In a polity that has lost its way and can no longer distinguish between value and money - what difference does the size of the deficit make? What really matters is to whom this money is flowing. Basically, it is going to the same cabals who got us in this mess to begin in the first place. The saddest thing about the current levels of US federal spending is that the funds are being allocated to perpetuate the same 'smoke-and-mirrors' system that begat this fiscal atrocity in the first place. Nationalize the banks - nationalize them now!
Based on this news report it seems that OPEC is willing to play along for this year (h/t theoildrum.com)
It's still tricky looking longer term. The Saudis would like to see a stable long term price of $75 per barrel. I believe the break even for Canadian Oil Sands is around $85 per barrel. And I have read that the Canterel fields in Mexico will soon be producing at levels sufficient only for domestic consumption. Additionally, low oil prices continue to take oil fields out of production and reduce exploration.
We certainly have a financial crisis on our hands now but ultimately, we will have to confront an even more serious commodities crisis.
If I was dictator of China right now, I'd be printing yuan for all it's worth- with a limitation that it can only be spent domestically on domestic goods.
The reason? Keeping people employed and building a domestic economy in the face of huge slowdowns in trade.
So I wouldn't be at all surprised to see the Chinese start spending and trying to create a domestic economy that can match it's previous 8% growth projections.
I'd be surprised, though, if they succeeded.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
I just mentioned that in a comment but I have never seen any in depth analysis of the "recycling" debt to China system and what their trade implosion means to that.
Such a piece of research I imagine would be a "hot" article.
I find that hard to believe as well. I think I've read press releases talking about a "temporary" slow down but back up to 8% growth protections. No way, unless all of a sudden the Chinese started spending and created a domestic economy.
We've all been kind of lax on trade on EP generally and one issue, it's interaction, considering we are now debt nation is the interaction with China buying U.S. debt....
by the trade deficit alone I am assuredly thrilled if the U.S. stops buying cheap plastic items from China but this is a new dimension to this economic malaise.
Willem Buiter has a long discussion on his blog about what is or may be going on. His radar went up when there were simultaneous announcements by the Fed, BofE, ECB, BoJ, and SNB.
The article is typically Buiter thorough and concludes:
In any case, the Machiavallian (sic) interpretation of the redundant second announcement of the central bank swaps is that it was intended to divert attention from the dire condition of the official foreign exchange reserves of a number of European countries, especially the UK. Extending the duration of the swaps delays the moment that the loss of the US dollars will have to be recognised. If this was indeed the case, it is bound to fail. Markets can be stupid, but not that stupid. This will not reduce the risk that Reijkjavik-on-Thames will have to seek IMF assistance at some point.
And he came up with the appropriate word to describe the financial fools . . . Machiavellian! Yep, that says it all.
I just spotted this article, which adds to the information.
“The shocker was that they only had only $3.3 billion [in] charge offs,” said Whitney Tilson of hedge fund manager T2 Partners, in a CNBC interview Wednesday afternoon. “It’s weird, because in Q4 Wachovia and Wells Fargo together had $6.1 billion in charge-offs, and then in a quarter in which things were terrible, those charge offs fell by 50 percent … They’re going to have a lot of losses over the next couple of years, [and] anyone baselining at $3.3 billion in charge offs per quarter is crazy.”
“We believe that credit quality materially deteriorated in the first quarter, and that Wells Fargo is under-reserving for expected future losses,” FBR’s Miller wrote in a Wednesday research brief. “We reiterate our Underperform rating.”
...
If the Fast Money crew had any desire to do basic analysis before running their collective mouths, they might have been able to pull up this chart — which should speak volumes about the value of skepticism here:
This shows the ratio of loan loss reserves/total loans at the four major U.S. banks still standing. Wells Fargo is in white. Notice anything? You know, like which bank is comparatively weakest on reserving activity against its loan book?
This chart doesn’t include updated Q1 numbers for Wells, as the bank did not provide an updated loan total on Wednesday — meaning it doesn’t include Wachovia. Historically, Wells has justified its lower reserves by maintaining a comparatively higher-quality loan book; can the same argument really be made now? With Wachovia’s option ARMs lurking? Because there’s an ugly truth about credit costs: they come home to roost eventually, irrespective of any games played with loss reserves in the interim.
My first impression is it seems like a round about to deal with the money printing press, exchange rates and the U.S. dollar as a reserve currency.
