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Post by Andrew on Feb 17, 2013 16:19:55 GMT
If I was wanted the US to fail I would not be wanting the Californian inland Empire to be recovering. Surprisingly however it is recovering. I was imagining a place like that would turn into a ghost town with the buildings cut into truckable pieces and moved somewhere else. Next thing you know QE will end and we will be looking at the real possibility of higher interest rates and then the ongoing grind of whatever kind of recovery is going to happen over the next many years. www.calculatedriskblog.com/2013/02/inland-empire-starting-to-recover.html
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Post by nautonnier on Feb 17, 2013 16:58:07 GMT
I think that this article actually says it all.... t.co/z2pw1yVXIt actually boils down to the right to own property, benefit from its ownership and pass that ownership its benefits to whoever you wish under whatever terms you wish. Where 'The State' deems that it has a 'right' to take some or all of your private property or interfere in its use or the benefits of its ownership, then the development of an authoritarian state is inevitable.
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Post by sigurdur on Feb 18, 2013 6:30:55 GMT
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Post by nautonnier on Feb 20, 2013 11:27:04 GMT
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Post by karlox on Feb 20, 2013 17:03:03 GMT
"Also of interest is the country list just above the USA. Spain, UK, Australia and then Mexico, Italy, and Greece. Brazil and Turkey stuck in between them and Portugal" so it´s not PIGS only... ;D Can put Venezuela in dark nowadays, or soon... what a mess there! Big datum to me is that behind US dolar there nearly nothing else in this world... And if this castle doesn´t fail only reason is... there is nothing else ... no gold enough... euro is an EXPERIMENT badly implemented and worst developped... yen and swiss francs, for a few, perhaps. If chinese currency were fully in exchange market their currency would have increase its value long time ago... and all dollar US Treasure Bonds etc they hold would´ve been inmediately devaluated... So we need yuán in open exchange market to further kick the can... But Chinese BOD won´t accept that in short time, perhaps as part of a deal mid-term... (That´s what US and EU have been strongly requesting Chinese leaders for years) So If I were a Big Capital Power now I would rather invest as much possigle buying farming lands and mining rights etc, and paying in cash, but I wouldn´t invest in any finantial product at all.
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Post by sigurdur on Feb 20, 2013 17:21:09 GMT
Karlox: And that is exactly what China is doing. Investing in land/minerals etc.
And paying cash.
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Post by karlox on Feb 20, 2013 19:13:51 GMT
Karlox: And that is exactly what China is doing. Investing in land/minerals etc. And paying cash. Preparing for what might come? One way or the other Debt can´t be paid at long term, and nowadays China is not so happy having put that much weath within dolar umbrella... Since China currency is under strict gov control I wouldn´t mind US and EU eurozone linking euro-dollar 1 by 1 for some years... that could make both economic areas grow and avoid deppression, buy neither US nor Germany want that.
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Post by karlox on Feb 20, 2013 19:20:13 GMT
And I would definetely set international rules for fair manufacturing and trading to some extend, time for rapid growth by-all-means in China should be past time... and certainly China is not ready for either an Euro or Dollar crash... so, somehow, our problems are there problems, and viceversa... globality.
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Post by dontgetoutmuch on Feb 20, 2013 22:28:17 GMT
It is not looking good. QE-infinity is rapidly inflating the financial bubble, beyond all capacity for normal market forces to handle. Everyone seems to think that printing money to finance the debt is a good thing to do...
But think about it. Everyone agrees that a dollar has a certain value. I trade a certain amount of a resource in my possession for dollars. For sake of argument, let’s simplify this and call the resource my time and effort to work at a job. My employer and I have reached an agreement. I will create something of value with my time and effort, and my employer will pay me in dollars for the value that I have created. I don't need dollars. I need gas, and food, and shelter. I need clothes, and a snow shovel. I need medical care for my family. I need to save for hard times if possible. I can use dollars to get all of this, currency (dollars) is a very efficient way to make value portable. As long as I have dollars, I can get what I need. People tend to forget that a dollar is valueless. What it represents is not, and that is the core problem with currency.
Let’s say I build widgets at my work. It takes me 1 hour to build a widget. It also takes lots of other expensive stuff that my employer handles, and is not part of this little example. I build eight widgets a day. My employer pays me for my time and effort. I use that pay to get gas, and food and all the other things I need. A gallon of gas does not cost me $4.02 a gallon. It costs me about 5 minutes of my time at work. A shopping cart with a week of food for the family in it costs me about 4 hours. As long as currency is used in this fashion, it works perfectly. The guy who makes the gas does the same thing. It takes him time and resources to make gas, which they trade for my money. And around it goes. People trade value for dollars to trade for other value. Understand that widgets, gas, food, and shelter are not unicorn farts that can be conjured at will.
