Financial Crisis

[12DrinkMore]

Warren Buffett going bearish?

http://finance.yahoo.com/techticker/articl...ountain-of-Debt

Original Buffet article is here

http://www.nytimes.com/2009/08/19/opinion/...nted=1&_r=1

And here is an article on the use of high frequency trading

http://www.atimes.com/atimes/Global_Economy/KH19Dj01.html

In the purest economic sense, Wall Street has been able to extract an ever-increasing rent from the market.

In recent years, much of the share volume on the New York Stock Exchange has been generated by high-frequency traders (HFT) - computers that trade stocks instantaneously based on algorithms and information about money flows and are located physically inside the exchange building to minimize communication times. The financial consultancy TABB Group has estimated that the total revenues from such trading amount to US$21 billion annually.

Although there are around 100 high-frequency trading houses, one institution, Goldman Sachs, has been estimated to have a 20% market share, and so presumably derives about $4 billion in annual revenues from this business. Most of that revenue must drop to Goldman's bottom line as net income, since the trading is done by computers, with no human traders involved.

According to a paper, "Toxic equity trading order flow on Wall Street," by the brokerage Themis Trading, there are a number of different types of HFT. Liquidity-rebate traders take advantage of volume rebates of about 0.25 cents per share offered by exchanges to brokers who post orders, providing liquidity to the market. When they spot a large order, they fill parts of it, then reoffer the shares at the same price, collecting the exchange fee for providing liquidity to the market.

Predatory algorithmic traders take advantage of the institutional computers that chop up large orders into many small ones. They make the institutional trader that wants to buy bid up the price of shares by fooling its computer, placing small buy orders that they withdraw. Eventually the "predatory algo" shorts the stock at the higher price it has reached, making the institution pay up for its shares.

Automated market makers "ping" stocks to identify large reserve book orders by issuing an order very quickly, then withdrawing it. By doing this, they obtain information on a large buyer's limits. They use this to buy shares elsewhere and on-sell them to the institution.

Program traders buy large numbers of stocks at the same time to fool institutional computers into triggering large orders. By this, they trigger sharp market moves.

Finally, flash traders expose an order to only one exchange. They execute it only if it can be carried out on that exchange without going through the "best price" procedure intended to give sellers on all exchanges a chance at best price execution. The SEC has now promised to ban this technique.

This toxic trading has caused volume to explode, especially in NYSE listed stocks. The number of quote changes has also exploded and short-term volatility has shot up. NYSE specialists now account for only around 25% of trading volume, instead of 80% as previously.

So does this mean that at least 75% of the trading is not based on any fundamental analysis of the underlying companies, but solely based on either detecting large fund flows or deliberately triggering trades, just to earn a "rent"? And out of the remaining 25%, I wonder just how much real in depth company analysis is done before trading, or is the whole market driven by trying to detect patterns in price movements and trading on these? The cost of a real analysis is extremely expensive and the cost of plugging price data feeds into a piece of software is minimal, so why bother doing the analysis?

[12DrinkMore]

http://www.independent.co.uk/news/business...ry-1775195.html

Britain's public finances plunged further into deficit last month – usually a period when the Treasury sees an inflow of funds. Compared with the £5.2bn positive contribution to the public finances recorded in July 2008, this year saw a net outflow of £8bn, thanks to a collapse in VAT and corporation tax receipts.

City analysts were expecting a net outflow of just £500m,

So a year on year negative swing of 13 billion.

And the "city analysts" were well off the mark, expecting 500 million in the red and the result was 8 billion. They must have all been counting their bonuses that day.

Edited August 21, 2009 by 12DrinkMore

[Naam]

So, where's it going to come from? Most likely the printing press. And, ultimately, Buffett says, that will destroy the value of the dollar.

that's a horrible scenario Buffet describes and contrary to the forecasts of Captain Harmonica

[midas]

US Sen Bunning: FDIC's Bair Said Up To 500 More Banks Could Fail

WASHINGTON -(Dow Jones)- Federal Deposit Insurance Corp. Chairman Sheila Bair believes up to 500 more banks could fail, a U.S. senator said Bair told him in a recent meeting.

"She told us that unless something dramatic happens, we could lose up to 500 more banks," Sen. Jim Bunning, R-Ky., said Thursday at a hearing of the Senate Banking Committee on the foreclosure crisis.

Will whatever is going to happen ........happen next week ? i know Naam likes cryptic dates

2009 Bank Holiday Coming Soon

Edited August 21, 2009 by midas

[teletiger]

(Almost) everybody is dreading the next unannounced "My fellow Americans". Especially on a Friday night, just after the markets have closed.

