Trillion-Dollar Meltdown

[marc26]

Originally Posted by LivinLOS

What like Saudi Arabia then ??? And who says that democracy is a rule ??

The US have overthrown multiple democratic governments to instill thier own dictator.. Shar of Iran over Mossadeq is a prime example.. The CIA went in and overturned a properly elected government becuase they were going to take back the oil tricked out of them by US and GB oil companies. So the CIA instil the Shar who was a absolute dictator and ran some of the most brutal torturing secret police in history much like those still used for Latin American dictators the west installs, trained at the US base called 'The School of the Americas' now moved from Panama to US soil. It was a rection to this US lead meddling in the country that directly lead to the Ayatollah and the hardline Iran we have now, can you spell blowback children ?? yes you can..

Dont confuse the PR they tell you with the way the world really works.

i dont really disagree with you but the middle east at that time, well maybe a little earlier, really was just a toss up between Russia and US. so if it wasnt US, it would have been Russia

[marc26]

Originally Posted by sundancekid

No need to worry then if McCain becomes the next President. Just loved this comment in the Boston Globe:

"The issue of economics is not something I've understood as well as I should," McCain said. "I've got Greenspan's book."

i knew i liked you
reading the Boston Globe, my hometown paper

[Dupree00]

Originally Posted by marc26

i dont really disagree with you but the middle east at that time, well maybe a little earlier, really was just a toss up between Russia and US. so if it wasnt US, it would have been Russia

Exactly! And who wants to eat borscht everyday?

[K2]

Originally Posted by LivinLOS

2007 they were behind germany by a hair.. But a LONG way from Japans I thought..

Sleuth of different measures .... this one on PPP adjusted per capita basis has China at #97!

GLOBAL/WORLD INCOME PER CAPITA GNI, GNP, GDP, 2008, 2007 2006, 2005 Wealth, Rich Country Ranking, Rank, Developing Countries : Finfacts Ireland

US at #7
UK at #11
Japan at #14

[LivinLOS]

Yeah but per capita is a pretty disenginious way to measure China at anything..

Lies, damn lies, and stats.

[garyteets]

Originally Posted by LivinLOS

Yeah but per capita is a pretty disenginious way to measure China at anything..

Lies, damn lies, and stats.

There's an old saying:

FIGURES DON'T LIE BUT LIARS FIGURE

[ATMwalking]

Bloomberg.com: Opinion

What's more, the process of weaning the global financial system and economy off the massive liquidity binge of the past decade will take two to five years and eventually cost $1.4 trillion, Roche said.

``The credit crisis isn't over,'' Wood says. ``Rather it is getting worse as the deleveraging process intensifies.''

Other parts of the article were more interesting, but that quote is a best match for this thread. After the silly google jump this week, kinda reflect my thinking. People are still too optimistic IMO. The next 6 months are going to be a lot hard to game through. At least that is what I am prepared for.

BTW, why is oil so hot right now while gold is out of favor? Weren't they moving together more before?

[LivinLOS]

Oil is hot for many reasons.. Not least of which is the russians have recently come out and admitted in fairly plain language that russia has passed peak oil... Thats big news for the speculators..

Also despite US slowdowns theres lots of data showing how China is exporting less and less to the US.. More and More to BRIC.. Domestic consumption on the rise..

150 oil before the end of 2010 ?? I say possible.

[dennisinkamala]

Borscht and Haladi are great foods as is the Russkie salad, done properly.
Whatya got against good soup Dupee??

Originally Posted by Dupree00

Exactly! And who wants to eat borscht everyday?

[dennisinkamala]

I think possible too but 130-135 is my guess

Originally Posted by LivinLOS

Oil is hot for many reasons.. Not least of which is the russians have recently come out and admitted in fairly plain language that russia has passed peak oil... Thats big news for the speculators..

Also despite US slowdowns theres lots of data showing how China is exporting less and less to the US.. More and More to BRIC.. Domestic consumption on the rise..

150 oil before the end of 2010 ?? I say possible.

[K2]

Originally Posted by LivinLOS

150 oil before the end of 2010 ?? I say possible.

Small pipeline blow up in Nigeria moved it 4% - so imagine a major disruption, at these elevated levels the bean counters in OPEC must be dreaming of mega cities and super infrastructure projects beyond our imagination. $150 seems conservative (especially for you Seft ) - easily could move $33 in a couple of weeks given the right shove. Of course none of this is very recession/inflation friendly - can anyone see a happy ending?

[dennisinkamala]

Never been a voyeur Kev.

Originally Posted by K2

can anyone see a happy ending?

