Financial topics

[Trevor]

One good example of what's going to happen is to just look at California; it's just a couple of years ahead of the rest of the country. Most of the cities and counties went nuts during the big property bubble and now that's it's at least partway collapsed, depending on the region, one city after another is going broke. Even Los Angeles is getting close to bankruptcy.

I happen to believe that we can rebuild and create a better world, but it's going to take a lot of agony to reach that point.

On another note, Spain's unemployment has now surpassed 25 percent.

[Reality Check]

I happen to believe that we can rebuild and create a better world, but it's going to take a lot of agony to reach that point.

If you mean by "we", the Hero Generation, or more correctly the portion of them that survive what is coming, then they will have the opportunity to build a new world.
But it will be their choice as to what kind of a world it is.

Those of us belonging to the Boomers and Gen X, will be, correctly, blamed for creating Generation X, and creating the disaster that is coming, respectively.

The Boomers will be too old to do anything but advise, pass on history, to the Hero Generation, and get out of the way by dieing, as the result of being denied life maintaining healthcare by Generation X.

Generation X is still busy making the crisis worse every day. They are not part of the solution. They are still creating the problem.

[Higgenbotham]

One good example of what's going to happen is to just look at California; it's just a couple of years ahead of the rest of the country. Most of the cities and counties went nuts during the big property bubble and now that's it's at least partway collapsed, depending on the region, one city after another is going broke. Even Los Angeles is getting close to bankruptcy.

Some may believe that won't happen in the other cities outside California that are more "conservative" but it will, based on my experience.

One possible reason is that most cities throughout the country have been run by city managers who use approximately the same principles regardless of what the conservative locals think. I lived in a conservative midwest city, population 35,000, that imported a city manager from the outside. This was in 1984. He proceeded to spend money and raise property taxes.

The locals didn't like the fact that he was spending more money, but they sure as hell didn't want their property taxes raised. Some local leaders (or rabble rousers) of the Hero Generation organized a demonstration on City Hall the night of a city council meeting to protest the tax increases. Hundreds showed up and the City Hall was filled to overflowing and those who couldn't fit in the building sat out in front until the meeting concluded. That was the end of the property tax increases and property tax rates per thousand assessed valuation went down 25% over the next 5 years. The councilors were voted in based on their record of supporting property tax decreases.

The city manager continued to spend money. The sewer plant was downtown along the river and emitted an awful odor due to the food processing industry in town. It was decided to build a new plant that would cost about $52 million. National engineering and construction firms were hired and cost was no object. The design chosen was to get rid of the odor once and for all. All sewage was pumped 5 miles outside the city to the new plant, processed, then pumped 5 miles back to the river. The final cost of construction ended up being $89 million, or about $2500 per resident, all paid for with municipal bonds.

I remember people in the Hero Generation, now deceased, telling me the city manager had "destroyed the city". One of these people was a retired lady, former office manager of a construction company, who read the city finances line item by line item. Little did I know and they never lived to see it. I watched them all die off one by one. In 2009, after the last collapse, I read a newspaper article saying the city was broke and would be shutting down if they didn't receive aid from the state. They got some aid and continued operations. But I can't be optimistic that at least this city won't follow in the footsteps of what is happening in California, as you predict.

[Reality Check]

The Federal Reserve Act of 1913 contains:

Sec. 16.
...

Every Federal reserve bank shall maintain reserves
...
and reserves in gold of not less than forty per centum
against its Federal reserve notes in actual circulation
...

Section 16 of the current Federal Reserve Act, as amended since 1913, contains no requirement that a certain percentage of Gold ( or Gold Certificates ) be held in reserve for the Federal Reserve Notes in circulation.

Does anyone know of another section for the current Federal Reserve Act, or of any other law or regulation, that requires a minimum percentage of Gold to be in reserve relative to the amount of Federal Reserve Notes in circulation ( or a minimum percent of gold relative to any thing else for that matter ) ?

[Higgenbotham]

Does anyone know of another section for the current Federal Reserve Act, or of any other law or regulation, that requires a minimum percentage of Gold to be in reserve relative to the amount of Federal Reserve Notes in circulation ( or a minimum percent of gold relative to any thing else for that matter ) ?

There is no current requirement that I know of to collateralize Federal Reserve Notes with any percentage of gold. The only requirement I know of is that the Federal Reserve notes have to be collateralized.

[aedens]

http://www.amazon.com/BEHIND-THE-GREEN- ... uckgo-d-20

They are adapting the clive piven albeit subtle route and backing projects and funding debt "crisis" projects.
Locals must insist on following the money the source. The "special projects" are not as they look or harmless.
Some of Gals seen the current facts and listed is one from the left coast on whats up.
The current mess on the rail projects is just another land grab mask as noted in another entry.
Many years ago I seen first hand what these POS are able to pull off.
To question is to be a heretic. Nothing good is coming with this mindset.

[Reality Check]

There is no current requirement that I know of to collateralize Federal Reserve Notes with any percentage of gold. The only requirement I know of is that the Federal Reserve notes have to be collateralized.

Given, that,

And, given that that collateral shown on the Fed Statistical reports for Federal Reserve Notes in circulation are a sub-set of, ( and included in) , the total Assets shown on the Fed's Balance sheet,

And, given that the same types of assets ( primarily Treasury Notes and Gold Certificates ) make up both the Feds Assets and the Collateral for the Federal Reserve Notes in Circulation,

Then it would appear that the Approximately one Trillion in excess reserves in the each commercial bank's Reserve accounts with the Federal Reserve, could be converted into one Trillion of additional Federal Reserve Notes in circulation, upon the request of the Banks. This would double the amount of Federal Reserve Notes in circulation, virtually overnight, and cut the ratio of gold to printed money in half.

[aedens]

paper garbage. http://www.zerohedge.com/news/2012-10-2 ... -age-money

[Higgenbotham]

paper garbage. http://www.zerohedge.com/news/2012-10-2 ... -age-money

http://www.amazon.com/BEHIND-THE-GREEN- ... uckgo-d-20
Locals must insist on following the money the source. The "special projects" are not as they look or harmless.

http://www.amazon.com/Confessions-Econo ... 0452287081

Perkins writes that his economic projections cooked the books Enron-style to convince foreign governments to accept billions of dollars of loans from the World Bank and other institutions to build dams, airports, electric grids, and other infrastructure he knew they couldn't afford.

14th Century.

[Trevor]

I remember people in the Hero Generation, now deceased, telling me the city manager had "destroyed the city". One of these people was a retired lady, former office manager of a construction company, who read the city finances line item by line item. Little did I know and they never lived to see it. I watched them all die off one by one. In 2009, after the last collapse, I read a newspaper article saying the city was broke and would be shutting down if they didn't receive aid from the state. They got some aid and continued operations. But I can't be optimistic that at least this city won't follow in the footsteps of what is happening in California, as you predict.

Government doesn't have a lot of self-control when it comes to spending even under ideal circumstances. With the postwar generations in charge, though, even trimming around the edges is going to be impossible, despite promises to the contrary. California's among the worst, but many, many cities did the exact same thing Stockton has done.

I admit, i expected the collapse to begin this year, but it looks like I again underestimated how determined they are to go further into debt in order to kick the can.

In other economic news, our 3Q growth rate was 2 percent, still anemic. China's has slowed to 7.4, falling for the 7th consecutive quarter. Italy's has shrunk at a rate of .8 percent for the second quarter.