But.....It's surely coming.

regards.

[AlexLah]

Abrak that site with Japan numbers, I mean it makes all perfect sense you know. You have an economy in coma for already 20 years, people earning less so they cannot even afford to have a child. If you have some time you should have a look at that YT video, it's a kind of love story and it shows the average Japanese couple that are struggling to get by. He hates his job and she hates her job they hate their lives and sometimes each other.

But in the end something beautiful happens..........

[AlexLah]

Ok all, I am back from the economic seminar and must say it was partly interesting (for me). I liked Stiglitz although his closing was a bit weak. He dropped a bomb there but I don’t think a lot of people noticed it.

Basically his message was that Asia should continue growing domestic consumption and develop each others markets. Asia will become the new center of economic power with most likely China as the biggest most influential. Asia should continue to develop infrastructure like roads and railways and further improve logistics to be more competitive. The availability of clean water will become very important in the coming decades so plans have to be made to invest in that. Governments must put more effort in making sure that education will be improved (International standards) and good education must also be offered more in the rural and underdeveloped areas.

He said, don’t expect any meaningful recovery in the US for the coming ten years and maybe more. Do not hope to get back to a situation where Asia exports to the US go back to levels like before the crisis. He said the US is doing what they accused Asia of in the 97 crisis, namely no transparency and hiding the corpses. It’s over, they are done, it is just a matter of time.

The prime minister had a good speech and I believe he really wants to do good for the country. If he lied than he is very good at it as I could not spot any body language indicating it. One of the things he pointed out was that Thailand will focus more on improving the living standards of the poor and the average working class as they represent the largest part of the population so if we can improve the lives for them it will contribute to the Thai economy more as compared to further benefit the upper class. The focus he said should not be that much on GDP as these numbers do not reflect the reality of life and therefore another type of indicator also needs to be used something that would reflect wellbeing of the people living in Thailand sort of standard of living index or something, I think SBK mentioned it here in a separate topic.

Then we had a short coffee break and the next panel came up. I will spare you all the details but I can honestly say that this guy gave one of the worst presentations I have ever seen. Maybe he is not used to present things but then at least show something interesting on your slides which had not only a very bad design but also went against all rules of how to use color and text plus size. Other speakers were not interesting to me and I think it might be because a lot of the stuff they talked about regarding this economic meltdown has and is already being discussed here.

So the new way to go is to not copy the US and EU model where banks and the big corporations rule a country. Make sure there is good and honest regulation which provides transparency. Focus on improving the living standards of the people as it will increase domestic consumption.

I hope the world has learned a lesson and we transform into a better, more just society.

Apologies for any spelling and/or grammatical errors, they have been put in intentionally.

Edited August 21, 2009 by AlexLah

[lannarebirth]

Nice report Alex. Thanks

[badge]

So the new way to go is to not copy the US and EU model where banks and the big corporations rule a country. Make sure there is good and honest regulation which provides transparency. Focus on improving the living standards of the people as it will increase domestic consumption.

I hope the world has learned a lesson and we transform into a better, more just society.

Ahh, "good and honest regulation which provides transparency", Asia's speciality

It all sounds lovely. Good Luck!

[AlexLah]

Well that was sort of the advice given, that that should be the route to take. If they do it is step 2 but I believe Asia has learned from past mistakes in 97 as you can see for example in Thailand there are no banks failing, I do not see prices of housing going down a lot, no monthly massive lay-offs, no exotic financial innovative products being pushed, I see new apartment projects are started and finished.

Mr. Stiglitz was just saying that there are huge opportunities to develop the region and they have to be treated carefully as not to make the same mistakes as he described what went wrong in the US, EU and UK.

Many countries in Asia are still developing nations so they have the chance to build something better, a system where more people can enjoy the benefit of sound economic policy. And in Thailand for example people still go on the street and are prepared to risk their lives if they feel they are being cheated (not meant to have a discussion about red and yellow shirts please).

Sure there is corruption, but this is happening in most countries even the so called developed ones. But people have a different triggering point when they finally stand up and say enough is enough. I really hope that the worst of this crisis is behind for those countries in trouble but I have my doubts.

It will require a change of mindset, and that was what this seminar was about (partly).

[flying]

He said, don't expect any meaningful recovery in the US for the coming ten years and maybe more. Do not hope to get back to a situation where Asia exports to the US go back to levels like before the crisis. He said the US is doing what they accused Asia of in the 97 crisis, namely no transparency and hiding the corpses. It's over, they are done, it is just a matter of time.

Thanks for the report

Schiff has been saying the same for awhile now.

