So it was written...

If I were to break down the door to my neighbor’s home, push a gun in the face of the family that lives there, announce that they had offended me, or my masters, for some behavior of theirs which was proscribed by the scrawlings of blind yet dutiful scribes in some mysterious set of holy books that they had neither read nor subscribed to, and then demand that they comply with my instantaneous orders or be subject to the instantaneous power of death which issues from the barrel of my gun — would they or would they not be justified in defending themselves? Would they or would they not be justified in attempting to escape? Would they or would they not act morally by exerting every possible influence, by applying every possible force, to stop me enforcing whatever arbitrary proscription I found in my holy book?

Government as god...

How do you like it so far?

Full essay.

Marc Faber: US will go bankrupt

Volvo truck sales plunge from 41,970 to just 115 - a 99.7% fall

The next time someone tells you the worst is over
show them this...

The depth of the recession was revealed today as truckmaker Volvo admitted demand across the Continent has crashed by 99.7% as it took orders for just 115 new lorries in the last three months.

That compares to orders totalling 41,970 in the third quarter of 2007. Global orders for Volvo slumped 55% in the last three months while Scania, of which Volvo has majority control, said its western Europe truck orders collapsed by 69%.

Full article.

Who's going to jump start this dead jalopy?

“It doesn’t matter how much Hank Paulson gives us,” said an influential senior official at a big bank that received money from the government, “no one is going to lend a nickel until the economy turns.” The official added: “Who are we going to lend money to?” before repeating an old saw about banking: “Only people who don’t need it.”

Read.

The next fashion trend in personal transportation

Gold Market Close to Breaking

This is big, very big...

The gap between the physical gold market and paper gold market is widening. An example bears this out. In Toronto this week, a major off-market gold transaction took place. The price paid was $1075 per ounce on the physical transaction. Its volume was in the multi-million$. There was no US involvement in the transaction, and the settlement was in euros. Enormous repositioning is ongoing by the groups that will participate in the new, partially gold-backed currency. My take is this movement is from a large financial entity with global activity, and ties to central banks. It might be tied to the upcoming split in the euro, into a Nordic Euro and trashed Latin Euro. The Nordic version might contain a gold component. This and other transactions are taking place with European settlement. They are being satisfied in the alternative market, far from the distortions of COMEX. This was a physical transaction with the real metal being moved. Big shifts occur behind the scenes. A couple of months ago, 400 metric tonnes were moved into storage with the Royal Canadian Mint by a sovereign entity.

The more massive the paper manipulation, the more violent the coming correction. The asylum managers are losing control of their paper-physical arbitrage. Watch the gold lease rates, and silver lease rates, which have each more than tripled in the last two months. Lease rates precede price movement. Bullion bankers, including central banks, are reluctant to lease their physical supply. This time is no different, an event to come after the COMEX criminality is swept aside, or simply overwhelmed in return. One well-informed source, with over two decades of gold market experience, actually expects arrests to take place among COMEX officials before long.

Highly recommended.

Again, it's ALL about the economy now.

"[The]next 5 or 6 days will be talked about for generations." --Art Cashin -SQUAWK BOX, CNBC, October 24, 2008, 08:51:46

Guaranteed.

Panama Has No Central Bank

In this modern, post-–Bretton Woods world of "monetary order" and coordinated central-bank inflation, many who are otherwise sympathetic to the arguments against central banks believe that the elimination of central banking is an unattainable, utopian dream.

Full article

Panama is expected to become Latin America's fastest-growing economy next year, the International Monetary Fund predicts in its latest outlook released this month. This year, it will likely end up just behind Peru as the fastest-growing economy, it estimates.

See the low inflation and slow growth results here.

The Glue of Power

"Without fear in its subjects, government is powerless. That's why there's always the latest crisis it creates so the poor saps it rules think they can't get along without it." --anon

The Real Cause of the Current Financial Crisis

The US Economy in pictures

Note: Read carefully and note the asterisks.

Also note the above doesn't include the latest bailouts.

The Shell Game must go on

To those who don't know what a shell game is, see this.

Sarkozy, Gordon Brown, and EU honcho José Manuel Barroso are talking up an international summit to discuss an “urgent overhaul of the world’s financial architecture,” that is to say a new Bretton Woods to establish a brand spanking new international economic order. Sarkozy has managed to grab George Bush’s ear and he will travel to Washington on Saturday to lay the groundwork for a conference.

