STOCK MARKET WATCH, Tuesday June 16

[ozymandius]

Source: du

STOCK MARKET WATCH, Tuesday June 16, 2009

Bush Administration Officials Under Indictment = 2
Financial Sector Officials Under Indictment = 0
Financial Sector Officials In Prison = 2

AT THE CLOSING BELL ON June 15, 2009

Dow... 8,612.13 -187.13 (-2.17%)
Nasdaq... 1,816.38 UNCH (UNCH)
S&P 500... 923.72 -22.49 (-2.38%)
Gold future... 927.50 -13.20 (-1.40%)
10-Yr Bond... 3.71 -0.08 (-2.19%)
30-Year Bond 4.56 -0.09 (-1.94%)

---

U.S. FUTURES & MARKETS INDICATORS
NASDAQ FUTURES..............................................S&P FUTURES

Market Conditions During Trading Hours

GOLD, EURO, YEN, Loonie and Silver

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---

This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.

Read more: du

[hamerfan]

1. Morning, Ozy!

Here's hoping for a good day for everyone. I'm off to work shortly....
hamerfan

[ozymandius]

2. G'morning hamerfan and everyone.

:donut: :donut: :donut:

Thank you for dropping by and I hope you have an easy day.

:hi:

[ozymandius]

3. Market Observation

Globalism or Localism
A Peek at Financial Ecosystems
BY ROB KIRBY

World Trade, free trade, regional currency blocs, global warming, G-8, G-20, New World Order, carbon taxes, Central Banking and Debt Based Money Systems, expanded roles for the World Bank and I. M. F. – collectively, these are all factors – or components of a financial eco-system - which have contributed to our current deteriorating, global economic circumstances.

There are those who would suggest that our deteriorating global economy has in fact been purposely engineered, and the true intent is to usher in One World Government and One World Currency as a “solution” to the problems that have purposefully been created. Under any circumstance one would be hard pressed to find anyone who believes that responsible financial stewardship has been exercised by leadership, and the irrespective whether there is a conspiracy or cabal operating in the dark shadows or not.

.....

Speaking of “black boxes,” we need look no further than the insanity and grotesqueness of derivatives markets – swelling in size into the hundreds of TRILLIONS in notional oustanding – with NO discernable end users and virtually NO-ONE asking HOW or WHY that could or should be.

.....

Conclusions

As Catherine Austin Fitts advocates, it is time for a grass-roots bottom-up approach wherein individuals become re-empowered, as it is evident that the top-down approach has serious flaws. The key reasons for this are as follows:

* The top down approach, as its legacy, has bestowed upon us a system of false weights and measurements. Derivatives which artificially set prices and falsified economic reporting leading to imprudent asset allocation. This trivializes effort.

* False measurements have led to the mis-pricing of capital, which has also led to the squandering of finite resources necessary for national salvation and the perpetuation of mankind.

http://www.financialsense.com/Market/wrapup.htm

[DemReadingDU]

17. Catherine Austin Fitts has a blog

blog
http://solari.com/blog/


from 6/13/09
The Missing Money

Wayne Gretzky once said, when asked the secret of his success at ice hockey, “I skate to where the puck will be.”

It is for the same reason I keep bringing up the issue of money missing from the US federal government and the possibility that collateral fraud and counterfeiting of US government and agency securities were instrumental in facilitating the transfers.

If we simply accept as a given books and records that are not reliable when there is significant evidence that vast sums have been stolen or transferred illegally, we will find ourselves being controlled and bought with the very money stolen from us.

We will endure the ultimate leveraged buyout in the history of our civilization.

This one financial issue will be an important determining factor as to whether our children and grandchildren will live as free men and women or not.

But it is too late, say some, as the money is gone. Actually, it is not too late to recapture funds. If liabilities were illegally or fraudulently originated, we may not be liable for them. In addition, if we are still interacting with liable parties with assets, we can create rights of set-aside for those responsible.

I am inspired by the story last week of the Italian seizure of billions in US bonds from two Japanese crossing the border into Switzerland . Max Keiser Comments

Do you think it is impossible for billions, if not trillions, of counterfeit or unrecorded sovereign and agency bonds to be issued and floating around the world?

Think again…
http://solari.com/blog/?p=3208

Edit: Be sure to read the comments!!!

[Demeter]

24. why Counterfeit Anything, When the Congress inYour Pocket Will Legally Bribe You?

There's no need to commit a crime.

[DemReadingDU]

27. I liked what someone said in the comments on Fitts blog

The bonds were $134.5 billion, the amount of remaining TARP is $134.5 billion.

What a coincidence, eh? Maybe that $134.5 billion left in the TARP fund
is the *same* $134.5 billion that two “Japanese” tried to smuggle into
Switzerland last week? Maybe the Feds are trying to smuggle their *own*
money out of the country and into Switzerland, because they know the
whole American financial system is headed for the toilet at warp speed?
http://solari.com/blog/?p=3208#comment-91734

[natrat]

37. i just assumed geitner was bribing the russians and japanese to support the dollar

[Demeter]

42. Extortion Is More the Goldman-Sachs Style

Mafiosi to the core.

[Demeter]

34. That Was an Amazing Column

I'm glad I read the whole thing. Poor Ms. Fitts.

[Joe Chi Minh]

66. Good morrow, both. These crazy, "Good morning" greetings to each other,

make these threads much more personal, drole and vibrant than other threads, however interesting the latter may be otherwise. And I suspect there's a kind of frisson of commingled horror and schadenfreud at what omens the day may hold. Time enough to grieve when the other shoe falls.

Understanding so much more of what's been going on than the rest of us, I expect you pull the covers over your head when you hit the pit, and only slowly peer through your fingers when you wake up. Good night all! On with the motley, tomorrow!

[sarcasmo]

69. I agree that the Derivatives market needs to be investigated, but I will take it one step further

and say the derivatives market needs to be erased.

[DemReadingDU]

70. Eventually, the derivatives bubble will burst

According to the Bank for International Settlements, the total outstanding derivatives notional amount is $684 trillion (as of June 2008)<2> with a gross market value of $20 trillion.
http://tinyurl.com/ykt7q5

I have read estimates that the derivatives market, globally, now could be 800 trillion to 1200 trillion, that's 1.2 quadrillion!