Invest in Asia as that is where the production is.

Also if US wants true recovery they need to do the same & start

producing again.

[flying]

Two versions similar in message.

Hope they have different results though

I still think Bernanke is leaving one way or the other & he wants now to

show for his part it has improved. SO the next FED Chair doesnt do the Mr O shuffle

& say well look at the mess I inherited from Bernanke

NOW

http://www.marketwatch.com/story/we-saved-...009-08-21-10100

THEN

September 1929

“There is no cause to worry. The high tide of prosperity will continue.” — Andrew W. Mellon, Secretary of the Treasury.

October 14, 1929

“Secretary Lamont and officials of the Commerce Department today denied rumors that a severe depression in business and industrial activity was impending, which had been based on a mistaken interpretation of a review of industrial and credit conditions issued earlier in the day by the Federal Reserve Board.” — New York Times

December 5, 1929

“The Government’s business is in sound condition.” — Andrew W. Mellon, Secretary of the Treasury

December 28, 1929

“Maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont, Secretary of Commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression.” — Associated Press dispatch.

January 13, 1930

“Reports to the Department of Commerce indicate that business is in a satisfactory condition, Secretary Lamont said today.” – News item.

January 21, 1930

“Definite signs that business and industry have turned the corner from the temporary period of emergency that followed deflation of the speculative market were seen today by President Hoover. The President said the reports to the Cabinet showed the tide of employment had changed in the right direction.” – News dispatch from Washington.

January 24, 1930

“Trade recovery now complete President told. Business survey conference reports industry has progressed by own power. No Stimulants Needed! Progress in all lines by the early spring forecast.” – New York Herald Tribune.

March 8, 1930

“President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days.” – Washington Dispatch.

May 1, 1930

“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.” – President Hoover

June 29, 1930

“The worst is over without a doubt.” – James J. Davis, Secretary of Labor.

August 29, 1930

“American labor may now look to the future with confidence.” – James J. Davis, Secretary of Labor.

September 12, 1930

“We have hit bottom and are on the upswing.” – James J. Davis, Secretary of Labor.

October 16, 1930

“Looking to the future I see in the further acceleration of science continuous jobs for our workers. Science will cure unemployment.” – Charles M. Schwab.

October 20, 1930

“President Hoover today designated Robert W. Lamont, Secretary of Commerce, as chairman of the President’s special committee on unemployment.” – Washington dispatch.

October 21, 1930

“President Hoover has summoned Colonel Arthur Woods to help place 2,500,000 persons back to work this winter.” – Washington Dispatch

November 1930

“I see no reason why 1931 should not be an extremely good year.” – Alfred P. Sloan, Jr., General Motors Co.

January 20, 1931

“The country is not in good condition.” – Calvin Coolidge.

June 9, 1931

“The depression has ended.” – Dr. Julius Klein, Assistant Secretary of Commerce.

Edited August 21, 2009 by flying

[losworld]

Ok all, I am back from the economic seminar and must say it was partly interesting (for me). I liked Stiglitz although his closing was a bit weak. He dropped a bomb there but I don't think a lot of people noticed it.

Basically his message was that Asia should continue growing domestic consumption and develop each others markets. Asia will become the new center of economic power with most likely China as the biggest most influential. Asia should continue to develop infrastructure like roads and railways and further improve logistics to be more competitive. The availability of clean water will become very important in the coming decades so plans have to be made to invest in that. Governments must put more effort in making sure that education will be improved (International standards) and good education must also be offered more in the rural and underdeveloped areas.

He said, don't expect any meaningful recovery in the US for the coming ten years and maybe more. Do not hope to get back to a situation where Asia exports to the US go back to levels like before the crisis. He said the US is doing what they accused Asia of in the 97 crisis, namely no transparency and hiding the corpses. It's over, they are done, it is just a matter of time.

The prime minister had a good speech and I believe he really wants to do good for the country. If he lied than he is very good at it as I could not spot any body language indicating it. One of the things he pointed out was that Thailand will focus more on improving the living standards of the poor and the average working class as they represent the largest part of the population so if we can improve the lives for them it will contribute to the Thai economy more as compared to further benefit the upper class. The focus he said should not be that much on GDP as these numbers do not reflect the reality of life and therefore another type of indicator also needs to be used something that would reflect wellbeing of the people living in Thailand sort of standard of living index or something, I think SBK mentioned it here in a separate topic.

Then we had a short coffee break and the next panel came up. I will spare you all the details but I can honestly say that this guy gave one of the worst presentations I have ever seen. Maybe he is not used to present things but then at least show something interesting on your slides which had not only a very bad design but also went against all rules of how to use color and text plus size. Other speakers were not interesting to me and I think it might be because a lot of the stuff they talked about regarding this economic meltdown has and is already being discussed here.

