How loud do the alarms have to get? There is an economic emergency in the country with millions upon millions of Americans riddled with fear and anxiety as they struggle with long-term joblessness, home foreclosures, personal bankruptcies and dwindling opportunities for themselves and their children.
Scott Brown's election signals second leg down ?!?!
As I write this, looking like a very real possibility. (Might be overly optimistic)
Scott Garrett, NJ Republican has gone on Bloomberg and PBSNewshour to press message that markets need certainty (he also said that Fannie and Freddie will require more money than TARP). Garrett said markets need to know what the rules are going to be so they can plan accordingly. This theme was also repeated by Timothy Geithner in his interview on PBS. At the moment markets don't know what to make of the recent Obama statement on banking regulation.
Then you have this gem on FoxBusiness and the WSJ where they announce that Bernanke's confirmation by Jan31 may be in trouble because of the "populist" election of Scott Brown.
If Bernanke is not confirmed, this would throw the markets into more turmoil and I think might confirm the 2nd wave down has started. If he is confirmed then we will see what happens next.
Less than six months after taking power, Japan's government is grappling with a budget blowout, financial scandals, and falling voter support. Yukio Hatoyama, the prime minister, says he will quit if it is proved that he lied about political donations from his mother. Meanwhile, prosecutors are about to question the second-ranking official in his Democratic Party of Japan over property purchases. Keeping in mind Japan is on its third finance minister in less than a year.
Some interesting articles:
Great analysis of todays trading after Obama announcement
It seems as if ever since Scott Brown won election in MA a whirlwind has started. First of all it is almost inconceivable to me that Brown won on his own merit. That defies logic and is held up by the votes. He got about the same number of votes in MA as John McCain did. I also think that if the DNC had wanted Coakley to win they would have pulled out all the stops to make sure she did win. They could have a top notch team in to run her campaign and they didn't. Its almost as if the DNC did not want to win or didn't care if they won in MA.
Then you have all this stuff about the PIIGS and Japan, the phony deficit commission, the supreme court ruling recognizing the reality of American politics, Obama coming out claiming he wants to reign banks in and world-wide the markets are all down today.
On top of that you have the continuously accelerating destruction of the American economy, eating itself in its never ending hunger for credit.
This chart says it all. A prime example here in BC is Fortress LLC being unable to restructure or get a new loan for Intrawest despite having a year to do so.
The dog is chasing its tail and eating itself in the process. Just like a hungry man eating his own foot and working his way up. There is no end in sight nor anyway to stop it. It is laughable when you hear someone say government just needs to stop spending. Farcical when someone says that China will rescue the world by consuming more. Thats impossible and a total joke.
American financial capitalism is destroying itself and is taking the whole world down with it.
2008 was the year of the defaults of failing banks -- Bear Stearns, Lehman -- and failures. 2009 was the year of the bailouts of failing banks and car companies. 2010 is shaping up to be the year of failing countries. Each year, the financial damage is worse than the preceding year.
As I've been saying for years, the world is in a deflationary spiral, as the massive real estate and credit bubbles continue to deflate. (Anyone who says we're facing superinflation is an idiot. See Ambrose Evans Pritchard's analysis.)
That means that everyone is "deleveraging," and each month there's less money in the world than there was the month before. As that process continues, there's less and less money to support failing banks, failing car companies, and failing countries. It's only a matter of time before some event triggers a massive worldwide panic. The timing can't be predicted, but the result is 100% certain. Deleveraging = Deflation ... Things you need will inflate, those you don't will deflate, in a huge way.
FT columnist Gideon Rachman Bankruptcy could be good for America
"with entitlement spending set to surge, there is no credible plan to bring the budget deficit under control over the medium term...Oddly, it might be best if the crisis came sooner rather than later. For a surprising number of countries, running out of money has been the prelude to national renewal."
Porter Stansberry The bankruptcy of the United States is now certain
"Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP...Currency speculators figured out how to accurately predict when a country would default. Two well-known economists - Alan Greenspan and Pablo Guidotti - published the secret formula in a 1999 academic paper. That's why the formula is called the Greenspan-Guidotti rule. The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support. The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured. So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default."
On top of all this you have PIIGS, Japan and the Euro falling apart
Garth Turner has another great blogpost up today where he writes:
"Not a day goes by I’m not reminded of the weight of conventional wisdom stacked against me. Bank economists, the real estate cabal, various pump-&-dump media interests, the Bank of Canada, the federal government. Luckily this is normal in my life thus far, so such criticism leaves me unruffled. But how so many people can believe the price of an asset will rise endlessly is hard to understand. How Canadians, by the millions, can be so sure they’re immune from what happened to the south, for the same reasons, in the country which most mirrors ours, mystifies."
