Financial Crisis

[midas]

To be honest it doesnt sound anything more than an average night out for Britney Spears.

And Abrak.........what is your " theory " behind this ?

Edited March 6, 2010 by midas

[Abrak]

To be honest it doesnt sound anything more than an average night out for Britney Spears.

And Abrak.........what is your " theory " behind this ?

My theory is that you watch too much 'youtube'

A 'joyrider' is not making an economic protest.

Virtually all crime statistics showed a noticeable fall in 2009. I did think that I spotted Britney grabbing some underwear though.

http://www.reuters.com/article/idUSTRE5BK2KI20091221

And dont get all righteous about these guys - when you say not everyone is sitting in their armchairs watching American Idol - there are obviously gangs vandalizing looting and joyriding. 'I stole it cos it was free'. Not the slightest indication that anyone gave a toss that one in four children in America was on food stamps, the US has been ripped off by its banks and bankers so they could at least shoot a few but instead they are raiding a liquor store.

Edited March 6, 2010 by Abrak

[midas]

And dont get all righteous about these guys - when you say not everyone is sitting in their armchairs watching American Idol - there are obviously gangs vandalizing looting and joyriding. 'I stole it cos it was free'. Not the slightest indication that anyone gave a toss that one in four children in America was on food stamps, the US has been ripped off by its banks and bankers so they could at least shoot a few but instead they are raiding a liquor store.

Aha ! I am glad you mentioned foodstamps…how long can a bankrupt USA keep giving them out ?

Your link to the Reuters article misses the point because this is not about crime its about what happens after the handouts stop and people are hungry. What is happening right now isn't relevant ........ its what is going to happen around 2012 and why.

As one of the commentators PaulRevere so correctly says :-

“That is the point of the video. There is a morally bankrupt and welfare dependent segment of society that is a tinderbox of potential violence. When our government's debt reaches a crisis point and social services cuts must be made or dollar devaluation occurs, one must be aware of what areas to avoid and how quickly anachy can erupt. ”

Edited March 6, 2010 by midas

[Abrak]

“That is the point of the video. There is a morally bankrupt and welfare dependent segment of society that is a tinderbox of potential violence. When our government's debt reaches a crisis point and social services cuts must be made or dollar devaluation occurs, one must be aware of what areas to avoid and how quickly anachy can erupt. ”

Ok got you now Midas. When your government's debt reaches a crisis point and social services cuts must be made or dollar devaluation occurs, I am 90% certain they will devalue the dollar. It would be crazy not to. Make your lower and middle classes suffer so that you can repay the Chinese at a good rate who hollowed out your economy in the first place. Inflate and devalue. If Bernanke's still in charge I am 98% certain. The only really difficult bit is to work out the best way of devaluing the US$.

[flying]

The only really difficult bit is to work out the best way of devaluing the US$.

You mean even better than the current way?

[12DrinkMore]

Well 12D,

I would start doing your maths.

Very, very few people own everything. Approximately 5% of the US population own 60% of total assets and approximately 100% of net assets. Obviously when Governments screw up everyone suffers but do not believe the rich are going to be around to bail everyone out.

In particular you imply that say the middle classes will shoulder much of the burden - they have nothing to give!!

As long as there are people left who think that they can be rich by taking out a large debt on a property, there will always be something to take off them. And, to be a little cynical, not only have they sold themselves into debt slavery, they have also sold their kids into debt slavery and possibly also their grandkids. They may not have financial assets to sell, but certainly the future labour of their offspring can still be given away now. Indeed the "boomers", possibly the "richest generation", are now heading into their latter years and are fully expecting their (collective) kids to pay the pensions and keep up the standard of living they have become to expect.

Warren is an excellent analyst. It is a pity she is not a policy maker.

[Abrak]

Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to Goldman Sachs.

[12DrinkMore]

Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to Goldman Sachs.

'tis a bleak and dark future you foresee Abrak, are their any green pastures the others side of the "Great GS Bailout"?

I am not sure how the stimulus is going to work, as the working class is not going to find the lines of credit required to start another buying spree.

Luckily technology will provide a solution and continue to provide ever lower prices and virtual lives resulting in the death of real humans,

http://www.guardian.co.uk/world/2010/mar/0...ved-online-game

I can see this more and more, people are living "facebook" lives, maybe they can all eventually head off to the paradise island in the internet, meet ideal partners and have ideal virtual brats. The odd delivery of fast food, ordered through the "virtual store" will satisfy the real basic nutritional needs.

