Financial Crisis

[midas]

But the federal law does not allow IRS to foreclose on your home if you can show it would cause you hardship.

i can't comment on that for lack of knowledge. however i know that the IRS cares (if the need arises) a sh*t about any law, e.g. can freeze your bank account, remove your yacht from its place at the marina, pull your Ferrari from the driveway, etc., etc., and all without any court order.

I dont agree Naam ! That you referring to is when someone has avoided tax.

but I am talking about circumstances when many small business people have their backs to wall

through no fault of their own.

The only point I am making Naam is that these guys in Washington have taken

it for granted unbelievably that those tax dollars will be free flowing and they they wont !!

[Naam]

But the federal law does not allow IRS to foreclose on your home if you can show it would cause you hardship.

i can't comment on that for lack of knowledge. however i know that the IRS cares (if the need arises) a sh*t about any law, e.g. can freeze your bank account, remove your yacht from its place at the marina, pull your Ferrari from the driveway, etc., etc., and all without any court order.

I dont agree Naam ! That you referring to is when someone has avoided tax.

but I am talking about circumstances when many small business people have their backs to wall

through no fault of their own.

The only point I am making Naam is that these guys in Washington have taken it for granted unbelievably that those tax dollars will be free flowing and they they wont !!

that might be the case but assuming it is what -in your opinion- will be the implications?

[midas]

But the federal law does not allow IRS to foreclose on your home if you can show it would cause you hardship.

i can't comment on that for lack of knowledge. however i know that the IRS cares (if the need arises) a sh*t about any law, e.g. can freeze your bank account, remove your yacht from its place at the marina, pull your Ferrari from the driveway, etc., etc., and all without any court order.

I dont agree Naam ! That you referring to is when someone has avoided tax.

but I am talking about circumstances when many small business people have their backs to wall

through no fault of their own.

The only point I am making Naam is that these guys in Washington have taken it for granted unbelievably that those tax dollars will be free flowing and they they wont !!

that might be the case but assuming it is what -in your opinion- will be the implications?

What I should have said in the previous post is that if the IRS did start grabbing things as in your example

- there isn't the power to do that now when mom and pop business people are facing hardship.

But then again Obama's " regime " so far has shown almost utter contempt regarding interpretation

of the Constitution so anything is possible. Desperate people can do anything .......but that applies

to both parties i.e. the IRS and the people

[flying]

* If he doesn't have any assets, for the IRS to levy taxes.

* If he doesn't have a stable income or means to pay the taxes owed.

* If the income of the tax payer is less than the minimum that is required to fulfill his basic living expenses.

For a start I am sure there will be more saying stuff the banks - we will keep it in cash !

( and maybe a lot more after the FDIC reports this week ) So IRS wont know about cash.

And even if you have assets like real estate that they will make you sell......in the current

market that could take for ever...................

There are way more unbanked than anyone imagines.

As for the 3rd rule you list... income is less than basic living expense is quickly becoming a reality. More & more mortgages under water here. They will not attack the owners primary residence but if they own additional properties that would be fair game. Although do you think unbanked folks keep additional property in their names?

The govt has taught the people well & it seems many of them will now put it into practice. In this way they are well on their way to a tax revolt & the govt knows it.

The govt knows if this gets big enough foreign debtors will run too. How many banks would loan to a person who is losing their income daily?

But....I put nothing past the govt. When you think you see what the right hand is doing you have completely missed the lefts work.

I would not rule out digital style currency. EBT type cards where the govt knows exactly what everyone has. Nice to know (as quoted below)for now we are a anathema to the banks

The unbanked

Of surprising interest, the FDIC reveals that millions of Americans don't trust or don't use banks. These Americans have been called the unbanked or underbanked, meaning that they "do not have access to banks or are not fully participating in the mainstream financial system," says the FDIC. The FDIC guesstimates that 10 percent of American families are "unbanked." That's a lot of capital the banks don't have access to. Those who hold currency outside of banks are anathema to the gods of banking.

Sources: Alison Vekshin, FDIC May Add to Special Fees as Mounting Failures Drain Reserve, Bloomberg News August 20, 2009; FDIC 2ndQuarter report 2009.

[Naam]

What I should have said in the previous post is that if the IRS did start grabbing things as in your example

- there isn't the power to do that now when mom and pop business people are facing hardship.

