Monday, June 29, 2009

Earthmonkey's conundrum

A truth’s initial commotion is directly proportional to how deeply the lie was believed. It wasn’t the world being round that agitated people but that the world wasn’t flat. When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic. – Dresden James

Thursday, June 25, 2009

We're now in The Great Re-run

The spectacular crash of 1929 followed five years of reckless credit expansion by the Federal Reserve System under the Coolidge administration. In 1924, after a sharp decline in business, the Reserve banks suddenly created some $500 million in new credit, which led to a bank credit expansion of over $4 billion in less than one year. While the immediate effects of this new powerful expansion of the nation's money and credit were seemingly beneficial, initiating a new economic boom and effacing the 1924 decline, the ultimate outcome was most disastrous. It was the beginning of a monetary policy that led to the stock-market crash in 1929 and the following depression.
The whole megillah.

Wednesday, June 24, 2009

More on The Crash...

The current mass delusion that will go down in history as the "green shoots fugue" can't possibly bring the credit freak show back because the credit -- i.e. money borrowed from the American future -- was swindled away. Something like $14 trillion worth of nominal dollars is being sucked into a cosmic vortex never to be seen again. It was last seen in the spectral forms of so many collateralized debt obligations, credit default swaps, so-called structured investment vehicles and other now-obvious frauds. That giant sucking sound we hear means the process is still underway, and the "money" disappearing into yawning oblivion will out-pace any effort orchestrated by the Federal Reserve and the US Treasury to replace it with new "money" (or credit). Therefore there is no chance between heaven and hell that the pre-2008 suburban homesteading and shopping fiesta can ever come back. The American polity is tapped out in all sectors, personal, corporate, and public...

This will be the moment when the US renounces its debt -- or just proves unable to continue pretending to service it. This moment is liable to come sometime after the middle of this summer. It will be the moment when all the green shoots babytalk stops and the scope of onrushing hardship becomes self-evident. It will be the moment when all of America finds itself in something like the aftermath of Hurricane Katrina, when the federal government proves comically impotent and the cold reality hits that we're now all on our own.

See it all.

Thursday, June 18, 2009

The Proverbial Box is no more

Thinking outside of that box is no longer an

It's a must.

There's nowhere else to do it.
to conclude this historical perspective, we want
to emphasize that the stepping out of the century-
old reference system is graphically visible in
the form of a curve simply popping out of the
frame which allowed ongoing trends and values to
be represented for centuries. This popping out of
traditional referential frameworks is speeding
up, affecting increasing numbers of sectors and
countries, enhancing the loss of meaning of
indicators used daily or monthly by stock
markets, governments, or official sources of
statistics, and accelerating the widespread
awareness that "the usual indicators" can no
longer give any insight, or even represent the
current world developments. The world will thus
reach summer 2009 without any reliable references

Of course, everyone is free to think that a few
points’ monthly variation of a particular
economic or financial indicator, itself largely
affected by the multiple interventions of public
authorities and banks, carries much more value on
the evolution of the current crisis than those
stepping out of century-old referential
frameworks. Everyone is also free to believe that
those who anticipated neither the crisis nor its
intensity are now in a position to know the
precise date when it will end.

Our team advises them to go see (or see again)
the movie Matrix (5) and to think about the
consequences of manipulating the sensors and
indicators of one’s perception of given
environment. Indeed, as we will examine in detail
in our special summer 2009 GEAB (N°36), the
coming months could be entitled « Crisis Reloaded
» (6).

Wednesday, June 17, 2009

The Next Boom

There will be another economic boom one of these days, but it will arrive suddenly and from an unexpected place.
Yea, a boom in hammers and anvils.


Full load.

Tuesday, June 16, 2009

The American Empire is Bankrupt

There are meetings being held Monday and Tuesday in Yekaterinburg, Russia, (formerly Sverdlovsk) among Chinese President Hu Jintao, Russian President Dmitry Medvedev and other top officials of the six-nation Shanghai Cooperation Organization. The United States, which asked to attend, was denied admittance. Watch what happens there carefully. The gathering is, in the words of economist Michael Hudson, “the most important meeting of the 21st century so far.”

