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IS the US in Recession and whos fault is that?

  • #21
  • Mar 14, 2008 11:38am Mar 14, 2008 11:38am
I have an even better idea:

When one of these funds go under because of really crappy and possibly unethical "bets", we should lock those traders and their bosses in a room with the customers they just ruined.

No SEC, no Fed intervention, no police, it would only have to happen once or twice.

Dark justice is the only true justice sometimes.



Quoting drummer486
It's really hard to say what's best overall. The Darwinian in me says that institutions that manage money improperly SHOULD go under. This has been happening with hedge funds lately what with margin calls etc. The way I see it, banks are essentially trading on margin as well - their customers' funds. The Great Depression was essentially one big customer-driven margin call, with depositors withdrawing their funds (the banks' margin), thus forcing the banks to liquidate their investments, thus depressing market prices, etc. Let those who have bad risk-management go under, and the economy should be better off in the future. Surely I'm no Economic Ph.D., but that's just how it seems to me.

On the other hand, extinction and depression are common in natural population cycles. In some of my engineering courses, we used differential equations to simulate these predictable cycles. These systems can have different degrees of what engineers call damping - the reduction of natural fluctuations. Essentially, the purpose of the Fed is to apply damping to our economic system in order to decrease fluctuations. We are thus relying on the Fed to apply this power appropriately. Hopefully they got As in their diffeq classes... otherwise, America might be steaming full-on into stagflation.
  • #22
  • Mar 14, 2008 6:41pm Mar 14, 2008 6:41pm
Just The End of Your Way of Life?