But then again Obama's " regime " so far has shown almost utter contempt regarding interpretation

of the Constitution so anything is possible. Desperate people can do anything .......but that applies

to both parties i.e. the IRS and the people

that does not answer my question "that might be the case but assuming it is what -in your opinion- will be the implications?"

[ray23]

The IRS are not the culprits everyone thinks they are, I was off on my payment one year, got audited. Had to pay an extra $500 fror the taxes owed no fine. One year in my business they actually gave me back more then I paid. Mt retirement is a disablity retirement no taxes. Asked my tax guy if I needed to file. Answer you didn't earn any taxable income so no you don't have to file. If the answer was I needed to file then I would have done just that.

They don't just show up adn seize things people are given every chance to pay inculding payment plan. There probabl;y was a time when things were different but not now.

If you intentionally hide the money yes they will nail you. Hey that's there job. Still you will know it's coming, if you step up instead making them chase you you won't have a problem other then how to pay.

Last year of my business ex putting the quartley payments into slot machines, I didn't know thought it had been paid. When they called I was honest with them and sit they up an interest free payment plan to recover the taxes, no fine.

You make an effort and they will meet you half way.

Try to defraud them and no they are not real friendly.

[flying]

Try to defraud them and no they are not real friendly.

Seems that is a two way street

[Naam]

The IRS are not the culprits everyone thinks they are...

i agree! when i opted to pay my income tax in the U.S. of A. it took quite some efforts to prove to the IRS that i am not only entitled but that it was mandatory

[flying]

The risk of a double-dip recession is rising

http://www.ft.com/cms/s/0/90227fdc-900d-11...144feabdc0.html

There are also now two reasons why there is a rising risk of a double-dip W-shaped recession. For a start, there are risks associated with exit strategies from the massive monetary and fiscal easing: policymakers are damned if they do and damned if they don’t. If they take large fiscal deficits seriously and raise taxes, cut spending and mop up excess liquidity soon, they would undermine recovery and tip the economy back into stag-deflation (recession and deflation).

But if they maintain large budget deficits, bond market vigilantes will punish policymakers. Then, inflationary expectations will increase, long-term government bond yields would rise and borrowing rates will go up sharply, leading to stagflation.

Edited August 24, 2009 by flying

[flying]

America May Need to Find Another Financier

Figures released by the Treasury Department this week indicated that China reduced its holdings of Treasury securities by $25 billion in June, the most China had ever sold in a month.In the first half of 2009, China and Hong Kong acquired only 9 percent of the more than $800 billion worth of Treasuries that were sold.

Japan, which was replaced by China as the largest foreign holder of Treasuries last year, has been a larger buyer this year, taking up 11 percent of the new supply of Treasuries.

http://www.nytimes.com/2009/08/22/business...mp;ref=business

[Naam]

America May Need to Find Another Financier

the Klingon Empire will not buy any UST as long as american explosives kill people in Iraq, Afghanistan and Pakistan.

[flying]

America May Need to Find Another Financier

the Klingon Empire will not buy any UST as long as american explosives kill people in Iraq, Afghanistan and Pakistan.

Yes but those Ferengi & Romulans have upped their monthly purchases. Will they be ever sorry when they try to use those dilithium crystals we sold them

[12DrinkMore]

The risk of a double-dip recession is rising

http://www.ft.com/cms/s/0/90227fdc-900d-11...144feabdc0.html

In the debate over what "shape" this recession will have had once it is over there seem to be two arguments.

1. We are now recovering because of one quarter's bad but not as bad as last quarter's figures, the housing market has not dropped as much for one month, a few polls saying that optimism has improved a bit and over the last week the Bernanke "I saved the world" rhetoric, which has the stock markets defying Newton's laws again. So basically a lot of hot air trying to convince us we are on the path to recovery, causing sheeple to become optimistic and start increasing debt and buying stuff. But we are being increasingly fed, "He (Bernanke) cautioned that any recovery is likely to be gradual at first, with high unemployment".

In the same breath, almost, we are being pacified with "Our Leaders" have fixed them problem, but it may take a while before you have a job again. So just carry on watching the TV. Cue "Don't worry, be happy".

2. Analysts such as Roubini looking hard at the real figures, and asking the reasonable question, with all the figures so bad, how on earth can we have a recovery any time soon? How can the sheeple afford to take on more debt, why aren't the governments fixing the regulations to prevent the next banking induced bubble?

http://www.newgeography.com/content/00725-the-rogue-treasury

Senator Chuck Grassley (R-IA) suggested [referring to former-Secretary Paulson] that Congress “was awed by a person who comes off of Wall Street, making tens of millions of dollars. … You think he knows all the answers and when it’s all said and done you realize he didn’t know anything more about it than you did.”