New York Times is saying it gives the Fed another $287 billion in "liquidity".
So, I guess the answer is the Fed and the Treasury are so busy robbing the people blind they realized they had some extra bucks lying around by holding onto the foreign currency instead of loaning that out too.
The other thing is good luck trying to raise capital in the private market. Who are they kidding, the financial conglomerates are going to go for and need the low cost capital that taxpayers provide.
CRITICAL ANGLE OF POTENTIAL DIFFERENCE THAT DRIVES CONSUMPTION TO PUSH PRODUCTION
Ricardian equivalence is an ideal state that assumes proportional distribution of income and savings and proportional growth of income and savings which is the case for a natural system of energy distribution without free will , like plants or animals. In an ideal state you wouldn’t need a stimulus because you wouldn’t have a depression. But in our real state of disproportional distribution a lower percentage has savings capacity and the majority doesn’t have savings capacity therefore government demand sided spending stimulates the economy because the majority spends the money instead of saving. In a free will system in order to keep equilibrium and avoid chaos you have to regulate distribution of income by keeping a relationship between the lower bracket and the upper bracket avoiding dispertion that would collapse the critical angle of consumption-production, like the critical angle of a light beam,fermats principle of least time or the critical angle that supports the wing of aircraft, bernoullis principle . The critical angle allows for the proportional difference of potential that,transmits light, that supports an aircraft wing in flight and the adequate difference of potential that allows for consumption to breed production. .A supply sided tax cut widens the critical angle in favor of an inverted pyramid during a recession would not be an incentive for investment because of the falling rate of profit and would concentrate income even further on the top income bracket who have greater savings ability on the contrary stimulating aggregate demand by government spending transfers liquidity to the consumers who spend all their income because they have no savings potential. Therefore driving the difference of potential for production of goods. Market power or purchasing power of the majority of consumers pushes production. A Potential Difference in favor of consumer purchasing power is what keeps the equilibrium of growth and avoids the collapse of the system because consumer purchasing power is the base of the pyramid and a greater amount of money at the base generates the difference of potential necessary to push the motor of the system, just like the difference of pressure that lifts an aircraft in the air.
My only concern is that they are demonstrating on the Saturday before Easter when, almost certainly, the streets around the big banks (and certainly the Capitol in St. Paul, MN) will be deserted. I would go anyway, if there were anything scheduled where I could easily get to it (no car) but I do hope we start demonstrating during the workweek at times and places that will seriously inconvenience the bankers--or at least get some attention from people who work in the area.
That the big banks are essentially financial ghouls, while the smaller/community banks are doing well....well most of them are, there are some in trouble. Over the years the little guy banks were getting killed by the bigger ones, now it is the very advantage that the latter posed that now serves as their achillies heal.
Thanks.
In a polity that has lost its way and can no longer distinguish between value and money - what difference does the size of the deficit make? What really matters is to whom this money is flowing. Basically, it is going to the same cabals who got us in this mess to begin in the first place. The saddest thing about the current levels of US federal spending is that the funds are being allocated to perpetuate the same 'smoke-and-mirrors' system that begat this fiscal atrocity in the first place. Nationalize the banks - nationalize them now!
Based on this news report it seems that OPEC is willing to play along for this year (h/t theoildrum.com)
It's still tricky looking longer term. The Saudis would like to see a stable long term price of $75 per barrel. I believe the break even for Canadian Oil Sands is around $85 per barrel. And I have read that the Canterel fields in Mexico will soon be producing at levels sufficient only for domestic consumption. Additionally, low oil prices continue to take oil fields out of production and reduce exploration.
We certainly have a financial crisis on our hands now but ultimately, we will have to confront an even more serious commodities crisis.
If I was dictator of China right now, I'd be printing yuan for all it's worth- with a limitation that it can only be spent domestically on domestic goods.
The reason? Keeping people employed and building a domestic economy in the face of huge slowdowns in trade.
So I wouldn't be at all surprised to see the Chinese start spending and trying to create a domestic economy that can match it's previous 8% growth projections.
I'd be surprised, though, if they succeeded.
-------------------------------------
Executive compensation is inversely proportional to morality and ethics.
I just mentioned that in a comment but I have never seen any in depth analysis of the "recycling" debt to China system and what their trade implosion means to that.