And once the peeps all have their cybermansions, cyberpools and enjoy their cyberkids, with naturally endless cybersex the only necessity is for a few ancillary services to deal with basic life support functions until the number of humans left on the globe falls to a supportable number.....

Sorry, a bit offtrack, but there is surely a book to be written here....

[Chaimai]

And once the peeps all have their cybermansions, cyberpools and enjoy their cyberkids, with naturally endless cybersex the only necessity is for a few ancillary services to deal with basic life support functions until the number of humans left on the globe falls to a supportable number.....

CyberChang !

What a horrible thought.

[Abrak]

Owners of capital will stimulate the working class to buy more and more of expensive goods, houses and technology, pushing them to take more and more expensive credits, until their debt becomes unbearable. The unpaid debt will lead to bankruptcy of banks, which will have to be nationalized, and the State will have to take the road which will eventually lead to Goldman Sachs.

'tis a bleak and dark future you foresee Abrak, are their any green pastures the others side of the "Great GS Bailout"?

I am not sure how the stimulus is going to work, as the working class is not going to find the lines of credit required to start another buying spree.

Luckily technology will provide a solution and continue to provide ever lower prices and virtual lives resulting in the death of real humans,

http://www.guardian.co.uk/world/2010/mar/0...ved-online-game

I can see this more and more, people are living "facebook" lives, maybe they can all eventually head off to the paradise island in the internet, meet ideal partners and have ideal virtual brats. The odd delivery of fast food, ordered through the "virtual store" will satisfy the real basic nutritional needs.

And once the peeps all have their cybermansions, cyberpools and enjoy their cyberkids, with naturally endless cybersex the only necessity is for a few ancillary services to deal with basic life support functions until the number of humans left on the globe falls to a supportable number.....

Sorry, a bit offtrack, but there is surely a book to be written here....

First of all it isnt my quote it is 150 years old from Das Kapital except the replacement of Communism by Goldman Sachs and actually I think Marx felt that Goldman Sachs might come first. Could have been written 5 years ago. Unfortunately I think he rather like you, I believe, confused 'enforced collective responsibilty' with 'personal denibility'. Marx would really have been better off as a hedge fund manager.

Cue Sokal...Marx was a complete idiot lets have the gold standard

I used to get excited about these things but now I realize absolutely noone cares (apart from Britney Spears). The important thing is to see the humor in it all. So much abuse and all roads lead to Paris Hilton and Lloyd Blancfein. Even you have put away your gun and are entering the virtual world.

Talking about Facebook I joined went to my mates page and it said 'another foot of perfect powder in Utah' so I sent him a message 'Looked at your facebook page, I hope you realize you sound like a complete and utter wanke_r' to which he replied 'I hope you realize that starting a message, I looked at your Facebook page, has totally destroyed what credibility you had left in my eyes.'

[flying]

'tis a bleak and dark future you foresee Abrak, are their any green pastures the others side of the "Great GS Bailout"?

So the dream turned out to be a nightmare in disguise..... Why is it such a problem to wake the F@ up?

Can Folks not go back to living within their means? Is this some kind of biblical parable? Once the fruit of instant gratification through credit has been tasted folks can never be satisfied again?

Funny I was just watching some movie & the lady had some jar hidden in her cupboard for a vacation. She would do odd jobs & put her tips etc in the jar saving for a vacation. I had to smile as it also reminded me of growing up. My mom did the same as we also did when we wanted something. Just worked & saved & then bought it..... No instant gratification along with the finance charge.

Also reminded me of Lay Away....How the bigger stores such as Sears Roebuck etc...all had lay away. Folks bought something put a few dollars down & came in weekly adding to it till they paid for the item & then took it home. Again no finance charge.

Edited March 6, 2010 by flying

[Naam]

And once the peeps all have their cybermansions, cyberpools and enjoy their cyberkids, with naturally endless cybersex the only necessity is for a few ancillary services to deal with basic life support functions until the number of humans left on the globe falls to a supportable number.....

CyberChang ! What a horrible thought.

:D

[jazzbo]

Can Folks not go back to living within their means? Is this some kind of biblical parable? Once the fruit of instant gratification through credit has been tasted folks can never be satisfied again?