To put these large numbers into perspective, the world GDP is 60 trillion and the GDP of the United States is 14 trillion.
http://tinyurl.com/y2pn7u

According to CNN's bailout tracker, the United States has committed over $10 trillion of our taxpayer money for bailouts. While this is a huge amount to keep our economy, it is not enough to keep the derivative markets from eventually bursting.
http://tinyurl.com/cncuyf

[ozymandius]

4. Today's Reports

08:30 Housing Starts May
Briefing.com 485K
Consensus 485K
Prior 458K

08:30 Building Permits May
Briefing.com 500K
Consensus 508K
Prior 498K

08:30 PPI May
Briefing.com 0.5%
Consensus 0.6%
Prior 0.3%

08:30 Core PPI May
Briefing.com 0.1%
Consensus 0.1%
Prior 0.1%

09:15 Capacity Utilization May
Briefing.com 68.4%
Consensus 68.4%
Prior 69.1%

09:15 Industrial Production May
Briefing.com -0.7%
Consensus -1.0%
Prior -0.5%

http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm

[UpInArms]

30. 8:30 reports - all over the board - check the rev's and y-o-y numbers

U.S. May housing starts jump 17.2% to 532,000 rate
8:30am Today

U.S. May building permits rise 4% to 518,000 rate
8:30am Today

U.S. May single-family permits up 7.9% to 408,000
8:30am Today

U.S. housing starts down 45.2% in past year
8:30am Today

U.S. single-family permits down 35.1% in past year
8:30am Today

U.S. April starts revised 454,000 vs. 458,000
8:30am Today

US May PPI up 0.2% vs 0.5% expected
8:30am Today

US May core PPI down 0.1% vs. gain 0.1% expected
8:30am Today

US May PPI energy prices up 2.9%
8:30am Today

US May PPI food prices down 1.6%
8:30am Today

US PPI down 5% in past 12 months
8:30am Today

US core PPI up 3% in past 12 months
8:30am Today

[ozymandius]

32. How do we make sense of this?

The numbers bounce around like a super ball in a cement room.

U.S. May housing starts jump 17.2% to 532,000 rate

U.S. housing starts down 45.2% in past year

......

US May PPI up 0.2% vs 0.5% expected
US May PPI energy prices up 2.9%
US PPI down 5% in past 12 months

Wha....?

[UpInArms]

63. it appears the market report writers are having a

Psychitzoid embolism

[ozymandius]

5. Oil hovers below $71 on economic recovery concerns

SINGAPORE – Oil prices hovered below $71 as investors mulled whether a three-month rally went too far, too fast amid high supplies and weak demand.

Benchmark crude for July delivery rose 24 cents to $70.86 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, it fell $1.42 to settle at $70.62

....

But bad economic news could puncture investor optimism. An index of New York manufacturing released the Federal Reserve Bank of New York on Monday indicated that demand weakened in June.

....

In other Nymex trading, gasoline for July delivery rose 0.83 cent to $2.06 a gallon and heating oil gained 0.96 cent to $1.83. Natural gas for July delivery was steady at $4.18 per 1,000 cubic feet.

http://news.yahoo.com/s/ap/oil_prices

[ozymandius]

8. Crude Oil Advances in New York Before U.S. Inventory Report

June 16 (Bloomberg) -- Crude oil rose for the first time in three days, advancing above $71 a barrel as the dollar weakened against the euro, and before a report on fuel supplies in the U.S., the world’s biggest energy consumer.

The U.S. Energy Department will probably say tomorrow that crude stockpiles dropped 2 million barrels last week, according to a Bloomberg survey. Oil lost 2 percent yesterday, extending its decline from last week’s seven-month high of $73.23 a barrel as a stronger dollar made commodities less appealing as a currency hedge.

.....

Crude-oil supplies probably dropped 2 million barrels last week from 361.6 million barrels the previous week as refiners ramped up production and boosted stockpiles of gasoline and heating oil, a Bloomberg News survey showed. Inventories are 11 percent above the five-year average for this time of year.

Gasoline supplies probably rose 550,000 barrels in the week ended June 12 from 201.6 million the previous week. All of those surveyed said supplies climbed. Stockpiles during the same week last year fell 1.2 million barrels amid the peak motor fuel demand season in the U.S.

http://www.bloomberg.com/apps/news?pid=20601081&sid=aVNENpgrrk9M

[ozymandius]

9. Gas prices climb their fastest ever

Maryland gasoline prices may not be as high as last summer, but they have risen faster than in any previous year.

Since the beginning of the year, the average price of a gallon of regular gas in Maryland has increased 63 percent to $2.58 - a steeper climb than last year's march to a record $4.05, according to AAA Mid-Atlantic.

The steady climb since the market bottomed out at $1.58 Jan. 2 has raised fears of a return to $3 or $4 gasoline.

With gas prices up $1 per gallon since the beginning of the year, some Maryland families are feeling a pinch that even memories of last year's sky-high prices can't ease. Although Monday's gas prices are almost $1.50 less than at this time last year, some drivers say it doesn't matter. Today's pain is what counts.

http://www.baltimoresun.com/business/bal-md.gas16jun16,0,1815398.story

---

Although this story is focused on Baltimore, it mirrors price movement elsewhere.

[tclambert]

18. Gotta prediction for ya. Gas will hit $3/gal by 4th of July weekend.

Why? Because the oil companies can get away with it. You know they intend to creep it back up past $4/gallon again, just slowly enough that we won't jump out of the pan. That's the kind of thing that happens when there is no competition in a "free" market.

[ozymandius]

21. I concur.

The crude and distillate inventory reports do not mention the amount of oil being held offshore in tankers, in formerly mothballed reservoirs and in reserve tanks at refinery locations. The inventory report primarily measures the amount of each in the pipeline. So by withholding true inventory numbers, mainly offshore, there is no reason for the price not to keep rising.

[Demeter]

25. Been There, Done That for Memorial Day

What? So what if Michigan in in its 9the year of Depression?

[Demeter]

41. Gas Now $2.62 in Ann Arbor; Down 30 cents in two days

[mrdmk]

55. Too late here in California $3.009

According to Gas Buddy in California Unleaded Gasoline Average Prices

California

Today 3.009

Yesterday 2.994

Nation Wide

Today 2.647

Yesterday 2.643

Gasoline prices are raising faster in California than the rest of the country. This in spite of the fact that California is an oil producing state. Other data does support this trend...

California

One Week Ago 2.913

One Month Ago 2.511

One Year Ago 4.579

Nation Wide

One Week Ago 2.596

One Month Ago 2.292

One Year Ago 4.079


Some interesting reading on California crude: www.energy.ca.gov/2006publications/CEC-600-2006-006/CEC-600-2006-006.PDF

Use of oil is on the rise, so is the population: http://recenter.tamu.edu/data/pops/pops06.htm

Makes you wonder who is really pushing for higher prices.

[hamerfan]

57. I'm thinking state taxes

make gas higher in CA.

[mrdmk]

65. Nope, sorry there are 1 state that charges more than $0.399 CA rate

The lowest is Alaska. Rates are Gas $0.00 and Diesel $0.00. Per SB 4002 passed 8/08 during a special session, the state motor fuel excise tax of 8 cpg is suspended from 9/1/08 until 8/31/09.

The highest is New York. Rates are Gas $0.425 and Diesel $0.426. The state imposes a 8 cpg motor and diesel fuel excise motor fuel tax. The other taxes include a state sales tax adjusted based on population to reflect the MCTD region (8.34 cpg) and general region (8 cpg) tax. The local county sales tax can be a cpg or a % basis tax. Most counties impose a % based tax and "Other Taxes" reflects the blended rate applied to the state average retail prices.