And here's a clip with Warren

http://globaleconomicanalysis.blogspot.com...aved-world.html

Lots of info packed in just nine minutes.

If the banks are unwilling to sell toxic assets marked to market, because they have a mark to fantasy value on the books, then at what price are they been dumped on the US tax payer?

Edited August 24, 2009 by 12DrinkMore

[Naam]

America May Need to Find Another Financier

the Klingon Empire will not buy any UST as long as american explosives kill people in Iraq, Afghanistan and Pakistan.

Yes but those Ferengi & Romulans have upped their monthly purchases. Will they be ever sorry when they try to use those dilithium crystals we sold them

you might be able to bullsh*t the Romulans but there's no way that the Ferengi buy that kind of crap

[midas]

What I should have said in the previous post is that if the IRS did start grabbing things as in your example

- there isn't the power to do that now when mom and pop business people are facing hardship.

But then again Obama's " regime " so far has shown almost utter contempt regarding interpretation

of the Constitution so anything is possible. Desperate people can do anything .......but that applies

to both parties i.e. the IRS and the people

that does not answer my question "that might be the case but assuming it is what -in your opinion- will be the implications?"

A middle class America with the entrepreneurial spirit and talent that made USA great, being squashed by a government aiming to collect most of its revenue from those entrepreneurs ( who will find legal ways to avoid it - not evade it ) for its out of control spending cannot possibly lead to a bright future.

[flying]

So basically a lot of hot air trying to convince us we are on the path to recovery,

And here's a clip with Warren

Hot Air.... A Very good analogy considering they are trying to re-inflate the asset bubble

I saw that Warren clip a few days back & yes it was very good & well worth the watch.

That is when I first learned that the smaller banks held their toxic assets as whole loans. Which got me to thinking we are making a mistake in letting them fail while the large..too big too fail have not even addressed theirs yet. Which are now as she said sliced & diced.

The more I see, the more I feel we are just watching a controlled crash. Almost like watching the band play on the Titanic after it hit the berg. Looking for a V, U or a W shape is silly. It is a lightning bolt seeking ground

Edited August 24, 2009 by flying

[ray23]

They didn't learn a darn thing, here we go again repackaging loans.

http://news.yahoo.com/s/ap/20090824/ap_on_...eltdown_deja_vu

[Naam]

What I should have said in the previous post is that if the IRS did start grabbing things as in your example

- there isn't the power to do that now when mom and pop business people are facing hardship.

But then again Obama's " regime " so far has shown almost utter contempt regarding interpretation

of the Constitution so anything is possible. Desperate people can do anything .......but that applies

to both parties i.e. the IRS and the people

that does not answer my question "that might be the case but assuming it is what -in your opinion- will be the implications?"

A middle class America with the entrepreneurial spirit and talent that made USA great, being squashed by a government aiming to collect most of its revenue from those entrepreneurs ( who will find legal ways to avoid it - not evade it ) for its out of control spending cannot possibly lead to a bright future.

no disagreement. but will the price of som tam and phrik nam pla in Pattaya be affected?

[12DrinkMore]

This paper is only for the hard core,

http://cedar.barnard.columbia.edu/faculty/...%20Response.pdf

it delves into the complex world of financial engineering and the author concludes that the pricing of risk, or the cost of insuring that risk was too low, and not that the securitization of debt was the real issue.

But the point I would like to make is that the simple financial transaction of taking out a loan and paying it back has been bloated up into a huge complex web of opaque instruments, with, as far as I can see, the sole object of generating a bit of extra profit at somebody else's expense. It has turned into a huge game of "pass the parcel", only instead of the parcel being unwrapped at every turn, it was wrapped up in more mystery and complexity until the last person holding it is the tax payer, who haven't a dam_n clue why they are now suffering.

Surely the solution is not to make the whole thing more complicated, but to reduce the level of complexity to a transparent level? A return to simple loans and mortgages, which could be individually insured against default. The overly "clever" guys at the banks should be sacked and sent back to university or maybe industry, where their talents could be put to much more productive use.

