I found some interesting facts in this month's JW letter. He's trying to figure out who is really buying all these bonds. Well here's the breakdown per the USTreasury through the 3rd qtr of 2009:
-foreign and international buyers (not China, Japan, India): $697B -US FED - $286B -US households - $528 BILL.
Those are levels with one qtr remaining. The UK has almost doubled their bond holdings in the last 5 months by adding $170 BILL, a staggering amount. A nice feat for a country leaning towards austerity and in terrible financial shape. The US households are part of the "other investors" category but a little bit of digging by Sprott showed that GSE's, Fannie, and corporations were essentially net even on bond purchases...hence it all falls on the shoulders of J6P who somehow found $528BILL to spend on TBonds in the first 3 qtrs of 2009. An interesting fact considering that it was a 35X increase from 2008 levels when the stock market crash occurred and everyone sought safety in treasuries. It's hard to believe any of these numbers other than FED's purchases. The rest does seem to smack of hidden monetization as does the fact that bond sales over the past 4 years have outpaced the budget deficits by $1.5 TRILL. So where did the difference go to as it surely doesn't show up in the money supply numbers because it's the only place that people do look. If I were monetizing the debt I certainly would not allow it to show up in Money supply numbers....just like the big banks have kept their derivatives risks off their balance sheets for a decade.
Ha! I just cracked a rib laughing....................MJ
Walker Proof Digital Album Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Some think this guys is nuts but I find his viewpoint a breath of fresh air. His view on a strict gold standard is that we never had one. The bankers were always free to lend more money than they could cover. That's what has always lead to booms and bust, not the fact that gold was in play or not. But gold is a good target such that the vast majority of US citizens assign the blame to the 19th and 20th century depressions to the former semi-gold standard.
Up to this point in the banking crisis the FDIC has agreed to loss-share arrangements of $180 BILL with the acquiring entity. That's money that could eventually have to be paid out to those entities should the assets/derivatives eventually fail. Just another means to hide monetary easing with no initial change to the money supply. Ironic that these are bets on derivatives, which are in effect bets themselves. Bets on bets? So when do we up the ante to bets on bets on bets?
The most trustworthy source of information I've ever known has died suddenly. Now who do we go to for real intel?
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
Ran across this literature today and thought I'd share. Global Warming Petition Project currently signed by 31,000+ degreed individuals, many of which hold advance degrees. The charts shown include glacier recession, sea water level and temp, solar activity, CO2 correlations, hurricane and tornado activity, etc. I found it interesting that all of these warming effects were already in motion by 1800-1825, long before hydrocarbons (HC) ramped up by the industrial age. During a 3X increase in HC's from around 1940-1965, the trends actually show global cooling. The overall rate of glacier recession and warming for example is at the same rate as since the 1800's. One would think that the rates would have increased if HC's played a key role. These rates have held steady for 200 yrs at 7"/sea level rise per century and 1/2 deg C rise per century in ocean temperature, well within historical norms. Just coincidentally solar activity over these 200 yrs overlaps very well. Something I wasn't aware was that the increasing C02 trends during this cycle have robustly increased plant and tree growth, in some cases quite remarkably. Might global warming actually be good?
RR, if you haven't seen it, the documentary video "The Great Global Warming Swindle" is very interesting, and is available on Ebay for under $10 and it covers the other side of the topic very well.
It's clear that the climate is changing (but debate as to whether warmer or cooler), but there's no conclusive evidence that man is causing it.
Ultimately it is a good thing to become more energy efficient and clean up the environment, but draconian measures like cap and trade are completely unjustified.
<< <i>RR, if you haven't seen it, the documentary video "The Great Global Warming Swindle" is very interesting, and is available on Ebay for under $10 and it covers the other side of the topic very well.
It's clear that the climate is changing (but debate as to whether warmer or cooler), but there's no conclusive evidence that man is causing it.
Ultimately it is a good thing to become more energy efficient and clean up the environment, but draconian measures like cap and trade are completely unjustified. >>
There have been a dozen times in Earth's history when CO2 was 10x what it is today and global temps were warmer, cooler, and about the same as they are today. There is no correlation between atmospheric CO2 and temps. Furthermore, AGW is a complete fallacy. Even the fraud at EAU admits there's no statistical evidence of AGW.
Cap & tax is designed to gain more control over the economy by a centralized power. Nothing more.
<< <i>RR, if you haven't seen it, the documentary video "The Great Global Warming Swindle" is very interesting, and is available on Ebay for under $10 and it covers the other side of the topic very well.
It's clear that the climate is changing (but debate as to whether warmer or cooler), but there's no conclusive evidence that man is causing it.
Ultimately it is a good thing to become more energy efficient and clean up the environment, but draconian measures like cap and trade are completely unjustified. >>
There have been a dozen times in Earth's history when CO2 was 10x what it is today and global temps were warmer, cooler, and about the same as they are today. There is no correlation between atmospheric CO2 and temps. Furthermore, AGW is a complete fallacy. Even the fraud at EAU admits there's no statistical evidence of AGW.
Cap & tax is designed to gain more control over the economy by a centralized power. Nothing more. >>
It may be "happening" to Bill Gross but his own Chief Executive El Erian doesn't quite agree with him. Gross seems heavily reliant on the faulty CPI as an accurate inflation indicator. The CPI using 1980 methods is around +8%. While CPI-U did take a dip <0% in late 2009 it has rebounded back to positive territory. Looking at the CPI chart one would be hard-pressed to say if the trend is back to increasing or will continue on a downward path. Do remember that 40% of the CPI-U is based on housing/imputed rents. Isn't one of Pimco's objectives to sell lots of bonds to its customers? So the 20 yr party/non-bubble in bonds will continue on longer - backed by the full, fiat, and credit of insolvent govts, govt entities, states, municipalities, and corporations. In any event prices are going to continue to stagnate or fall for various sectors of the economy (ie durable goods, certain discretionary items, clothing, autos, computers, expensive homes, etc.). There will also be sectors of the economy that will continue to see rising prices. I know one thing, the world's total food/water/critical consumables bill is not going to be shrinking any time soon. The deflationary vs. inflationary debate continues to be just that...a debate.
Humans are so arrogant. We think we are the cause of everything, whether good or bad. There are other forces at play when it comes to global warming. I don't dispute that there is global warming, but I do have doubts that we are the cause of it. HBO or IFC, I can't remember had a special on this saying the oceans are the main cause of global warming......
But what makes the oceans get warmer? Possibilities: earth's molten core generating increased heat, accumulated gas in the atmosphere retaining more heat from wherever it gets generated, or the sun.........I'll pick door #3 Monty.