Links in middle of page: http://www.api.org/statistics/fueltaxes/index.cfm

Of course all USA citizens pay a 18.4% Federal Tax on Gasoline Sales.

[Demeter]

46. Rural Mich. counties turn failing roads to gravel

LANSING, Mich. (AP) - Some Michigan counties have turned a few once-paved rural roads back to gravel to save money.

More than 20 of the state's 83 counties have reverted deteriorating paved roads to gravel in the last few years, according to the County Road Association of Michigan. The counties are struggling with their budgets because tax revenues have declined in the lingering recession.

Montcalm County converted nearly 10 miles of primary road to gravel this spring.

The county estimates it takes about $10,000 to grind up a mile of pavement and put down gravel. It takes more than $100,000 to repave a mile of road.

Reverting to gravel has happened in a few other states but it is most typical in Michigan. At least 50 miles have been reverted in the state in the past three years.

[tclambert]

51. I thought turning them into gravel was free.

Just let the freeze-thaw cycles of a couple winters break 'em up.

[tclambert]

52. And this is why we like 4 wheel drive gas guzzlers.

Rough roads + deep snow = zero Priuses (Priux?)

[ozymandius]

6. Witnesses to testify in trial of former AIG CEO

NEW YORK – Witnesses begin testifying Tuesday in the civil trial of American International Group Inc.'s former top executive, accused of plundering an AIG retirement program of billions of dollars.

Attorney Theodore Wells told jurors Monday in Manhattan that former Chief Executive Officer Maurice "Hank" Greenberg improperly took $4.3 billion in stock from the company in 2005, after he was ousted by the company amid investigations of accounting irregularities.

....

Wells said that Greenberg, within weeks of being forced out in mid-2005, gave the go-ahead for tens of millions of shares to be sold from a trust fund. The fund was set up decades ago to provide incentive bonuses to a select group of AIG management and highly compensated employees that they would receive upon their retirement.

....

The embattled insurer is trying to reclaim the money from Starr it says was wrongly pocketed through stock sales by Greenberg.

http://news.yahoo.com/s/ap/20090616/ap_on_re_us/us_aig_trial

[ozymandius]

7. Fraud Victims Want Maximum for Madoff

They are widows, retired schoolteachers, electrical contractors and Korean War veterans. Most had a strong message for the judge in charge of sentencing Bernard L. Madoff: impose the maximum sentence allowable by law.

In more than 100 letters and e-mail messages to Judge Denny Chin, victims of Mr. Madoff’s $65 billion Ponzi scheme described how their lives had been forever changed by the actions of a man they had trusted.

The letters, sent to the Federal District Court in Manhattan and released to the public on Monday, come ahead of Mr. Madoff’s sentencing on June 29. Eight of the victims, including one who has known Mr. Madoff personally for more than 20 years, asked Judge Chin for permission to speak at the sentencing.

.....

Some took issue with the portrayal of the fraud’s victims in the news media as being among the wealthy and privileged. “Many Madoff victims are elderly individuals or retirees who were saving for the future and they had the misfortune to believe in a powerful Wall Street insider who was repeatedly investigated and given a clean bill of health,” wrote Emma De Vito, 81, a widow from Chalfont, Pa., who lost her entire life savings to Mr. Madoff.

Separately on Monday, Representative Paul E. Kanjorski, an influential Pennsylvania Democrat, demanded that the S.E.C. provide Congress with an update on its internal investigation into why the agency failed to detect the Madoff scheme.

http://www.nytimes.com/2009/06/16/business/16madoff.html?ref=business

[tclambert]

19. You know, Madoff has really made it tough for all the honest corporate executives out there.

Oh, man, I made myself laugh out loud on that one!

[ozymandius]

23. As well it should be tough.

The "brightest and the best" really should earn their money. Let's see just how many are really bright enough to earn the megabucks. If I were Commissar - these CEOs would have to answer the Riddle of the Sphinx every day when they enter the office building. Historical penalties for a wrong answer withstanding.

[Joe Chi Minh]

67. Didn't you know? It's a free world! Or it is for some. No wonder the word, "free"

and its derivations are an obsessional mantra to Repubicans.

[ozymandius]

10. Interest Rates Will Stay Low

The 10-year Treasury has exploded off the lows it experienced in late 2008, when its yield bottomed at 2.02% as investors fled risk and hopes for the best. Now yields are up 84%, to 3.72, though this recent peak is itself a bit shy of the 4% mark, which it broke briefly on June 11 before falling back down.

....

John Osbon, head of Osbon Capital, notes that the 10-year Treasury is the bond to watch: "If one were to watch one price and one organization among the 30-plus government programs, the Fed would be the group and the 10-year its voice," he says.

Osbon gives so much importance to the decade-note because so many other rates spring from it, including those for mortgages, corporate bonds, junk and even emerging markets. So, should the 10-year rise to 4% and stay there, it would kill off any recovery. This is because inflation remains at 0% to 2%, making 4% money suddenly quite expensive by comparison.

http://www.forbes.com/2009/06/15/interest-rates-fed-intelligent-investing-federal-reserve.html

[ozymandius]

11. Four Horsemen of Wall Street

Greed, Mendacity, Stupidity and Arrogance

Link to Stiglitz's column at Vanity Fair.

Link to The Big Picture, where I found the Vanity Fair link.

[willing dwarf]

29. Three of the four horsemen have been hanging round for years

Greed, Mendacity and Arrogance are the rules on Wall Street aren't they? Broker's cupidity and cunning used to create the fig leaf which covered all that. But since the "c" in cupidity got switched to an "st" there's no more covering the fact that we're fecked, thank you very much Wall Street.

[Demeter]

36. Stiglitz Says It Cannot Continue

I say, who is gonna stop it? This isn't a natural process, it's a crime spree.

Natural processes have natural limits. Crime sprees need an opposing force. And Obama has proven he's nothing of the kind, nor will he hire any.

[Dr.Phool]

12. The American Empire Is Bankrupt

Posted on Jun 14, 2009
Wikimedia Commons

By Chris Hedges

This week marks the end of the dollar’s reign as the world’s reserve currency. It marks the start of a terrible period of economic and political decline in the United States. And it signals the last gasp of the American imperium. That’s over. It is not coming back. And what is to come will be very, very painful.

Barack Obama, and the criminal class on Wall Street, aided by a corporate media that continues to peddle fatuous gossip and trash talk as news while we endure the greatest economic crisis in our history, may have fooled us, but the rest of the world knows we are bankrupt. And these nations are damned if they are going to continue to prop up an inflated dollar and sustain the massive federal budget deficits, swollen to over $2 trillion, which fund America’s imperial expansion in Eurasia and our system of casino capitalism. They have us by the throat. They are about to squeeze.

