Financial topics

[Reality Check]

Either the EU caves and does a 100% bailout, or Cyprus is a festering sore, inside, or outside, the EU.

That sore will spread contagion to those other portions of the EU banking system in countries where the EU might next decide to let that portion of the EU banking system fail.

There is no solution to the EU problem long term, but they can follow the U.S. Fed model and continued to kick the can down the road for years if they make no mistakes. But the same intellectual, educational and moral challenges that led the leaders of Europe to create this unfix-able economic disaster, are likely to cause them to make the wrong choice at some point. Cyprus is either that point in time, or a trial run for that point in time.

[Higgenbotham]

something on the order of a 20% crash in 10 minutes, but the market doesn't recover
I was kicking that around to consider the capital controls in percentages of the problem that capital can move as in actual allowed flows today as Ben alluded to and the lack of participation in the asian front as noted back some. Given the condition of actors in regional conflicts and consumer sentiment to the euro issues how did it manage to assert stability yesterday even on the daxx?

Narrow volatility versus extreme volatility where the distribution of outcomes is dumbbell shaped versus having the shape of the normal curve is the crux of the matter with any system observed today, whether the stock market or otherwise. In all cases, I think a valid case can be made for more extreme historical outcomes.

I discussed retail. Today we have big box versus lots of small proprietors. Big box is powerful and efficient within the particular narrow conditions under which it operates whereas lots of small proprieters are resilient - if some go, there are some left, and they go due to various local causes that aren't linked. With big box, once that goes, you have nothing.

Transportation is similar. Automobiles and horses or bicycles would be similar to big box and small proprietors. Bicycles are easy to maintain but now many don't have one or are too weak to use one, so if the automobiles can't be fueled or the parts aren't there to repair them, many can potentially be left with walking in an environment that is not conducive to walking. That's not a great example but I wouldn't be surprised if it works.

Same with food stamps versus soup kitchens, retail grocery chains versus home gardens and local independents, computers versus pieces of paper, specifically electronic money versus paper money, and just about anything else you can think of.

I would model the stock market exactly like the physical systems, and if we see that 20% or so crack in 10 minutes where the stock market doesn't come back I'll be concerned that the physical systems will imitate the virtual system in fairly short order, like 1-2 years later because it is all based on the same thing. If there are limits on the market where they shut down trading for the day after so many points or percentage points down, it won't matter. It will simply open limit down day after day and increase hysteria.

[aedens]

Either the EU caves and does a 100% bailout, or Cyprus is a festering sore, inside, or outside, the EU.

That sore will spread contagion to those other portions of the EU banking system in countries where the EU might next decide to let that portion of the EU banking system fail.

There is no solution to the EU problem long term, but they can follow the U.S. Fed model and continued to kick the can down the road for years if they make no mistakes. But the same intellectual, educational and moral challenges that led the leaders of Europe to create this unfix-able economic disaster, are likely to cause them to make the wrong choice at some point. Cyprus is either that point in time, or a trial run for that point in time.

http://generationaldynamics.com/forum/v ... 970#p18556

Around seven percent is Russian cash I have read but cannot link at the moment. Also the financial hub it is handles around
a trillion dollars in business cash flow per year and I will find that number or interview I heard earlier. We are not seeing all the
moving parts and as linked they bought Greek debt and neglected as always politician do to do the smart thing at times.
I am way over the line on they are finished in the Euro and as we noted investors provide knowledge and cash infusion
which is commodity credit as we have discussed here that is well over 90 percent of currency on record. I am currently
going through this process in our group so I see many reflections but we must get past the rhetorical questions.
I feel as noted before they blew it and are being served terms of the banks charters and when the accounts are drawn down
its over. I would agree RC the midnight hour for them is here , and the trial run for termination of insured accounts to serve final notice.

No accidents in Politics just intent.

Math: ($3.72 / 1M BTU) x (1000 BTU / 1 cf) x (7 tcf) = $26.04B total present value and 16.0B in cash on account and drawing
down and I did not check SDR yet.

And yes they who are being bailed out are the stupid core financial institutions that pissed all their Muppet money searching for yield
so this is a traction event since we understood the mechanics of other people money does run out. I think the whole zone went crack as you do also.

Noble apparently reckons a pipeline could be in operation as soon as 2014 or 2015. Surveys suggest more than 100 trillion cubic feet (2.831 trillion cubic metres) of reserves lie untapped in the eastern Mediterranean basin between Cyprus and Israel

[aedens]

We know TBTF is to big to manage for some groups since they are cartelized for hidden tax which is our wasting process Higg. I see no relenting on statist avarice since they have been told point blank and clearly what step they are at. It was very clear from many sources to what lies ahead unless they understand what they ignore. I have tuned many devices as you suggest Higg which will tear this machine apart so I understand your analogy very clearly.

[Higgenbotham]

Thinking more about the collapse of the Soviet Union and whether that was a dark age process reminded me of something.

Most of the Eastern European countries were absorbed into Western Europe and that process went smoothly. There was one exception, though, and that was Belarus, which borders on Poland and Russia. Belarus became in independent country most closely allied with Russia. I think if you want to see first hand what a dark age resembles, then visiting Belarus would be a good idea, and reading about it wouldn't be a bad idea. I've visited Belarus myself and it was a real eye opener. Technically, I don't think Belarus is in a dark age because of what surrounds it, but it's the closest thing to a semi-Western country that has fallen that I know of. I'll see if I archived anything specific and then maybe re-copy anything good here.