<< <i>But what makes the oceans get warmer? Possibilities: earth's molten core generating increased heat, accumulated gas in the atmosphere retaining more heat from wherever it gets generated, or the sun.........I'll pick door #3 Monty.
roadrunner >>
1) Earth's molten core hasn't changed - can't be the cause 2) Accumulated gas in the atmosphere retaining more heat - close but no cigar 3) The sun - can't be, solar activity is mostly constant
Answer: the increased carbon dioxide in the atmosphere causes more of the sun's rays to be trapped; it's called the "greenhouse effect."
"It's far easier to fight for principles, than to live up to them." Adlai Stevenson
<< <i>But what makes the oceans get warmer? Possibilities: earth's molten core generating increased heat, accumulated gas in the atmosphere retaining more heat from wherever it gets generated, or the sun.........I'll pick door #3 Monty.
roadrunner >>
1) Earth's molten core hasn't changed - can't be the cause 2) Accumulated gas in the atmosphere retaining more heat - close but no cigar 3) The sun - can't be, solar activity is mostly constant
Answer: the increased carbon dioxide in the atmosphere causes more of the sun's rays to be trapped; it's called the "greenhouse effect." >>
Need to build toilets for pigs & cows who are one of the major contributors to the greenhouse effect from their manure.
"Bongo drive 1984 Lincoln that looks like old coin dug from ground."
<< <i>But what makes the oceans get warmer? Possibilities: earth's molten core generating increased heat, accumulated gas in the atmosphere retaining more heat from wherever it gets generated, or the sun.........I'll pick door #3 Monty.
roadrunner >>
1) Earth's molten core hasn't changed - can't be the cause 2) Accumulated gas in the atmosphere retaining more heat - close but no cigar 3) The sun - can't be, solar activity is mostly constant
Answer: the increased carbon dioxide in the atmosphere causes more of the sun's rays to be trapped; it's called the "greenhouse effect." >>
Need to build toilets for pigs & cows who are one of the major contributors to the greenhouse effect from their manure. >>
Cows, pigs, and termites all produce a lot of methane, which is a super greenhouse gas compared to carbon dioxide.
"It's far easier to fight for principles, than to live up to them." Adlai Stevenson
The sun - can't be, solar activity is mostly constant
Totally false. The sun goes thru multi-year phases of various levels of activity. This has been mapped and recorded for the last couple of hundred years.
<< <i>The sun - can't be, solar activity is mostly constant
Totally false. The sun goes thru multi-year phases of various levels of activity. This has been mapped and recorded for the last couple of hundred years. >>
Wrong, your thinking of sunspot activity, I'm talking energy output.
"It's far easier to fight for principles, than to live up to them." Adlai Stevenson
I mentioned this could be a real possibility over a year ago as the inflation/deflation debate began in earnest. Tough to get rising prices when people have less money to spend.
This is also the first step in attempting to right the sinking entitlement ship.
Totally false. The sun goes thru multi-year phases of various levels of activity. This has been mapped and recorded for the last couple of hundred years
There was a segment on National Geographic last week that showed how the Sun has surface storms.
They need to constantly monitor the surface activity of the sun and shut off satellites if needed. These storms have the capability of frying them.
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China is putting itself in a position where dominance of the gold market, of which it is capable, could lead to it exerting global financial hegemony.
Author: Lawrence Williams Posted: Wednesday , 04 Aug 2010
LONDON -
Almost a year ago Mineweb published a short article referring to a report from China that state-controlled organisations - as virtually all entities are in China - had launched marketing efforts at persuading its citizens to buy gold and silver as an investment. This turned out to be the best read story ever published on Mineweb.Not surprisingly with such an article, which we have been assured by our Chinese contacts is correct, there have been those who have accused us of falling prey to pure promotional hype from the gold lobby and there has been no such programme. But the facts belie the doubters with Chinese gold purchases by investors rocketing last year and this.
Earlier this year you could also have read on Mineweb that the World Gold Council had entered an agreement with China's, and the world's, largest bank the Industrial & Commercial Bank of China (ICBC) (state-owned of course) to co-operate to promote gold investments in China.
Yesterday we learnt that China is further loosening its controls on the import and export of gold on the one hand, and on the other that it is also going to support Chinese company investment in overseas gold mining projects.
Does anyone notice a pattern emerging here?
For long we have put forward the view on Mineweb that Eastern buying, and that from China in particular, will effectively put a floor under the gold price - and that floor seems to be rising continuously as seen in the gold price's stair step advances in recent months. A senior Chinese official has stated publicly that the country will buy gold on the dips so as not to disrupt the market and undermine the US dollar - and there is perhaps more than anecdotal evidence that the Chinese government is buying gold, effectively surreptitiously, for its reserves, but not disclosing this until it reckons it is opportune so to do. Last time it announced an increase in gold reserves it had in fact been accumulating the yellow metal for 6 years before it actually made the fact public.
But why should China hold back dissemination of this information? The Chinese know that an announcement that shows it has accumulated a further large gold holding will move the gold price sharply upwards. (Another reason why China has not bought any of the IMF gold.) A resultant gold price leap could well be seen globally as a devaluation of the dollar, leading to yet another nail in the greenback's coffin, and given the dollar-related element in China's huge currency reserve surplus, that could be seen as not being in China's best interest - at least for now.
There has also been considerable evidence that Chinese companies (all state-controlled) have been buying up western investments - in the resource sector in particular - at a phenomenal, and seemingly ever-growing, rate. Some would say this is an attempt to convert some of the nation's huge dollar currency surplus into hard assets, while at the same time helping secure future supply lines for the global industrial giant. Some of China's top economists have gone on record as saying that they have little confidence in the long term future of the dollar as the only real reserve currency, and replacing some of its dollar reserves in this manner is probably - certainly - government policy.
But what this does mean to the West in general, and to the U.S.A. in particular, is ‘don't screw with the Dragon'. It has golden teeth which can really cause financial damage to the status quo if it should so wish, and it is also gaining a position where it can dominate the supply of many militarily strategic metals and minerals, not just gold, should any other country try and resort to gunboat diplomacy! The time is perhaps not ripe - yet, but every move that China makes in the resource sector in general, and in gold and in some particularly strategic metals and minerals (think rare earths) could be interpreted as a long term plan to make China top dog in the global economy and, at the same time, make it secure from any nation which might want to try to prevent it reaching this position of global dominance by any means.
But in the meantime it is set on keeping its own 1.4 billion population happy - and subservient. The best way of doing this is by continuing internal growth, which in turn is needed to generate the demand to fuel its industrial engine. 8% GDP growth is a bad year for China. What would most of the West's industrialised nations give for a growth rate of half that today? Within this policy, persuading its new, and rapidly growing, middle classes to invest in gold, and then ensure the metal continues to rise gradually in price, thus maintain wealth aspirations, is one way of keeping a potentially troublesome element of society more than happy.