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency. If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.

(snip) Good read. More at link.

http://www.truthdig.com/report/item/20090614_the_american_empire_is_bankrupt/

[ozymandius]

20. I can agree with the observations re: international realignment to insulate

themselves from a degraded dollar. Much of the societal effects sound over-the-top apocalyptic.

I agree that a dollar that must support itself, without the global support system rendered through fiat currency, will reshape U.S. foreign policy. Radically. Boondoggle defense spending will need to dry up as the global U.S. military presence loses its purpose and funding.

[Demeter]

28. The Sheep Look Up?

With apologies to John Brunner, ain't gonna happen. These sheep around us don't have bendable necks. It will merely be a slaughter.

http://tal.forum2.org/sheep

"This book presents the reader with a story about the Earth in several years, with a very pessimistic view, on the edge of “dark-future” Cyberpunk. In a world where the American president is nothing but a figurehead, USA's biggest export is dirty air, and daily weather reports tell you how polluted the air is today, a group of people -- the Trainites -- try to fight back for Mother Nature.

Inspired by the books of one Austin Train, the Trainites act on two levels: living the right life, eating only natural food, etc. as well as fighting physically. They are fighting an uphill battle, but finally, things begin to change.

It's interesting to note that Brunner creates a fictitious aid organization called “Globe Relief.” Any connection with the modern real-world “Global ReLeaf” organization?

Although dealing with different moral issues, one cannot avoid the striking similarity between The Sheep Look Up and Brunner's Stand on Zanzibar. It begins with the writing style (newspaper extracts, a multitude of characters, and other aspects, although in this book the style is a bit more subtle and mainstream), but it's most noticeable when comparing the two main characters - Chad C. Mulligan (from SoZ) and Austin Train. Both are scientists who got rich from writing books with provocative names (here, these are Guide to the Survival of Mankind, You Are What You Have to Eat, and A Handbook for 3000 AD, among others). Both tried to warn humanity of forthcoming disasters, and both decided to leave it all and live like homeless poor men (although for different reasons). In both books, these heroes change a lot of things when they decide to re-emerge into the public awareness.

However, just like The Sheep Look Up in comparison with Stand on Zanzibar, Train, when compared to Mulligan, is a bit more subtle and less rude, less cynic, and more scientifically accurate.

Perhaps the most noticeable effect of SoZ on its reader is the future-shock it creates, and the beautiful way in which the reader is immersed with the fictional future described. To me, at least, this effect was lacking in The Sheep Look Up. It is more of a mainstream book, protesting, like many other books before and after it, against humankind's abuse of nature."

SO THE QUESTION IS--JUST AS AIR POLLUTION CIRCLES THE GLOBE AND THERE'S NO PLACE TO ESCAPE IT, SO TOO DOES THIS DOLLAR FRAUD THE BANKSTERS HAVE PERPETRATED. WHERE DO THE BANKSTERS INTEND TO LIVE THEIR LIVES OF LUXURY, IF THEY HAVE BEFOULED THEIR OWN NESTS?

[DemReadingDU]

35. I think they will be stuck in their walled estates

surrounded by a moat of water and lots of private security. They will have electricity generated by solar and wind. Their gardeners have saved zillions of seeds to grow food, and they have stockpiled everything else they need, hoping they can remain secluded for several years.

[Demeter]

40. I Don't Think So

First, such isolation is unsustainable. Second, those stockpiles will run out, and there won't be any sophisticated manufacturing and design to produce new stuff. Third, even private security will fail.

Unless they know how to do useful sustaining kinds of work, these people will die of their own disdain for manual labor and/or complete boredom. Their recreational drugs will run out, their recreational slaves will die or escape, their paper assets will be worthless, nobody will buy their gold or jewels or trade for their "necessities".

It cannot be done. No man is an island, except within his mind.

[DemReadingDU]

44. I think they will try, if only for a couple years

but I doubt they can be sustained for that long.

[Tansy_Gold]

49. They would be leaving the military materiel in the hands of their

enemies, and they would have MANY enemies.

The despots would control power for a while, and even have armies to support them, which would lead to very ugly wars, but I don't think it would be sustainable int he long run.

Or maybe Earth After People would become a reality.



Tansy Gold, getting depressed

[tclambert]

53. When I watch TV episodes of "Earth After People" I can't help but think

"that looks good for the Earth."

[Demeter]

59. Me, Too. Have Some Virtual Chocolate.

I wish there was a pill for stupid. We could put it in the water supply at a Coca-Cola bottler and save the world.

[DemReadingDU]

33. Michael Hudson: De-Dollarization: Dismantling America’s Financial-Military Empire

6/14/09 De-Dollarization: Dismantling America’s Financial-Military Empire by Prof. Michael Hudson

The Yekaterinburg Turning Point

The city of Yekaterinburg, Russia’s largest east of the Urals, may become known not only as the death place of the tsars but of American hegemony too – and not only where US U-2 pilot Gary Powers was shot down in 1960, but where the US-centered international financial order was brought to ground.

Challenging America will be the prime focus of extended meetings in Yekaterinburg, Russia (formerly Sverdlovsk) today and tomorrow (June 15-16) for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization (SCO). The alliance is comprised of Russia, China, Kazakhstan, Tajikistan, Kyrghyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. It will be joined on Tuesday by Brazil for trade discussions among the BRIC nations (Brazil, Russia, India and China).

The attendees have assured American diplomats that dismantling the US financial and military empire is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the United States, NATO or the US dollar as a vehicle for trade. US diplomats may well ask what this really means, if not a move to make US hegemony obsolete. That is what a multipolar world means, after all. For starters, in 2005 the SCO asked Washington to set a timeline to withdraw from its military bases in Central Asia. Two years later the SCO countries formally aligned themselves with the former CIS republics belonging to the Collective Security Treaty Organization (CSTO), established in 2002 as a counterweight to NATO.

Yet the meeting has elicited only a collective yawn from the US and even European press despite its agenda is to replace the global dollar standard with a new financial and military defense system. A Council on Foreign Relations spokesman has said he hardly can imagine that Russia and China can overcome their geopolitical rivalry,1 suggesting that America can use the divide-and-conquer that Britain used so deftly for many centuries in fragmenting foreign opposition to its own empire. But George W. Bush (“I’m a uniter, not a divider”) built on the Clinton administration’s legacy in driving Russia, China and their neighbors to find a common ground when it comes to finding an alternative to the dollar and hence to the US ability to run balance-of-payments deficits ad infinitum.

What may prove to be the last rites of American hegemony began already in April at the G-20 conference, and became even more explicit at the St. Petersburg International Economic Forum on June 5, when Mr. Medvedev called for China, Russia and India to “build an increasingly multipolar world order.” What this means in plain English is: We have reached our limit in subsidizing the United States’ military encirclement of Eurasia while also allowing the US to appropriate our exports, companies, stocks and real estate in exchange for paper money of questionable worth.