...Glossed over in all the corporate media coverage is the global elite demand that a global currency be established. “Europe wants to present a blueprint for a new worldwide currency system,” reports the AFP in the video here.

There already is a single currency on the planet.

Been around a long time.

It's called hard money.

Start using it. If you have your own business,
start pricing in gold or silver. Get shed of
their shell game.

No good will come of it especially if you're caught in it.

Full report.

Government's Last Stand: Force Always Eats Itself

Finance is a final constraint upon a government. When it can no longer finance itself, it fails. When its tax collections fail, it fails. When its printing press no longer seizes enough real capital to sustain the government, it turns to brute force seizure. This brings its political power into the open. As greater awareness of the seizures spreads, capital flees. Capital flees taxes and seizures of all kinds. It goes into hiding domestically. It runs off to foreign havens. This has been going on for many years. It will accelerate. The costs to the government of seizing capital will rise sharply, and this will constrain government.

With capital flight, the government’s theft runs into diminishing returns. The cost of enforcing open and direct seizures rises. Furthermore, lenders balk. Interest rates on government debt rise. At the same time, tax collections become more difficult. The government fails to manage the capital it has seized, and that too diminishes its means of finance. The entire economy slows down, harming tax revenues. Underground markets proliferate, undercutting tax revenues.

The principal that capital abhors a negative return (or that it demands a positive return) overcomes the power of government. Government fails. And this is a blessing. If the black hole of government proves too powerful for the concerted action of its citizens to control it, then they will control it by their own personal and individual actions. They will remove their capital from government control.

Government has lived by capital, and it will die by capital.

Denial will reign for a short while as that god also dies.

Then...enlightenment.

Full essay.

Soon to end

So when Henry Paulson argues that it is necessary to pump money into credit markets to prevent them from freezing up, he doesn't bother to realize that the money he pumps into the credit markets is coming directly out of the very same credit markets. He is doing little more than rearranging the deck chairs on the Titanic; shuffling the money from one set of financial intermediaries to another does not increase either liquidity or solvency. It merely delays the problem for a few brief moments.

Even the failing banks pay lip service to their fiduciary responsibility, but any privately funded firm that took money from more-productive people to give it to less-productive people would soon go out of business. Only the government can violate Hazlitt's logic and survive, because only government can socialize its losses through the tax system.

...but not forever.

Read.

Can the Fed inject cash fast enough?

Banks, which usually keep an average of $2 billion in excess reserves earmarked for withdrawals, pumped that up to an astounding $90 billion by Wednesday, Lou Crandall, chief economist at Wrighton ICAP, told The Journal.

And for good reason. By the close of business on Wednesday, $144.5 billion - a record - had been withdrawn. How much money was taken out of money market funds the prior week? Roughly $7.1 billion, according to AMG Data Services

Read.

The Austrians were right

"The most important institutions in human society
-- language, law, money, and markets -- all
developed spontaneously, without central
direction." --David Boaz

One does not take over free markets to save them. It was and still is government intervention in the first place that is destroying the free markets. The root cause of the mess we are in is fractional reserve lending, an unsound currency, and interest rate micro-mismanagement by the Fed.

In a free market, there would not be a Fed, nor would there be fractional reserve lending, nor would there be unsound currencies. And instead of attacking the root cause of the mess, Bush, Paulson, Bernanke, and others are responding with measures that lead one further down the path of fascism, supposedly to "preserve the system".

Also sad is the fact that highly respected economic professors like Krugman and Roubini openly cheer such nonsense. There is very little if anything in these bailout measures that is worth cheering over. Indeed, there may not be anything left worth preserving if we continue down this foolish path we are on for too much longer.

The actions taken by Central Bankers to "preserve the system" are tantamount to cutting off one's head so that it won't get any more blemishes.

"In politics stupidity is not a handicap." -- Napoleon Bonaparte

What can I say that hasn't been said before.

Read.

Kabooooooom

Nuclear-armed Pakistan is bleeding foreign reserves at an alarming rate leading to fears that it could default on its loans.

There are mounting fears that Ukraine, Kazakhstan, and Argentina could all now slide into a downward spiral towards bankruptcy, while western banks exposed to property bubble across Eastern Europe have seen their share price crushed.