Now maybe I'm being too cynical in my analysis, but history also suggests that some nations are prepared to look very long term in their approach to global business and politics, and ultimate dominance in both - and the Chinese seem to fit this pattern well. On the other hand a capitalist democracy is less well suited to extended planning of this type as fortunes of political parties wax and wane and agendas are constantly shifting. The world order is changing. The U.S. cannot exert its current global financial control for ever.
Follow Lawrence Williams on twitter - www.twitter.com/lawrie_williams
But why should China hold back dissemination of this information? The Chinese know that an announcement that shows it has accumulated a further large gold holding will move the gold price sharply upwards. (Another reason why China has not bought any of the IMF gold.) A resultant gold price leap could well be seen globally as a devaluation of the dollar, leading to yet another nail in the greenback's coffin, and given the dollar-related element in China's huge currency reserve surplus, that could be seen as not being in China's best interest - at least for now.
>>
The paper gold market could still probably supress the gold price no matter how much China buys.
The paper gold market could still probably supress the gold price no matter how much China buys.
Not if China decided to buy on the NYSE or LBMA and requested delivery for all their purchases. It wouldn't take long for the drawdown to wake the markets up. Yeah, the banksters could write another $50-$100 BILL in paper gold derivatives to try and offset this, but it's hard to conceal an inventory drawdown unless the exchanges started using paper ounces as well.
China is putting itself in a position where dominance of the gold market, of which it is capable, could lead to it exerting global financial hegemony.
Author: Lawrence Williams Posted: Wednesday , 04 Aug 2010
LONDON -
Almost a year ago Mineweb published a short article referring to a report from China that state-controlled organisations - as virtually all entities are in China - had launched marketing efforts at persuading its citizens to buy gold and silver as an investment. This turned out to be the best read story ever published on Mineweb.Not surprisingly with such an article, which we have been assured by our Chinese contacts is correct, there have been those who have accused us of falling prey to pure promotional hype from the gold lobby and there has been no such programme. But the facts belie the doubters with Chinese gold purchases by investors rocketing last year and this.
Earlier this year you could also have read on Mineweb that the World Gold Council had entered an agreement with China's, and the world's, largest bank the Industrial & Commercial Bank of China (ICBC) (state-owned of course) to co-operate to promote gold investments in China.
Yesterday we learnt that China is further loosening its controls on the import and export of gold on the one hand, and on the other that it is also going to support Chinese company investment in overseas gold mining projects.
Does anyone notice a pattern emerging here?
For long we have put forward the view on Mineweb that Eastern buying, and that from China in particular, will effectively put a floor under the gold price - and that floor seems to be rising continuously as seen in the gold price's stair step advances in recent months. A senior Chinese official has stated publicly that the country will buy gold on the dips so as not to disrupt the market and undermine the US dollar - and there is perhaps more than anecdotal evidence that the Chinese government is buying gold, effectively surreptitiously, for its reserves, but not disclosing this until it reckons it is opportune so to do. Last time it announced an increase in gold reserves it had in fact been accumulating the yellow metal for 6 years before it actually made the fact public.
But why should China hold back dissemination of this information? The Chinese know that an announcement that shows it has accumulated a further large gold holding will move the gold price sharply upwards. (Another reason why China has not bought any of the IMF gold.) A resultant gold price leap could well be seen globally as a devaluation of the dollar, leading to yet another nail in the greenback's coffin, and given the dollar-related element in China's huge currency reserve surplus, that could be seen as not being in China's best interest - at least for now.
There has also been considerable evidence that Chinese companies (all state-controlled) have been buying up western investments - in the resource sector in particular - at a phenomenal, and seemingly ever-growing, rate. Some would say this is an attempt to convert some of the nation's huge dollar currency surplus into hard assets, while at the same time helping secure future supply lines for the global industrial giant. Some of China's top economists have gone on record as saying that they have little confidence in the long term future of the dollar as the only real reserve currency, and replacing some of its dollar reserves in this manner is probably - certainly - government policy.
But what this does mean to the West in general, and to the U.S.A. in particular, is ‘don't screw with the Dragon'. It has golden teeth which can really cause financial damage to the status quo if it should so wish, and it is also gaining a position where it can dominate the supply of many militarily strategic metals and minerals, not just gold, should any other country try and resort to gunboat diplomacy! The time is perhaps not ripe - yet, but every move that China makes in the resource sector in general, and in gold and in some particularly strategic metals and minerals (think rare earths) could be interpreted as a long term plan to make China top dog in the global economy and, at the same time, make it secure from any nation which might want to try to prevent it reaching this position of global dominance by any means.
But in the meantime it is set on keeping its own 1.4 billion population happy - and subservient. The best way of doing this is by continuing internal growth, which in turn is needed to generate the demand to fuel its industrial engine. 8% GDP growth is a bad year for China. What would most of the West's industrialised nations give for a growth rate of half that today? Within this policy, persuading its new, and rapidly growing, middle classes to invest in gold, and then ensure the metal continues to rise gradually in price, thus maintain wealth aspirations, is one way of keeping a potentially troublesome element of society more than happy.
Now maybe I'm being too cynical in my analysis, but history also suggests that some nations are prepared to look very long term in their approach to global business and politics, and ultimate dominance in both - and the Chinese seem to fit this pattern well. On the other hand a capitalist democracy is less well suited to extended planning of this type as fortunes of political parties wax and wane and agendas are constantly shifting. The world order is changing. The U.S. cannot exert its current global financial control for ever.
Follow Lawrence Williams on twitter - www.twitter.com/lawrie_williams >>
Tell your grandchildren to learn Mandarin. They will need it to report to their overseers.
Numismatist. 50 year member ANA. Winner of four ANA Heath Literary Awards; three Wayte and Olga Raymond Literary Awards; Numismatist of the Year Award 2009, and Lifetime Achievement Award 2020. Winner numerous NLG Literary Awards.
A nice but long summary on how the key portions of the financial reform bill were essentially gutted by both parties. They even removed anything to do with regulating gold and silver derivatives which of course are not manipulated.
<< <i>A nice but long summary on how the key portions of the financial reform bill were essentially gutted by both parties. They even removed anything to do with regulating gold and silver derivatives which of course are not manipulated.
In a nutshell it says all the wealth in the world is being sucked up by the Wall Street leaches and as long as the republocrats get their cut it's not going to end.
The huge profits that Wall Street earned in the past decade were driven in large part by a single, far-reaching scheme, one in which bankers, home lenders and other players exploited loopholes in the system to magically transform subprime home borrowers into AAA investments, sell them off to unsuspecting pension funds and foreign trade unions and other suckers, then multiply their score by leveraging their phony-baloney deals over and over. It was pure financial alchemy – turning manure into gold, then spinning it Rumpelstiltskin-style into vast profits using complex, mostly unregulated new instruments that almost no one outside of a few experts in the field really understood.
