Financial Crisis

[jazzbo]

As they say they do not GAAP account many liabilities like pensions etc because they do not have to pay them.

Readers can use this statement to find such information as:

* the makeup of the federal government’s assets and liabilities,

* which liabilities increased the most, and,

* whether the federal government has a positive net position—more

assets than liabilities—or a negative net position—more liabilities

than assets.

For example, the two largest liabilities as of the end of fiscal year

2008 are (1) about $5.8 trillion of debt held by the public, from whom

the federal government borrowed money to pay for past deficits, and (2)

about $5.3 trillion of pension and benefits owed to civilian employees

and military personnel. These two items also account for the largest

increases in liabilities for fiscal year 2008: federal debt held by the

public and accrued interest increased by about $758.5 billion, and

federal employee and veteran benefits payable increased by

approximately $549.8 billion.

As of the end of fiscal year 2008, the

federal government’s negative net position was about $10.2 trillion.

http://www.gao.gov/htext/d09946sp.html

Calculations from the "2008 Financial Report of the United States Government" also show that the GAAP

negative net worth of the federal government has increased to $59.3 trillion while the total federal obligations

under GAAP accounting now total $65.5 trillion.

Meaning calculations made not by the US Treasury but by John Williams http://www.shadowstats.com/ As they say? No. As You Say.

Edited December 3, 2009 by jazzbo

[midas]

I read somewhere that 45% of the world population exists on less than

$2.50 per day. Doesnt this leave room for American salaries to be " negotiated " down significantly ?

The Economic Reality That No One Wants to Talk About

The basic assumption that jobs will eventually return when the economy recovers is probably wrong.

many Americans won't be rehired unless they're willing to settle for much lower wages and benefits.

Today's official unemployment numbers hide the extent to which Americans are already on this path.

Among those with jobs, a large and growing number have had to accept lower pay as a condition for

keeping them. Or they've lost higher-paying jobs and are now in a new ones that pays less.

http://www.huffingtonpost.com/robert-reich...t_b_377167.html

Edited December 3, 2009 by midas

[flying]

I read somewhere that 45% of the world population exists on less than

$2.50 per day. Doesnt this leave room for American salaries to be " negotiated " down significantly ?

Not as the system stands now.

But if it collapses....( headed that way if left as is IMO)

Then yes many possibilities exist

But as it stands now? No Way

We pay the interest on incredible debt. Incurred through unbridled printing.

The debt is sold to others ( including back to ourselves in a slight of hand) but the interest is paid through taxation.

The article you linked saying things like....

A one-year payroll tax holiday on the first, say, $20,000 of income - which would quickly put money into peoples' pockets and simultaneously make it cheaper for businesses to hire because they pay half the payroll tax.

Could not be done in the current system.

Without even mentioning the incredible stupidity of military spending what we do to bully....errr police the world.

In the meantime bill boards such as these are starting to sprout up on the landscaper of what Herr Naam refers to as the Greatest Nation On Earth

[midas]

I read somewhere that 45% of the world population exists on less than

$2.50 per day. Doesnt this leave room for American salaries to be " negotiated " down significantly ?

Not as the system stands now.

But if it collapses....( headed that way if left as is IMO)

Then yes many possibilities exist

But as it stands now? No Way

but it seems to me with this underlying by-product

of globalisation ( i.e. there will always someone somewhere in the world

that will do the job for an even cheaper price ) there is not a hope in hel_l of creating

" inflationary expectations "

[ThailandLovr]

December ATM day coming up for me tomorrow. Sure enough, the USD down more. Only 33.12 per xe.

Down, down, down ... month after month.

Of course no surprise to anybody.

[flying]

Greece tests the limit of sovereign debt as it grinds towards slump

Like Labour under Brown, idiot leaders mistook a bubble for their own skill. But the consequences in EMU are more dreadful. Austerity may prove self-defeating, without the cure of devaluation. Greece risks grinding deeper into slump.

The EU can paper over this by transfering large sums of money to Greece. But will Berlin, Paris – and London, also on the hook – feel obliged to bail out a country that has so flagrantly violated the rules of the club, not least by holding Eastern Europe's EU entry to ransom over Cyprus? That is neither forgotten, nor forgiven.

During the panic last February, German finance minister Peer Steinbruck promised to rescue any eurozone state in dire trouble. He is no longer in office. The pledge was, in any case, a bounced political cheque even when he wrote it. Greece can assume nothing.

Full article at link above

Edited December 3, 2009 by flying

[Abrak]

The debt is sold to others ( including back to ourselves in a slight of hand) but the interest is paid through taxation.