So the new way to go is to not copy the US and EU model where banks and the big corporations rule a country. Make sure there is good and honest regulation which provides transparency. Focus on improving the living standards of the people as it will increase domestic consumption.

I hope the world has learned a lesson and we transform into a better, more just society.

Apologies for any spelling and/or grammatical errors, they have been put in intentionally.

Nice report. Thanks. Yes there is much truth in evaluating the current U.S. case. We see pumping on a daily basis that the recession is over. In actuality it is a depression but they changed it to recession years ago by definition to make it softer sounding. It is a long way out from here for the U.S. Even if everyone threw up their hands and danced in the streets that the depression is over it would make no difference. They'd simply run out to buy a car, home, clothes etc. to discover they have no more equity in their homes to borrow against, their credit lines have been cut and their bank account is empty. The Fed is dreaming if they think consumers will get them out of this in the near future. Now comes the crunch. As things gradually pick up the money printing combined with greedy oil and commodities manipulation will push inflation through the roof putting a quick end to any recovery. It will be a lost decade for the U.S. However, as people continually look for cheaper products Asia will continue to export and to grow their domestic consumption.

The inflation we will experience will influence more Asian countries to grow more Agric. products and become more self sufficient for their food supply. This in turn will negatively effect agricultural shipments from the West so this commodities manipulation will not only screw with economic growth but decrease demand for another too expensive Western product.

The U.S. is in need of real change and a return to a true economy of transparency but this will not happen as long as certain forces continue to control and manipulate the U.S. Gov't. The founding fathers of the U.S. with all their efforts to create a balanced and fair constitution and government must be weeping in their graves.

Sorry to sound negative but sadly the same will be true for Great Britain and many other Western nations. The party is over and the thieves have left with the alcohol.

[losworld]

Two versions similar in message.

Hope they have different results though

I still think Bernanke is leaving one way or the other & he wants now to

show for his part it has improved. SO the next FED Chair doesnt do the Mr O shuffle

& say well look at the mess I inherited from Bernanke

NOW

http://www.marketwatch.com/story/we-saved-...009-08-21-10100

THEN

September 1929

“There is no cause to worry. The high tide of prosperity will continue.” — Andrew W. Mellon, Secretary of the Treasury.

October 14, 1929

“Secretary Lamont and officials of the Commerce Department today denied rumors that a severe depression in business and industrial activity was impending, which had been based on a mistaken interpretation of a review of industrial and credit conditions issued earlier in the day by the Federal Reserve Board.” — New York Times

December 5, 1929

“The Government’s business is in sound condition.” — Andrew W. Mellon, Secretary of the Treasury

December 28, 1929

“Maintenance of a general high level of business in the United States during December was reviewed today by Robert P. Lamont, Secretary of Commerce, as an indication that American industry had reached a point where a break in New York stock prices does not necessarily mean a national depression.” — Associated Press dispatch.

January 13, 1930

“Reports to the Department of Commerce indicate that business is in a satisfactory condition, Secretary Lamont said today.” – News item.

January 21, 1930

“Definite signs that business and industry have turned the corner from the temporary period of emergency that followed deflation of the speculative market were seen today by President Hoover. The President said the reports to the Cabinet showed the tide of employment had changed in the right direction.” – News dispatch from Washington.

January 24, 1930

“Trade recovery now complete President told. Business survey conference reports industry has progressed by own power. No Stimulants Needed! Progress in all lines by the early spring forecast.” – New York Herald Tribune.

March 8, 1930

“President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days.” – Washington Dispatch.

May 1, 1930

“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.” – President Hoover

June 29, 1930

“The worst is over without a doubt.” – James J. Davis, Secretary of Labor.

August 29, 1930

“American labor may now look to the future with confidence.” – James J. Davis, Secretary of Labor.

September 12, 1930

“We have hit bottom and are on the upswing.” – James J. Davis, Secretary of Labor.

October 16, 1930

“Looking to the future I see in the further acceleration of science continuous jobs for our workers. Science will cure unemployment.” – Charles M. Schwab.

October 20, 1930

“President Hoover today designated Robert W. Lamont, Secretary of Commerce, as chairman of the President’s special committee on unemployment.” – Washington dispatch.

October 21, 1930

“President Hoover has summoned Colonel Arthur Woods to help place 2,500,000 persons back to work this winter.” – Washington Dispatch

November 1930

“I see no reason why 1931 should not be an extremely good year.” – Alfred P. Sloan, Jr., General Motors Co.