Development districts face wave of bond defaults The roads are brand new. Sidewalks, too. Recently built gazebos overlook picturesque lakes. And there is green everywhere. What is missing are the people, and the homes, and, particularly, the dollars that people and homes represent. This is the situation facing many of Florida's community development districts, CDDs for short, a favorite tool of developers during the boom to raise money for the construction of roads and other infrastructure in the grand developments they planned.
To date, Florida's CDDs have defaulted on more than $4 billion in bonds, $330 million of it in Sarasota, Manatee and Charlotte counties. The defaults throw into doubt the futures of picturesque developments in Manatee County, such as CrossCreek, and mammoth planned communities in South Sarasota County, like Sarasota National.
An estimated 73 percent of CDDs are in default, according to Richard Lehmann, the publisher of floridacddreport.com, which tracks the CDD industry. Before the shakeout ends, he expects the number to rise to 85 percent.
Municipal governments have defaulted on bonds before, but never to this extent, Lehmann said.
He called the wave of failures in Florida "the biggest single default event in the history of municipal bonds." Who gets stuck?
They have been fixing the neighborhood roads here in Baltimore also. New sidewalks and roads in Dundalk and Overlea. Federal Stimulus money I guess.
So Goldsaint's prediction in an earlier post of a complete economic collapse in 10 years. I give it 4-7 years with this bogus financial reform. Except this time there will be no salvation from the Federal Government.
Beginning one year after enactment of the Cap and Trade Act, you won’t be able to sell your home unless you retrofit it to comply with the energy and water efficiency standards of this “Cap & Trade” bill, passed by the House of Representatives. If it is also passed by the Senate, it will be the largest tax increase any of us has ever experienced.
I read this blurb today. Anyone have any more details on this measure? Supposedly you will have to pay a $200 fee to have your home certified and assigned an efficiency label, that is required in order to sell your home in a Cap'N Trade World. No label...No sale. If your home is short on insulation, water purification, etc. it would seem you'll have to rip things apart to upgrade should you ever need to sell. Won't this make the housing market even more of a mess than it already is? How about people moving on short notice due to work assignments? Certification requirements would undoubtedly become more stringent as time goes on. So is this for real?
<< <i>Beginning one year after enactment of the Cap and Trade Act, you won’t be able to sell your home unless you retrofit it to comply with the energy and water efficiency standards of this “Cap & Trade” bill, passed by the House of Representatives. If it is also passed by the Senate, it will be the largest tax increase any of us has ever experienced.
I read this blurb today. Anyone have any more details on this measure? Supposedly you will have to pay a $200 fee to have your home certified and assigned an efficiency label, that is required to sell your home. No label...No sale. If your home is short on insulation, water purification, etc. it would seem you'll have to rip things apart to upgrade. Won't this make the housing market even more of a mess than it already is? Certification requirements will undoubtedly become more stringent as time goes on.
Is it possible to raise rates as long as our top 6 banks own $180 TRILL in interest rate swaps/derivatives? This has been the primary lever that has kept rates low for the past 10 yrs. The FED has typically been a follower of market set interest rates.
I'm also assuming that those banks with profitable paper positions in these interest rate swaps are not about to let them go for the "good of the nation." They'll fight tooth and nail against anyone who tries to keep them from their annointed pay day. And if they are on the wrong end of the swaps, they'll fight just as hard to prevent having to mark to market the impending loss.
Raise rates and watch business buckle with another punch in the gut. Watch consumers scurry under the nearest rock as they find that their disposable income's been cut in half with taxes and job cutbacks.
Then, watch the national debt and interest liabilities swell as a % of GDP as the dollar moves toward de facto devaluation. Once the dollar is devalued significantly, every Social Security beneficiary and every retiree who owns T-Bonds will be floundering and crowding the government offices, looking for explanations and financial assistance. It is a fiasco already, and it's going to be much worse. That's the main reason that they are trying to keep rates low - they know we're all in trouble, and they know they'll be blamed, (which they should be).
The bailouts should never have happened. The bonuses should never have happened. The FASB's accounting standards should never have been relaxed. Investment banking and mortgage banking should never have been allowed to merge. All of these situations are in fact financial malfeasance, or fraud and should be prosecuted as such.
Q: Are You Printing Money? Bernanke: Not Literally
"China's hidden borrowing may push government debt to 96 percent of gross domestic product next year, increasing the risk of a financial crisis in the world's third-biggest economy, Professor Victor Shih said.
"The worst case is a pretty large-scale financial crisis around 2012," said Shih, a political economist at Northwestern University in Evanston, Illinois, who spent months researching borrowing transactions by about 8,000 local-government entities. "The slowdown would last at least two years and maybe longer," the author of the book "Factions and Finance in China" said in a phone interview March 1.
Surging borrowing by local-government entities, uncounted in official estimates of China's debt-to-GDP ratio, is the key reason for Shih's concern. Harvard University Professor Kenneth Rogoff said Feb. 23 that a debt-fueled bubble in China may trigger a regional recession within a decade, while hedge-fund manager James Chanos has predicted a Chinese slump after excessive property investment.
By Shih's count, China's debt may reach 39.838 trillion yuan ($5.8 trillion) next year. His forecast for debt-to-GDP compares with an International Monetary Fund estimate for China of 22 percent this year, which excludes local-government liabilities. The IMF sees Spain at 69.6 percent, the U.S. at 94 percent, Greece at 115 percent and Japan at 227 percent.
Chinese officials allowed lending to explode from late 2008 to fight off the effects of the global financial crisis. In 2009, new loans rose to a record 9.59 trillion yuan ($1.4 trillion).
In the fourth quarter of 2009, the Chinese economy grew 10.7 percent from a year earlier.
The economy faces "a slow grinding down of all this debt and there's no easy way out," Beijing-based Pettis, a finance professor at Peking University, said in a Feb. 24 interview."
Is is just me or does it seem like everything is going to slam into the fan in 2012?
<< <i>Raise rates and watch business buckle with another punch in the gut. Watch consumers scurry under the nearest rock as they find that their disposable income's been cut in half with taxes and job cutbacks.
Then, watch the national debt and interest liabilities swell as a % of GDP as the dollar moves toward de facto devaluation. Once the dollar is devalued significantly, every Social Security beneficiary and every retiree who owns T-Bonds will be floundering and crowding the government offices, looking for explanations and financial assistance. It is a fiasco already, and it's going to be much worse. That's the main reason that they are trying to keep rates low - they know we're all in trouble, and they know they'll be blamed, (which they should be).