I dont know whether you meant that 'IS' literally or not.

BUT the simple fact is that the US has NOT being paying interest on its debts out of taxation. It has basically paid the interest on its debts by borrowing more to pay the interest (public and private combined).

At the point the US stops borrowing more you can argue you are paying your interest (out of income or taxes.)

(BTW I meant this from more of a cashflow angle. The US (public and private) debt might actually fall this year (possibly). But it will only fall on the basis that debt has been written off at which point the creditor has paid your interest for you (and more).)

And even when the US stops borrowing more, I am not convinced you will still pay an 'interest rate' on your debt because Bernanke's plan is to create 'negative' real rates.

[jazzbo]

Not as the system stands now. But if it collapses.... ( headed that way if left as is IMO)

From The Color of Money screenplay --

Player -- What you got in there?

Vincent (Tom Cruise) -- In here?

Doom.

[flying]

The debt is sold to others ( including back to ourselves in a slight of hand) but the interest is paid through taxation.

I dont know whether you meant that 'IS' literally or not.

BUT the simple fact is that the US has NOT being paying interest on its debts out of taxation. It has basically paid the interest on its debts by borrowing more to pay the interest (public and private combined).

Bit of a side track to what I was implying against Midas link as to reason why it wouldnt work in the system we have but...........

FED prints paper & calls it currency ..... Then they 'lend' it to the government of the US at interest charged on the total face value of that paper. Each year the government pays them a fee based on the total paper in circulation.

Yes of course they are as you say not able to keep up. Remember I said before the credit cards are smoking & they are in the process of bankruptcy.

The majority of income tax goes to cover interest payments on a national debt created by the same banking system we are bailing out.

FUBAR

Edited December 3, 2009 by flying

[Naam]

more doom and gloom:

Overview

Global economy growing nicely, Fed & ECB starting to slowly reduce

special stimulus, rate hikes a long way ahead given unemployment.

Fixed Income

Government yields set to range-trade for a while, then probably rise.

Credit spreads now close to fair value. Risk/reward in High Yield less

attractive currently.

Equities

Equities withstood the “stress-test” of the Dubai World standstill, tactical

indicators not yet negative, valuations fair, we stay constructive.

Alternative Investments: Commodities

Gold’s strong upward momentum matters more than being high by

historic standards. Base metals set to trend up. Oil too, longer term.

Alternative Investments: Real Estate

Trend continues upwards, spreading to more markets.

Forex

JPY can rise even more. USD vulnerable to bout of year-end weakness

and trend remains down.

Global Macro

Moderation is visible in some data after the

sharp rebound, but growth is continuing,

broadening and becoming more selfsustaining.

Global inflation is past the low points

reached during the summer and should increase

further, but underlying pressure is

low.

The ECB begins to clarify its "exit strategy,"

which should as a first step mean that 12-

month repo transactions will end after the final

one in December.

Fixed Income

Risk aversion and end-of-year positioning

should help government bond markets over

the coming weeks. We see the recent drop

in yields as exaggerated and expect a correction

to the upside to occur early next

year.

Dubai World credit event added to market

volatility in a time of relatively scarce liquidity

but market response remained generally contained.

While we remain strategically positive

on credits, lower risk appetite could weigh on

credit markets in the short term.

Equities

The "Dubai dip" is a reminder of the risks

faced by many economies. If this or similar

events produce a significant dip in the

broad equity markets, we feel it is another

buying opportunity.

One lesson is to avoid "old bubbles" (Japan,

Ireland) but to buy markets where investor enthusiasm

still has strong scope to rise (EM).

We remain overweight cyclicals relative to

defensives, and underweight banks, which

are suffering as concerns over capital raising

and country indebtedness grow.

Alternative Investments: Commodities

Base metal inventories are in the process of

peaking. Starting in early 2010, we think

the sector can start performing better.

Gold has positive seasonal effects in December.

The weak USD and low real interest

rates are supportive. Gold could have a

strong rally into year-end.

Oil remains caught in the USD 70-80

range amid high US heating oil inventories.

Oil should only break higher once heating

oil inventories have normalized.

Alternative Investments: Real Estate

Direct Investments: Recovery in many

global direct commercial real estate markets

should continue in 2010 thanks to improved

fundamentals such as relatively attractive

valuations.

Real Estate Equities: After a short-term

consolidation, real estate equities should

move higher going into Q1 2010 as liquidity

and macroeconomic conditions remain favorable.

Forex

JPY can see more strength in 2010 on the

back of rising real rates due to deflation,

Japan's net creditor position and repatriation

flows by banks, Japanese investors

and corporates.