This decision was expected and likely delayed until MA senate race over. Still a shock. Makes you wonder what on earth is going on in the US. If allowed to stand people may as well just give up.
I'll say one thing though, this decision is also a recognition of the defacto truth. Corporations own Washington and have for decades. This decision can be seen as formally admitting the truth.
I think this is smoke and mirrors. If Obama or anyone else had seriously wanted to do something about financial risk taking they would have done it a year ago. In my opinion this is another false flag non-event. It will never materialize, will be watered down, drag on for years, or be too late. The real question, yet again, is why? Why now and what does it mean? I suspect it is political cover so can say tried to do something or started to take action to reduce financial risk.
Here is another false-flag story, this one more blatant than the first
Question is what is the point? Clearly more smoke and mirrors but why? Another example of how the people really have no idea what is going on and the politicians don't want us to know. Watch this hand while you have no idea what the other hand is doing. This commission implies that the government intends to do nothing.
ModernMystic has a great video up discussing what he sees as 3 possible options on how governments are handling the collapsing world economy. A) let it go and chips fall where they may B) slow fall over the next decade C) Massive spending aka New New deal. There may be other options.
In my view C) is not viable because it assumes existing fiat currency sustainable, which it is not.
So is it A) Fast or B) Slow.
There a quite a few bloggers and analysts, including Roubini and Faber, predicting a slow fall and the benefits to this are obvious. The problem with the slow fall argument is simple. If Obama et al were intending a slow fall, why accelerate the bankruptcy of the United States? Why in 2008 acknowledge that "Too Big to Fail" was a systemic risk and then in 2009 make TBTF banks even bigger? Joesph Stiglitz and many others have gone on record saying the risk now is greater than the risk in 2007 and 2008. In other words why has the US government accelerated and made risk even greater if the intent is have a slow collapse?
The recently passed financial reform bill in the House has provision of $4 trillion to bail out wall street and limits debate to ten hours. So the government has provided for the possibility of another bailout of wall street if necessary. How serious is this? On the one hand you have legislation preparing for another wall street bailout. On the other hand you have Obama, congress and the media bank bonus bashing pointing out record wall street profits while main street is ignored and continues to economically deteriorate. As always the medium is the message.
What is the message? Wall street made record profits in 2009 because taxpayers bailed them out in 2008. Without taxpayer bailout these firms would not even exist today. They owe their existence and 2009 profit because of taxpayer bailout. Taxpayers bailed them out, they made record profits, taxpayers saddled with debt, rising unemployment, depreciating wealth, access to credit and so on. In other words wall street reigns while main street suffers.
I think there is a very real possibility this is all a setup.
When the next financial crisis comes, there will be no bailout. These firms will be allowed to fail and congress has laid the grounds for denying another bailout. They are and have made the public so angry at the last bailout this will give congress the cover they need for not authorizing another one. No bailout, firms will go bankrupt, financial system will collapse, chips fall where they may.
So next question is when? Impossible to predict but can speculate...haha
In 2010 real unemployment will continue to increase, the economy will continue to deteriorate. (Fake employment will include 1.3 million census workers) Lets suppose the situation is allowed to continue. That will mean in 2011 wall street will again make record profits and bonuses. In 2012 wall street makes record profits, 2013 and so on. How logical is this? It's possible but is it logical?
Currently the most telling indicator of timing for the next crisis is Obama's recent executive orders, declaration of national emergency and so on. If. and big IF, Joesph Stiglitz and others are right, the situation is worse now than in 2007, the risk greater than before and getting greater, that essentially means another crisis is inevitable. So another crisis is inevitable. Obama knows this and is preparing for it by taking extraordinary measures. The state of national emergency because of the "Swine Flu" has not been lifted. How long will this national emergency go on for? One year? Two years? Three years? If the next crisis is three years away why create this "Council of Governors" now? Along with the litany of other things Obama has done such as enlist the post office for a national emergency. Why all this preparation for an l emergency if next crisis is years away?
I am changing my mind that the next big leg down is a long way off. When the earthquake hit Haiti I thought to myself, right, the next phase will be delayed because of this. That still may be true, it might be put off, but I don't think it is ten years away or will be a slow fall.
My rational fundamentally has always been the sooner they get this old system over with the sooner they can restart with a new system. That to me is logical and rational. The idea will be a slow decay makes little to no logical sense. Why elect Obama to preside over a slow decay? Why has hollywood and the entertainment media incessantly bombarded its audience with "end of the world as we know it" theme if going to be a slow decay? What will 2010 theme be? 2011? 2012?
