October 27, 2008

Everything we predicted is coming true...

And that's not a good thing

Too bad nobody wanted to listen. It didn't have to get this bad.


Anonymous said...

Hey Keith, now we have crossed the rubicon on bizarro world: The US Department of Energy is lending money to automakers. WTF?????

This country is doomed!

Let's call each other, "comrades", from now on.

Anonymous said...

You think Nancy, Barney, et al are fearing for their lives yet? And some clown actually "Wants" to be president?

Anonymous said...

Unfortunately, it DID have to get this bad, and it WILL get even worse.

We had the "perfect storm" forming, and it does little good to see the tsunami coming when you know there's nothing that can be done at that point.

You might be able to run to the highest hill to survive, but you know your entire world will be changed forever, and your friends and family will not be saved. Kind of reminds me of the decision you'd have to make in a massive nuclear strike when you live outside the major population areas: do you even WANT to survive, as life on the planet will be changed, and perhaps it's merciful to be killed in the initial attack.

Ah, well, people live and learn!

Anonymous said...

Well, not everything. The predictions of hyperinflation and gold going to the moon don't seem to be coming true...

Anonymous said...

Drown. You're the generation that wrecked America and saddled your children with student loans!

Anonymous said...

Granite doesn't float.

Anonymous said...

And remember the worst is yet to come. CDS $$$$ are 5 times > the **worlds** GDP! Ouch! leverage hurts.

Jesus could come down and insure everyone and it would still collapse.

Anonymous said...

That was good. But what next?

I think it will be Japanese way of free money (low interest rates) because America has no guts to go thro' severe cleansing. Another bubble in the making like it or not.

Psycho said...

Comming to a US market near you.....Nikkei falls below 7,000, hits 26-year intraday low
[Open in new window]

Anonymous said...

Yes thats true, we are also experiencing a record drop in apartment booking that started from us and now moving towards europe and asia.

Anonymous said...

Boy this sucks. Stock almost under the 8000 mark. I know we all have been giving these morons a bad time on taking out loans they could not pay back. People like Casey Serin and that Mornon from Bakersfield were fun to watch, however these people were playing with real dollars and Euros, Pounds and so on it seems. I guess there are millions of people around the globe the pulled the BS that these two morons have...oh I am off to Morocco on Vacation, I hope everything is back to normal when my wife and I are back. I am looking forward to not watching this anymore for a few days, but happy this site existed so we are protected. I just hope we all learned something and these bad people I hope the FBI takes care of them. If not well I will be helping out at the soup kitchens.

Anonymous said...

ha ha, funny cartoon.

it would be more accurate if rather than a flotation device uncle same was holding a fistful of IOUs.

Anonymous said...

Yeah, it's too bad nobody listened to you Keith.

There's still "Hope and Change" (tm) though...

Maybe your messiah Obama will make you his Secretary of the Treasury.


Anonymous said...

We will be under Martial Law by Christmas.
& Elections will be canceled.

Anonymous said...

SS is fine for the next 30 years at least. don't buy into the unfunded liability claptrap.

Anonymous said...

No reason for this except for the plat du jour - greed, robbery, mismanagment. It amazes me that there can be bailouts for all the outlaws, but none for social security. Isn't that also too big to fail? I mean as long as we are printing money out of the woodwork ... I'm kind of being sarcastic there ... but really, it shouldn't have been robbed. If Social Security actually fails this country's third world status will be established.

Tyrone said...

Art Laffer is questioned about the Peter Schiff penny bet...

Art Laffer the Asshole

Mammoth said...

...and if bush and his crooked cronies had been allowed to privatize Social Security, then that boat would be under water by now.

Anonymous said...

Is Global Excess Liquidity from Yen Carry Trade going to finally unwind.


Talk about crying wolf…who on this planet thinks the yen is rallying because of speculative forces that need a reminder from G7 about overshooting? No one. Japan lived high on the carry-trade hog from a competitiveness standpoint for much of the last 5 years.

Because of massive unprecedented deleveraging in capital markets it is not surprising the yen is rallying in an unprecedented fashion. Calling the move excessive and volatile reflects a gross misunderstanding of what is driving financial markets.


The specific value of these unwinding investments is open to debate, with most estimates putting the carry trade in the $2 trillion to $3 trillion range.

The value of private individuals’ overseas holdings is even less well known, but it is probably larger than the total value of the traditional carry trade.


``All liquidity starts in Japan, the world's largest creditor country,'' said Jesper Koll, chief economist for Japan at Merrill Lynch & Co. ``When rates go up here, rates go up everywhere.''