Seasonality favors more downside for the

USD into year-end.

AUD/USD to remain supported, but peak in

global growth momentum and speculative

long positions may render further substantial

gains more difficult.

[jazzbo]

Remember I said before the credit cards are smoking & they are in the process of bankruptcy... FUBAR

From the Warden Norton dialog in The Shawshank Redemption:

We'll have us a little book-barbecue in the yard! They'll see the flames for miles! We'll dance around it like wild Indians! Do you understand me? Are you catching my drift? ... Or am I too obtuse?

The Warden was about as pathological as you all are becoming... have you considered GAD Therapy?:

2010 ICD-9-CM Diagnosis Code 300.00: Apprehension or fear of impending actual or imagined danger, vulnerability, or uncertainty.

maybe your health insurer will pay for it with FIAT dollars.

Edited December 3, 2009 by jazzbo

[flying]

Gold’s strong upward momentum matters more than being high by

historic standards. Base metals set to trend up. Oil too, longer term.

Gold has positive seasonal effects in December.

The weak USD and low real interest

rates are supportive. Gold could have a

strong rally into year-end.

Well as some expected Gold is outpacing currencies from November on.

I agree with the strong rally into the end of the year but think January will be

smoking too. We will see

Silver while appearing weak may even get stronger relative to gold soon enough.

Almost makes one want to look at junior miners of both

Alas I am about to get busy & will not be able to be screen bound

Edited December 3, 2009 by flying

[midas]

more doom and gloom:

Overview

Global economy growing nicely, Fed & ECB starting to slowly reduce

special stimulus, rate hikes a long way ahead given unemployment.

Fixed Income

It explains so much about your view of things Naam that you are pacified by this sort of “ advertorial “ – from your broker no doubt.

Funny no mention about Obama about to slug people wiith higher taxes ( and the likely response from very unhappy taxpayers - as seen in the billboard posted by flying ), no prospect of resolving unemployment, increased credit card defaults, commercial real estate values going down, increased foreclosures etc

[midas]

Unemployment Worsens, Climbs In Nearly Half Of U.S. Metro Areas

http://www.businessinsider.com/unemploymen...o-areas-2009-12

[midas]

Alternative Investments: Real Estate

Direct Investments: Recovery in many

global direct commercial real estate markets

should continue in 2010 thanks to improved

fundamentals such as relatively attractive

valuations.

Real Estate Equities: After a short-term

consolidation, real estate equities should

move higher going into Q1 2010 as liquidity

and macroeconomic conditions remain favorable.

How can anyone rely on the " opinion " of someone who writes self serving drivel like this.

Show me any - never mind " many " commercial real estate market anywhere in the world right now that is showing

signs of sustainable improved fundamentals.

And Cantor Fitzgerald LP Chief Executive Howard Lutnick explains why in this article

http://www.reuters.com/article/GlobalFinan...E5AH5FM20091118

[Naam]

more doom and gloom:

Overview

Global economy growing nicely, Fed & ECB starting to slowly reduce

special stimulus, rate hikes a long way ahead given unemployment.

Fixed Income

It explains so much about your view of things Naam that you are pacified by this sort of “ advertorial “ – from your broker no doubt.

-only poor boys would entrust a broker with their money.

-that it is not my view but an opinion what i posted should be clear when reading "we think". i am not like some arrogant know-it-all doom&gloomers to use "pluralis maiestatis".

-quite obviously this thread is exclusively for shitty and apocalyptic news whereas reality shows clearly that most of the apocalyptic riders are nothing but sore losers which keep on patting each other shoulders when one has discovered a new youtube clip or a blogspot where the claim is made that the sky is falling.

last not least. i am not pacified by anyone, definitely not by bank anals whom i know to be sore losers since nearly two decades. i am trying to reach my own conclusions and most important is that i am very happy with the results.

[jazzbo]

quite obviously this thread is exclusively for shitty and apocalyptic news whereas reality shows clearly that most of the apocalyptic riders are nothing but sore losers Maybe so... but they have a way to deal with non-believers such as yourself:

Welcome to your control panel

Manage your ignored users

This section allows you to set up your ignored users list.