George Bailey (James Stewart) to the evil Mr. Potter (Lionel Barrymore) in the 1946 Frank Capra's It's a Wonderful Life:

What'd you say just a minute ago? They had to wait and save their money before they even ought to think of a decent home.

Wait! Wait for what

? Until their children grow

up and leave them? Until they're so old and broken-down that they . . . Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about . . . they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath?

[Gambles]

The only really difficult bit is to work out the best way of devaluing the US$.

You mean even better than the current way?

The problem though is that the exorbitant priviledge is no longer what it was. There's plenty of research on this but my view is that China can dictate RMB:US$ rates better than American policy makers or the markets can.

Money supply has increased from $700 Bn to $1.7 trn and is headed over $ 3 Trn.

The question is can this continue to have zero impact on the USD by being held within bank balance sheets and not genuinely circulating and having no multiplier effect. Can the Fed continue to just make money but prevent it being used which deals with debt (for now) and avoides inflation or currency debasement (for now). I suspect that they can but that this will build up catastrophic pressures that are likley to be unleashed in 2011 or 2012 or maybe even later. At the moment US can print enough to service all requirements as long as Wile-E-Coyote doesn't look down (the line at what's coming)

[Abrak]

but my view is that China can dictate RMB:US$ rates better than American policy makers or the markets can.

I agree with this entirely. China should not be in the dollar peg because it has capital controls. Everyone else of any significance does not. Therefore by definition China sets it exchange rate and every other currency moves with market forces around it. The really cool thing they are doing at the moment is giving vague hints of revaluation which appreciates their competitors currencies and destroys their competiveness. Does China have any friends left or are they so big they dont need any?

[flying]

The problem though is that the exorbitant priviledge is no longer what it was. There's plenty of research on this but my view is that China can dictate RMB:US$ rates better than American policy makers or the markets can.

Money supply has increased from $700 Bn to $1.7 trn and is headed over $ 3 Trn.

The question is can this continue to have zero impact on the USD by being held within bank balance sheets and not genuinely circulating and having no multiplier effect. Can the Fed continue to just make money but prevent it being used which deals with debt (for now) and avoides inflation or currency debasement (for now). I suspect that they can but that this will build up catastrophic pressures that are likley to be unleashed in 2011 or 2012 or maybe even later. At the moment US can print enough to service all requirements as long as Wile-E-Coyote doesn't look down (the line at what's coming)

Good points !

[lannarebirth]

Now that's more like it!

Voters in Iceland Appear to Reject Repayment Plan

By Sarah Lyall

Published: March 6, 2010

LONDON

]Icelands voters expressed their outrage on Saturday against bankers, the government and what they saw as foreign bullying, overwhelmingly rejecting a plan to pay $5.3 billion to Britain and the Netherlands to reimburse customers of a failed Icelandic bank.

Britain has warned Iceland that it risks being an international pariah if it does not pay the money back and has threatened to stall the country’s efforts to join the European Union.

http://www.nytimes.com/2010/03/07/world/eu...d.html?emc=eta1

Edited March 7, 2010 by lannarebirth

[flying]

Now that's more like it!

Yes........I was just watching these...

http://news.bbc.co.uk/2/hi/business/8553979.stm

[Abrak]

Put down that Keynes book

Why dont you pick one up. He warned the US that taking on the role of Central Reserve Currency would destroy the economy and it is had gone from the largest creditor to the largest debtor. Worst still it now needs debt to survive.

He also warned the US that a central reserve currency backed by gold is essentially an oxymoron. Your proud of the USA's 8,000 tonnes but they used to have 22,000. It took them 4 years to turn into a debtor nation, 15 years to debase the gold standard.

So answer 2 simple questions. Name one credible economist who believes in the gold standard. I dont know of one. I assume you do and if you dont you might have to admit that there is a possibility it isnt a good idea.

Now here is a tricky one. How can a country act as a Central Reserve Currency without depleting all its gold reserves assuming its currency is backed by gold. Just theoretically? And you are not allowed to give destroying the Global economy as an answer.

[flying]

China to Nullify Financing Guarantees by Local Governments

[Gambles]

Now that's more like it!

Voters in Iceland Appear to Reject Repayment Plan

By Sarah Lyall

Published: March 6, 2010

LONDON

]Icelands voters expressed their outrage on Saturday against bankers, the government and what they saw as foreign bullying, overwhelmingly rejecting a plan to pay $5.3 billion to Britain and the Netherlands to reimburse customers of a failed Icelandic bank.