[The Loop]

Originally Posted by ATMwalking

The next 6 months are going to be a lot hard to game through. At least that is what I am prepared for.

Gotta agree with you there ATM.The hard part is going to be picking the right time to jump off the fence and back into the markets.
I`m in no real hurry at the moment.

Originally Posted by ATMwalking

BTW, why is oil so hot right now while gold is out of favor? Weren't they moving together more before?

I held gold for many years up until recently and it has always moved with oil.
Can`t really work out what is happening with it now.

[TanMan]

Gold and oil move inversely to the world value of the US Dollar because the bulk of it is denominated/purchased/pegged to that currency. The cheaper the US$, the relatively cheaper the world oil and gold are. That's 80% of the equation, but supply and demand factors kick in the other 20%...

[JayBee]

Oil is where the hot money is going now. Like a hot stock. Big money is shorting the dollar, shorting US stocks, and buying oil. How far it can go is anybody's guess, but it is not likely to end until the dollar stabilizes. This phenomenon has pushed oil well past gold as the choice of those looking for a place to put their excess dollar account. It is not demand for oil that is currently driving the price of oil.

Jim Awad, the chairman of WP Stewart Asset Management, says Wall Street's been disappointed so far in "tepid" 2008 earnings outlooks. "What you're not seeing from the corporate sector is a sign we're through the worst in the economy," Awad says. On top of that, Awad says money is actually leaving the stock market for the oil market. "It's almost like oil has become a stock. It's become a place for hot money to make money."

At some point, however, the equation balances out, because, since oil is traded in dollars, the higher price of oil should, theoretically, result in an increased need for dollars to pay for the oil. As long as the Arabs don't convert their profit(dollars) back to a different currency. Although, if they do, then that pushes down on the dollar, thereby inflating the price of oil more, and creating a vicious inflationary cycle, with the Arabs making money on both sides of the equation. If the Arabs did that, however, they would come under intense political pressure from the US, and, ultimately, risk breaking the US/Saudi alliance, which has been a sweet deal for the Saudis for many decades. Without US backing, I think the days of the Saudi royal family's reign would be numbered.

But just think what would happen, if OPEC decided to trade oil in Euros, rather than dollars. It's frightening to imagine what would happen to the value of the dollar without having the Saudis to soak up so much of the excess.

Right now the Fed is caught between the inflationary price pressure from oil, and the deflationary price pressure in the real estate markets. Because Ben fears deflation far more than inflation, it is clear where his intention lies. But how far can he go in his efforts to prop us real estate, with people getting upset now about the inflation in oil and food? Oil and food, of course, don't count when the Fed is figuring out the rate of inflation. But they sure count when people go to the gas station and the supermarket. The pressure is building, the natives are getting restless!

All of this sets up the current cornering of the oil market by investors(speculators). Oil is a consumable, gold is not. That works in favor of the speculators, and that is why it is currently the favored investment of those looking to use their dollars to make more dollars and offset the loss of value of the dollar in the currency markets.

[JayBee]

BTW, where are the defenders of Greenspan now? I hate to say I told you so, but LivinLOS and I had been condemning Greenspan's irresponsible Fed easy-money policies for years, while others lauded Greenspan for the many years of low inflation and economic growth his regime brought us. I give credit to LivinLOS for correctly predicting the outcome of Greenspan's policies, which we are now seeing: asset bubbles, and credit bubbles popping right and left, and not a thing Bernanke can do about it, other than inflate the currency even more, and undertake risk for the investment bankers of the world.

Although it wasn't so clear to me, where it was all heading, it was clear that the policy of fostering growth with artificially low interest rates, thereby rewarding the imprudent and reckless individuals and companies, while penalizing the reasonable and prudent individuals and companies, the Fed was forestalling short-term market turbulence, and allowing it to build up to BIG trouble further down the road. Now the Fed is bailing out investment banks and propping up individuals, to save them from the disaster they deserve for their reckless decisions and policies, because allowing them to fail would bring such harsh conditions for the whole economy, and everyone would suffer for the sins of the few.

Is there anyone defending Greenspan now?

[JayBee]

Oh, and BTW, in case you were wondering what is happening to real estate values in SF, check out this link:

MarketWatch Broadband

Somewhere....over the rainbow, bluebirds sing......

Bubble, what bubble?

[LivinLOS]

Originally Posted by JayBee

Now the Fed is bailing out investment banks and propping up individuals, to save them from the disaster they deserve for their reckless decisions and policies, because allowing them to fail would bring such harsh conditions for the whole economy

The problem is that the FED has to allow the markets to take thier knocks, then base and recover to create a prosperous USA in the mid / long term future. However even I recognize that they really do have a 'too big to fail' problem when these banks are so tied up in counter party derivative risk.