Alas I am about to get busy & will not be able to be screen bound... maybe building houses as a contractor with FHA fiat money

[Naam]

quite obviously this thread is exclusively for shitty and apocalyptic news whereas reality shows clearly that most of the apocalyptic riders are nothing but sore losers Maybe so... but they have a way to deal with non-believers such as yourself:

most of those who hate my guts don't have the guts to put me on ignore. some of them seem to be masochists who keep on coming back and give me a good reason to kick their butts. and the best is that they deliver most of the arguments which can be challenged easily free of charge

[midas]

quite obviously this thread is exclusively for shitty and apocalyptic news whereas reality shows clearly that most of the apocalyptic riders are nothing but sore losers Maybe so... but they have a way to deal with non-believers such as yourself:

most of those who hate my guts don't have the guts to put me on ignore. some of them seem to be masochists who keep on coming back and give me a good reason to kick their butts. and the best is that they deliver most of the arguments which can be challenged easily free of charge

I have never read one single argument from you backed with anything other than about rubber mattresses, wet dreams

or your opinion of your dog and that is some record in 10,000 posts

[Abrak]

The majority of income tax goes to cover interest payments on a national debt created by the same banking system we are bailing out.

Sorry to be a bit pedantic here but this was the Thai argument before the 1997 crash - 'there are no non-performing loans'. Yes, sure but that is simply because you lend them more to pay the interest (you could take 90% of listed companies and their net debt increased more than their interest charge). And look at Dubai - why do you think NPLs are less than 3% - because the banks keep on lending the companies more money.

So even the above comment isnt 'straight' to me - the majority of income tax payments is equivalent to interest payments on debt is fine. But less face it the government has revenues (your taxes) it also has expenditures and interest payments. So the very simple fact is, as your taxes dont pay for their expenditures you are not paying your interest.

So the Government has to bail out a banking system that was built on increased lending to borrowers who earnings were lower than expenditures anyway. If the bank assumed they were being paid interest by lending them more you can see why borrowers continued to spend more than they earnt. Now the US Government has forecast it will increase it debts more than its interest costs for the foreseeable future (and that assumes this strategy will be financed at low interest costs - which certainly doesnt work with credit cards.) So interest payments are being made by borrowing more.

Theoretically future increased rates of taxes might pay your interest charges or for repayment of the loans. While Government spends more than it earns before interest costs you are paying nothing and passing all liabilities into the future. You are not paying anything towards the debts and interest of your Government - you are not even paying the expenditures of your Government. It is total fiction. In the CBO's November 2009 forecasts Government debt to GDP (on heroic GDP growth assumptions) reaches 200% between 2035 and 2062. Interest rates never really go above 3.5%. So at no point is the Government expecting taxes to pay towards debt or interest on debt and at no point are you even expected to even pay for their total expenditures before interest in any given year.

[midas]

not a surprise

Worse Than Enron?

Wall Street’s big banks are playing dangerous new accounting games—

and this time taxpayers are on the hook for hundreds of billions.

Nomi Prins former managing director at Goldman Sachs uncovers a scandal in the making.

http://www.thedailybeast.com/blogs-and-sto...than-enron/full

[Abrak]

-only poor boys would entrust a broker with their money.

-that it is not my view but an opinion what i posted should be clear when reading "we think". i am not like some arrogant know-it-all doom&gloomers to use "pluralis maiestatis".

If someone states 'we think the earth is round' or 'we think that the US economy will grow next year', he would be generally expressing a consensus view. It is quite the opposite of 'pluralis majestatis' and is known as 'pluralis modestiae' (which means 'modesty' as opposed to 'arrogance'.) It is meant to deflect 'arrogance' (in other words you fully realize that you are not the only person thinking it). So the average forecast of US growth is 2.9% next year - based on a poll of 48 economists. So 'we think the US economy will grow next year' is far less arrogant than 'I think'.

However starting a paragraph 'quite obviously' is usually regarded as arrogant if used wrongly. You do redeem yourself by being a multiple poster here. And I do agree with the sentiment - what this thread really needs is someone who believes that the US will grow at 5% next year and will give the reasons why.

-quite obviously this thread is exclusively for shitty and apocalyptic news whereas reality shows clearly that most of the apocalyptic riders are nothing but sore losers which keep on patting each other shoulders when one has discovered a new youtube clip or a blogspot where the claim is made that the sky is falling.

last not least. i am not pacified by anyone, definitely not by bank anals whom i know to be sore losers since nearly two decades. i am trying to reach my own conclusions and most important is that i am very happy with the results.

[flying]

Theoretically future increased rates of taxes might pay your interest charges or for repayment of the loans. While Government spends more than it earns before interest costs you are paying nothing and passing all liabilities into the future. You are not paying anything towards the debts and interest of your Government - you are not even paying the expenditures of your Government. It is total fiction. In the CBO's November 2009 forecasts Government debt to GDP (on heroic GDP growth assumptions) reaches 200% between 2035 and 2062. Interest rates never really go above 3.5%. So at no point is the Government expecting taxes to pay towards debt or interest on debt and at no point are you even expected to even pay for their total expenditures before interest in any given year.