What makes the carry trade so worrisome is that nobody really knows how big it is. For example, the BOJ has no credible intelligence on how many hedge funds, investors and companies have borrowed cheaply in ultra-low-interest-rate yen and re-invested the funds in higher-yielding assets elsewhere.

Nor are the Bank for International Settlements, Federal Reserve Bank of New York or the International Monetary Fund likely to know how much leverage this most popular of trades has enabled banks to build up. Ditto for regulators overseeing the dealings of portfolio mangers around the globe.


How is money created

1. central bank money (physical currency)

2. commercial bank money (money created through loans) - sometimes referred to as checkbook money

When a loan is supplied with central bank money, new commercial bank money is created. As a loan is paid back, the commercial bank money disappears from existence.

The expansion of $100 through fractional-reserve lending at varying rates.

The money multiplier effect.

central bank money is $100.00

commercial bank money created is $357.05

commercial bank money created + central bank money = 457.05

Anonymous said...

Do you believe that the Group of Seven really has no clue in what is going on.


Oct. 27, 2008 - The Group of Seven warned on Monday the yen's wild swings threatened financial stability, fanning speculation central banks may intervene to halt a rally in the currency driven by a Japanese exodus from emerging markets.

The yen has surged nearly 20 percent so far in October on a trade weighted basis, more than twice as big as any month going back to 1970, including the carry trade collapse in October 1998 and the Plaza Accord to weaken the dollar in 1985.

Aug. 2007 - Strains in financial markets from the U.S. subprime mortgage crisis spark an unwind of yen carry trades.

August 1998 the dollar rises to near 148 yen, partly due to yen carry trades in which investors borrow yen funds at Japan's near zero interest rates to buy higher-yielding currencies.

June 17, 1998 - As the dollar shoots above 144 yen, U.S. authorities join the Bank of Japan to buy yen.


April 19, 1995 - The dollar hits a record post-war low at 79.75 yen after U.S.-Japanese trade frictions spark heavy selling. By the end of the year it is near 103.40.

``We can't rule out the possibility that our accommodative policy has had some influence on overseas financial markets,'' said Hirohide Yamaguchi,``Some people say one side effect of our policy is the yen carry trade,''

Anonymous said...

HPers have been saying BOJ should stop Excess Global Liquidity from Yen Carry Trade.


People have talked about the “yen carry trade” for years. Those of a bearish persuasion had warned it was one of the greatest bubbles left to burst. Many others, judging by my e-mail inbox, found their warnings farfetched. But events last week suggest the bears were right, Their theory deserves re-examination.

Since 2004, the correlation between the US stock market and the euro-yen exchange rate, as the chart shows, has been total.

There is argument about who was making the trade. Some said Japanese retail investors (known as Mrs Watanabe) who recognised that, with a weak yen, the best returns came from investing overseas, selling the yen in the process. Others reckoned it was one of many ways in which hedge fund managers found cheap leverage.

Both now seem to be correct. The carry trade was also broader than many appeared to realise.

Anonymous said...

Is their HOPE for the YEN or just false HOPE even if BOJ intervene.


Even if the Bank of Japan does seek to sell its currency, the ``chances of success are weak at best'' as the credit crunch stops the Japanese from investing abroad and prompts them to repatriate their money, said Ashraf Laidi, chief currency strategist at CMC Markets in New York.

Japanese Economy Minister Kaoru Yosano said an interest- rate cut by the central bank wouldn't be very effective either.

``Holding the rate at 0.5 percent or lowering it won't have much impact on the currency level,'' Yosano said in Tokyo today. ``I think the unwinding of carry trades and cashing out by funds are causing the yen to strengthen.

The traditional link between currency rates and the Bank of Japan's interest rates has been broken.''

Anonymous said...

Well, not everything. The predictions of hyperinflation and gold going to the moon don't seem to be coming true...

patience my young padawan, patience.

Anonymous said...

If all boats start sinking, it doesn't matter if the only one left floating is made of a handful of empty potato chip bags tied together with rubber bands and blown up with cocktail straws.

The drowning will swim to it like it was the Queen Mary.

That's basically what the dollar is right now.

Gold don't float, but when we're all sleeping with the fishes, gold will still be able to be shined up while the dollars will have decomposed at the bottom of the sea.

Paul E. Math said...

Like I mentioned before, look at a graph of baby boomer retirement. At the same time that boomers are requiring social security, medicare and medicaid, they are also selling stocks to fund their retirement.

And they aren't working anymore either so they are not adding any value to the economy - they are only consuming.

The more consumption by retired boomers, the less there will be for the rest of us.

The only possible consequnce is a lowering of our standard of living.