The bailouts should never have happened. The bonuses should never have happened. The FASB's accounting standards should never have been relaxed. Investment banking and mortgage banking should never have been allowed to merge. All of these situations are in fact financial malfeasance, or fraud and should be prosecuted as such. >>
I agree mostly, but I think raising rates would strengthen the dollar, not devalue it. That would kill exports and the stock market and businesses and promote more saving, rather than spending. And higher rates are worthless without an appropriate cut in spending.
While I agree that it is the correct course of action to raise, it is political suicide. Wall street will never support such moves, and neither will most if not all of the government dependents.
I agree mostly, but I think raising rates would strengthen the dollar, not devalue it. That would kill exports and the stock market and businesses and promote more saving, rather than spending. And higher rates are worthless without an appropriate cut in spending.
Initially, a rise in rates would provide some nominal dollar support. What I meant, is that a rise in rates would precipitate all the rest, and when the ball gets rolling, the dollar would then cave. I don't think that there is an easy way out, or they would have been leaning on it already.
Q: Are You Printing Money? Bernanke: Not Literally
Im not talking about a rate increase of 1000 basis points (10%). A Fed funds rate of 2% would help much more than it would hurt. If people arent buying houses with 4% mortgage rates, then they surely wont buy at 6%. So whats the harm? Bernanke is afraid of Depression 2. Scared policy is doomed policy.
Comments
-foreign and international buyers (not China, Japan, India): $697B
-US FED - $286B
-US households - $528 BILL.
Those are levels with one qtr remaining. The UK has almost doubled their bond holdings in the last 5 months by adding $170 BILL, a staggering amount. A nice feat for a country leaning towards austerity and in terrible financial shape. The US households are part of the "other investors" category but a little bit of digging by Sprott showed that GSE's, Fannie, and corporations were essentially net even on bond purchases...hence it all falls on the shoulders of J6P who somehow found $528BILL to spend on TBonds in the first 3 qtrs of 2009. An interesting fact considering that it was a 35X increase from 2008 levels when the stock market crash occurred and everyone sought safety in treasuries. It's hard to believe any of these numbers other than FED's purchases. The rest does seem to smack of hidden monetization as does the fact that bond sales over the past 4 years have outpaced the budget deficits by $1.5 TRILL. So where did the difference go to as it surely doesn't show up in the money supply numbers because it's the only place that people do look. If I were monetizing the debt I certainly would not allow it to show up in Money supply numbers....just like the big banks have kept their derivatives risks off their balance sheets for a decade.
Jim Willie on TBonds
roadrunner
Ha! I just cracked a rib laughing....................MJ
Fellas, leave the tight pants to the ladies. If I can count the coins in your pockets you better use them to call a tailor. Stay thirsty my friends......
Katz on gold, price inflation, & bankers and bailouts
Up to this point in the banking crisis the FDIC has agreed to loss-share arrangements of $180 BILL with the acquiring entity. That's money that could eventually have to be paid out to those entities should the assets/derivatives eventually fail. Just another means to hide monetary easing with no initial change to the money supply. Ironic that these are bets on derivatives, which are in effect bets themselves. Bets on bets? So when do we up the ante to bets on bets on bets?
roadrunner
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
OISM 2007 video on global warming trends - 10 min.
Skip the 2 min. intro to this to get to the basic charts
More detailed information supporting above video but using same charts
Global Warming petition project home page
roadrunner
It's clear that the climate is changing (but debate as to whether warmer or cooler), but there's no conclusive evidence that man is causing it.
Ultimately it is a good thing to become more energy efficient and clean up the environment, but draconian measures like cap and trade are completely unjustified.
<< <i>RR, if you haven't seen it, the documentary video "The Great Global Warming Swindle" is very interesting, and is available on Ebay for under $10 and it covers the other side of the topic very well.
It's clear that the climate is changing (but debate as to whether warmer or cooler), but there's no conclusive evidence that man is causing it.
Ultimately it is a good thing to become more energy efficient and clean up the environment, but draconian measures like cap and trade are completely unjustified. >>
There have been a dozen times in Earth's history when CO2 was 10x what it is today and global temps were warmer, cooler, and about the same as they are today. There is no correlation between atmospheric CO2 and temps. Furthermore, AGW is a complete fallacy. Even the fraud at EAU admits there's no statistical evidence of AGW.
Cap & tax is designed to gain more control over the economy by a centralized power. Nothing more.
<< <i>
<< <i>RR, if you haven't seen it, the documentary video "The Great Global Warming Swindle" is very interesting, and is available on Ebay for under $10 and it covers the other side of the topic very well.
It's clear that the climate is changing (but debate as to whether warmer or cooler), but there's no conclusive evidence that man is causing it.
Ultimately it is a good thing to become more energy efficient and clean up the environment, but draconian measures like cap and trade are completely unjustified. >>
There have been a dozen times in Earth's history when CO2 was 10x what it is today and global temps were warmer, cooler, and about the same as they are today. There is no correlation between atmospheric CO2 and temps. Furthermore, AGW is a complete fallacy. Even the fraud at EAU admits there's no statistical evidence of AGW.
Cap & tax is designed to gain more control over the economy by a centralized power. Nothing more. >>
Holy Carp!!!! Im agreeing with everyone.
Knowledge is the enemy of fear
Knowledge is the enemy of fear
roadrunner
Box of 20
roadrunner
Knowledge is the enemy of fear
<< <i>But what makes the oceans get warmer? Possibilities: earth's molten core generating increased heat, accumulated gas in the atmosphere retaining more heat from wherever it gets generated, or the sun.........I'll pick door #3 Monty.
roadrunner >>
1) Earth's molten core hasn't changed - can't be the cause
2) Accumulated gas in the atmosphere retaining more heat - close but no cigar
3) The sun - can't be, solar activity is mostly constant
Answer: the increased carbon dioxide in the atmosphere causes more of the sun's rays to be trapped; it's called the "greenhouse effect."
<< <i>
<< <i>But what makes the oceans get warmer? Possibilities: earth's molten core generating increased heat, accumulated gas in the atmosphere retaining more heat from wherever it gets generated, or the sun.........I'll pick door #3 Monty.
roadrunner >>
1) Earth's molten core hasn't changed - can't be the cause
2) Accumulated gas in the atmosphere retaining more heat - close but no cigar
3) The sun - can't be, solar activity is mostly constant
Answer: the increased carbon dioxide in the atmosphere causes more of the sun's rays to be trapped; it's called the "greenhouse effect." >>
Need to build toilets for pigs & cows who are one of the major contributors to the greenhouse effect from their manure.
