Financial topics

[Higgenbotham]

Exactly how rentier repressionary markets work. As we observed here: It will sum up to calculating the “financial repression tax,” more specifically, the annual “liquidation rate”

Also it goes like this: The Federal Reserve regulates banks. Now again this week we see a barrage of Federal Reserve thieves out in force telling us how important it is that interest rates be at zero. But that's the zero that the banksters pay to you. What's not said is how important it is that credit card interest rates be some large number other than zero. Or if you don't use credit cards, that the money in your pocket, i.e. "Federal Reserve Notes" be losing value to inflation because the banksters get TRILLIONS in free money from the Federal Reserve, which depreciates your currency and raises prices, but not wages.

So today I heard this story. There were some Little League games last night and the umps didn't show up. Everyone is standing around and nobody knows why the umps didn't show up. Most of the umps are near retirement age. Finally word comes that the umps want more money. They are getting $45 per game and they want $55. And when this story was told to me I said does anybody get why this is happening? The Federal Rserve is giving TRILLIONS to banksters to boost prices which pits the little people against each other for a mere TEN dollars.

[aedens]

http://traderdannorcini.blogspot.com/20 ... again.html
Noboby knows when but why is just an after thought on who killed it.
“social silences”

[Trevor]

They're "Too Big to Fail", remember? That means we have to keep propping up all the banks no matter what. They did the exact same thing when the Japanese bubble popped. All the banks and companies were so run-down that the only thing they could do was survive on further bailouts. I believe their interest rate is still about .1 percent.

[Higgenbotham]

It is possible that individual mandates will take the place of inflation as a "painless" tax, if prices go up, politicians can simply curse and threaten the people supplying the service we are mandated to buy, or implement price controls. This all has some huge implications for what the future economy might be, if schools, medicine and pensions are all "privatized" but the government mandates price controls, then large blocks of the economy could be frozen in place and unable to progress. All roads lead to Rome.

This seems highly likely. And this is a minor detail in some ways, in others not, but on many of my property tax bills I have noticed a separate line item for "library" and I think the parasites will target that line item if the public complains about high taxes. It's convenient for a number of reasons, one being that during a descent into a Dark Age it will be advantageous to certain groups to destroy accurate historical records. The likely process is libraries would be "privatized" and anything that doesn't generate revenue would be thrown out and replaced by things like Disney movies that do generate revenue.

[OLD1953]

When it comes to mattress stuffing, this is most illuminating.

http://www.zerohedge.com/news/where-mon ... ish?page=4

The comments don't seem to take failure of nations or national bankruptcy into account. When you do that, considering that all money is marked as debt now, it seems to me that the place where all the money will go is obvious, it'll go down a black hole and vanish. The black swan to end all black swans, and it will start with the collapse of Spain or Italy, because they are too big for any realistic attempt at rescue. When they start to go, the nation of Europe will jump into "every man for himself" and start manning the lifeboats as the ship of state sinks, and then the crash comes.

How many banks are now actually hedge funds? How many will go down when the CDS insurer fails and nobody picks them up? The assumption that governments will always rescue them is on very shaky ground now. And when they go, the money vanishes, and we are going to have a really rough ride.

Looking at a couple of other articles/threads there, I note some speculation that the government is manipulating gold prices (which I don't much doubt they are manipulated) to be artifically low by selling physical metal into the market. I have to first question the assumption that the FED wants lower gold prices, the question there is why? and there isn't much of an answer save to affect market psychology. If I was Bernake, I'd probably LIKE higher gold prices, they'd tend to drive investors to bonds instead of gold, or create fears of a gold bubble or top with correction to follow. And why would anyone want to sell physical metal to manipulate that market? The gold futures is already far larger than the size of the gold stocks available to service that market, calls to own physical gold are pretty obviously attempts to drive up that derivative price. It is much easier to manipulate the price of gold by messing with the futures market, it's a small market relatively speaking. I'd suspect the banks/hedge funds are manipulating gold as a fix vs bonds, assuming a series of defaults will run up the gold price. I think it will drop in such a case myself, because all markets will have the air let out of them at once, because the banks that will be failing are the remaining players in the markets, but I suppose we'll see.