January 20, 1931

“The country is not in good condition.” – Calvin Coolidge.

June 9, 1931

“The depression has ended.” – Dr. Julius Klein, Assistant Secretary of Commerce.

Well anyone who thought the press is objective should think twice with that headline. The very Fed that brought this crisis to us has now saved us. Interesting.

[sokal]

Good reporting Losworld.

Bernankes is always wrong so basically what ever he says the opposite tends to happen. Today he said that the economy has leveled out.

[flying]

Well anyone who thought the press is objective should think twice with that headline. The very Fed that brought this crisis to us has now saved us. Interesting.

True but what is really crazy is they think doubling or I should say trillion-ing

(is there such a word ) up the cause will somehow now be the cure?

The U.S. is in need of real change and a return to a true economy of transparency but this will not happen as long as certain forces continue to control and manipulate the U.S. Gov't. The founding fathers of the U.S. with all their efforts to create a balanced and fair constitution and government must be weeping in their graves.

Also True & surprising when considering even just a few of the things in the Declaration Of Independence. They wrote about similar things they the people sought to escape.

Seems we are coming full circle

He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.

For imposing Taxes on us without our Consent:

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.

http://www.ushistory.org/declaration/document/index.htm

Edited August 21, 2009 by flying

[ray23]

Whoewver posted the article about he banks and FDIC the bank mentioned in the States was mine, so a timely heads up for me. Only the smaller of my retirements goes in there. Not that hard to switch it over to the Bank of Bangkok New York direct deposit in to my account here. Thats where my other one goes.

Did he define this a little better. Thats a very broad statement and can be taken out of context easily. Not going to grow as it was or bread lines, could mean either?

"He said, don’t expect any meaningful recovery in the US for the coming ten years and maybe more. Do not hope to get back to a situation where Asia exports to the US go back to levels like before the crisis. He said the US is doing what they accused Asia of in the 97 crisis, namely no transparency and hiding the corpses. It’s over, they are done, it is just a matter of time."

The Thai P.M. is an impressive man, he is also a man under constant attack. I beleive in these times he is Thailands hope. But the opposition could care less about Thailand, so that is not going to stop them. We have a very delicate year ahead of us here. Hope he survives it.

Thanks for the report very good and to the point.

[flying]

Who ever posted the article about he banks and FDIC the bank mentioned in the States was mine, so a timely heads up for me.

Not sure but I post a lot about the banks & the FDIC

3 more so far today

I see a few sites now have guessing games every Friday as to how many today.

They always close them down on a Friday to allow them to go in & transfer accounts over the weekend.

So that bring us to the nice round number of 80 so far this year. FDIC is getting very thin now & will need the 100 Billion approved by Congress a month or so ago.

I some how do not think it will be enough. The FDIC was not designed to handle this size of a problem.

Edited August 21, 2009 by flying

[flying]

It will be interesting to see how the people & the markets respond to the news given next week

Although I thought the meeting was going to be on 8/26/09 this article says the 25th

Days Away From Economic Chaos

America is just a few days away from a possible day of reckoning. I again call attention to this day, August 25, when the Federal Deposit Insurance Corporation issues its 2nd Quarter report for 2009 on the state of health of American banks.

It has not particularly alarmed Americans that its growth and prosperity have been built upon debt. The American public is a bit desensitized, particularly since the Y2K threat fizzled. We must wait and see how Americans respond to the upcoming FDIC report.

The following charts tell the story. There are roughly 8400 American banks that set aside a small portion of their profits to aggregately insure bank depositors should their local bank fail. A plethora of bank failures has depleted the FDIC reserve fund from $52.8 billion in 2008 to $13 billion in the 1st Quarter of 2009. (See chart below)

http://www.lewrockwell.com/sardi/sardi116.html

Edited August 21, 2009 by flying

[ray23]

I'm lucky that these threads exist, this was not field, so I learn everyday and I'm grateful for it.

America in my opinnion will survive in some form not exactly sure what that will be. The current middle age group hablt sen tough times befoer I have. They to will learn and adapt just as I did. I doubt that we will see in the states what we have seen in the last twenty years or so. Not going to be fun. But, in the end they will be much stronger people.

America doesn't need a repeat of the last twenty years, they need solid ground it will mean more to them then the high of buying junk they don't need. My daughters ar finally geetting some respect for money. I tried my best to teach them that. but until yuo have been knocked down the lessons don't seem real. They sure do to them now. So I think we will see a lot different generation in the future and that is what is needed.

To bad the government hasn't figured that out.

