Financial topics

[Iceman]

Glad to see you got the hacker problem fixed John, as I need my fix of your site and stellar contributors each and every winding down day. Whew...the entire Cypriot banking problem thing seems like the chain-chain-chain, chain of fools events that sparked WW uno. Otherwise...heading to an "Eagles" concert at the MGM Grand this evening in Vegas with the Mrs. Tequila Sunrise time, and thanks ALL for your awseome take on USA/WORLD chain of unwinding events!

[Carl Lieberman]

John,
Was reading an interview with Nassim Taleb and noticed that Generational Dynamics came up. For all of your efforts, it's good to know that the world is listening.
http://www.reddit.com/r/IAmA/comments/1 ... agile_ama/

[–]nntaleb[S] 85 points 2 days ago
Rule: any company that would cause a national emergency requiring a bailout should it fail should be classified BAILABLE-OUT and employees should not be allowed to earn more than civil servants. That would force companies to 1) be small, 2) not leech off the taxpayer.
permalinkparent
[–]locster 7 points 2 days ago
However, if that rule/law were imposed then one or two generations down the line it's likely that it would start to be slackened as people forgot why it was there (or ceased to feel as emotional about the issue as we do now). (See: Generational dynamics) Hence, are we doomed to always be in a cycle of global crash and post crash rebuilding?

[aedens]

Looks like Hugo Chavez was alot smarter than most other bright leaders so good luck to all countries currently trying to (or about to try too) repatriate their Gold hordes back from New York or London. NWO means you are not wanted and The red and blue politards here want to follow the Euro in the ditch, brilliant theory. Goverment does have a place not to include a smothering theft cult.

FRANKFURT | Tue Jun 26, 2012 12:42pm EDT (Reuters) - Cyprus government bonds are no longer eligible as collateral for refinancing operations with the European Central Bank after the country's credit ratings fell below the minimum standard, the bank said on Tuesday.
A European Central Bank (ECB) spokesman said the downgrade of Cyprus into speculative grade territory by all accepted rating agencies meant that Cypriot government securities no longer fulfilled the creditworthiness requirement.
The ECB measure is likely to be lifted if the bailout Cyprus has requested is approved.
"Cypriot government securities cannot be used as collateral in Euro system monetary policy operations," the spokesman said.
"Counterparties making use of those securities will have to replace them with eligible collateral or, alternatively, get recourse to the liquidity provided by national central banks in line with the relevant Euro system arrangements (Emergency Liquidity Assistance).

Maybe they should of been booted before this. Pay as you go central bank leveraged over 300 percent or repressionary inflationary taxanistas here.
The germans are like, gee our model is broken over the trillions they made over a decade on flawed logic since 4000 B.C.E on Socialist Mypic No Skin the Game nonsense. John covered this day one to the dust bin it was going to.
=====================================================================================================
Vice President Joe Biden's London stay in February was not the most expensive part of his trip. A government document released on February 14, 2013 shows that the contract for the Hotel Intercontinental Paris Le Grand came in at $585,000.50.
None of these people even begin to care about the taxpayers. NWO is becoming Not Wanted Opportunists.
Taxpayers are idiots.

[Higgenbotham]

Person of the Year 2009
Ben Bernanke
By Michael Grunwald
Wednesday, Dec. 16, 2009

But while he doesn't put it quite this bluntly, he implicitly makes a case for doing nothing, for waiting to see how the recovery plays out. He suggests that pumping more money into banks that are already flush with reserves could be like pushing on a string, increasing liquidity but not lending. For now, the Fed is merely instructing its supervisors to lend more. The days of whatever it takes are apparently over. "The additional steps aren't as obvious or clear as the ones we've already taken," Bernanke says. "It's an enormous problem. There aren't easy solutions."

http://www.time.com/time/specials/packa ... -6,00.html

In December 2009 Bernanke was correct in my view. Why he reneged on that I cannot fathom. The whole page that is linked is a good review.

Bernanke supported the $787 billion stimulus last winter, but when asked about a second, he repeatedly refused to bite, saying only that no matter what Congress does, it needs to produce a credible plan to reduce long-term deficits. Basically, he'd like us to make do with the money we've got — no additional borrowing or printing. What he wants Congress to do is reform the system so that big firms can be allowed to fail without risking an apocalypse.