Snipped a lot of your post but I do see what your saying & dont really argue with it.

As this last paragraph shows

Also agreed that in reality there is always shortfall & a glimpse at http://www.usdebtclock.org/

will make most go cross eyed.

But this final paragraph is as good as anything to show the folly of our unsound currency

It also is a good example of why the Constitution placed a ban on paper money & permitted only gold & silver as money.

Of course that was long ago & ignored when the FED was ushered in back in 1913

Look how far ( down) they brought us in 96 years

[flying]

C-SPAN did an interview today with Ron Paul.

One of his best IMO & very informative.

Well worth the time....as always IMO

http://www.c-span.org/Watch/Media/2009/12/...n+Paul+RTX.aspx

Edited December 3, 2009 by flying

[Naam]

However starting a paragraph 'quite obviously' is usually regarded as arrogant if used wrongly. You do redeem yourself by being a multiple poster here. And I do agree with the sentiment - what this thread really needs is someone who believes that the US will grow at 5% next year and will give the reasons why.

-my best guess is that the lion share of my multiple postings are not in the economy but in various technical sections.

-i don't believe in a growth of 5% and therefore can't state any reasons.

-i find it ridiculous to focus on the Greatest Nation on Earth™ as if we are back in the 70s and 80s when the proverbial "the U.S. of A. sneezes, the rest of the world gets pneumonia" was applicable.

-in my view the discussion should cover mainly the global economic situation, especially the country we live in, and not incidents which are irrelevant to that situation such as "a bank in Duluth, Minnesota (one of the thousands of superfluous shitty american banks which wanted to piss with the big dogs but couldn't lift the leg) went belly-up and now the FDIC is in the red".

a personal message to you Abrak. i can't judge your "performance" but without any doubt you possess a wealth of financial knowledge. however, the former "anal" shows in nearly each of your postings and i strongly doubt that most interested readers can easily follow your argumentation. what you have to keep in mind is that this is not a forum for MBAs who are to be lectured to prepare them for a dissertation to obtain a Ph.D. degree.

no offence meant!

[jazzbo]

Kuhn N.: ...most of those who hate my guts don't have the guts to put me on ignore.

Sure they do... Doesn't take any.

[midas]

If someone states 'we think the earth is round' or 'we think that the US economy will grow next year', he would be generally expressing a consensus view. It is quite the opposite of 'pluralis majestatis' and is known as 'pluralis modestiae' (which means 'modesty' as opposed to 'arrogance'.) It is meant to deflect 'arrogance' (in other words you fully realize that you are not the only person thinking it). So the average forecast of US growth is 2.9% next year - based on a poll of 48 economists. So 'we think the US economy will grow next year' is far less arrogant than 'I think'.

However starting a paragraph 'quite obviously' is usually regarded as arrogant if used wrongly. You do redeem yourself by being a multiple poster here. And I do agree with the sentiment - what this thread really needs is someone who believes that the US will grow at 5% next year and will give the reasons why.

Even Paul Krugman has joined the bears

Double dip warning

http://krugman.blogs.nytimes.com/2009/12/0...le-dip-warning/

[midas]

-i find it ridiculous to focus on the Greatest Nation on Earth™ as if we are back in the 70s and 80s when the proverbial "the U.S. of A. sneezes, the rest of the world gets pneumonia" was applicable.

-in my view the discussion should cover mainly the global economic situation, especially the country we live in, and not incidents which are irrelevant to that situation such as "a bank in Duluth, Minnesota (one of the thousands of superfluous shitty american banks which wanted to piss with the big dogs but couldn't lift the leg) went belly-up and now the FDIC is in the red".

At times comments like these make you look like the most " unscientific scientist " I have ever encountered

[Naam]

Midas, why do you publicly masturbate? back to your ricefield!

[flying]

a personal message to you Abrak. i can't judge your "performance" but without any doubt you possess a wealth of financial knowledge. however, the former "anal" shows in nearly each of your postings and i strongly doubt that most interested readers can easily follow your argumentation. what you have to keep in mind is that this is not a forum for MBAs who are to be lectured to prepare them for a dissertation to obtain a Ph.D. degree.

I recognize that it was a personal message but...........

I vastly prefer a post that may be overly complicated & cause me to look up information to a post that is a hollow shell.

Not to imply

Posts that makes one think or see from a different perspective is always welcomed