Again I want you guys to understand just how valuable the lesson I get here and they are appreciated. Hope some day to find the middle ground not eveything rosey not all doom and gloom. Just the reality.

Edited August 21, 2009 by ray23

[Naam]

And in Thailand for example people still go on the street and are prepared to risk their lives if they feel they are being cheated (not meant to have a discussion about red and yellow shirts please).

the truth is that people in Thailand go on the street for a couple of free meals and an additional few hundred Baht in their pockets. this and free transportation from far away areas, paid for by those who have vested interests, goes without saying. anybody believing something different is a dreamer.

p.s. i am not referring to the rare cases of strikes or factories closing where employees demonstrate without getting paid from certain sources.

[BEENTHEREDONETHAT]

I thought this was interesting from Mish

In case no one is keeping track, Bernanke has now fired every bullet from his 2002 “helicopter drop” speech Deflation: Making Sure "It" Doesn't Happen Here.

Bernanke's Scorecard

Here is Bernanke’s roadmap, and a “point-by-point” list from that speech.

1. Reduce nominal interest rate to zero. Check. That didn’t work...

2. Increase the number of dollars in circulation, or credibly threaten to do so. Check. That didn’t work...

3. Expand the scale of asset purchases or, possibly, expand the menu of assets it buys. Check & check. That didn’t work...

4. Make low-interest-rate loans to banks. Check. That didn’t work...

5. Cooperate with fiscal authorities to inject more money. Check. That didn’t work...

6. Lower rates further out along the Treasury term structure. Check. That didn’t work...

7. Commit to holding the overnight rate at zero for some specified period. Check. That didn’t work...

8. Begin announcing explicit ceilings for yields on longer-maturity Treasury debt (bonds maturing within the next two years); enforce interest-rate ceilings by committing to make unlimited purchases of securities at prices consistent with the targeted yields. Check, and check. That didn’t work...

9. If that proves insufficient, cap yields of Treasury securities at still longer maturities, say three to six years. Check (they’re buying out to 7 years right now.) That didn’t work...

10. Use its existing authority to operate in the markets for agency debt. Check (in fact, they “own” the agency debt market!) That didn’t work...

11. Influence yields on privately issued securities. (Note: the Fed used to be restricted in doing that, but not anymore.) Check. That didn’t work...

12. Offer fixed-term loans to banks at low or zero interest, with a wide range of private assets deemed eligible as collateral (…Well, I’m still waiting for them to accept bellybutton lint & Beanie Babies, but I’m sure my patience will be rewarded. Besides their “mark-to-maturity” offers will be more than enticing!) Anyway… Check. That didn’t work...

13. Buy foreign government debt (and although Ben didn’t specifically mention it, let’s not forget those dollar swaps with foreign nations.) Check. That didn’t work...

What now Ben? More of the same stuff that failed miserably before, only on a grander scale?

http://www.marketwatch.com/story/we-saved-...009-08-21-10100

[Naam]

What now Ben?

what would those know-it-all have done better? if they had the power to do something, respectively doing nothing because that is what most of these bloody clowns proposed in the media, we would be in exactly the mess that the resident and non-resident apocalyptic doom&gloom riders have predicted only a few months ago. in hindsight it is easy to criticise and have a big mouth.

fact is that Bernanke et al used a pragmatic approach to deal with a crisis. perhaps mistakes were made, perhaps other ways would have led to the same or an even better result. but until now there is no evidence that the applied approach did not work and nobody (except perhaps my good friend Alex Lah ) is able to predict what the future holds for most of us. that is... if Alex stays away from the fridge where he keeps his Chang.

my ranting also applies to those who blame Obama for the shit² his predecessor, guided by the puppetmasters in the background, has produced. the "n-word" in the White House is a thorn in their àsses and it was clear from the beginning that that the closet ku-klux-claners will blame him for anything that might go wrong, be it the distinction of a rare species of cockroaches on a remote island in the south pacific or that the sex drives of the penguins in Patagonia has been greatly reduced by the melting of the polar icecaps.

all afore-said of course in my [not so] humble opinion

[ray23]

Media doesn't that really depend on which way the wind is blowing take a position that will sell air time.

As to Mr. O sure would be nice if he at least say he was working on some way to pay this back, and he just might be looking for taxes from overseas accounts hidden money. Big money is in those accounts not avergae working stiff's.

The real answer lies in paying the dues, not going to be easy and it's not going to happen over night. That much I have learned.

[losworld]

I thought this was interesting from Mish

In case no one is keeping track, Bernanke has now fired every bullet from his 2002 "helicopter drop" speech Deflation: Making Sure "It" Doesn't Happen Here.