It is the first formal step by our major trading partners to replace the dollar as the world’s reserve currency.
Don make a hoot what they do. The entire planet's been living on
the perceived value of the dollar. All currencies are paper trash. Trust is gone.

Gold and silver along with other things of value will survive.

The kind of 'bullshit' thrown on 'green shoots' grows nothing.
If they succeed, the dollar will dramatically plummet in value, the cost of imports, including oil, will skyrocket, interest rates will climb and jobs will hemorrhage at a rate that will make the last few months look like boom times. State and federal services will be reduced or shut down for lack of funds. The United States will begin to resemble the Weimar Republic or Zimbabwe. Obama, endowed by many with the qualities of a savior, will suddenly look pitiful, inept and weak. And the rage that has kindled a handful of shootings and hate crimes in the past few weeks will engulf vast segments of a disenfranchised and bewildered working and middle class. The people of this class will demand vengeance, radical change, order and moral renewal, which an array of proto-fascists, from the Christian right to the goons who disseminate hate talk on Fox News, will assure the country they will impose.
Full article.

Monday, June 15, 2009

Grocery Stores Begin To Accept Gold and Silver

The reporter here probably had his account at youtube suspended for this video:

Friday, June 12, 2009

Germans Can Now Buy Gold Through Vending Machines

A vending machine selling tiny gold bars was launched at the main railway station in Germany’s Frankfurt-am-Main. The ATM machine, the size of a phone-booth and shaped as a gold bar, was installed in the financial metropolis of the European Union, Itar-Tass news agency reports.

The new service appeared because of the aspiration of the Germans to rescue their savings during the crisis converting the funds on their bank accounts to gold bars.
Well, something like that...

Large profit margin at those prices.


Wednesday, June 10, 2009

Bond Market Blowout

"Mancur Olson, the American economist, in his books (The Logic of Collective Action and The Rise and Decline of Nations), speculated that small distributional coalitions tend to form over time in developed nations and influence policies in their favor through intensive, well funded lobbying. The policies result in benefits for the coalitions and its members but large costs borne by the rest of population. Over time, the incentive structure means that more distributional coalitions accumulate burdening and ultimately paralysing the economic system causing inevitable and irretrievable economic decline.
“What we will have going forward is not Weimar Republic-type price hyperinflation, but a financial profit inflation in which zombie financial institutions turn nominally profitable in a collapsing economy. The danger is that this unearned nominal financial profit is mistaken as a sign of economic recovery, inducing the public to invest what remaining wealth they still hold, only to lose more of it at the next market meltdown, which will come when the profit bubble bursts. ("Liquidity drowns meaning of 'inflation", by Henry C. K. Liu Asia Times)
Nothing to see here. Move along, citizen.

Full article.

Tuesday, June 09, 2009

We can't afford no more stuff

Unlike Japan’s slump of the ’90s and ’00s, this depression is worldwide. Americans aren’t buying like they used to. So, foreigners aren’t selling. Everyone gets poorer as expected income and profits disappear…and turn into losses.

Meanwhile, in America, today’s jobs report shows that unemployment is still on the rise. People without jobs can’t buy stuff – neither the kind of stuff you get at the grocery store…nor the kind of stuff you get from real estate agents. Since they don’t buy stuff, manufacturers don’t make stuff. And since they don’t make stuff, they don’t need the stuff that stuff is made of, nor the employees who turn the raw stuff into the finished stuff.

Result: the stuffing gets knocked out of the economy.

Thursday, June 04, 2009

Great Depressions Are So Methodical

Our view on Keynesian safety nets has always been that in a bust they would be about as useless as a hardhat in a crowbar storm.

Wednesday, June 03, 2009

Job losses compared to previous recessions

More charts here.