[aedens]

“Stranger of Athens, we have heard much of thy wisdom and of thy travels through many lands, from love of knowledge and a wish to see the world. I am curious therefore to inquire of thee, whom, of all the men that thou hast seen, thou deemest the most happy?” This he asked because he thought himself the happiest of mortals: but Solon answered him without flattery, according to his true sentiments, “Tellus of Athens, sire.” Full of astonishment at what he heard, Croesus demanded sharply, “And wherefore dost thou deem Tellus happiest?” To which the other replied, “First, because his country was flourishing in his days, and he himself had sons both beautiful and good, and he lived to see children born to each of them, and these children all grew up; and further because, after a life spent in what our people look upon as comfort, his end was surpassingly glorious. In a battle between the Athenians and their neighbours near Eleusis, he came to the assistance of his countrymen, routed the foe, and died upon the field most gallantly. The Athenians gave him a public funeral on the spot where he fell, and paid him the highest honours.”

[Trevor]

I can't help but remember what John had said in one of his books about our current situation.

Today, the Fed is acting to prevent these massive results by flooding the economy with money -- by keeping the federal funds interest rate close to 0%, and possibly by repurchasing long-term bonds. Businesses that are close to bankruptcy can often borrow cheap money and keep going. People who are close to bankruptcy can often borrow against credit cards, which pass along the low interest rates to their customers.

So we're seeing a different effect on people's lives of the massive stock price drop than we saw in the 1930s. In the 1930s, people went bankrupt and homeless. Today, people and businesses are going massively into low interest rate debt.

It's not known what effect this will have in the long run. In the optimistic scenario, it will give businesses time to change to produce 21st century products, instead of the old 20th century products. In the pessimistic scenario, it will keep the "crusty old bureaucracy" in place a few years longer, thus causing an even harder fall when the fall finally comes.

From the looks of this, the pessimistic scenario has occurred. If anything, the crusty old bureaucracy has grown if you consider the massive increase in government spending that's taken place over the last few years. It's also given false confidence to investors and banks, having sent the message that "if anything goes wrong, we can just get another bailout".

[OLD1953]

The FED has certainly grown in size and status, but it's a private bank, not part of the government. The US federal govt is shrinking in terms of number of employees (opposed to retirees or pensioners, which are different books and aren't bureaucrats - and yes I've seen attempts to count them as the same thing), the military is being reduced, etc. The FED may be getting bigger, but the bureaucracy is not.

http://www.opm.gov/feddata/HistoricalTa ... ce1962.asp

Only goes thru 2010, doesn't show the recent military cutbacks, nor the attrition in other sectors. It's not what it's being advertised to be.

Don't forget to discount for the 2010 census!

And we need to take into account that we are actually reducing per number of citizens at an even more rapid rate.

This guy is angry over food fraud.

http://www.forbes.com/sites/larryolmste ... -beef-lie/

Well worth reading all three parts.

[aedens]

April has now seen six of the last nine days swinging between 2 sigma gains and 2 sigma losses (for the NASDAQ) ht z/h
Small business is being systematically destroyed by tax and regulatory provisions.

[Higgenbotham]

The FED has certainly grown in size and status, but it's a private bank, not part of the government. The US federal govt is shrinking in terms of number of employees (opposed to retirees or pensioners, which are different books and aren't bureaucrats - and yes I've seen attempts to count them as the same thing), the military is being reduced, etc. The FED may be getting bigger, but the bureaucracy is not.

OLD, if I understand it right, you work in the military. When John talks about the "crusty old bureaucracy" he is referring to the large private corporations that were founded or grew mostly out of the bottom of the last cycle. For example, GE, founded by Edison, I think, was once an innovative and self-sustaining company that has become a crusty old bureaucracy dependent on government handouts, favors, and contracts.

My theory on where people best innovate is that it hasn't changed. It does not occur inside large bureaucracies like GE despite a wider recognition of what innovation is and how it is done, because innovation is closely tied with the human spirit and the conditions of necessity and freedom (maybe not the exact right words) from which all of history's progress has come. Necessity is maximized under tough economic conditions, but so is freedom. People innovate best in small unstructured environments like garages, basements, or small companies. The way the maximum number of bright people get into innovative environments is for the crusty old bureaucracies to collapse and for costs to come down. In the case, as like today, when the societal structure of the US has become flawed so as to disallow innovation, people will probably go outside those boundaries to innovate. The US economy will not receive the benefit.

Small business is being systematically destroyed by tax and regulatory provisions. They will just leave here taking every last cent and setup elsewhere and it is ongoing before your very eyes.

Another way of stating that innovation is disallowed. Reward a parasitic monster like GE but pick on the little companies from which most progress comes.