The markets are pricing an 80pc risk that Ukraine will default, based on five-year credit default swaps (CDS) – an insurance policy on a country being able to pay its debts.

The country's banking system has begun to break down after years of torrid credit growth; its steel mills are shutting as demand collapses; and the political crisis is going from bad to worse.

President Viktor Yushchenko dissolved parliament this week in a dispute that risks bitter conflict with the country's Russian bloc. Diplomats fear Moscow could be drawn into the crisis – or even use it as a pretext to occupy territory in a replay of the Georgia invasion this summer.

Ukraine's government seized Prominvestbank this week, suspending payments to creditors. It closed the Kiev stock market, which has fallen 73pc this year.

Emerging market stocks have been tumbling since their peak in October, when investors were still betting that rising stars such as the BRICs (Brazil, Russia, India, China) were now strong enough to shake off a US crisis. That illusion has been shattered.

The International Monetary Fund said it is mobilising a "rapid-fire" fund worth several hundred billion dollars to stop a domino collapse across the developing world.

The trigger for the latest round of capital flight has been the lightning implosion of Iceland. BNP Paribas warned clients yesterday that the island is heading for "sovereign default" with contagion risks for other economies that have been living beyond their means on foreign credit.

Where will the capital flee now?

Guess.

Read.

Earthmonkey in his current confused state

Polspeak...

This part of the bailout plan is a "forced voluntary partial bail out." -Liesman, THE CALL, CNBC, October 14, 2008, 11:06:26

Derivatives Deleveraging, Debt Deflation, Gold and Bailout II

Numbers flying around like flies at a picnic...along
with the attendees, helping themselves to the free food...

But it won't work. Ultimately, even if they came up with a $1 trillion program, all it would do is buy time. I mentioned that there is $1000 trillion of various leveraged markets deleveraging, and putting up 1 trillion against that just won't work.

Full article.

The Futility of Control

Controlling the actions, economic or otherwise, of billions (or even millions, perhaps even hundreds) of people always ends up looking like a circle jerk...with the same effect.--jomama

For your ongoing entertainment...

Iceland For Sale

Make your bids here.

The "F" word

No 'mays' or 'maybes' about it...

It's amazing how far government is getting involved in our banking system. Is this going to restore confidence? The idea that "the government" is in control may work against us. Maybe this thing is bigger than the governments. The idea that government bonds are AAA may not hold up. -SQUAWK BOX, CNBC, October 9, 2008, 07:34:42

Iceland just found out.

The bigger take longer to fall.

Iceland is toast

Take a look.

A Convention of Hogs Looking at broken Wrist Watches called

"The White House said Bush was open to the idea of a leaders' summit on the economic upheaval."

Read.

Dark Ages II just around the bend

During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. The Netherlands has just rushed through a second, more sweeping nationalisation of Fortis. Ireland and Greece have had to rescue all their banks. Iceland is facing an Argentine denouement.

The US commercial paper market is closed. It shrank $95bn last week, and has lost $208bn in three weeks. The interbank lending market has seized up. There are almost no bids. It is a ghost market. Healthy companies cannot roll over debt. Some will have to sack staff today to stave off default.

Again, whatever pissing in the wind governments will do will
bankrupt their citizens, bankrupting themselves.

The we're-all-in-this-together philosophy coming to fruition.

Now I'm reminded of the scene of Slim Pickens in the movie Dr.
Strangelove riding out of the bomb bay on his A-bomb hollaring,

"YYYYYYYEEEEEEEEEEEEEEEEEEEHAAAAAAWWWWWWWWW!"

Read.

Systemic Financial Meltdown now.

Nouriel Roubini:

So we are now facing:

- a silent run on the huge mass of uninsured deposits of the banking system and even a run on some insured deposits are small depositors are scared;

- a run on most of the shadow banking system: over 300 non bank mortgage lenders are now bust; the SIVs and conduits are now all bust; the five major brokers dealers are now bust (Bear and Lehman) or still under severe stress even after they have been converted into banks (Merrill, Morgan, Goldman); a run on money market funds restrained only by a blanket government guarantee; a serious run on hedge funds; a looming refinancing crisis for private equity firms and LBOs);

- a run on the short term liabilities of the corporate sector as the commercial paper market has totally frozen (and experiencing a roll-off) while access to medium terms and long term financings for corporations is frozen at a time when hundreds of billions of dollars of maturing debts need to be rolled over;

- a total seizure of the interbank and money markets.