When Uncle Sammy prints a dollar out of unicorn exhaust something magical happens. That new dollar affects every single dollar in existence. Everyone who owns a dollar has just been robbed. It is outright theft. No one will pay a dollar for a unicorn fart. This outright theft is of course fairly intangible to the rest of us. It shows up in higher prices. Stuff actually costs much, much less than it used to. Uncle Sammy has eaten up ALL of this and then some. Think about it. We are much better at making stuff then we were 50 years ago. Then it would have taken 100 guys to make 1 widget a day. Now it just takes little ole me to make eight in a day. Of course the widget costs more now than it did then. For example about the time I was born, a new Corvette cost about $4300.00. Using Uncle Sammy's official numbers. In today's dollars that would be about $23,000.00. Actual cost today is about $55,000.00.
For anyone paying attention at this point, the effect of trading dollars for unicorn farts is obvious, (the inflation) but there is also a hidden cost. Productivity is a fancy name that means that, as you get better at making widgets, your costs will go down. I know Chevy sucks, but they don't have negative productivity. Historical productivity in the U.S. varies, but a ballpark figure is two percent per year, every year. Uncle Sammy takes all of that, and then some. The thirty two thousand dollars missing from the numbers above can be called the Uncle Sammy created dollars out of unicorn farts tax. And everyone on the planet that holds U.S. dollars paid it. But now Uncle Sammy is creating at least $40,000,000,000.00 a month (A MONTH!!!) out of thin air. I don't know exactly how this fits in with the official national debt. I do not believe that this is counted as debt, and I do not think that it shows up anywhere except on Uncle Sammy's checking account. Eventually paying for real things with imaginary things will catch up with you. It is unavoidable. Uncle Sammy is trapped. To pay the bills he needs money. He has been taking our money, (taxes) but we are running out. A short term solution was to create money out of unicorn farts. All of those unicorn farts that people have are driving down the value of actual dollars. What Uncle Sammy has created is a bubble that will continue to expand ever more rapidly until the number of unicorn farts in circulation causes the currency to fail. The fart bubble will burst, it is inevitable.
Things will get very ugly at that point. People will discover that they have traded value for unicorn farts, and will be unable to recover. All the pieces are in place. The printing of dollars without restraint, massive budget deficits in spite of the frenzied flatulence. The inability of government to live within its means is a huge signal that the end is near. (I can’t believe I wrote the end is near!!!) A huge "grasshopper" class of people unable or unwilling to do the dirty work of actual work, but more than willing to take value stolen from others. What happens when Uncle Sammy can no longer trade imaginary money for value?
Right now, over more than half of the people in this country either work directly for the government, or are feeding at a government trough. These people will vote to keep the money rolling in. A politician’s natural tendency to throw money at a problem will keep the money train rolling on. No one seems to be able to define exactly how much blood sweat and tears productive people must pay to support the unproductive, but the time is very near when the government could take it all, and it would not be enough. Does anyone seriously believe that simply printing money out of thin air will make the problem go away? Does anyone think that the people used to getting a check every other week for nothing are going to quietly accept the fact that there will be no more dole as they know it? Has anyone ever read books like Atlas Shrugged? Has anyone truly considered what happens when the lights go out?
During the lifetime of anyone alive today, whenever there was a huge disaster, the U.S. would come riding to the rescue, investing enormous resources to mitigate human suffering. What happens when the world economy goes down in flames? We will be just as affected as everyone else, and no one is going to come to our aid.
This is going to be bad. It is going to happen.
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Post by nautonnier on Feb 21, 2013 1:28:54 GMT
Unfortunately, I think you have the tense wrong in your last statement.
This is going to be bad. It is going to happening right now.
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Post by magellan on Feb 21, 2013 3:30:01 GMT
Excellent writeup dgom. A few things I'd add in the additional cost of a Corvette; 50 years of [now unsustainable] accumulated employee and retiree benefits attached not to mention mismanagement, untold regulations, legal costs etc. etc. etc. Now GM gets special tax status and still owes the taxpayers $26b, but big deal right? Your point is well taken. Also, the Federal Reserve is "printing" $85b/mo, not the commonly reported $40b and in just the month of January 2013 $237b for foreign bank bailouts (Europe). www.zerohedge.com/news/2013-02-09/feds-bailout-europe-continues-record-237-billion-injected-foreign-banks-past-month And that is the just the tip of the iceberg. The total amount is in the multiples of trillions of dollars none of which is accounted as part of the U.S. deficit/debt, but the dollar and hence us are affected by it just the same. What me worry?