He concludes

I have been suggesting that, if securitization is the problem, then insurance is the answer. The financial system did insurance wrong during the runup, and as a consequence we got an unsustainable boom and a nearly unstoppable freefall when the bubble burst. But if we do insurance right, we can make securitization work. Doing insurance right will involve the government going into the insurance business.

This, IMO, is totally wrong. There are very few people who understand the development of the financial markets, in particular the "financial engineering". How is the government expected to be able to price complex insurance when it can't even balance income versus expenditure?

It is worth recalling how the system was supposed to work, which involves recalling why the government did not prevent but rather encouraged the development of this system. The whole point of the 1988 Basel Accord, which introduced risk-weighted capital requirements (updated in 2004 as Basel II), was to regulate risk-taking by banks. On-balance sheet risk absorbed regulatory capital charges, but off-balance sheet risk did not. Eventually, as Glass-Steagall was relaxed, banks could originate any kind of business they wanted; capital controls only determined where that business was ultimately booked. The regulatory authorities apparently hoped that credit risk would be held by deep pockets elsewhere in the economy, namely pension and insurance companies.

Well, the deep pockets are now not so deep.

[lannarebirth]

This paper is only for the hard core,

http://cedar.barnard.columbia.edu/faculty/...%20Response.pdf

it delves into the complex world of financial engineering and the author concludes that the pricing of risk, or the cost of insuring that risk was too low, and not that the securitization of debt was the real issue.

But the point I would like to make is that the simple financial transaction of taking out a loan and paying it back has been bloated up into a huge complex web of opaque instruments, with, as far as I can see, the sole object of generating a bit of extra profit at somebody else's expense. It has turned into a huge game of "pass the parcel", only instead of the parcel being unwrapped at every turn, it was wrapped up in more mystery and complexity until the last person holding it is the tax payer, who haven't a dam_n clue why they are now suffering.

Surely the solution is not to make the whole thing more complicated, but to reduce the level of complexity to a transparent level? A return to simple loans and mortgages, which could be individually insured against default. The overly "clever" guys at the banks should be sacked and sent back to university or maybe industry, where their talents could be put to much more productive use.

He concludes

I have been suggesting that, if securitization is the problem, then insurance is the answer. The financial system did insurance wrong during the runup, and as a consequence we got an unsustainable boom and a nearly unstoppable freefall when the bubble burst. But if we do insurance right, we can make securitization work. Doing insurance right will involve the government going into the insurance business.

This, IMO, is totally wrong. There are very few people who understand the development of the financial markets, in particular the "financial engineering". How is the government expected to be able to price complex insurance when it can't even balance income versus expenditure?

It is worth recalling how the system was supposed to work, which involves recalling why the government did not prevent but rather encouraged the development of this system. The whole point of the 1988 Basel Accord, which introduced risk-weighted capital requirements (updated in 2004 as Basel II), was to regulate risk-taking by banks. On-balance sheet risk absorbed regulatory capital charges, but off-balance sheet risk did not. Eventually, as Glass-Steagall was relaxed, banks could originate any kind of business they wanted; capital controls only determined where that business was ultimately booked. The regulatory authorities apparently hoped that credit risk would be held by deep pockets elsewhere in the economy, namely pension and insurance companies.

Well, the deep pockets are now not so deep.

I agree with your opinion. You cannot insure speculators, but speculators can create hedges for their investments. The illusion of insurance was what caused the 1987 stock market crash and clearly contributed to this latest fiasco as well.

[12DrinkMore]

Well, my vision of Japan is currently embodied in Naoki (see one of Alex's posts above)

So it is a bit sad to see that Kawasaki is moving its motorcycle production out of Japan to Thailand. Good for the Thais, but not for all the Naokis out there in Japan.

http://translate.google.com/translate?js=y...history_state0=

"your capitalism sucks", as Naoki would say.

Edited August 24, 2009 by 12DrinkMore

[teletiger]

"And last month CP (yes, the Thai food company) announced it will be manufacturing up to 2 million motorcycles per annum in China. (For sale in China I presume) Musical chairs.

Regards.

[ray23]

Repackaging loans screwed it up the first time so lets go back and do it again. What the heck in the end the governmet will bail us out anyway.

To me this is shear insanity, what are the odds of these guys playing it straight very little. we have to take the hit now or even more in the future. Lets take it now it's already on the table, get it over with it. So rebuilding can really start. There is no way this can be controlled already been proven

Edited August 24, 2009 by ray23

[flying]

Well I am surprised & yet a little happy.