I haven't written anything for public consumption in a while, because I've been busy living in what I like to call, "the real world" and making my living by trading my own money. That's what I do these days. I'm a fly on the wall with electronic access to the dens of thieves.
If I come out on top then I transfer those digits for things I need.
Yes I'm still long gold from $290, and crude from $60 but whatever, I've been doing ok. I've been doing ok that is, if the money I have was worth what it used to be, but it isn't. So rather than just slap a label on what it is when words have already arguably lost their meaning, let's discuss it.
I am personally more concerned about quality of life issues than I am about money given the current circumstances.
The last time when I wrote publicly, I was talking about the decline of the empire and the end of the pre eminence of the US dollar...war, that sort of thing.
So that's what's going on now, what I was talking about then.
The US is currently in what I like to call a period of "decay". It is in a period of decay in every possible way. If you live in the real world like I do, it is evident. If you consume a diet of the corporate media cheerleading squad, then you don't live in the real world and it could be difficult for us to communicate during the rest of this essay. We've got people charged with cleaning up the corrupt broken system going out with an $80,000 hooker bill and being replaced by a blind man. The current El Presidente is a wind-up doll for a bunch that should all be in orange jumpsuits. It would be comical if it weren't so sad to watch it all go down. It is a modern day tragedy being played out in real time in the context of a giant government/corporate media theatre production.
It's amazing to me how people who are into politics or religion or whatever will violently oppose some opinions, when people simply report the facts they see around them. Anyway, again... another subject. Politics and religion are both the same thing. They are both simply effective methods to control large masses of people. I just figured that one out not too long ago when I was into my learning the history of the world project. It has always been that way and always will be.
So anyway, that's all I do to make my living. I assimilate the facts I see around me and invest accordingly. I keep a diary of what I think and why, and I even publish it. If I'm right I make money and if I'm wrong I lose money. I like it that way. It keeps me honest.
That's one reason I don't write a lot publicly these days. It is becoming increasingly difficult for people who live in the real world to communicate with those who don't, and there is an increasing number of those who don't just simply because most people believe what they are told and the lies they are being told are now monumental. Astronomical in size. That's one of those universal rules about human beings; the majority will always go along with whatever you tell them. That's just the way it always has been and always will be. All good propagandists know that.
For those who do think for themselves and live in the real world however, everything that is happening today has been entirely predictable and even expected. I mean, the corporate media will say "no one ever saw this" or "they never saw that" and really the case is they just choose not to have those people appear. That's a whole subject in itself however.
I was noting to my subscribers the other evening that if you take a look at a picture of a pump price for gas from ten years ago until now, that's around an 18% increase annualized every year for ten years. All the other prices in the real world have risen at commensurate levels like healthcare and all the big items people like me in the real world need to spend money on.
Furthermore, if you plot energy in the last five years, the numbers are bigger. If you plot the last two the numbers are bigger yet. The last one, bigger yet. So what we have here in the real world are prices accelerating at an ever-increasing double-digit rate. Call that what you want. We have real wages basically constant and good jobs are harder to come by. We have a middle class that is going away. We have the majority of the citizens having their wealth, if they still have any, confiscated due to the ravages of inflation, or with toxic financial contact with the healthcare/pharma, legal or government money machines. So in the "not real world" big brother and his corporate media outlets wants you to believe that there really hasn't been much inflation or any significant changes to the status quoand that lie is so big that you may even believe it.
So if you do, then you don't live in the real world and we cannot communicate effectively because what you think you know is the product of a corporate boardroom. What I know is the product of living.
The other big thing that has happened since I last wrote is that the guys on Wall Street figured out how to loan a bunch of money to people that had no ability or even real desire to repay that money except for the fact that house prices were sure to go ever higher which is the definition of a mania. So working through a little bit of that math, with an estimated 30% of homeowners currently upside down on their mortgages, that works out to around ten trillion dollars of real estate still to be walked away from according to simple math and a few basic assumptions I worked out the other night.
In the "not real world" they have told you from the outset that first there was no real estate bubble, then that there might have been one, then that it would be over quickly and now they aren't sure when it will be over and the PR firms are busy working on what to tell you next.
It's not going to be over any time soon. The big question in my mind is whether the whole thing is about to go kaput or if we are just going to witness a continuous decay as the wealth shifts into a very small percentage of the population... as the middle class flames out. Again, that is a subject in itself. That is the subject of the Straussian nightmare; a change in the form of government that is pitched as the same thing as the old government.
So on top of this Wall Street genius of loaning money to people who could not pay, you have the cure for all this mess being printing more money (creating more debt). So they're going to fix a problem of too much debt by creating more debt. Perfect. They're even monetizing it by taking nearly worthless debt for brand new money created with the push of a button and an organized media campaign to tell you what they did and why it was good and why it was not monetization or covert nationalization of the banking system. It is what it is, call it what you want.
