6 replies to this topic

[heritage_ray]

Nothing much to add here. The descent is simply being managed.

We are today witnessing the Acute Stage of Bursting Credit Bubble Dynamics

(excerpt)

"At this point, there is clearly insufficient Credit expansion to support inflated asset markets; incomes and household spending; corporate cash flows and investment; and government receipts and expenditures. 

Lending markets are frozen, securitization markets broken, corporate and muni debt markets in disarray, derivatives markets in shambles, and the leveraged speculating community is engaged in panic de-leveraging. 

As a consequence, the over-indebted household, corporate and state & local sectors now face a devastating liquidity crisis.

We are today witnessing the Acute Stage of Bursting Credit Bubble Dynamics.  It''s an absolute debacle, and there''s little our well-intentioned policymakers can do about it other then try to slow the collapse."

 

[heritage_ray]

Sobering - Martenson says everything for which The Crash Course was designed to warn about is now in motion.

"Everything that I have been writing about, everything that I have been lecturing about, and everything that I made the Crash Course about is now in motion. It is here, and it is happening right now." - Chris Martenson

It''s Here And It''s Now (excerpt)

The purpose of this Martenson Report is to nudge you
further and further toward taking any remaining actions
that can help shield you from what is coming. I want
you to understand that my advice and my voice are just
one of many, and that your job is to listen to everything
and make up your own mind.

Between now and “then,” with “then” being up to 10
years from now, most of the wealth of all overly-
indebted nations will be destroyed.

The debt-based fiat money system of our past is
drawing to a close.  The extent to which your money is
locked within that system is the extent to which you risk
losing it all.  Not (necessarily) because it will be stolen
with malicious intent by your leaders, but rather by
their benign ignorance.

There are simply too many claims on a future that is too
small.  Those claims - debts and money - have to be
reduced.  Whether that is accomplished by a process of
inflation or by one of deflation is the only question left
to resolve.

MEA CULPA

So far, my advice has been spotty.  Certainly my advice
to steer clear of stocks was right, as was my advice to
avoid real estate.  But I was very much expecting an
inflationary destructive process, and so far the data tells
us that deflation is the dominant mechanism.  So, low
marks on that one.

By ‘deflation,'' I mean that money is being destroyed
faster than it is being created.   The Fed has certainly
been shoveling new money into the system at historic,
never-before-seen rates.  It has ‘expanded its balance
sheet,'' meaning it is taking in more and more debt and
putting out more and more money.  In a world of
deflation, money gains value against assets and goods –
the opposite of inflation.  During deflation, you want to
hold cash.

[gjohnsit]

"Federal Reserve Credit ballooned $254bn to a record $1.389 TN, with a historic 3-week increase of $457bn. Fed Credit has expanded $515bn y-t-d (77% annualized) and $527bn y-o-y (61%)."

  No matter what anyone tells you to the contrary, a spike like this has enormous consequences. I don''t think people fully appreciate it...but they will.

[heritage_ray]

"When the Fed insists it has no choice but to print up hundreds of billions of new dollars and when the keepers of accounting standards bend in the face of criticism that market prices hurt, what they are really saying is the that financial truth is too awful to bear." - James Grant

[mannfm11]

I wouldn''t worry about the Fed reserve credit.  You didn''t read what Doug wrote and what many of us have been writing for a long time.  There won''t be any money to buy bubble gum for most people.  They won''t be worrying about home prices soon.  The lights might go out in the emerging markets.  The money is going to come back to the Fed in time.  Look and you will see that actual cash is very little of that money and the Fed cannot replace bank lending, Wall Street lending and all the other stuff going up in smoke.  Few realize that it is quite likely that Buffett is going to lose the bets he made.  It isn''t a matter of just having money expand, it is having money expand at sufficient enough pace.  You need $600 billion to pay the interest on the debts.  That is to sustain zero real growth, zero inflation, zero bank profits, zero, zero, zero.  All the profits in the world flow from US banking, this is the missing tune.  Look at how badly the rest of the world suddenly needs dollars, as the Euro implodes.  The Fed is probably making the same mistake it made in the 1930''s, trying to bail out the European central banks along with its own economy.  If they hadn''t proposed the bailout 2 weeks ago, I doubt oil would be over $70 a barrel right now.  Look at the price of gasoline, falling more rapidly than oil, despite the fact that refining has been restrained by hurricanes.  The US hasn''t had a loose gasoline market for years and now gasoline can''t even fetch what oil brings.  The only thing keeping oil up is the absurd idea that it will be hoarded.  It will be running over the tops of tanks in a matter of a few months.  Watch for a major collapse in copper, as the corners come apart.  The Arabian peninsula has committed itself to massive spending projects, which means it is going to hold onto its share of the oil market at all costs this time.  Times are about to get really lean in places like Venezuela and Iran.  I doubt the Nigerians are going to be fooling around with their oil politics for too long either.  The Fed might go bust, but it will be awhile.  You don''t see the dollar collapsing in the middle of all of this do you?  It won''t work and the banks will eventually get their bearings and just sit there and the Fed will have its funds back.

[mannfm11]

gjohn, there will be a day, maybe in a week, maybe in 2 years where I will be just as inflationary as you are.  I think things will be pretty damn ugly by January 20 when the next crook in chief takes office.  Ray posted some interesting stuff and I kind of follow what Martenson says, as he had to switch from inflation to deflation.  The Fed can''t replace the money fast enough.  The big losers are going to have to liquidate and we might need to find out what we want to eat soon.  There is one impact we are going to find out about, what is the debtor situation of the US going to do?  One thing the US has to its advantage is it owes no gold, which would be what created Weimar Germany, it got something for what it paid out and the debt is denominated in dollars.  There is a damn interesting book on mises.org called The Bubble that Broke the World and it goes into how Germany held the US hostage with its debts, which would basically bust plenty of US banks if they defaulted.  The problem was we had to keep giving Germany cash to stay afloat, but cash was gold.  The French who owed us plenty of money then tried to take their deposits out of the US in gold while there was a pause in collecting and paying international debts.  China may be the one that funds our deflation by bringing the cash back here.  AT some point the whole game becomes nonsense.  It is quite amazing how MBA''s and PHD''s get involved in a game of nonsense, but we are watching one right now.

[mohonri28]

GREAT POSTS RAY, THANKS  nm