“The artificially maintained unipolar system,” Mr. Medvedev spelled out, is based on “one big centre of consumption, financed by a growing deficit, and thus growing debts, one formerly strong reserve currency, and one dominant system of assessing assets and risks.”2 At the root of the global financial crisis, he concluded, is that the United States makes too little and spends too much. Especially upsetting is its military spending, such as the stepped-up US military aid to Georgia announced just last week, the NATO missile shield in Eastern Europe and the US buildup in the oil-rich Middle East and Central Asia.

The sticking point with all these countries is the US ability to print unlimited amounts of dollars. Overspending by US consumers on imports in excess of exports, US buy-outs of foreign companies and real estate, and the dollars that the Pentagon spends abroad all end up in foreign central banks. These agencies then face a hard choice: either to recycle these dollars back to the United States by purchasing US Treasury bills, or to let the “free market” force up their currency relative to the dollar – thereby pricing their exports out of world markets and hence creating domestic unemployment and business insolvency.

lots more...
http://dandelionsalad.wordpress.com/2009/06/14/de-dollarization-dismantling-america%e2%80%99s-financial-military-empire-by-prof-michael-hudson/

[mbperrin]

38. They can also recycle their dollars by buying hard assets within the

US, paying local prices for factories, resources, companies, anything that can be bought and held in the hand as real.

I believe this may have begun already somewhat:

http://www.washingtonpost.com/wp-dyn/content/article/2008/01/27/AR2008012702380.html

Weak Dollar Fuels China's Buying Spree Of U.S. Firms
Foreign Cash Ignites Political Concerns

By Ariana Eunjung Cha
Washington Post Foreign Service
Monday, January 28, 2008; Page A01
SHANGHAI -- From his posh office in a coastal city in eastern China, millionaire Zhou Jiaru oversees more than 100 workers at an auto parts refurbishing factory he purchased in a struggling manufacturing town on the other side of the world.

Zhou's new company is in Spartanburg, S.C.
<snip>

"The U.S. dollar is getting weaker and weaker, and many medium to small U.S. companies are in economic crisis. So they need investments from China. It is very good timing," said Yu Dan, a representative for the state of Pennsylvania in China.

Yu, who is one of about 30 people in China who represent American cities and states, said at least six Chinese companies are in the process of closing deals in Pennsylvania. One will make some purchases in the food industry. Another will invest in the wood industry, because as Yu put it, "Pennsylvania has very good hardwood resources, and the aboriginal people in the north Pennsylvania woods are good workers."

Aboriginal people? The Amish, Yu clarified.

[hamerfan]

50. If this is true,

about the meeting and what the attendees hope to achieve, will spell the end of the American economic model (don't laugh) as we know it. It is necessary to read! Thanks for posting, Doctor!

[Festivito]

13. Debt: 06/12/2009 11,374,952,729,568.32 (DOWN 673,690,741.31) (Small rise, FICA down.)

(Debt moves up about a third of a billion. FICA drops. Boring.)

= Held by the Public + Intragovernmental(FICA)
= 7,110,923,807,097.73 + 4,264,028,922,470.59
UP 342,814,514.03 + DOWN 1,016,505,255.34

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.78, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain a another American, so at the end of the workday of the report, there should be 306,638,342 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,095.66.
A family of three owes $111,286.99. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 22 reports in the last 30 to 32 days.
The average for the last 22 reports is 5,204,458,065.32.
The average for the last 30 days would be 3,816,602,581.24.
The average for the last 32 days would be 3,578,064,919.91.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 98 reports in 143 days of Obama's part of FY2009 averaging -0.23B$ per report, -0.08B$/day so far.
There were 173 reports in 255 days of FY2009 averaging 7.80B$ per report, 5.30B$/day.

PROJECTION:
There are 1,318 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 18.4T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
06/12/2009 11,374,952,729,568.32 BHO (UP 748,075,680,655.24 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,350,227,832,655.90 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
05/21/2009 +016,742,591,292.36 ------------**********
05/22/2009 +000,007,301,981.46 ------------******
05/26/2009 +000,178,213,075.69 ------------******** Tue
05/27/2009 +000,332,821,919.42 ------------********
05/29/2009 +019,434,324,960.50 ------------**********
06/01/2009 +078,540,152,146.76 ------------********** Mon
06/02/2009 +000,543,288,286.72 ------------********
06/03/2009 -000,003,266,733.82 -----
06/04/2009 +011,755,789,483.75 ------------**********
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********

128,297,534,801.91 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,710,320,926,309.25 in last 267 days.
That's 1,710B$ in 267 days.
More than any year ever, including last year, and it's 168% of that highest year ever only in 267 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 267 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3923349&mesg_id=3923375

[Festivito]

62. Debt: 06/15/2009 11,400,723,732,452.21 (UP 25,771,002,883.89) (up 22B$.)

(Debt goes up about a week's worth after about a week of doing little or nothing. Not earth shattering.)

= Held by the Public + Intragovernmental(FICA)
= 7,133,203,590,883.64 + 4,267,520,141,568.57
UP 22,279,783,785.91 + UP 3,491,219,097.98

Source: Debt to the penny:
http://www.treasurydirect.gov/NP/BPDLogin?application=np

THINKING IN BILLIONS: Think 3 or 4 dollars per billion in a 307-Million person America.
If every American, man, woman and child puts in $3.26 each THAT'S 1B$.
A family of three: Mom, Dad, Child: $9.78, ABOUT TEN BUCKS for a 1B$ federal program.
I hope that is clear. However, I'd suggest using $3 per 1B$ to underestimate it.
Use $4 per 1B$ to overestimate the cost when thinking: Is the federal program worth it?
Aid to Dependant Children: 2B$/yr =$8/yr(a movie a year) Family of 3: $24/yr(an hour of bowling)

PERSONALIZED DEBT:
Every 12 seconds we net gain a another American, so at the end of the workday of the report, there should be 306,659,942 people in America.
http://www.census.gov/population/www/popclockus.html ON 05/25/2009 01:14 -> 306,504,012
Currently, each of these Americans owe $37,177.09.
A family of three owes $111,531.26. (And that is IN ADDITION to their mortgage.)

ANALYSIS:
There were 20 reports in the last 30 to 31 days.
The average for the last 20 reports is 5,830,666,251.38.
The average for the last 30 days would be 3,887,110,834.26.
The average for the last 31 days would be 3,761,720,162.18.
There were 252 reports in 365 days of FY2007 averaging 1.99B$ per report, 1.37B$/day.
There were 253 reports in 366 days of FY2008 averaging 4.02B$ per report, 2.78B$/day.
There were 75 reports in 112 days of GWB's part of FY2009 averaging 8.03B$ per report, 5.38B$/day.
There were 99 reports in 146 days of Obama's part of FY2009 averaging -0.12B$ per report, -0.05B$/day so far.
There were 174 reports in 258 days of FY2009 averaging 7.91B$ per report, 5.33B$/day.