So the idea is that by pushing buttons you can cure these ills, but the reality is that big pile of new money is diluting the old money and sending the US dollar into the toilet. I mean, they're pitching it as all good, and what's left of the free markets are in sharp disagreement with the party line.
Now; the only reason the USA has gotten away with the idea that this balance sheet was compatible with the idea of being the world's reserve currency was that the USA was the global kingpin, the Mac daddy... until the empire did what all empires do and that's get too big for their britches.
Then they always start going off expanding the empire into places that are too expensive to maintain, imposing their will on people who don't want their will imposed on, and then that all gets so expensive and they start making so many enemies they start going bankrupt. That's what always happens. It always does. That's probably another one of those human nature things.
So in the real world right now, we have a situation where the banks are bankrupt, the government is bankrupt, the people are bankrupt, and the cure for this is to lower interest rates and create more money (debt) by pushing a button... diluting the value of the money further and causing everything we have going on now. It all makes sense here in the real world. All the pieces to the puzzle fit and none don't.
So is this stagflation or is this hyperinflation? Well, I'm not carrying a wheelbarrow around with my money in it yet, but I do know the prices and costs of everything I need to live are going up at an ever-increasing rate.
The shape of that curve is a polynomial consistent with ever accelerating inflation which some would call hyperinflation. I know that if I earn a 20% return, then I might be keeping up with the increase in the costs of everything I need to maintain my personal status quo. If you can balance a checkbook and multiply, then you know. If you are one of the ones who believe everything you're told, then you have to not believe your lying eyes or not be able to balance a checkbook.
When the cure for all problems can only be to lower interest rates and dilute the supply of the money by creating more money, then that is a vicious cycle consistent with acceleration or hyperinflation.
I really don't like it when people casually compare what is going on right now to 1929, because in 1929 the cure was basically to spend less and now the cure is basically to spend more. Even worse, being the geniuses we are, we figured out a way to amplify spending, called derivatives. They're based on the real thing but amplifiedlike 100 times. So we've already been doing the "cure" for so long that maybe the patient is no longer responding?
So what we are currently seeing, in both gold and crude oil is a loss of confidence. It's a loss of confidence that this whole thing makes any sense.
It's a loss of confidence in the absurd idea that you can create wealth by pushing a button. Since this whole thing now relies solely on confidence and not any intrinsic value, commodities, especially gold and crude oil, are acting as alternative wealth storage devices to paper currency.
If you have a bushel of corn, then you know what that is. You can eat it, or do a bunch of other stuff with it. With a piece of paper with a picture and official looking numbers on it, well you aren't as sure as you were yesterday what you can do with that. There will be no run on the banks this time around, because the banks can always be refilled with ever more worthless money. Instead of a run on the banks, there will be a run on the dollar. A run on the dollar (or run into commodities) is the modern equivalent to a run on the banks back then, for the reasons I'll get into shortly.
So there is a loss of confidence roughly equal to people's confidence in the government and the banking system. This decreased confidence is fueled by the fact that they are creating too much money. The idea with fiat money is that you only grow the amount of it as the total output of the economy increases otherwise you are diluting it. The thought experiment for that goes like this. You have one giant pile of stuff, and one giant pile of money. Right now there is enough money so that one-dollar gets one pound of stuff. Now, if you double the amount of that money, then it takes two dollars to equal one pound of that stuff. Unless the pound of stuff doubles in size, you have just caused 100% price inflation. So, operations like just zapping a half a trillion or so into existence out of thin air means just a bigger pile of money going after the same amount of stuff. So that's what we have going on now. These are financial engineering acts of desperation to save a system by giving it more of what got it to this point in the first place... debt. So when regular people like me think about that, they think, that doesn't make any sense, and they lose confidence.
That's in the real world. On TV things are still good though. So if you don't like what you're reading here, then go turn on the TV. You'll feel better.
I hate to simplify things too much, but this is the reason Mr. Greenspan called gold the conscience of the central bankers back in the 60's before he lost his mind or whatever happened. Maybe he couldn't resist the power of the ring or something... I don't know. Anyway, it's their conscience because they can't just zap gold into existence with the stroke of a pen.
Guess what? They can zap money into existence now. Poof - you've got money.
Any amount you want. That's why this is fundamentally different from the great depression. This time, they can just increase the giant pile of money. they can just drop it out of helicopters if they have to. They even said so... and it isn't going to buy as much stuff. It doesn't already.
So you still have the same basic problem from a human standpoint. That's the really interesting thing. In other words, whether you have a deflation like in the 30's or an inflation like now, the people suffer similar effects. It's hard to find a job, you can't make ends meet, city and government functions and services are understaffed and underfunded, and you are hungry. They are both a state of decay. Both usually end in war too.
The last one did. This one is different however in a lot of ways... and it's much more serious. It is fundamentally different because it is the end of the world's first experiment in government by the people and it has been replaced by something new.
So if you're into labels, then maybe you can find a label for what to call this. I like to quote Lenin on that:

"Fascism is capitalism in decay." -Vladimir Lenin
So I really don't want to get into all that implies in a short essay, but I will condense it all and say the US is in a state of decay. Political, socioeconomic, leadership, influence, status, any label you can think of.
The US is losing power and influence in the world, and it only has 5% of the world's populationand they're all bankrupt. I like to think of it like a continuum from the US coming out on top after WWII to a banana republic run by El Presidente. That's what I call them now, whoever he or she is, El Presidente because that's what they are. A corporate spokesman who is put there, bought and paid for by Acme corp.
The country has lost its way and is increasingly operating at the whim of the corporate lobbyists and special interests that own the politicians as the stench of it all starts to smell so foul that even the corporate media disinformation campaign can't convince your lying eyes. It is not what it appears to be. It is Rome circa 400's. It has already bankrupted itself policing an unsustainably large global empire. You have to live through the decline.
So that all gets into people living in the real world versus those who are not. Again, it's safe to say that the world is voting with its dollars... and the 5% of the world's population are going down hard on 95% leverage. They aren't going to like it either.
Tune in next time to hear which states secede first.

Mar 14, 2008
Craig Harris
Check Mate GAME OVER
  • #23
  • Mar 14, 2008 6:58pm Mar 14, 2008 6:58pm
Yep, I agree with what Craig has written... This Sh** is just getting started.
Check Mate GAME OVER
  • #24
  • Mar 14, 2008 6:58pm Mar 14, 2008 6:58pm
Martin nods and says "aight" to R-Word

http://www.bloomberg.com/apps/news?p...07c&refer=home
Trust price. Know yourself.
  • #25
  • Mar 14, 2008 7:03pm Mar 14, 2008 7:03pm
Just like my rants have been... They think the solution is by dropping rates and printing more cash... It makes my laugh!!!

I better go buy some more 7.62MM rounds for my M-60 Machine gun.
Check Mate GAME OVER
  • #26
  • Mar 14, 2008 7:10pm Mar 14, 2008 7:10pm
What does he mean "as the wealth shifts into a very small percentage of the population".

The upper 1-2% have held most of any/all money since almost forever. There's nothing worth mentioning left to shift. In relative terms of top vs bottom the lever is gigantic; within the lower realms the abyss that opens at a certain threshold which leads to a cascade of unaffordability is a bit bigger in %s, but not that big in net income difference.

Everyhing is about triggers and dominos..

But saying that there's really any wealth left to shift or concentrate..mh..missed the last 30+ years, that chap.
Trust price. Know yourself.
  • #27
  • Mar 14, 2008 8:00pm Mar 14, 2008 8:00pm
I wholeheartedly agree with that article.

Where we end up in the short term remains to be seen. He may be right there too, but long term he's hit the nail right on the head.

Isn't it fantastic that the common people get a sense for all this quicker than governments give them credit for?

We all know how much more we are paying for things in relation to our earning capacity. It's on the nose.

Not a puppetted corpse yet, but the smell's making us feel crook now.
Bundy's status today: "Waiting..."
  • #28
  • Mar 17, 2008 7:38am Mar 17, 2008 7:38am
Quoting SeekingLight
What does he mean "as the wealth shifts into a very small percentage of the population".

The upper 1-2% have held most of any/all money since almost forever. There's nothing worth mentioning left to shift. In relative terms of top vs bottom the lever is gigantic; within the lower realms the abyss that opens at a certain threshold which leads to a cascade of unaffordability is a bit bigger in %s, but not that big in net income difference.

Everyhing is about triggers and dominos..

But saying that there's really any wealth left to shift or concentrate..mh..missed the last 30+ years, that chap.
Well I guess the latest example is with Bear Sterns... Some people lost billions or millions. Here we go!!
Check Mate GAME OVER
  • #29
  • Mar 17, 2008 10:04am Mar 17, 2008 10:04am
Quoting SeekingLight
What does he mean "as the wealth shifts into a very small percentage of the population".

The upper 1-2% have held most of any/all money since almost forever. There's nothing worth mentioning left to shift. In relative terms of top vs bottom the lever is gigantic; within the lower realms the abyss that opens at a certain threshold which leads to a cascade of unaffordability is a bit bigger in %s, but not that big in net income difference.

Everyhing is about triggers and dominos..

But saying that there's really any wealth left to shift or concentrate..mh..missed the last 30+ years, that chap.
It's kinda like we (not royalty) are the cattle. We're working, sweating, and producing products and services in exchange for money, all with the dream of someday "getting ahead".

They, (royalty - the ruling class and the rich) keep coming up with new ways to take it from us. Bankers got richer, people lost their homes, banks go broke, government bails out banks (with money they collect from us or borrow from .... uh... the bank.... then we pay the interest...).

So the game doesn't end just because they have most of the money. It's about power and control. We're stuck on the treadmill, right where they want us, while their game is to keep us from ever "getting ahead".
  • #30
  • Mar 17, 2008 10:06am Mar 17, 2008 10:06am
How long can it continue?

If the workers are producing goods in exchange for money, fine. But you have these people taking all the money without producing goods -- there's an exchange problem. More money, no goods = inflation.

How has our economy sustained for this long with the government taking almost all the money? Think about it, every time a dollar changes hands and someone gets paid, the government gets a third. By the time it's changed hands 3 or 4 times, the government has 70 - 80% of it.
  • #31
  • Mar 17, 2008 10:54am Mar 17, 2008 10:54am
Quoting bunton
...................
Tune in next time to hear which states secede first.