I am glad he will be around to see if he in fact did save the world.

Also no scapegoat to say well look at the mess I inherited from Ben

http://www.msnbc.msn.com/id/32545908/ns/bu...ks_and_economy/

Obama to reappoint Bernanke as Fed chief

In making decision, Obama weighed Fed chairman’s actions in recession

OAK BLUFFS, Mass. - President Barack Obama will nominate Federal Reserve chief Ben Bernanke to a second term, The Associated Press and NBC News reported Monday night.

Bernanke helped steer the U.S. through what many observers said was the gravest financial crisis since the Great Depression by unleashing breathtaking sums of money to fight it.

Bernanke, 55, recently wrapped up the Fed's annual conference in Jackson Hole, Wyo. He remains under pressure to help speed a recovery, with joblessness now at 9.4 percent.

President Barack Obama was to make the official announcement on Tuesday during a break from his vacation on Martha's Vineyard in Massachusetts, according to NBC and the AP.

Bernanke was first named Fed chairman by former President George W. Bush.

In his announcement, Obama plans to praise Bernanke as someone who led the country through a financial crisis, the AP said. Obama plans to note Bernanke's expertise on the Great Depression of the 1930s and his efforts to prevent another crisis.

Edited August 25, 2009 by flying

[flying]

Really weird article............

http://www.reuters.com/article/marketsNews...413380120090824

Madoff dying of cancer, fellow inmates say-NY Post

NEW YORK, Aug 24 (Reuters) - Bernard Madoff, convicted of swindling $65 billion through the biggest-ever Ponzi scheme, has told fellow prison inmates that he is dying of cancer, the New York Post reported on Monday, citing unnamed prison sources.

Madoff, 71, who since June has been serving a 150-year sentence at a North Carolina federal prison, has been telling fellow inmates he does not have much longer to live, the Post said, citing the unofficial and unusual sources.

The Post said there had been speculation that Madoff was suffering from pancreatic cancer earlier this year. Inmates said Madoff was taking "about 20 pills a day" and "not doing very well."

The Post said Madoff's lawyer did not return messages Sunday and had previously declined to answer questions about whether Madoff had cancer. Reuters could not reach Madoff lawyer Ira Sorkin immediately for comment.

The tabloid also reported Madoff has engaged in a number of surprising new activities with some unexpected social circles.

A shirtless Madoff has joined weekly "Native American religious purification ceremonies" that involve prayers, heated rocks to induce sweat and smoking from a ceremonial pipe, the paper said.

The paper also reported that various "gangs" at the prison are trying to recruit Madoff while some inmates regularly cook "sandwich wraps" for him at their cells. (Reporting by Joseph A. Giannone, editing by Maureen Bavdek)

[Naam]

Well, my vision of Japan is currently embodied in Naoki (see one of Alex's posts above)

So it is a bit sad to see that Kawasaki is moving its motorcycle production out of Japan to Thailand. Good for the Thais, but not for all the Naokis out there in Japan.

http://translate.google.com/translate?js=y...history_state0=

"your capitalism sucks", as Naoki would say.

all "naokis" on this planet have to get used to something which is called "globalisation". an avalanche which started years ago and there is no way that it can be stopped.

[Naam]

Obama to reappoint Bernanke as Fed chief. In making decision, Obama weighed Fed chairman’s actions in recession

this is not right! why didn't O'Bama consult with Thaivisa's resident experts to avoid that kind of wrong decision?

[flying]

Obama to reappoint Bernanke as Fed chief. In making decision, Obama weighed Fed chairman's actions in recession

this is not right! why didn't O'Bama consult with Thaivisa's resident experts to avoid that kind of wrong decision?

Well actually he did.........But when he asked should I go with Larry Summer or Benny Bernanke I said neither.......Abolish the FED....He hung up....

[midas]

Obama to reappoint Bernanke as Fed chief. In making decision, Obama weighed Fed chairman's actions in recession

this is not right! why didn't O'Bama consult with Thaivisa's resident experts to avoid that kind of wrong decision?

Well actually he did.........But when he asked should I go with Larry Summer or Benny Bernanke I said neither.......Abolish the FED....He hung up....

this will not be a good decision as far the price of som tam and phrik nam pla in Pattaya is concerned

Edited August 25, 2009 by midas

[flying]

Interesting............

http://www.safehaven.com/article-14290.htm

August 24, 2009

Bank Reserves and Inflation

by Steve Saville