PROJECTION:
There are 1,315 days remaining in this Obama 1st term.
By that time the debt could be between 13.2 and 18.4T$.
It could be higher. It could be lower.

HISTORICAL:
President's term begins and ends on Jan 20.
(Guess who might want to hide the Reagan Bush years. Jan 20 data is missing before 1993.)
01/20/1993 _4,188,092,107,183.60 WJC Inaugural
01/22/2001 _5,728,195,796,181.57 WJC (UP 1,540,103,688,997.97)
01/20/2009 10,626,877,048,913.08 GWB (UP 4,898,681,252,731.43)
06/15/2009 11,400,723,732,452.21 BHO (UP 773,846,683,539.13 so far since Obama took office.)

Fiscal Year ends: Sep 30
Borrowed in FY1993: (Maybe later.)
Borrowed in FY1994: 281,261,026,873.94
Borrowed in FY1995: 281,232,990,696.07
Borrowed in FY1996: 250,828,038,426.34
Borrowed in FY1997: 188,335,072,261.61
Borrowed in FY1998: 113,046,997,500.28
Borrowed in FY1999: 130,077,892,735.81
Borrowed in FY2000: _17,907,308,253.43 Bill alone
Borrowed in FY2001: 133,285,202,313.20 Bill and George
Borrowed in FY2002: 420,772,553,397.10 All George
Borrowed in FY2003: 554,995,097,146.46
Borrowed in FY2004: 595,821,633,586.70
Borrowed in FY2005: 553,656,965,393.18
Borrowed in FY2006: 574,264,237,491.73
Borrowed in FY2007: 500,679,473,047.25
Borrowed in FY2008: 1,017,071,524,650.01
Borrowed in FY2009: 1,375,998,835,539.80 so far this fiscal year.

LAST FIFTEEN REPORTS OF ADDITIONS TO PUBLIC DEBT(NOT FICA):
05/22/2009 +000,007,301,981.46 ------------******
05/26/2009 +000,178,213,075.69 ------------******** Tue
05/27/2009 +000,332,821,919.42 ------------********
05/29/2009 +019,434,324,960.50 ------------**********
06/01/2009 +078,540,152,146.76 ------------********** Mon
06/02/2009 +000,543,288,286.72 ------------********
06/03/2009 -000,003,266,733.82 -----
06/04/2009 +011,755,789,483.75 ------------**********
06/05/2009 -000,226,149,345.97 ---
06/08/2009 +000,015,040,049.19 ------------******* Mon
06/09/2009 +000,025,670,087.48 ------------*******
06/10/2009 +000,124,232,779.18 ------------********
06/11/2009 +000,484,710,305.16 ------------********
06/12/2009 +000,342,814,514.03 ------------********
06/15/2009 +022,279,783,785.91 ------------********** Mon

133,834,727,295.46 Total of 15 above reports.

Heavy borrowing seems to start after 09/18/2008.
US borrowed $1,736,091,929,193.14 in last 270 days.
That's 1,736B$ in 270 days.
More than any year ever, including last year, and it's 171% of that highest year ever only in 270 days.
And it is over 100% of ANY dismal Bush, for any dismal Bush-year, ONLY IN 270 DAYS NOT 365.

For a prettier and more explanatory view of our nation's debt:
http://www.brillig.com/debt_clock

(Debt to the penny keeps changing. Stuff is missing. Best to keep our own history.) LAST REPORT:
http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=102&topic_id=3924791&mesg_id=3924820

[ozymandius]

14. Credit Bailout: Issuers Slashing Card Balances

....

Mr. McClelland’s credit card company was calling yet again, wondering when it could expect the next installment on his delinquent account. He proposed paying half of his $5,486 balance and calling the matter even.

It’s a deal, the account representative immediately said, not even bothering to check with a supervisor.

....

As they confront unprecedented numbers of troubled customers, credit card companies are increasingly doing something they have historically scorned: settling delinquent accounts for substantially less than the amount owed.

....

Only a few creditors are willing to confirm the practice. Bank of America and American Express say they decide on a case-by-case basis whether to accept less than the full balance. Other card companies refuse to discuss the subject, but their trade group, the American Bankers Association, acknowledges that settlements are becoming more common.

The shift comes as the financial services industry finds itself losing some of its legendary power. A credit card reform bill that makes it harder to raise rates on existing balances and prevents certain automatic fees flew through Congress and was signed by President Obama in late May.

....

Still, a line has been crossed, credit experts say.

http://www.nytimes.com/2009/06/16/your-money/credit-and-debit-cards/16credit.html?_r=1

[Demeter]

31. The Money Excerpt

"During the boom, nonpayers were treated more harshly because, paradoxically, their debt was more valuable. Collection agencies were eager to buy bundles of old debt from the card companies for as much as 15 cents on the dollar. In a healthy economy, even the hopelessly indebted can pay something.

In this recession, where collection agencies have little hope of collecting from the unemployed, that business model is suffering. Experts say 5 cents on the dollar is now the most a card company can hope to get for its past-due accounts."

[UpInArms]

15. dollar watch

http://quotes.ino.com/chart/?s=NYBOT_DX&v=i

Last trade 80.535 Change -0.626 (-0.81%)

Forex Market Update: U.S. Dollar Gives Back, Reserve CurrencyTo Be Discussed At BRIC Meeting

http://www.dailyfx.com/story/market_alerts/fundamental_alert/Forex_Market_Update__1245148330699.html

The dollar came back under pressure during the European morning after Russia indicated that global currency reserves would be discussed at the BRIC meeting. It criticized the existing reserve currencies, including the dollar and pushed for the creation of supranational currency. EUR/USD made an early run up to 1.3875 and received fresh impetus after the German ZEW jumped in June, suggesting that the ECB will not cut rates further. A high of 1.3923 was noted before profit taking forced a move back in to 1.3870. Cable was boosted by the general dollar tone and also received a fillip from May CPI, which came in at 2.2% y/y and raised the prospect of U.K. rate hike sooner than expected. Strong demand for today's 25-yr syndicated Gilt issuance was also an influence and the pair hit 1.6480 before pulling back in to 1.6400. The JPY crosses experienced heavy bargain hunting from European speculative names, which lifted USD/JPY to 96.80 despite the dollar experiencing moderate selling pressure.

...more...