Mar 14, 2008
Craig Harris
He must be some really important guy I must have never heard about, huh?
  • #32
  • Mar 17, 2008 2:29pm Mar 17, 2008 2:29pm
One question

Why did Bernanke hike rates to 5.25% and then go for drastic and emergency rate cuts.

Why did he not just keep it constant at 3% all along and let the economy grow on its own.
  • #33
  • Mar 17, 2008 2:54pm Mar 17, 2008 2:54pm
Quoting SunTrader
He must be some really important guy I must have never heard about, huh?
Well I don't know the guy, but he just talks sense. Or has a different perspective that most find it hard to believe (mainly the highly educated types). Amazing how some have had this shit all mapped out and yet it was shunned in public eye as being way out in left field. Well believe all is well if you wish.
Check Mate GAME OVER
  • #34
  • Mar 17, 2008 3:04pm Mar 17, 2008 3:04pm
Anybody get the home owners insurance renewal letter? Mine looks just awesome add another 1000 per year on top on the other shit... You can not tell me your better off then you were 5 years ago.

How about those who work a JOB (just over broke), what was your increase in pay?

Pretty soon folks will realize that the husband and wife working does not cut it and will farm out the kids to help bring in money.

LIVING THE AMERICAN DREAM
Check Mate GAME OVER
  • #35
  • Mar 17, 2008 3:24pm Mar 17, 2008 3:24pm
Quoting bunton
Anybody get the home owners insurance renewal letter? Mine looks just awesome add another 1000 per year on top on the other shit... You can not tell me your better off then you were 5 years ago.

How about those who work a JOB (just over broke), what was your increase in pay?

Pretty soon folks will realize that the husband and wife working does not cut it and will farm out the kids to help bring in money.

LIVING THE AMERICAN DREAM
remember the movie "problem child" and how he helps the girls selling lemonade for $2
  • #36
  • Mar 17, 2008 8:18pm Mar 17, 2008 8:18pm
Living the American dream means living over their heads. But I guess that is the fault of Wall Street and the Credit Card Companies. They made everyone buy the extra goodies and a bigger house then they could really afford.

It is some kind of commie plot, I tell ya!!!

Meanwhile more billionaires reside in Moscow than New York.
  • #37
  • Mar 17, 2008 8:45pm Mar 17, 2008 8:45pm
I know it is recession at my house... !!! And my 7 year old is out looking for a job... !!

Quoting bunton
Anybody get the home owners insurance renewal letter? Mine looks just awesome add another 1000 per year on top on the other shit... You can not tell me your better off then you were 5 years ago.

How about those who work a JOB (just over broke), what was your increase in pay?

Pretty soon folks will realize that the husband and wife working does not cut it and will farm out the kids to help bring in money.

LIVING THE AMERICAN DREAM
  • #38
  • Mar 17, 2008 9:15pm Mar 17, 2008 9:15pm
Quoting SunTrader
Living the American dream means living over their heads. But I guess that is the fault of Wall Street and the Credit Card Companies. They made everyone buy the extra goodies and a bigger house then they could really afford.

It is some kind of commie plot, I tell ya!!!

Meanwhile more billionaires reside in Moscow than New York.
Yea I herd about the big "B's" in Moscow. Hey check out that Cramer clip on bear sterns... Man he must feel like digging a hole.

Here the link: http://www.forexfactory.com/showpost...&postcount=337
Check Mate GAME OVER
  • #39
  • Mar 17, 2008 9:27pm Mar 17, 2008 9:27pm
Alright I think I've done enough pollution regarding my bearish tones. I'll chill out from my dark views and look for the positives...

Let me see.........uuummm I flipped out at the pumps today as I gladly paid 4.20 for 1 gallon of high grade diesel fuel..hehehehe


Really I'll chilling!
Check Mate GAME OVER
  • #40
  • Mar 17, 2008 10:19pm Mar 17, 2008 10:19pm
Quoting bunton
Yea I herd about the big "B's" in Moscow. Hey check out that Cramer clip on bear sterns... Man he must feel like digging a hole.

Here the link: http://www.forexfactory.com/showpost...&postcount=337
Do I have to?

He is not my favorite, not to mention most of what passes for business news on that channel.
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