It's gonna be a rough ride

TimeVirus · Galactic Overlord Posts: 26139

Money Out Of Thin Air: Now Federal Reserve Chairman Ben Bernanke Wants To Eliminate Reserve Requirements Completely?
http://theeconomiccollapseblog.com/archives/money-out-of-thin-air-now...

Up until now, the United States has operated under a "fractional reserve" banking system. Banks have always been required to keep a small fraction of the money deposited with them for a reserve, but were allowed to loan out the rest. But now it turns out that Federal Reserve Chairman Ben Bernanke wants to completely eliminate minimum reserve requirements, which he says "impose costs and distortions on the banking system". At least that is what a footnote to his testimony before the U.S. House of Representatives Committee on Financial Services on February 10th says. So is Bernanke actually proposing that banks should be allowed to have no reserves at all?

That simply does not make any sense. But it is right there in black and white on the Federal Reserve's own website....

The Federal Reserve believes it is possible that, ultimately, its operating framework will allow the elimination of minimum reserve requirements, which impose costs and distortions on the banking system.

If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system? Not that we are operating with sound money now, but is the solution to have no restrictions at all? Of course not.

What in the world is Bernanke thinking?

But of course he is Time Magazine's "Person Of The Year", so shouldn't we all just shut up and trust his expertise?

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Ricochet · Tachyon Tech Posts: 177

AcneVulgaris · Entropy Engineer Posts: 1366

It's the only way to keep the party going at this point. It's 1:30am, and we know we can't pay our bar tab. Might as well get ourselves around as much top shelf liquor as possible before closing time.

TimeVirus · Galactic Overlord Posts: 26139

Yes, a “Global Debt Time-Bomb” Will Explode Soon: Can You Guess Which of 20 “Triggers” Will Ignite a New “Great Depression” & Wipe Out Your 401(k)?
http://wallstreetwarzone.com/yes-a-global-debt-time-bomb-will-explode...

Retire? You can fuggetaboutit if the new “Global Debt Time-Bomb” is detonated by any one of 20 “Made-in-America” trigger-mechanisms. Yes, 20. And yes, any one can destroy your retirement, because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st Century, igniting the “Great Depression II” that Bush, Bernanke,Paulson and now Obama have simply delayed with their endless knee-jerk, debt-laden wars, stimulus bonanzas, and bailouts.

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TimeVirus · Galactic Overlord Posts: 26139

Underemployment At Record 20% According To Gallup
http://www.zerohedge.com/article/underemployment-record-20-according-gallup

Just in case anyone needed confirmation that the DOL data is just a little, how should we say it, cooked, here comes Gallup with their March 15 undermployment number, which just hit a 2010, and series, high of 20%. This is obviously worse compared to both the beginning of the year (19.5%) and February (19.8%). Unlike the Dept of Labor's arcane voodoo which lately is based more on executive confidential memos and snowfall observations, Gallup's underemployment measure is based on more than 20,000 phone interviews collected over a 30-day period and reported daily.

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TimeVirus · Galactic Overlord Posts: 26139

Well written article covering many aspects of our current situation.

The Tipping Point at Zero
http://www.financialsense.com/fsu/editorials/willie/2010/0323.html

The USEconomy is bifurcated, with price inflation advancing on the cost side while price deflation harms on the asset side, to produce a nasty storm that is unlikely to abate. When high pressure zones clash with low pressure zones, hurricanes and tornadoes occur. Calling the resulting near 0% or low 2% price inflation on a net basis a good sign completely ignores the forces pulling the national economy apart.

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TimeVirus · Galactic Overlord Posts: 26139

China Officially Disses the Dollar (and Treasury Debt)
http://www.economicpolicyjournal.com/2010/06/china-officially-disses-dollar-and.html

The Peoples Bank of China has announced that it will no longer fix its currency in terms of the dollar. Instead it will manage the yuan against a basket of currencies.

The most significant result of this new policy by the PBOC is that they will have less demand for Treasury securities. With the alarming Treasury debt that will be issued in coming years the fact that China is marginalizing its direct need for dollars is another reason why at some point U.S. interest rates explode to the upside.

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AcneVulgaris · Entropy Engineer Posts: 1366

"If there were no minimum reserve requirements, what kind of chaos would that lead to in our financial system?"

Infinite leverage. Infinite inflation, the only shelter from which would be taking on ever-increasing amounts of debt at ever-higher interest rates, and profiting off the devaluation of the debt by subsequent inflation.

Fortunately, that wont work. People have no ability to make additional payments, so they can't prop it up anymore. He can't blow another bubble this time.

Hannigan · Reality Coordinator Posts: 1029

Giant poop bubble is next, have you not been paying attention.

TimeVirus · Galactic Overlord Posts: 26139

Pending Homes Sales Crash in a Record Fall to a Record Low as Tax Break Expires. The MSM Misses It.
http://blog.ml-implode.com/2010/07/pending-homes-sales-crash-in-a-record-fall-to-a-record-low-as-tax-break-expires-the-msm-misses-it/

The Index of pending home sales fell a record 30% in May to a record-low reading of 77.6 — two huge pessimistic indicators of future prices nationwide. Yet the combination of two record negatives went barely reported when the stats were announced last week.

So here’s the news for you now, a week late, but new to the marketplace of ideas. Pending-home sales now stand below the worst numbers we have seen since the housing crash started in 2006. The rubber bands and duct tape are breaking apart. Presume the fix of a fall is in.

Take a look at the three charts below and judge for yourself how important the facts are which the National Association of Realtors (NAR) announced last Thursday (July 1st). [And the Media didn't report]

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Red Devil · Infinity Agent Posts: 2949

Shhhhh! Do you want the whole neighborhood to know?