This is indeed a cardiac arrest for the shadow and non-shadow banking system and for the system of financing of the corporate sector. The shutdown of financing for the corporate system is particularly scary: solvent but illiquid corporations that cannot roll over their maturing debt may now face massive defaults due to this illiquidity. And if the financing of the corporate sectors shuts down and remains shut down the risk of an economic collapse similar to the Great Depression becomes highly likely.

So what needs to be done? Even several hundreds of billion dollars in emergency liquidity support to the financial system by the Fed and other central banks in the last week alone have not been enough to stop the seizure of liquidity in interbank markets and the shut down of financing for the corporate sector as counterparty risk is now extreme (no one trusts any more in this crisis of confidence even the most reputable and trustworthy financial and corporate counterparties).[My emphasis]

That, ladies, is massively deflationary.

Learn how to barter.

You're going to want to read this.

How to Destroy the State and more

They will allow individuals, businesses, dogs, cats, martians and two box 'o rocks to borrow to keep the economy functioning. --L. Reichard White

Cash is again king

Question is, which kind of cash?

The difference this time is one of scale. There has never been so large a boom as the one driven by globalized finance and underpinned by cheap fossil fuels, and the coming bust should be proportionate. There has also never been such an interconnected financial system where incidents in one country can so readily be transmitted to others through financial contagion.

The financial wizards thought they had risk under control, but in reality their attempt to eliminate risk resulted in magnifying it and spreading around the globe. We are now all hostages of each other, as the effects of the early bank failures begin to reverberate through the system. Europeans and Asians will suffer the consequences of the American house price collapse, while Americans and Europeans will suffer from the unwinding of the yen carry trade and the bursting of the Chinese productivity bubble.

Assets prices will be going back where they came from before the advent of easy money, which in many cases means they will fall by 90% or more, just as tulips did in Holland in the 1630s, or shares in the South Sea company did in the 1720, or dotcom shares did in recent years. Equities, real estate, long bonds, commodities, collectibles and others have a long, long way to fall in order to reverse the speculative excess.

Whereas manic buyers bid up the prices during the boom, a lack of buyers will now drive a relentless asset prices decline. Those few buyers who do emerge will set new benchmarks at lower levels all the way down, repricing entire asset classes - for everyone who owns them - all along the way. Cash will be king at a time when very little of it will be available.

There is nothing the Fed or other central banks can do to prevent this. Once a market becomes dominated by hoarding (whether of cash, gasoline, bread or anything else), it becomes almost impossible to keep it adequately supplied. Whatever liquidity is injected into the system ends up being taken off the table almost immediately by whomever is in a position to do so. Credit deflation will run its course and we would all do well to prepare to the extent that we can.

Read.

Toilet paper

Children at play

Greenberger insists he is not a pessimist about the economy; he says that "intelligent leaders" — coupled with government aid, transparency and regulation — can enable the American economy to transcend its current troubles. But he has harsh words for the companies that were engaging in questionable practices — and for the government that turned a blind eye to the potential consequences.

Useful wasn't it, all that regoolation(sic)?

Just think, you 'murikuns paid for all that useless activity.

Greenberger asserts that the fact that there was "no adult supervision" of Wall Street will cost the American public in the long run.

"The $85 billion will come out of the United States Treasury. And either we're going to fund that from China or you and I are going to have to pay for it through taxes," he says. "[As] a lot of people are saying now: We privatize profits; we socialize losses."

Read.

Who will supervise the supervisors?

Who gave this intense idiot a mike?

A fine distraction

When, as a small child, I became ill and had to take a pill, my parents would crush it into a powdered form, hide it in the middle of a spoonful of ice cream, and feed it to me. Like skilled magicians, they were thus able to distract my attention from what they were trying to accomplish.

The same legerdemain is being practiced by those seeking to slip yet another taxpayer-subsidized transfer of wealth to corporate interests. The "ice cream," in this instance, takes the form of (a) creating the bogeyman that corporate executives might receive multi-million dollar bonuses from the proposed bailout, and (b) that such possibilities will be specifically precluded by the bailout legislation. "We will take care of that problem right now," the politicos promise. It is thus hoped that Boobus will be sufficiently distracted from a $700 billion act of grand theft, by the assurance that a few million dollars will not be going to CEOs and other execs.

Full essay.