<< <i>
<< <i>
<< <i>But what makes the oceans get warmer? Possibilities: earth's molten core generating increased heat, accumulated gas in the atmosphere retaining more heat from wherever it gets generated, or the sun.........I'll pick door #3 Monty.
roadrunner >>
1) Earth's molten core hasn't changed - can't be the cause
2) Accumulated gas in the atmosphere retaining more heat - close but no cigar
3) The sun - can't be, solar activity is mostly constant
Answer: the increased carbon dioxide in the atmosphere causes more of the sun's rays to be trapped; it's called the "greenhouse effect." >>
Need to build toilets for pigs & cows who are one of the major contributors to the greenhouse effect from their manure.
Cows, pigs, and termites all produce a lot of methane, which is a super greenhouse gas compared to carbon dioxide.
Totally false. The sun goes thru multi-year phases of various levels of activity. This has been mapped and recorded for the last couple of hundred years.
<< <i>The sun - can't be, solar activity is mostly constant
Totally false. The sun goes thru multi-year phases of various levels of activity. This has been mapped and recorded for the last couple of hundred years. >>
Wrong, your thinking of sunspot activity, I'm talking energy output.
<< <i>Wrong, your thinking of sunspot activity, I'm talking energy output. >>
Look up Hale, Gleissberg, Suess, and Hallstatt cycles as well as the Earth's 31,000 year procession.
The sun's radiation does indeed vary with time.
The economic impact of overreacting to what is now being recognized as natural phenomena will be catastrophic.
I mentioned this could be a real possibility over a year ago as the inflation/deflation debate began in earnest. Tough to get rising prices when people have less money to spend.
This is also the first step in attempting to right the sinking entitlement ship.
Knowledge is the enemy of fear
There was a segment on National Geographic last week that showed how the Sun has surface storms.
They need to constantly monitor the surface activity of the sun and shut off satellites if needed.
These storms have the capability of frying them.
Beware the Dragon's gold teeth
China is putting itself in a position where dominance of the gold market, of which it is capable, could lead to it exerting global financial hegemony.
Author: Lawrence Williams
Posted: Wednesday , 04 Aug 2010
LONDON -
Almost a year ago Mineweb published a short article referring to a report from China that state-controlled organisations - as virtually all entities are in China - had launched marketing efforts at persuading its citizens to buy gold and silver as an investment. This turned out to be the best read story ever published on Mineweb.Not surprisingly with such an article, which we have been assured by our Chinese contacts is correct, there have been those who have accused us of falling prey to pure promotional hype from the gold lobby and there has been no such programme. But the facts belie the doubters with Chinese gold purchases by investors rocketing last year and this.
Earlier this year you could also have read on Mineweb that the World Gold Council had entered an agreement with China's, and the world's, largest bank the Industrial & Commercial Bank of China (ICBC) (state-owned of course) to co-operate to promote gold investments in China.
Yesterday we learnt that China is further loosening its controls on the import and export of gold on the one hand, and on the other that it is also going to support Chinese company investment in overseas gold mining projects.
Does anyone notice a pattern emerging here?
For long we have put forward the view on Mineweb that Eastern buying, and that from China in particular, will effectively put a floor under the gold price - and that floor seems to be rising continuously as seen in the gold price's stair step advances in recent months. A senior Chinese official has stated publicly that the country will buy gold on the dips so as not to disrupt the market and undermine the US dollar - and there is perhaps more than anecdotal evidence that the Chinese government is buying gold, effectively surreptitiously, for its reserves, but not disclosing this until it reckons it is opportune so to do. Last time it announced an increase in gold reserves it had in fact been accumulating the yellow metal for 6 years before it actually made the fact public.
But why should China hold back dissemination of this information? The Chinese know that an announcement that shows it has accumulated a further large gold holding will move the gold price sharply upwards. (Another reason why China has not bought any of the IMF gold.) A resultant gold price leap could well be seen globally as a devaluation of the dollar, leading to yet another nail in the greenback's coffin, and given the dollar-related element in China's huge currency reserve surplus, that could be seen as not being in China's best interest - at least for now.
There has also been considerable evidence that Chinese companies (all state-controlled) have been buying up western investments - in the resource sector in particular - at a phenomenal, and seemingly ever-growing, rate. Some would say this is an attempt to convert some of the nation's huge dollar currency surplus into hard assets, while at the same time helping secure future supply lines for the global industrial giant. Some of China's top economists have gone on record as saying that they have little confidence in the long term future of the dollar as the only real reserve currency, and replacing some of its dollar reserves in this manner is probably - certainly - government policy.
But what this does mean to the West in general, and to the U.S.A. in particular, is ‘don't screw with the Dragon'. It has golden teeth which can really cause financial damage to the status quo if it should so wish, and it is also gaining a position where it can dominate the supply of many militarily strategic metals and minerals, not just gold, should any other country try and resort to gunboat diplomacy! The time is perhaps not ripe - yet, but every move that China makes in the resource sector in general, and in gold and in some particularly strategic metals and minerals (think rare earths) could be interpreted as a long term plan to make China top dog in the global economy and, at the same time, make it secure from any nation which might want to try to prevent it reaching this position of global dominance by any means.
But in the meantime it is set on keeping its own 1.4 billion population happy - and subservient. The best way of doing this is by continuing internal growth, which in turn is needed to generate the demand to fuel its industrial engine. 8% GDP growth is a bad year for China. What would most of the West's industrialised nations give for a growth rate of half that today? Within this policy, persuading its new, and rapidly growing, middle classes to invest in gold, and then ensure the metal continues to rise gradually in price, thus maintain wealth aspirations, is one way of keeping a potentially troublesome element of society more than happy.
Now maybe I'm being too cynical in my analysis, but history also suggests that some nations are prepared to look very long term in their approach to global business and politics, and ultimate dominance in both - and the Chinese seem to fit this pattern well. On the other hand a capitalist democracy is less well suited to extended planning of this type as fortunes of political parties wax and wane and agendas are constantly shifting. The world order is changing. The U.S. cannot exert its current global financial control for ever.
Follow Lawrence Williams on twitter - www.twitter.com/lawrie_williams
<< <i>
But why should China hold back dissemination of this information? The Chinese know that an announcement that shows it has accumulated a further large gold holding will move the gold price sharply upwards. (Another reason why China has not bought any of the IMF gold.) A resultant gold price leap could well be seen globally as a devaluation of the dollar, leading to yet another nail in the greenback's coffin, and given the dollar-related element in China's huge currency reserve surplus, that could be seen as not being in China's best interest - at least for now.
>>
The paper gold market could still probably supress the gold price no matter how much China buys.