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Post by Andrew on Feb 21, 2013 9:51:29 GMT
Excellent writeup dgom. A few things I'd add in the additional cost of a Corvette; 50 years of [now unsustainable] accumulated employee and retiree benefits attached not to mention mismanagement, untold regulations, legal costs etc. etc. etc. Now GM gets special tax status and still owes the taxpayers $26b, but big deal right? Your point is well taken. Also, the Federal Reserve is "printing" $85b/mo, not the commonly reported $40b and in just the month of January 2013 $237b for foreign bank bailouts (Europe). www.zerohedge.com/news/2013-02-09/feds-bailout-europe-continues-record-237-billion-injected-foreign-banks-past-month And that is the just the tip of the iceberg. The total amount is in the multiples of trillions of dollars none of which is accounted as part of the U.S. deficit/debt, but the dollar and hence us are affected by it just the same. What me worry? That Zerohedge article is confused or dishonest. The fed increases the excess reserves by buying what are either implicitly or explicitly US government obligations, for example the mortgage payments of US government sponsored agency mortgages. The money is not 'handed over to the foreign banks'. The text from Zero hedge does not even make any sense at all. we have a sinking feeling that as the Fed creates $85 billion in reserves every month... it will do just one thing: hand the cash right over straight to still hopelessly insolvent European banks." So with Friday having come and gone, we did just the check we suggested. As the chart below shows, we were right.
Another way of showing what has happened: in the past 4 weeks, the Fed has injected a record $237 billion of cash into foreign banks with access to the Fed's excess reservesSo the fed creates 85B per month and will hand it right over to the insolvent foreign banks who will receive 237B??
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Post by karlox on Feb 21, 2013 19:57:18 GMT
For anyone paying attention at this point, the effect of trading dollars for unicorn farts is obvious: pay Taxes for CO2 and NH4 emissions!!! (first inflation next burst) Now try to see it from this point: what strenght or power will US keep and enhace if such a collapse ever happens? My answer: Military, which leads us to a War oriented economy, or the economy of War.
Second: Why is still Euro so high? it was born with a less than 1 dollar value, and now still being traded at 1,3177!!! I fear there is a B plan from Germany to temporarily split eurozone in two divisions Euro A and Euro B, otherwise euro is unsustainable. Third question and thought, could not be rather exceptional but rather convenient for the exceptional crisis that US (and Fed), EU (and ECB) could reach a fixed exchange rate for their currencies for a few years while favouring free trade among the zone? Other countries like Japan -if they wish- or South Korea and Brazil or UK or Switzerland could join the agreement... What would China do this case? Would not rather be much more thruethful and realistic to set 1 dolar = 1 euro exchange linked for a few years at once? (instead of printing printing printing...) And perhaps we might create together a really Open North Atlantic trans Pacific global Market? But this spiral needs a halt for it is a dead spiral for sure! And markets are unleashed powers with no-head and their panic -for many many reasons a these times- might trigger something much bigger. This is my more Optimistic version.
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Post by magellan on Feb 21, 2013 21:10:05 GMT
Excellent writeup dgom. A few things I'd add in the additional cost of a Corvette; 50 years of [now unsustainable] accumulated employee and retiree benefits attached not to mention mismanagement, untold regulations, legal costs etc. etc. etc. Now GM gets special tax status and still owes the taxpayers $26b, but big deal right? Your point is well taken. Also, the Federal Reserve is "printing" $85b/mo, not the commonly reported $40b and in just the month of January 2013 $237b for foreign bank bailouts (Europe). www.zerohedge.com/news/2013-02-09/feds-bailout-europe-continues-record-237-billion-injected-foreign-banks-past-month And that is the just the tip of the iceberg. The total amount is in the multiples of trillions of dollars none of which is accounted as part of the U.S. deficit/debt, but the dollar and hence us are affected by it just the same. What me worry? That Zerohedge article is confused or dishonest. The fed increases the excess reserves by buying what are either implicitly or explicitly US government obligations, for example the mortgage payments of US government sponsored agency mortgages. The money is not 'handed over to the foreign banks'. The text from Zero hedge does not even make any sense at all. we have a sinking feeling that as the Fed creates $85 billion in reserves every month... it will do just one thing: hand the cash right over straight to still hopelessly insolvent European banks." So with Friday having come and gone, we did just the check we suggested. As the chart below shows, we were right.