Such a piece of research I imagine would be a "hot" article.
I find that hard to believe as well. I think I've read press releases talking about a "temporary" slow down but back up to 8% growth protections. No way, unless all of a sudden the Chinese started spending and created a domestic economy.
We've all been kind of lax on trade on EP generally and one issue, it's interaction, considering we are now debt nation is the interaction with China buying U.S. debt....
by the trade deficit alone I am assuredly thrilled if the U.S. stops buying cheap plastic items from China but this is a new dimension to this economic malaise.
Willem Buiter has a long discussion on his blog about what is or may be going on. His radar went up when there were simultaneous announcements by the Fed, BofE, ECB, BoJ, and SNB.
The article is typically Buiter thorough and concludes:
And he came up with the appropriate word to describe the financial fools . . . Machiavellian! Yep, that says it all.
I'm working on a follow up to this post, once that number is reported.
I just spotted this article, which adds to the information.
on how it affects overall consumer spending and ability to pay other bills.
here.
JV is right because not only are they keeping the results from the public, magically all banks are "fine" yet magically need more money.
My first impression is it seems like a round about to deal with the money printing press, exchange rates and the U.S. dollar as a reserve currency.
New York Times is saying it gives the Fed another $287 billion in "liquidity".
So, I guess the answer is the Fed and the Treasury are so busy robbing the people blind they realized they had some extra bucks lying around by holding onto the foreign currency instead of loaning that out too.
the whole stress test is a friggin' scam.
Capital needs?
Yet another tsunami of liquidity being pumped into the insolvent banks
It has always been about class warfare.
The other thing is good luck trying to raise capital in the private market. Who are they kidding, the financial conglomerates are going to go for and need the low cost capital that taxpayers provide.
That last paragraph is a complete b.s.
Here it is: More Quickly Than It Began, The Banking Crisis Is Over. I was going to do a story on this but why bother.
CRITICAL ANGLE OF POTENTIAL DIFFERENCE THAT DRIVES CONSUMPTION TO PUSH PRODUCTION
Ricardian equivalence is an ideal state that assumes proportional distribution of income and savings and proportional growth of income and savings which is the case for a natural system of energy distribution without free will , like plants or animals. In an ideal state you wouldn’t need a stimulus because you wouldn’t have a depression. But in our real state of disproportional distribution a lower percentage has savings capacity and the majority doesn’t have savings capacity therefore government demand sided spending stimulates the economy because the majority spends the money instead of saving. In a free will system in order to keep equilibrium and avoid chaos you have to regulate distribution of income by keeping a relationship between the lower bracket and the upper bracket avoiding dispertion that would collapse the critical angle of consumption-production, like the critical angle of a light beam,fermats principle of least time or the critical angle that supports the wing of aircraft, bernoullis principle . The critical angle allows for the proportional difference of potential that,transmits light, that supports an aircraft wing in flight and the adequate difference of potential that allows for consumption to breed production. .A supply sided tax cut widens the critical angle in favor of an inverted pyramid during a recession would not be an incentive for investment because of the falling rate of profit and would concentrate income even further on the top income bracket who have greater savings ability on the contrary stimulating aggregate demand by government spending transfers liquidity to the consumers who spend all their income because they have no savings potential. Therefore driving the difference of potential for production of goods. Market power or purchasing power of the majority of consumers pushes production. A Potential Difference in favor of consumer purchasing power is what keeps the equilibrium of growth and avoids the collapse of the system because consumer purchasing power is the base of the pyramid and a greater amount of money at the base generates the difference of potential necessary to push the motor of the system, just like the difference of pressure that lifts an aircraft in the air.
My only concern is that they are demonstrating on the Saturday before Easter when, almost certainly, the streets around the big banks (and certainly the Capitol in St. Paul, MN) will be deserted. I would go anyway, if there were anything scheduled where I could easily get to it (no car) but I do hope we start demonstrating during the workweek at times and places that will seriously inconvenience the bankers--or at least get some attention from people who work in the area.
But this is long overdue--I'm excited!!
Sorry...Robert, couldn't help it. :P Please forgive me.
That the big banks are essentially financial ghouls, while the smaller/community banks are doing well....well most of them are, there are some in trouble. Over the years the little guy banks were getting killed by the bigger ones, now it is the very advantage that the latter posed that now serves as their achillies heal.
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