Not if China decided to buy on the NYSE or LBMA and requested delivery for all their purchases. It wouldn't take long for the drawdown to wake the markets up. Yeah, the banksters could write another $50-$100 BILL in paper gold derivatives to try and offset this, but it's hard to conceal an inventory drawdown unless the exchanges started using paper ounces as well.
roadrunner
Canada Unexpectedly Lost Jobs in July
Knowledge is the enemy of fear
<< <i>Interesting Gold articlesGold
Beware the Dragon's gold teeth
China is putting itself in a position where dominance of the gold market, of which it is capable, could lead to it exerting global financial hegemony.
Author: Lawrence Williams
Posted: Wednesday , 04 Aug 2010
LONDON -
Almost a year ago Mineweb published a short article referring to a report from China that state-controlled organisations - as virtually all entities are in China - had launched marketing efforts at persuading its citizens to buy gold and silver as an investment. This turned out to be the best read story ever published on Mineweb.Not surprisingly with such an article, which we have been assured by our Chinese contacts is correct, there have been those who have accused us of falling prey to pure promotional hype from the gold lobby and there has been no such programme. But the facts belie the doubters with Chinese gold purchases by investors rocketing last year and this.
Earlier this year you could also have read on Mineweb that the World Gold Council had entered an agreement with China's, and the world's, largest bank the Industrial & Commercial Bank of China (ICBC) (state-owned of course) to co-operate to promote gold investments in China.
Yesterday we learnt that China is further loosening its controls on the import and export of gold on the one hand, and on the other that it is also going to support Chinese company investment in overseas gold mining projects.
Does anyone notice a pattern emerging here?
For long we have put forward the view on Mineweb that Eastern buying, and that from China in particular, will effectively put a floor under the gold price - and that floor seems to be rising continuously as seen in the gold price's stair step advances in recent months. A senior Chinese official has stated publicly that the country will buy gold on the dips so as not to disrupt the market and undermine the US dollar - and there is perhaps more than anecdotal evidence that the Chinese government is buying gold, effectively surreptitiously, for its reserves, but not disclosing this until it reckons it is opportune so to do. Last time it announced an increase in gold reserves it had in fact been accumulating the yellow metal for 6 years before it actually made the fact public.
But why should China hold back dissemination of this information? The Chinese know that an announcement that shows it has accumulated a further large gold holding will move the gold price sharply upwards. (Another reason why China has not bought any of the IMF gold.) A resultant gold price leap could well be seen globally as a devaluation of the dollar, leading to yet another nail in the greenback's coffin, and given the dollar-related element in China's huge currency reserve surplus, that could be seen as not being in China's best interest - at least for now.
There has also been considerable evidence that Chinese companies (all state-controlled) have been buying up western investments - in the resource sector in particular - at a phenomenal, and seemingly ever-growing, rate. Some would say this is an attempt to convert some of the nation's huge dollar currency surplus into hard assets, while at the same time helping secure future supply lines for the global industrial giant. Some of China's top economists have gone on record as saying that they have little confidence in the long term future of the dollar as the only real reserve currency, and replacing some of its dollar reserves in this manner is probably - certainly - government policy.
But what this does mean to the West in general, and to the U.S.A. in particular, is ‘don't screw with the Dragon'. It has golden teeth which can really cause financial damage to the status quo if it should so wish, and it is also gaining a position where it can dominate the supply of many militarily strategic metals and minerals, not just gold, should any other country try and resort to gunboat diplomacy! The time is perhaps not ripe - yet, but every move that China makes in the resource sector in general, and in gold and in some particularly strategic metals and minerals (think rare earths) could be interpreted as a long term plan to make China top dog in the global economy and, at the same time, make it secure from any nation which might want to try to prevent it reaching this position of global dominance by any means.
But in the meantime it is set on keeping its own 1.4 billion population happy - and subservient. The best way of doing this is by continuing internal growth, which in turn is needed to generate the demand to fuel its industrial engine. 8% GDP growth is a bad year for China. What would most of the West's industrialised nations give for a growth rate of half that today? Within this policy, persuading its new, and rapidly growing, middle classes to invest in gold, and then ensure the metal continues to rise gradually in price, thus maintain wealth aspirations, is one way of keeping a potentially troublesome element of society more than happy.
Now maybe I'm being too cynical in my analysis, but history also suggests that some nations are prepared to look very long term in their approach to global business and politics, and ultimate dominance in both - and the Chinese seem to fit this pattern well. On the other hand a capitalist democracy is less well suited to extended planning of this type as fortunes of political parties wax and wane and agendas are constantly shifting. The world order is changing. The U.S. cannot exert its current global financial control for ever.
Follow Lawrence Williams on twitter - www.twitter.com/lawrie_williams >>
Tell your grandchildren to learn Mandarin.
They will need it to report to their overseers.
(x2,Meltdown),cajun,Swampboy,SeaEagleCoins,InYHWHWeTrust, bstat1020,Spooly,timrutnat,oilstates200, vpr, guitarwes,
mariner67, and Mikes coins
Gutting of Dodd-Frank financial regulatory bill
Hey, does the earth's core moving count as a Cardinal Crossing catastrophe?
roadrunner
<< <i>A nice but long summary on how the key portions of the financial reform bill were essentially gutted by both parties. They even removed anything to do with regulating gold and silver derivatives which of course are not manipulated.
Gutting of Dodd-Frank financial regulatory bill
>>
In a nutshell it says all the wealth in the world is being sucked up by the Wall
Street leaches and as long as the republocrats get their cut it's not going to end.
It's important to note that two of the key players who gutted the Dodd-Frank Financial Reform Bill were - you guessed it - Dodd and Frank.
I knew it would happen.
The huge profits that Wall Street earned in the past decade were driven in large part by a single, far-reaching scheme, one in which bankers, home lenders and other players exploited loopholes in the system to magically transform subprime home borrowers into AAA investments, sell them off to unsuspecting pension funds and foreign trade unions and other suckers, then multiply their score by leveraging their phony-baloney deals over and over. It was pure financial alchemy – turning manure into gold, then spinning it Rumpelstiltskin-style into vast profits using complex, mostly unregulated new instruments that almost no one outside of a few experts in the field really understood.
Where does your area stack up?
Knowledge is the enemy of fear
<< <i>Highest income in USA is in Washington DC.
Where does your area stack up? >>
That's not exactly true...it's the "burbs" in VA & MD that surround DC. The City itself would not rank in the top 50.
Development districts face wave of bond defaults
The roads are brand new. Sidewalks, too. Recently built gazebos overlook picturesque lakes. And there is green everywhere. What is missing are the people, and the homes, and, particularly, the dollars that people and homes represent.
This is the situation facing many of Florida's community development districts, CDDs for short, a favorite tool of developers during the boom to raise money for the construction of roads and other infrastructure in the grand developments they planned.