Another way of showing what has happened: in the past 4 weeks, the Fed has injected a record $237 billion of cash into foreign banks with access to the Fed's excess reservesSo the fed creates 85B per month and will hand it right over to the insolvent foreign banks who will receive 237B?? It is confusing because the Federal Reserve is in auto-mode and works in secret, they are too important to be scrutinized. Any talk of intervention by Congress (their Constitutional duty) would compromise the Fed's "independence" per Chief Bernanke. If you can find out what banks comprise the Federal Reserve, you'd be the first. First, understand the total amount of unicorn farts exceeds $16 TRILLION dollars between 2007 and 2010. www.forbes.com/sites/traceygreenstein/2011/09/20/the-feds-16-trillion-bailouts-under-reported/GAO report here, linked to page of payouts to various financial institutions, corporations etc. www.scribd.com/doc/60553686/GAO-Fed-Investigation#outer_page_144============================================ Next, is the Sept 2012 report of "truckloads" of money headed for Greece from BoA (Bank of America), Merrill Lynch et al which if you'll notice are in the GAO list on page 144. www.businessinsider.com/bofa-merrill-lynch-truckloads-of-cash-to-greece-2012-9============================================= From 2007 until now, the Federal Reserve has been printing and printing and printing. In December 2012 it was announced central banks would give Europe an "extended" line of credit hence the $237b in January 2013. Again, where did the European banks get the money to extend this line of credit? Well, take a wild guess. www.cnbc.com/id/100310162/Federal_Reserve_Central_Banks_to_Extend_Credit_Lines============================================= That brings us to the article you say makes no sense. Figuring it all out is not easy, but that's what people like Tyler Durden do. The Federal Reserve is now monetizing U.S. debt and also pumping huge sums of unicorn farts into Europe. Go to the link provided, page 18 line 25. What ZH is saying is the QE that is supposedly targeted for priming the pump of the U.S. economy (food stamps for Wall Street) in large part is going to Europe. The $85b reference is only a smidgen of the total. But what the hey, it's only paper unicorn farts right? The numbers are staggering. Bottom line: Europe is toast. How can the dollar be used like this one may ask? Because the dollar is the reserve currency, but it might not be for much longer. By printing so many dollars not only does it devalue the dollar, it devalues other currencies as well, so America is toast too. Just for fun look at what's happening to the British Pound. What is keeping governments operating? Bond swapping. If (or should I say when) the bond market fails, it is over baby. So if you really want to watch for signs of another collapse coming, look at the bond market. It's all propped up by funny money unicorn farts. I'm not sure, but it looks to me the Utopian Socialist experiment has failed.
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Post by Andrew on Feb 21, 2013 21:28:55 GMT
Without rereading that ZH article they seem to have made a bit of a mess of explaining what you just explained about the dollar swaps being renewed for another year. The swaps are at a fixed currency rate. The ECB will still be here next january, and the ECB is obligated to then swap back the euros given to the fed for dollars.
As for the general situation, the bond markets are doing remarkably well given the scale of this crisis, fairly clearly there are sufficient players who want to have these government bonds and consequently US treasuries only have a few percent in yield taken off because of the QE purchases. Even junk bonds are in favour and private label MBS is coming back. FHA delinquencies seem to be mainly confined to 2008 and 2009, with the subsequent years performing well. Fannie and Freddie are in wind down mode and have tighter lending conditions already and yet there is the beginnings of a housing recovery. All in all the fed is in a reasonably strong position and the naysayers are going to need quite a bit of bad data to arrive for their pessimistic outlook to be justified.
Not surprisingly Gold has run out of steam for the time being.
As for money being unicorn farts, if you are required upon pain of inprisonment to collect unicorn farts and hand them to the government then unicorn farts will be sought after valueable items. Further out the US will have to have higher taxation and cut back spending to ensure unicorn farts are sufficiently sought after.
Unless the US absolutely shows it is unable to manage its affairs then it is going to pull through this crisis, but for sure it is going to have to adjust the way of living of Americans so that they live in the real world rather than some kind of consumer fantasy where somebody else pays. Importantly that means the rich are going to have to pay more in taxes and you will likely see fewer fat cat Americans.
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