Reference from post earlier today:

I might modify that a bit to say that jump starting and stabilizing things in 2008 and 2009 was not necessarily bad. But, once stabilized, LTRO and (QE2 and) QE3 were counter productive.

[vincecate]

In December 2009 Bernanke was correct in my view. Why he reneged on that I cannot fathom.

The government needs to borrow around $1 trillion per year. The only thing holding the US economy together is low interest rates. At higher rates the interest on the debt would take up all the taxes and make it obvious the government was broke. If the government needed to borrow $1 trillion per year from the private sector interest rates would be sky high. So the Fed has to buy bonds or things fall apart right away. The printing money is to kick the can down the road so that there is time to hope for a miracle, or retire. We might not even make it long enough for him to retire.

If from the beginning it was clear the printing of money was going to go on forever, people probably would have gotten out of the dollar right away. To begin with there was lots of talk about their exit strategy. Then by printing money and then paying banks to leave their money with the Fed they have been able to print lots of money without making inflation. So now people think they can print $1 trillion per year without causing inflation. So a couple years down the road they can do an open ended printing and people are not worried.

I am so sure this is going to end badly. Just not sure when.

[Higgenbotham]

Reading between the lines of the Time article, if Bernanke had been asked in December 2009 what would happen if the deficits weren't reined in, more money was printed by the Fed, and too big to fail got bigger, his answer would have been that there will be a financial apocalypse. Then he went ahead and became a participant in those actions. It's not really that I can't fathom it from the standpoint of collective human stupidity. What I can't fathom is that if he was smart enough to know all that, why wasn't he more forceful in voicing it or trying to stop it.

I am so sure this is going to end badly. Just not sure when.

It seems like Bernanke knows it too, and has known it, and isn't sure he can get out in time.

[vincecate]

What I can't fathom is that if he was smart enough to know all that, why wasn't he more forceful in voicing it or trying to stop it.

The politicians don't think the Fed Chairman should be telling them what to do. Mish has been critical that Bernanke was "getting involved in politics". Many other central bank chairman have been in Bernanke's predicament. There does not seem to be any good way out, once the debt and deficit are out of control.

[aedens]

Vin your argument is gaining traction I feel. ‘But this week they were buying items for the gold. They know that if they put their money into gold instead of the bank, no one — not even Angela Merkel and the EU — can take it from them.’
His words were echoed by a pretty, dark-haired, 30-year-old Russian-born accountant who lives on the island. She warned: ‘Cyprus is in a suicidal situation.
Many Russians are scared they will lose everything, and I expect them — and their money — to leave the island.
‘Those who have real funds will never trust the Cyprus banking system or the EU again. There are plenty of other places for our rich to go: the Cayman Islands, Jersey, Luxembourg. This is a bad day for Cyprus. As a financial centre, the island’s reputation is ruined.

As we have learned over time money goes were it is treated best. Localized agony until critical mass. I do feel the canary there is no accident.
Localised shock, yes, collapse is under intense capital controls to drip blood to avoid arterial bleeding to prevent brain damaged taxpayers
expiring all at once.

http://www.dailymail.co.uk/news/article ... z2OQ8zzfbK

[Higgenbotham]

What I can't fathom is that if he was smart enough to know all that, why wasn't he more forceful in voicing it or trying to stop it.

The politicians don't think the Fed Chairman should be telling them what to do.

There have been a few Fed Chairmen, like Volcker, who didn't let the politicians tell them what to do. Obviously we have known all along that Ben Bernanke is no Paul Volcker and the article points out that Bernanke had no prior supervisory experience or responsibility beyond deciding what bagels to order before the meetings of the Princeton economics department.

[vincecate]

There have been a few Fed Chairmen, like Volcker, who didn't let the politicians tell them what to do. Obviously we have known all along that Ben Bernanke is no Paul Volcker and the article points out that Bernanke had no prior supervisory experience or responsibility beyond deciding what bagels to order before the meetings of the Princeton economics department.

But no matter who was Fed Chairman, no matter how good they were, I don't think they could really had done much to get the politicians to balance the budget or even cut spending significantly. In particular since all government economist are Keynsian and think more government spending stimulates the economy. It would not be possible for an economist to rise to the top of the Fed if they did not think that. See the article below.

Priceless: How The Federal Reserve Bought The Economics Profession
http://www.huffingtonpost.com/2009/09/0 ... 78805.html