The chain reaction of bear falling could have taken down the US banking system.. It was that dire ! Then what would have been the gold price ?? 2k over night ??

Golds just having a breather, its 32% for a year.. Off around 10% from its peaks.. Still in its uptrend, nothing in the fundamental economic picture has changed.. I have zen like calm !! Stagflation is here and is hard to work through, I dont think this is going to be the quick recovery.

As to SF homes, seems to be a very narrow segment.. I still say those buyers will be underwater in the near term.

[LivinLOS]

Another note on SF home prices..

If home prices remain the same.. But money supply (read inflation) grows at 40% over 2 years. And the value of the dollars used to buy that asset drop on the global market, has it really maintained its price ??

[LivinLOS]

Just scanning a few related links..

Anyone interested in another problem no one will talk about should check out David Walker (and if they can get to see a film called I.O.U.S.A. I havent found a copy yet, its been on very limited release so far).



And I know this is a puff piece.. I know it a promo.. But personally being someone who thinks that 'its the economy stupid' that makes a country strong, and a society pleasant. He IS the only candidate who really talks about it in depth and detail. shame he just doesnt seem to have star power!!



Oil is at 118.. The USD/EUR is a hair from 1.6.. Inflation is in everything..

[JayBee]

Originally Posted by LivinLOS;

The chain reaction of bear falling could have taken down the US banking system.. It was that dire ! Then what would have been the gold price ?? 2k over night ?? .

The failure of Bear-Stearns was just a good old-fashioned run on the bank, caused by the rapidly mounting lack of confidence in the banking system, which has basically run amok since the deregulation brought on by the gradual gutting and eventual appeal, in 1999, of the provisions of the Glass-Steagall Act, which had regulated the banking industry since the 30's Depression. Had not the Fed intervened by agreeing to accept worthless paper as collateral for loans to Bear-Stearns, agreeing to do so for others, if needed, and opening the discount window to investment bankers, Bear-Stearns would not have had the money to keep its' doors open for another week. Its' demise would have triggered a banking panic, a rush to withdraw funds from investment banks, and the ensuing run on the banks would have caused chaos in the financial world, with investment banks falling like dominoes. Not only in the US, but also in Europe and elsewhere, since many banks there are also holding loads of worthless subprime paper, as well as other equally worthless kinds of debt obligations.

If you care to know the details of the demise of Glass-Steagall, and how it led to the current financial crisis, read this link: frontline: the wall street fix: mr. weill goes to washington: the long demise of glass-steagall | PBS

The repeal enabled commercial lenders such as Citigroup, the largest U.S. bank by assets, to underwrite and trade instruments such as mortgage-backed securities and collateralized debt obligations and establish so-called structured investment vehicles, or SIVs, that bought those securities. Glass-Steagall was passed during the Depression to prevent banks from undertaking the kind of reckless speculation that led to an overexpansion of credit, a Wall Street crash, and the great recession known as the Depression. Alan Greenspan, as head of the Fed, reinterpreted Glass Steagall, creating huge loopholes, and over the period of 1987-1999, effectively reduced the impact of Glass-Steagall to a mockery of its' original intent. The final blow was the repeal in 1999, which was directly engineered by Citigroup lobbyists, so that they would not have to conform to the conditions the Fed imposed when it approved the Citigroup/Traveller's merger in 1998. Greenspan's approval gave Citigroup 2 years to meet the requirements of the approval, in effect, giving their lobbyists a two year deadline to get Glass-Steagall repealed, since they never intended to meet the conditions imposed upon them. In reality , the two years grace period was given for them to get the repeal, not meet the restrictions. A few days after the bill was passed, Rubin, then Secretary of the Treasury took a job in a top executive position with Citigroup.

So this is what led directly to the subprime mortgage crisis, by allowing banks to underwrite and market mortgage-backed securities, collateralized debt obligations, and derivatives. And our old friend, AG, was right in the thick of it. When the first steps towards the gutting of Glass-Steagall were being taken by the Fed Board in 1987, they were approved over the strenuous objections of then chairman Paul Volker. Volker expressed his fear that lenders would recklessly lower loan standards in pursuit of lucrative securities offerings and market bad loans to the public. His words proved to be prophetic, since that is exactly what happened, and today we are seeing the results. Several months later, Greenspan replaced Volker, and the door to deregulation of the banking industry was soon to be opened wide.