US Dollar Rally Continues as DJIA Tests Key Support at 8600

http://www.dailyfx.com/story/dailyfx_reports/daily_fundamentals/US_Dollar_Rally_Continues_as_1245102701761.html

The US dollar was one of the biggest winners on a day when equities and FX carry trades took a beating, indicating that the greenback hasn’t lost its luster as a “safe haven” asset. Looking to the news of the day, the US Treasury said that foreign demand for US assets rose more slowly during the month of April, as total net purchases of long-term equities, notes and bonds increased by a net $11.2 billion, down from $55.4 billion in March. Meanwhile, the New York Fed’s “Empire” manufacturing index fell more than expected to a reading of -9.41 in the month of June from -4.55, signaling a deeper contraction in business activity. A look at the breakdown of the report shows that the shipments component fell negative once again after rising into positive territory last month for the first time since July 2008. In fact, every other component - including prices paid/received, new orders, inventories, and number of employee - remained negative, suggesting that the manufacturing sector is far from recovery.

According to Bloomberg News, the Commerce Department may report on Tuesday that US housing starts and building permits staged a healthy rebound during the month of May. Indeed, housing starts are projected to have risen to an annual rate of 485K from a record low of 458K, while building permits are forecasted to have risen to 508K from a record low of 498K (revised up from 494K). This will be one of the first housing-related indexes released for the month of May, but as we saw with last month's results, it isn't necessarily a great leading indicator as new and existing sales improved while starts and permits tumbled. Nevertheless, surprisingly strong results could offer a boost to investor sentiment, while unexpected declines could lead risk aversion to dominate once again.

...more...

[UpInArms]

16. Russia's Medvedev: Supranational currency will be created

http://www.reuters.com/article/bondsNews/idUSLG42629320090616

YEKATERINBURG, June 16 (Reuters) - Russian President Dmitry Medvedev said on Tuesday existing reserve currencies, including the dollar, have not performed their function, and a new supranational currency was in the making. "We are likely to witness the creation of a supranational reserve currency ... which will be used for international settlements," Medvedev told a new conference. "Although volumes will be limited.

"The existing currency system is not ideal. There is a range of risks, including inflation risks," Medvedev said.

[ozymandius]

22. I hear the USD coughing and gagging on the floor.

It never made sense to me why the world would want to isolate one nation's currency as THE international currency of trade and preferred central bank reserve. I worry about what this portends for our children. However, if I were planning fiscal and monetary policy for an economy not belonging to the United States, this move away from a one-stop-shop for trading and currency valuation would make sense to me.

[tclambert]

26. "Here iss plan: Ve put all eggs in ONE BASKET!"

"Ve vill call it ze 'One Basket Plan.' Zen next time zere iss economic problem, the WHOLE WORLD will share ze misery. . . . Kind of like now."

I liked Nassim Taleb's (the "Black Swan" guy) comment on TeeVee a few weeks back when he said the banking industry should be more like the restaurant business. Restaurants fail all the time, but we can always find a place to eat because there are lots of little restaurants. One failure or a hundred failures does not crash the system.

In other words, we need to break up the big banks, and for that matter, any other businesses "too big to fail." In a way, this applies internet principles to economics. The internet works so reliably, so robustly, because of its distributed network structure. Any place too much capacity comes together creates a vulnerable point, such as the undersea cables that caused a problem last year. Three cables under the Mediterranean got cut in the same time period, by earthquake, anchors, and fishing nets. This strangled communications between Europe, the Middle East and South Asia for a time. The solution is greater redundancy. In that case, more cables over more routes. In general, you don't want any nodes or comm lines to grow too large or it becomes a critical point.

Same in economics. We should reverse the merger fad and replace it with a program of divestiture. Businesses want to grow larger because they want to form monopolies. But that monopolistic instinct creates dangerous situations for the overall economy. Smaller, more competitive companies work better for society and the customers (you know, we the people).

That argument comes right from Adam Smith's On the Wealth of Nations, which he wrote 233 years ago. We still haven't learned that lesson.

[Joe Chi Minh]

68. Weird that you should have written that about Adam Smith at the bottom,

as I was framing a comment to the effect that the fraudulent persona with which the far-right have tarred Adam Smith wouldn't have approved of hampering "free trade"(!) in any way - particularly any breaking up of cartels of those large corporations, invariably run by endemically altruistic businessmen (nature of the doctrinaire, capitalist beast, to some extent, to be fair).

[DemReadingDU]

39. Denninger: None Of This Was A Mistake

6/16/09 Karl Denninger: None Of This Was A Mistake

You're going to be unhappy reading this.

You've been warned.

I said - very unhappy.

Dateline August 2nd, 2002:

The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.

Judging by Mr. Greenspan's remarkably cheerful recent testimony, he still thinks he can pull that off. But the Fed chairman's crystal ball has been cloudy lately; remember how he urged Congress to cut taxes to head off the risk of excessive budget surpluses? And a sober look at recent data is not encouraging.

...

Bear in mind also that government officials have a stake in accentuating the positive. The administration needs a recovery because, with deficits exploding, the only way it can justify that tax cut is by pretending that it was just what the economy needed. Mr. Greenspan needs one to avoid awkward questions about his own role in creating the stock market bubble.

more...
http://market-ticker.org/archives/1124-None-Of-This-Was-A-Mistake.html

[Demeter]

43. It Was All Intentional, and It Was All a Mistake

and if there's any justice, the injured will see that the perpetrators pay.

[DemReadingDU]

45. most likely, a revolution

violent and bloody. Might not happen in my lifetime, but in my children's lifetime.

Right now, Americans are too passive. So it's going to take awhile to get that worked up to change anything.

[AnneD]

56. I have been going to this local restaurant for years....

over 20 years I guess. The owner is a Greek guy named John. Most of his staff has been with him that long too. I thought he had gone out of business last year, but it turns out he just moved. Out of spite, his old landlord took down the forwarding info and new address. Well gradually, the old partons have been finding the restaurant.

Anyway, John has some sharp political views. I ask him one time about the government (this was at the time of the bailouts).

"They are all fascist," he snorted. Any more, I tend to agree that we are leaning toward fascism.

"I don't understand why people are not taking to the streets over this" I said as I dropped the paper down in disgust,"What will it take to get folks off their butts and up in arms."

"I'd give it 200 more years, this country can't imagine how bad it can get. The Greeks-we've seen it all. The first time something like this happens anymore-we all hit the streets and call a general strike. After a while-they learn not to pull stuff like that over on us."

He may be right, he may be wrong-but he cooks damn good Greek American food and he has lived through more than I ever will.

[Demeter]

47. Guernsey Island: A Lesson in Municipal Finance

http://solari.com/blog/?p=3210#more-3210

Catherine and Daily Musings,
June 14, 2009 at 9:06 pm


By: Hub Pages



In the early 19th century, the little British Channel island of Guernsey faced a problem. Its sea walls were crumbling. its roads were too narrow, and it was already heavily in debt. There was little employment and people were leaving for elsewhere.

Instead of going still further into debt, the island government simply issued 4,000 pounds in state notes to start repairs on the sea walls as well as for other needed public works. More issues followed and twenty years later the island had, in effect, printed nearly 50,000 pounds. Guernsey had more than doubled its money supply without inflation.