Bernanke's Scorecard

Here is Bernanke's roadmap, and a "point-by-point" list from that speech.

1. Reduce nominal interest rate to zero. Check. That didn't work...

2. Increase the number of dollars in circulation, or credibly threaten to do so. Check. That didn't work...

3. Expand the scale of asset purchases or, possibly, expand the menu of assets it buys. Check & check. That didn't work...

4. Make low-interest-rate loans to banks. Check. That didn't work...

5. Cooperate with fiscal authorities to inject more money. Check. That didn't work...

6. Lower rates further out along the Treasury term structure. Check. That didn't work...

7. Commit to holding the overnight rate at zero for some specified period. Check. That didn't work...

8. Begin announcing explicit ceilings for yields on longer-maturity Treasury debt (bonds maturing within the next two years); enforce interest-rate ceilings by committing to make unlimited purchases of securities at prices consistent with the targeted yields. Check, and check. That didn't work...

9. If that proves insufficient, cap yields of Treasury securities at still longer maturities, say three to six years. Check (they're buying out to 7 years right now.) That didn't work...

10. Use its existing authority to operate in the markets for agency debt. Check (in fact, they "own" the agency debt market!) That didn't work...

11. Influence yields on privately issued securities. (Note: the Fed used to be restricted in doing that, but not anymore.) Check. That didn't work...

12. Offer fixed-term loans to banks at low or zero interest, with a wide range of private assets deemed eligible as collateral (…Well, I'm still waiting for them to accept bellybutton lint & Beanie Babies, but I'm sure my patience will be rewarded. Besides their "mark-to-maturity" offers will be more than enticing!) Anyway… Check. That didn't work...

13. Buy foreign government debt (and although Ben didn't specifically mention it, let's not forget those dollar swaps with foreign nations.) Check. That didn't work...

What now Ben? More of the same stuff that failed miserably before, only on a grander scale?

http://www.marketwatch.com/story/we-saved-...009-08-21-10100

Good post. Yes this is all smoke and mirrors. Now the Fed is using the media to convey messages of economic growth and an end to the depression (yes this is a depression in America if you go by the same parameters as the Great Depression). I have to laugh when I read the rosy story about a company having lost billions but being on the upswing because this quarter was not as bad as last or not as severe as forecast or housing on the upswing simply because we have entered the traditionally strong summer season.

The Fed created this mess plain and simple. Greenspan was the real culprit and Bernake is trying to save the Fed through misinformation and massive spending that will not only be paid through painful inflation but also through taxing future generations. Obama says he will not tax the middle class but my guess is what he will do is indirectly tax them through user fees, passing debt to lower levels of gov't and fuel and sales taxes. They'll likely spin it that he said he "wouldn't increase income tax for the middle class". What the taxes will in effect do is further shut down spending and decrease the taxation revenue base. Anyone with any serious money will get the hel_l out of the country so they don't pay for all these mistakes and this can be a good thing for Thailand but even better for tax free havens like the Caymans, etc.

So where does the Gov't go from here? Well the only true hope for America in the long run is abolishing the Federal Reserve system and cleaning up the Financial institutions but we all know this won't happen without a lot of blood in the streets. Most Americans will just need to be satisfied with running water, cable tv and a bag of potato chips.

Edited August 22, 2009 by losworld

[losworld]

What now Ben?

what would those know-it-all have done better? if they had the power to do something, respectively doing nothing because that is what most of these bloody clowns proposed in the media, we would be in exactly the mess that the resident and non-resident apocalyptic doom&gloom riders have predicted only a few months ago. in hindsight it is easy to criticise and have a big mouth.

fact is that Bernanke et al used a pragmatic approach to deal with a crisis. perhaps mistakes were made, perhaps other ways would have led to the same or an even better result. but until now there is no evidence that the applied approach did not work and nobody (except perhaps my good friend Alex Lah ) is able to predict what the future holds for most of us. that is... if Alex stays away from the fridge where he keeps his Chang.

my ranting also applies to those who blame Obama for the shit² his predecessor, guided by the puppetmasters in the background, has produced. the "n-word" in the White House is a thorn in their àsses and it was clear from the beginning that that the closet ku-klux-claners will blame him for anything that might go wrong, be it the distinction of a rare species of cockroaches on a remote island in the south pacific or that the sex drives of the penguins in Patagonia has been greatly reduced by the melting of the polar icecaps.

all afore-said of course in my [not so] humble opinion

This is not a race issue nor has it ever been. Fact is its the same puppeteers today as it was yesterday. It's long been same shit different pile. Wake up people!