To date, Florida's CDDs have defaulted on more than $4 billion in bonds, $330 million of it in Sarasota, Manatee and Charlotte counties. The defaults throw into doubt the futures of picturesque developments in Manatee County, such as CrossCreek, and mammoth planned communities in South Sarasota County, like Sarasota National.
An estimated 73 percent of CDDs are in default, according to Richard Lehmann, the publisher of floridacddreport.com, which tracks the CDD industry. Before the shakeout ends, he expects the number to rise to 85 percent.
Municipal governments have defaulted on bonds before, but never to this extent, Lehmann said.
He called the wave of failures in Florida "the biggest single default event in the history of municipal bonds."
Who gets stuck?
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
So Goldsaint's prediction in an earlier post of a complete economic collapse in 10 years. I give it 4-7 years with this bogus financial reform. Except this time there will be no salvation from the Federal Government.
Box of 20
Fed takes action as economy sinks further
Fed, Citing Slowdown, to Buy U.S. Debt
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I read this blurb today. Anyone have any more details on this measure? Supposedly you will have to pay a $200 fee to have your home certified and assigned an efficiency label, that is required in order to sell your home in a Cap'N Trade World. No label...No sale. If your home is short on insulation, water purification, etc. it would seem you'll have to rip things apart to upgrade should you ever need to sell. Won't this make the housing market even more of a mess than it already is? How about people moving on short notice due to work assignments? Certification requirements would undoubtedly become more stringent as time goes on. So is this for real?
roadrunner
<< <i>Beginning one year after enactment of the Cap and Trade Act, you won’t be able to sell your home unless you retrofit it to comply with the energy and water efficiency standards of this “Cap & Trade” bill, passed by the House of Representatives. If it is also passed by the Senate, it will be the largest tax increase any of us has ever experienced.
I read this blurb today. Anyone have any more details on this measure? Supposedly you will have to pay a $200 fee to have your home certified and assigned an efficiency label, that is required to sell your home. No label...No sale. If your home is short on insulation, water purification, etc. it would seem you'll have to rip things apart to upgrade. Won't this make the housing market even more of a mess than it already is? Certification requirements will undoubtedly become more stringent as time goes on.
roadrunner >>
See Snoops.com
roadrunner
Raise rates now.
Knowledge is the enemy of fear
I'm also assuming that those banks with profitable paper positions in these interest rate swaps are not about to let them go for the "good of the nation." They'll fight tooth and nail against anyone who tries to keep them from their annointed pay day. And if they are on the wrong end of the swaps, they'll fight just as hard to prevent having to mark to market the impending loss.
roadrunner
Then, watch the national debt and interest liabilities swell as a % of GDP as the dollar moves toward de facto devaluation. Once the dollar is devalued significantly, every Social Security beneficiary and every retiree who owns T-Bonds will be floundering and crowding the government offices, looking for explanations and financial assistance. It is a fiasco already, and it's going to be much worse. That's the main reason that they are trying to keep rates low - they know we're all in trouble, and they know they'll be blamed, (which they should be).
The bailouts should never have happened. The bonuses should never have happened. The FASB's accounting standards should never have been relaxed. Investment banking and mortgage banking should never have been allowed to merge. All of these situations are in fact financial malfeasance, or fraud and should be prosecuted as such.
I knew it would happen.
Cracks Behind The Great Wall
By Steve Christ
Wednesday, March 3rd, 2010
Here's the latest story on the economic truth from behind the Great Wall.
As you might expect, it tends to be at odds with the official party line.
From Bloomberg entitled: China's Hidden Debt Risks 2012 Crisis, Northwestern's Shih Says
"China's hidden borrowing may push government debt to 96 percent of gross domestic product next year, increasing the risk of a financial crisis in the world's third-biggest economy, Professor Victor Shih said.
"The worst case is a pretty large-scale financial crisis around 2012," said Shih, a political economist at Northwestern University in Evanston, Illinois, who spent months researching borrowing transactions by about 8,000 local-government entities. "The slowdown would last at least two years and maybe longer," the author of the book "Factions and Finance in China" said in a phone interview March 1.
Surging borrowing by local-government entities, uncounted in official estimates of China's debt-to-GDP ratio, is the key reason for Shih's concern. Harvard University Professor Kenneth Rogoff said Feb. 23 that a debt-fueled bubble in China may trigger a regional recession within a decade, while hedge-fund manager James Chanos has predicted a Chinese slump after excessive property investment.
By Shih's count, China's debt may reach 39.838 trillion yuan ($5.8 trillion) next year. His forecast for debt-to-GDP compares with an International Monetary Fund estimate for China of 22 percent this year, which excludes local-government liabilities. The IMF sees Spain at 69.6 percent, the U.S. at 94 percent, Greece at 115 percent and Japan at 227 percent.
Chinese officials allowed lending to explode from late 2008 to fight off the effects of the global financial crisis. In 2009, new loans rose to a record 9.59 trillion yuan ($1.4 trillion).
In the fourth quarter of 2009, the Chinese economy grew 10.7 percent from a year earlier.
The economy faces "a slow grinding down of all this debt and there's no easy way out," Beijing-based Pettis, a finance professor at Peking University, said in a Feb. 24 interview."
Is is just me or does it seem like everything is going to slam into the fan in 2012?
<< <i>Raise rates and watch business buckle with another punch in the gut. Watch consumers scurry under the nearest rock as they find that their disposable income's been cut in half with taxes and job cutbacks.
Then, watch the national debt and interest liabilities swell as a % of GDP as the dollar moves toward de facto devaluation. Once the dollar is devalued significantly, every Social Security beneficiary and every retiree who owns T-Bonds will be floundering and crowding the government offices, looking for explanations and financial assistance. It is a fiasco already, and it's going to be much worse. That's the main reason that they are trying to keep rates low - they know we're all in trouble, and they know they'll be blamed, (which they should be).
The bailouts should never have happened. The bonuses should never have happened. The FASB's accounting standards should never have been relaxed. Investment banking and mortgage banking should never have been allowed to merge. All of these situations are in fact financial malfeasance, or fraud and should be prosecuted as such. >>
I agree mostly, but I think raising rates would strengthen the dollar, not devalue it. That would kill exports and the stock market and businesses and promote more saving, rather than spending. And higher rates are worthless without an appropriate cut in spending.
While I agree that it is the correct course of action to raise, it is political suicide. Wall street will never support such moves, and neither will most if not all of the government dependents.
Initially, a rise in rates would provide some nominal dollar support. What I meant, is that a rise in rates would precipitate all the rest, and when the ball gets rolling, the dollar would then cave. I don't think that there is an easy way out, or they would have been leaning on it already.
I knew it would happen.
Raise rates now!!!
Knowledge is the enemy of fear