A report of the island’s States Office in June 1946 noted that island leaders frequently commented that these public works could not have been carried out without the issues, that they had been accomplished without interest costs, and that as a result “the influx of visitors was increased, commerce was stimulated, and the prosperity of the Island vastly improved.” By 1943, nearly a half million pounds worth of notes belonged to the public and was so valued that much of it was being hoarded in people’s homes, awaiting the island’s liberation from the
Germans.

About the same time that Guernsey started to fix its sea walls the town of Glasgow, Scotland, borrowed 60,000 pounds to build a fruit market. The Guernsey sea walls were repaid in ten years, the fruit market loan took 139. In the first part of the 20th century, Glasgow paid over a quarter million pounds in interest alone on this ancient project.

How did Guernsey avoid the fiscal disaster that conventional economics prescribed for it? First and foremost by understanding that when you build roads or sea walls or colleges or houses, you are not reducing your society’s wealth. In fact, if you do it right, you are creating something that will add to its wealth. The money that was created was simply backed by public works rather than gold or “full faith and credit.” It was, in fact, based on something more solid than the dollar bills in our wallets today. In contrast, tacking on an interest charge to public works — as we do in the US — creates no new wealth, but merely transfers claims on existing wealth from debtors to creditors.

From Sam Smith’s “Great American Political Repair Manual”

[Demeter]

48. Chris Mayer in The 5 Min Forecast

http://dailyreckoning.com/act-ii-of-the-food-crisis/

"Inflation - rising prices, or a drop in the purchasing power of the dollar - will soon rise to the very top of economic concerns," writes value investor Chris Mayer. "I can't understand why there are pundits who insist we can't have inflation while the economy is weak. There are plenty of examples of weak economies with high inflation. After all, I don't think they are hitting on all cylinders in Zimbabwe, where inflation is thousands of percent.

"Look at food prices. Soybeans hit a nine-month high of $12.50 a bushel. The Department of Agriculture said that inventories would drop to only 110 million bushels - the lowest level since 1976-77, when inventories hit 103 million bushels. There were about 2 billion fewer mouths on the planet then. At today's 32-year low, we can eat through that stockpile in about two weeks. Not a lot room for error; hence, the nine-month high in prices.

"We have a similar tight market in corn. In corn, we're down to about a four-week supply, the lowest in six years. Corn has rallied also. In fact, the prices of a variety of grains are now at levels not seen since the last food crisis:


or see graph at link

"During the last food crisis, rice traded for $1,000 a ton and there were riots in different parts of the world. The financial crisis took the headlines away from the unfolding food crisis, but now we are looking at act II."

[mullard12ax7]

54. K&R, only because it was an up day

Anyone ever notice that? There's a lot of cheerleading going on, devoid of any ability to even entertain reality much less discuss it. Here's a real situation: the U.S. dollar may no longer be the worlds main currency, imagine the ramifications of that.

[Demeter]

58. Curing One Financial Disaster With a Worse One By Bill Bonner

http://dailyreckoning.com/curing-one-financial-disaster-with-a-worse-one/

The New York Times reports that Mr. Tim Geithner is defending the stimulus program wherever he goes.

The Washington Post reports that Larry Summers is doing the same thing.

Isn't it interesting, dear reader? There were very few people who understood what was happening during the bubble years. Neither Summers nor Geithner was among them. Summers was one of the original members of Time magazine's 'Committee to Save the World.' Along with Alan Greenspan and Robert Rubin, Summers saved the world from the Asian debt crisis. That was 10 years ago this month.

Of course, the three didn't really save the world - they set it up for a much bigger catastrophe. In the meantime, Summers went on to a disastrous interlude in academia. Robert Rubin went to Citigroup, where he pushed the bank in the wrong direction - towards dangerous derivatives. When the debt bombs blew up, Rubin was then pushed out of the firm. And Alan Greenspan went on to manage the Fed in an almost unimaginably clumsy way - practically single-handedly bringing about the biggest bubble in world economic history.

But now, there's a new Committee to Save the World. Summers is back. And he's joined by Bernanke and Geithner. What a great committee! Innocents and insiders... who neither saw any evil, heard none, nor spoke none. The three were deaf, dumb, and blind to the biggest bubble in all time.

But now they are taking the lead in fixing the problems they never saw. How?

With stimulus! A $100 billion here. A $100 billion there. They've put at risk an amount of money nearly three times as great as America's expenses in World War II.

They bail out a bank in North Carolina. They take over an auto company in Detroit.

Hey, what about the casinos? Aren't you going to bail them out too?

What makes these three fellows think that this will make Americans richer? More prosperous? Or more secure? Has this sort of meddling ever actually made people better off? They should follow Ray Dalio's advice and read about similar crises in history. Can you make those crises go away by spending trillions? If so, there's no evidence of it in the histories we read. Not in the Great Depression. Not in the Latin debt crisis. Not in the Japanese experience.

And what about this time? The evidence we see tells us that the underlying economy is getting worse, not better. In addition to the figures cited above, there are the inflation rates. Inflation in America and Britain is coming down...to around 2%. In Europe it has already fallen into negative territory...with rates heading to minus 1%.

Meanwhile, oil is over $70 this morning - 7 times higher than it was when Larry Summers, et al, saved the world the first time. Gold is nearly 4 times higher.

In other words, the feds' easy money is not reaching the consumer and not stimulating the consumer economy. Consumption is down...and with it, business earnings are down too.

"Dow 1 million," says our old friend Jim Rogers. The feds' phony money can stimulate speculation, he points out. But it can't stimulate real growth.

This second 'Committee to Save the World' is destined to end like the first one - in disgrace and disaster. It will try to cure one disaster by creating a worse one.

[Tansy_Gold]

61. I got a rubber stamp, Mr. Bonner. You wanna borrow it?

I.T.Y.S.

[Demeter]

71. I Think Bonner Holds The Patent on that Stamp

[Demeter]

60. A Whole Lot of Ugly Today

let the Long, Hot Summer Begin!

[CatholicEdHead]

64. Best Buy shares slip after report that 1st-qtr profit fell 15 pct as shoppers limited spending

http://www.startribune.com/local/48149522.html

NEW YORK - Best Buy Co. Inc. is winning over customers left stranded when Circuit City closed, but it is still struggling with sluggish sales as shoppers continue to limit big purchases and Wal-Mart steps up competition.

Best Buy said Tuesday that it gained market share in the first quarter, particularly in TVs, computers and mobile phones, even as its profit fell 15 percent. The results beat Wall Street expectations, and the nation's largest consumer electronics seller maintained its annual profit outlook.

But Best Buy's shares fell $2.82, or more than 7 percent, to $35.84 in late trading amid uncertainty about consumer spending in the coming months.

"We see continued market share gains, a result of Circuit City's bankruptcy, but remain concerned by weakness in consumer spending and potential saturation of flat panel TVs," wrote Michael Souers, retail analyst at Standard & Poor's Equity Research in a report.