Maybe they think it would be akin to yelling, "FIRE!!!" in a crowded theater. Okay, an uncrowded theater. Very Happy

TimeVirus · Galactic Overlord Posts: 26139

Don't worry, the legacy media will keep it all covered up...

Shadowstats' John Williams Exposes The Media's Propaganda Spin, Or Why Watching CNBC Can Be Hazardous To Your Wealth
http://www.zerohedge.com/article/shadowstats-john-williams-exposes-medias-propaganda-spin-watching-cnbc-can-be-hazardous-your

In his latest letter to subscribers, Shadowstats' John Williams dissects recent economic data, and after providing yet more evidence that after the recent period of "bottom-bouncing at a low-level plateau of business activity" the economy has once again entered a double dip. Overall, it has cost the US taxpayers several trillion in debt (which will never be repaid), and a major hit to the value of the paper in their wallets, just to play the game of extend and pretend for a just under 18 months. The positive effects of the sugar high are now gone, leaving just the negative, one of which is the propaganda spin engulfing the entire legacy media complex whose survival depends on the ongoing perpetuation of the Ponzi lie that all is well. And courtesy of Mr. Williams we have prima facie evidence of precisely why formerly reputable channels such as CNBC are in the process destroying their credibility and causing an exodus of viewers, with the few remaining viewers remaining primarily for the opportunity to heckle the openly lying talking heads.

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TimeVirus · Galactic Overlord Posts: 26139

It Was MUCH, MUCH WORSE: BEA Revises Downward 2007, 2008, 2009 GDP Data
http://www.economicpolicyjournal.com/2010/07/it-was-much-much-worse-bea-revises.html

Most focus from the latest Bureau of Economic Analysis GDP data will be on the current slowed GDP number of 2.4%, but what is of further significance is that the BEA revised downward data for 2007, 2008 and 2009.

As Rick Davis at Consumer Metrics points out:

Apparently the "Great Recession" has been worse than our government has previously reported. And the recovery's brightest moment, Q4 2009, has been revised down from 5.6% to 5.0%. Similarly Q3 2009 dropped from 2.2% to 1.6%. And so on. The bottom of the recession was shifted back one quarter, with Q4 2008 now reported to have contracted at a -6.8% rate, revised down from the previously reported -5.4% rate. Most quarters of 2007, 2008 and 2009 have been revised down substantially, shifting the recession shown in the chart above back in time.

Again, this supports the thesis that economic data collected by the government is done in a very antiquated fashion. If they are still "revising" data from 2007, then what value can be put in current numbers (especially given the extremely limited value of GDP numbers in the first place).

Keep in mind that, while these revisions are going on, Rick Davis at Consumer Metrics Institute is measuring consumer durable goods activity in real time. Consumer durable goods is a much more important data piece than overall GDP since it is a very good indication of where the economy is relative to the business cycle (Climbing consumer durables indicates strong central bank manipulation of the economy, i.e. heavy money printing. Declining durable goods tends to indicate an economy adjusting away from a manipulated money printing "boom" period). This is all much more valuable and timely data for businesses and investors than the government data, and you get it in real time.

So where does CMI put things right now? Here's Davis again:

Our Daily Growth Index has dropped to new recent lows, and it is now contracting at a -3.4% rate.

TimeVirus · Galactic Overlord Posts: 26139

China Calls Our Bluff: The U.S. is Insolvent and Faces Bankruptcy as a Pure Debtor Nation
http://globalresearch.ca/index.php?context=va&aid=20449

The Scary Part

I chatted with the head of a small investment brokerage about the China credit rating story.

Because he gives his clients very bullish, status quo advice, I assumed that he would say that China was wrong.

To my surprise, he simply responded:

They're right. What's scary is that China knows it.

In other words, everyone who pays any attention knows that we're broke. What's scary is that our biggest creditor knows it.

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TimeVirus · Galactic Overlord Posts: 26139

Son of Subprime
http://www.dailyreckoning.com.au/son-of-subprime/2010/08/04/

In 2007, the writing was on the wall. The famous "perfect storm" had gathered above the US housing market, its eye hovering over subprime loans. As you know, the storm came...and it rained, and rained, and rained... Ultimately, it washed away trillions of dollars in investor wealth.

Now in an entirely different sector - probably the last place you'd look - the clouds are turning black once again. Strip out the finer details, and you'll find the very same mechanics that brought the subprime market from boom to bust:

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TimeVirus · Galactic Overlord Posts: 26139

Even the world's most positive motivational speaker is talking pessimistically about our future...

Is Tony Robbins Right About The Coming Economic Collapse?
http://www.dailymarkets.com/economy/2010/08/21/is-tony-robbins-right-about-the-coming-economic-collapse/

It seems like almost everyone is warning of a coming economic collapse these days. Do you remember Tony Robbins? He is probably the world’s best known “motivational speaker” and his infomercials dominated late night television during the 80s and 90s. He was always urging all of us to “unleash the power within” and to take charge of our lives. Well guess what? Now Tony Robbins is warning that an economic collapse is coming. In fact, he has issued a special video warning about what he believes is about to happen. Considering the incredible connections that he has at the highest levels of the financial world, it makes a lot of sense to consider what he is trying to warn us about. Robbins says that a “major retracement” is coming to financial markets and that the coming collapse is going to be a “painful process” as we go through it.

Those familiar with Tony Robbins know that he always goes out of his way to stress the positive, so if even he is openly warning the public about a coming economic nightmare than you know that things are starting to get really, really bad out there.

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