotiated through Fannie and Freddie? Well it use to be 50% of the market, and was just raised to 75%. When the Alt-A SHTF it'll be 100%.
There won't be a credit collapse because now there is always:
a GSE to extend credit
With an infinite line of Credit with the US Gov
Which can Create infinite amount of Treasuries
Which can be bought with infinite fresh bills from Ben's printing press.
Posted: Thu Aug 14, 2008 11:29 am Post subject: Re: They're Picking up Fish; Tsunami Curling Over
I've been a deflationist ever since I watched Money Masters 2 years ago.
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered." Thomas Jefferson, Letter 1802 to Secretary of the Treasury, Albert Gallatin
It makes sense if you're a banker: Expand the money supply with cheap money and loose loans. Get people in debt big-time. Then pull out the rug on the money supply. Voila! Everybody owes you (the banker) cash, and they'll have to liquidate to get it. Things become cheap. The bankers have all the cash, and they gobble up everything for pennies.
Meanwhile, competing banks (those who aren't in the loop) get caught off guard, and caught holding the hot potato. They go belly up. Now you have a monopoly on banking.
Another reason I think deflation is the next phase: Because everybody expects the opposite. Plus, maybe they have a deal with their Asian friends who are sitting on all that U.S. cash. ..."Don't dump dollars. We have a plan and we'll hook you up. Deflation is coming so those dollars will be worth more..."
you left out an important piece of my post with that quote Roc
FoxV wrote:
There won't be a credit collapse because now there is always a GSE to extend credit:
With an infinite line of Credit with the US Gov
Which can Create infinite amount of Treasuries
Which can be bought with infinite fresh bills from Ben's printing press.
Bond market is not part of the picture. Wouldn't that be inflationary? Damn Skippy it is. The Deflation argument is predicated by the US playing by the economic rules. Well the US has a long history of throwing out the rules when it doesn't suite them.
ultimately it just comes down to what will happen under each scenario
Inflation:
Insolvent homeowners can afford their homes
Reserve based banking system stays solvent
Government keeps its operations/wars funded
"Race to bottom" support by foreign CBs to keep their reserves healthy
Foreign influence over US Policy diminishes
Employment rises because of "Buy while you can" economics
Social unrest reduced by "gotta keep up" survival mode $60,000,000,000,000 Social security net stays intact $1,000,000,000,000,000 Derivative models stay intact
Deflation:
Massive amounts of homeless/squaters/disposesed
Reserve based banking system becomes insolvent
Government no longer able to fund wars/operations
Foreign CBs by up US assets on the cheap
US sovereignty greatly compromised (especially to Asia)
Employment falls because of "Wait to buy it cheaper" economics
Social unrest by idle and destitute population Social security gone Derivative models break
and I don't understand why you would say banks want deflation Polemic. Banks are not sitting on mountains of cash waiting to buy up hard assets. They're sitting on mountains of paper IOUs (bonds, equities, securities) both as assets and liabilities. In deflation all those things go down in value (price) and the cost to hold them goes up (yield).
There may be an argument to say that the banks can then loan out money at high yield, but to who. Nobody can afford their mortgage at 5% interest. Who's going to afford it at 20%?
And the banks wanting to own all the houses they have mortgages one has no precedent. Banks do not want to be landlords. That's why they're willing to take huge losses at auctions to get rid of properties. Especially if they are deflating in value. That just causes more losses.
Comparisons are often made between the 30's, 70's and now, but the US, and world, is a vastly different place. The entire world is fiat and the US is in its weakest position now than at any time in its history. The only asset it has left to maintain its supremacy is its Military. and guess what, WARS ARE INFLATIONARY.
Joined: Apr 27, 2007 Posts: 4351 Location: The Great Sonoran Desert
Posted: Thu Aug 14, 2008 2:21 pm Post subject: Re: They're Picking up Fish; Tsunami Curling Over
FoxV wrote:
you left out an important piece of my post with that quote Roc
FoxV wrote:
There won't be a credit collapse because now there is always a GSE to extend credit:
With an infinite line of Credit with the US Gov
Which can Create infinite amount of Treasuries
Which can be bought with infinite fresh bills from Ben's printing press.
Bond market is not part of the picture. Wouldn't that be inflationary? Damn Skippy it is. The Deflation argument is predicated by the US playing by the economic rules. Well the US has a long history of throwing out the rules when it doesn't suite them. -snip- As I said, all roads now lead to Weimer. sorry for the rant, put people are calling deflation while we're in the middle of 10% price inflation and 15% monetary inflation. Come on, get real. Stop reading Tickerforum and start reading Itulip
Well said and agree on all points. Next bubble - the privatization of war. _________________ "There must be a bogeyman; there always is, and it cannot be something as esoteric as "resource depletion." You can't go to war with that." Emersonbiggins
"... hope is a rotten-thighed whore" Niko Kazantzakis
Posted: Thu Aug 14, 2008 4:40 pm Post subject: Re: They're Picking up Fish; Tsunami Curling Over
Good article. Thanks for posting.
The next spokesperson, analyst or journalist who points to a write-down of debt securities by a few percent and mentions a "kitchen sink" or leaving the bad news "behind" or "out of the way", just take one of those charts and if the slope is not zero, smack them over the head with it. I mean how hard can it be for them to figure out that if the trend is still higher yield / lower price, it is not the end of the story? Oh wait, they probably know and are lying.
Real estate AAA should never have been priced anything like Treasuries. Being so close was a deliberate mis-pricing of risk we all appreciate now. Spreads nearly doubling, well yes, they need to soar higher in order to reflect the true risk. Though what that does to the value of the paper if you bought it at par when it was issued - ha. Good point about leverage there. More write-downs here we come. Also more liquidation of the good stuff to plug the holes this is going to open up in people who lose more than what they put down. This sort of thing has to be driving a lot of volatility.
How is holding this stuff to maturity working out anyway? Maybe I have not been paying attention, but I have not heard much hair-pulling over outright defaults? Do they just drop it into a non-performing assets bin and quietly contemplate opening the Pandora's Box of insurance?
Good thing I am not in debt, on the other hand that will not be any consolation if someone is stupid enough to try to bail out this stuff. _________________ Volatility. When life isn't exciting enough.
You cannot post new topics in this forum You cannot reply to topics in this forum You cannot edit your posts in this forum You cannot delete your posts in this forum You cannot vote in polls in this forum
News
Discussions
Resources
Members
Forum FAQ
Search
Usergroups
Profile
Log in to check your private messages
Log in