[Higgenbotham]

We know TBTF is to big to manage for some groups since they are cartelized for hidden tax which is our wasting process Higg. I see no relenting on statist avarice
since they have been told point blank and clearly what step they are at. It was very clear from many sources to what lies ahead unless they understand what
they ignore. I have tuned many devices as you suggest Higg which will tear this machine apart so I understand your analogy very clearly.

a, tear apart a series of Wal-Mart, Exxon, McDonald's or JP Morgan annual reports and see what you find. Look at Exxon's numbers from year to year for example, and look for vulnerabilities or information that is necessary for analysis but is hidden. Ask the designated reps for clarifying information and see what you get. They will respond but they won't tell you anything because they can't. I played this game around 2006.

[Higgenbotham]

Old post.
In my opinion, a good model for the future of the US retail economy will be what I saw on a cold February 2006 in Mogilev, Belarus, one of the poorest parts of the former USSR. There, I saw vendors standing outside in the freezing cold selling essentials (food, soap, etc.) off of carts. As I recall, they were using an old athletic field that had been converted to this purpose. I paid a very brilliant unemployed person to put me up in a Kruschev flat and spend a week showing me exactly how they were living post collapse. This particular family purchased most, but not all, of their goods from these outdoor vendors. The vendors made 5 or 10 dollars per day.
Other info.
They took me to a state run dental clinic. There were people there moaning in agony because they needed dental care but the state was way behind. The way I understood it was if you were in enough pain, you got in. It's been too long to remember what one woman said her specific wait time was to get a tooth taken care of, but 18 months comes to mind. Due to the linkage with Western Europe, though, a Western European dentist had come in and it was allowed to use him if you had the money. Few had enough money. I believe there was a tier in the middle where you could pay the state for expedited and higher quality dental care. Later, one of the people told me they had a tooth problem and the state wanted to pull the tooth, but if they had some money, they could go to the independent dentist and save the tooth with a root canal or something. I don't know if the story was made up or not, but I wired them $400 to get that taken care of. Which is one reason I say Belarus is not in a dark age because services and money can come in from the outside.

[Higgenbotham]

There was a modern road from the capital city to the city I visited. There was virtually no traffic on it or in the city. Every so often, I would see a large bus shelter and an old broken down bus that looked to be about 40 years old. That was the main form of transportation. Within the city, a bus ride was a dime. We didn't need to use a bus because the flats were all within a short walking distance of everything. The streets teemed with people who were walking in the bitter cold. Many would hold onto each other when walking, as if for dear life. The faces were expressionless. The men universally wore black jeans, not blue.
We would eat at a sort of swank modern restaurant where a meal cost about $4. It was about half full, never full. The people liked to window shop or dream of things they might buy if they had the money. Getting back to the restaurant, there was a girl who tagged along with us every day and I bought her a meal. This was a huge deal for her because she'd been looking through the windows of that restaurant for a long time but couldn't afford to eat there. She explained that her sister made about $120 per month working in a factory and her mother made about $200 per month.
The airport at the capital city had 7 flights out the day I left. You parked right in front in a huge parking lot that was virtually empty and walked right in, like you'd walk into a Home Depot on a week day. It was maybe a 100 foot walk. All of the flights out to the west were to Frankfort, Germany and Lufthansa I think was the only Western airline that served Belarus. When getting into Frankfort, the contrast was absolutely incredible, like being on a completely different planet. I was never so glad to get out of a place. I was there 9 days and by the 9th day I was climbing the walls.

[Higgenbotham]

I had asked them to take me out to the village where some of their relatives lived. They seemed agreeable to this idea but I found out they were in fact hesitant to do so. The reason, I found out, was that their relatives in the village wanted absolutely nothing to do with an American. Didn't want to see one, didn't want one around. One day, we went out there anyway. It was a few small houses, almost ilke shacks, in the middle of nowhere, that needed lots of repairs. We spent maybe an hour there, walking into the yard and around one of the houses they were familiar with, but not inside. There were obviously people in the houses but nobody came out to greet me or anything and we did not go inside. They seemed in a hurry to leave.
Which reminds me, I met a black woman from New York City who was on my flight in and out. We sort of commiserated in the Frankfort airport on the way out. Never were both of us so glad to see a fellow American, any American. She said she was in Gomel and people turned sideways on the street when she passed and would follow her for a few feet, staring at her. I had noticed the same type of thing in the airport where the Belarussian employees were staring in wonder at this woman and one was so entranced that she was moving her lips in strange ways.
The reason I bring these 2 things up is the interaction among population groups will decrease markedly if the US collapses, and it was good to have real live experience in seeing how that actually works.
That's about all I can think of for now.

[Higgenbotham]

My conclusion from visiting Belarus is that Belarus was more able to withstand a collapse than the US will be, and that when the US collapses it will be in worse shape than Belarus, which is a scary thought having been there. Anyone can pick through all I've written above and find a half dozen reasons why from the physical layout to the ethnicity to the adjustment time to the presence of dachas and other factors.

This US is optimized to operate under a very narrow range of conditions that likely will not be present for very long into the future. Once any of those conditions deviate, there is no flexibility to make corrections, contrary to what many assume.