Edited August 22, 2009 by losworld

[flying]

On the one hand he feels the recession is over but left scars

Yet some of his statements makes me wonder.

IMF sees slow growth, tax hikes soon

http://www.thestar.com/business/article/682712

Blanchard cautions that rising government debt levels mean fiscal stimulus programs cannot continue for "very long" unless private consumption and investment replace public support for growth.

Fiscal deficits could feed "worries about U.S. government bonds and the dollar ... causing large capital flows from the United States," Blanchard added."Dollar depreciation may take place, but in a disorderly fashion, leading to another episode of instability and high uncertainty" that could derail recovery.

Edited August 22, 2009 by flying

[Abrak]

I thought this was interesting from Mish

In case no one is keeping track, Bernanke has now fired every bullet from his 2002 “helicopter drop” speech Deflation: Making Sure "It" Doesn't Happen Here.

Bernanke's Scorecard

Here is Bernanke’s roadmap, and a “point-by-point” list from that speech.

1. Reduce nominal interest rate to zero. Check. That didn’t work...

2. Increase the number of dollars in circulation, or credibly threaten to do so. Check. That didn’t work...

3. Expand the scale of asset purchases or, possibly, expand the menu of assets it buys. Check & check. That didn’t work...

4. Make low-interest-rate loans to banks. Check. That didn’t work...

5. Cooperate with fiscal authorities to inject more money. Check. That didn’t work...

6. Lower rates further out along the Treasury term structure. Check. That didn’t work...

7. Commit to holding the overnight rate at zero for some specified period. Check. That didn’t work...

8. Begin announcing explicit ceilings for yields on longer-maturity Treasury debt (bonds maturing within the next two years); enforce interest-rate ceilings by committing to make unlimited purchases of securities at prices consistent with the targeted yields. Check, and check. That didn’t work...

9. If that proves insufficient, cap yields of Treasury securities at still longer maturities, say three to six years. Check (they’re buying out to 7 years right now.) That didn’t work...

10. Use its existing authority to operate in the markets for agency debt. Check (in fact, they “own” the agency debt market!) That didn’t work...

11. Influence yields on privately issued securities. (Note: the Fed used to be restricted in doing that, but not anymore.) Check. That didn’t work...

12. Offer fixed-term loans to banks at low or zero interest, with a wide range of private assets deemed eligible as collateral (…Well, I’m still waiting for them to accept bellybutton lint & Beanie Babies, but I’m sure my patience will be rewarded. Besides their “mark-to-maturity” offers will be more than enticing!) Anyway… Check. That didn’t work...

13. Buy foreign government debt (and although Ben didn’t specifically mention it, let’s not forget those dollar swaps with foreign nations.) Check. That didn’t work...

What now Ben? More of the same stuff that failed miserably before, only on a grander scale?

http://www.marketwatch.com/story/we-saved-...009-08-21-10100

So as you can see Bernanke was and is prepared to take far more radical steps to solving the crisis than the average prudent Fed Reserve Chairman. I am sure he would argue quite the opposite of you - that his measures have essentially worked!!

Having said that, I did find his 'we saved the world' speech intensely irritating. As others have pointed out, if it wasnt at least partly because of the Fed, the world wouldnt have needed saving in the first place.

But there are a couple of other things that bug me... first are these comments...

When we met last year (September), financial markets and the economy were continuing to suffer the effects of the ongoing crisis....however, there was little to suggest that market participants saw the financial situation as about to take a sharp turn for the worse.

In other words they just didnt see it coming in any way shape or form. Fine, so they were well behind the curve for much of the crisis but surely they should at least admit that was a mistake.

Secondly, he basically puts the crisis down to a 'panic'...

the events of September and October also exhibited some features of a classic panic, of the type described by Bagehot and many others.

Is this true? Fannie Mae, Freddie Mac, AIG, Lehmans went bust at enormous cost to the taxpayer. TARP was injected to keep many other financial institutions afloat. The underlying crisis was genuine in that the extent of bad debt meant there was a very real question mark over the solvency of the financial system. At no point has the Fed admitted to being the regulator that oversaw some disastrous lending practices.

So unlike many people, I am happy enough to give Bernanke credit for bringing the financial system back from the edge of disaster, I just wish they would take responsibility for taking it there in the first place.

[BlackJack]

Americans had to work from January 1 to August 12 this year just to cover cost of government.

CNS Posted 2009 Aug 15 (Cached)

Well thats smart

[Naam]

This is not a race issue nor has it ever been. Fact is its the same puppeteers today as it was yesterday. It's long been same shit different pile. Wake up people!

it is partly a race issue but i fully agree with you as far as the puppeteers are concerned.