Britain has warned Iceland that it risks being an international pariah if it does not pay the money back and has threatened to stall the country’s efforts to join the European Union.

http://www.nytimes.com/2010/03/07/world/eu...d.html?emc=eta1

This is just another symptom of moral hazard

If we're going to start to rebuild a world that has any kind of sense of individual and collective responsibility, Iceland is a good place to start. If the Icelandic government bows to the people and decides to tie its future to Russia rather than the EU, then the IMF should be prepared to call its bluff this time. It's well overdue the time to lay down a marker on Wall Street and in Reykjavik.

cheers,

Paul

[Naam]

Put down that Keynes book

Why dont you pick one up. He warned the US that taking on the role of Central Reserve Currency would destroy the economy and it is had gone from the largest creditor to the largest debtor. Worst still it now needs debt to survive.

He also warned the US that a central reserve currency backed by gold is essentially an oxymoron. Your proud of the USA's 8,000 tonnes but they used to have 22,000. It took them 4 years to turn into a debtor nation, 15 years to debase the gold standard.

So answer 2 simple questions. Name one credible economist who believes in the gold standard. I dont know of one. I assume you do and if you dont you might have to admit that there is a possibility it isnt a good idea.

Now here is a tricky one. How can a country act as a Central Reserve Currency without depleting all its gold reserves assuming its currency is backed by gold. Just theoretically? And you are not allowed to give destroying the Global economy as an answer.

Sokal

[Abrak]

So just for fun, and if anyone wants to join in, I have been pondering the end game and also some constructive solutions. Now just because I regard them as constructive doesnt mean they are, just some new ideas. I am starting from the assumption that most people have in this thread that the recovery is a bit of plaster over a big wound and that most of the underlying structural issues have not been addressed. Personally, I am not that bearish about the World economic fundamentals if these structural issues are addressed - I just think so many of the current relationships are destructive.

So the first idea is from Keynes - cue Keynes is an idiot from Sokal (despite giving the US complete forewarning how they would destroy their economy.)

He proposed that countries that generated current account surpluses should be taxed on those surpluses. Now that might sound inherently illogical to many people but it does make sense. First if countries with high C/A surpluses reduce them it will by definition reduce other countries current account deficits. (Afterall they should balance although there appears to be a reasonably global current account deficit at the moment probably with Mars.)

A few reasons why this really makes sense - at present all the economic adjustment to correct imbalances is placed on deficit countries who often deflate their economies. If the deficit countries make all the adjustment then global growth will tend to the lowest possible outcome. If surplus countries reduce their surpluses then deficit countries dont need to deflate so much. Thirdly current account surpluses are basically 'beggar my neighbor' policies that will only be rectified through free exchange rate movement which there isnt.

So tax current account surplus countries to make adjustments to reduce them. It is a very old idea of Keynes but it seems to have been forgotten (maybe it deserved to be) but there is a good reason why it could be implemented now.

The Chinese US relationship is particularly destructive at the moment - large surpluses from an undervalued currency, lending back to the US keeping rates too low, boosting spending etc but ultimately destroying both economies. In particular Bernanke blames China for much of the crisis (I guess it is a lot easier than blaming himself) and it increasing looks like the US is acting as though it has absorbed substantial amount of debt, due to an overvalued currency caused by others, it has destroyed its economic growth rate and so really it is going to make no effort to repay those debts in good faith. (Anyone see a budget surplus or current account surplus forecast from the US over the next 20 years.)

Edited March 8, 2010 by Abrak

[Naam]

Keynes is a dead man as is Albert Einstein and Alexander the Great. all were great men in their time but some of their theories are not valid anymore as circumstances have changed and new facts have surfaced. why picking on them or holding up all their theories/teachings is a useless and timewasting undertaking beyond my comprehension.

[midas]

I am starting from the assumption that most people have in this thread that the recovery is a bit of plaster over a big wound and that most of the underlying structural issues have not been addressed. Personally, I am not that bearish about the World economic fundamentals if these structural issues are addressed - I just think so many of the current relationships are destructive.

So the first idea is from Keynes - cue Keynes is an idiot from Sokal (despite giving the US complete forewarning how they would destroy their economy.)

He proposed that countries that generated current account surpluses should be taxed on those surpluses. Now that might sound inherently illogical to many people but it does make sense. First if countries with high C/A surpluses reduce them it will by definition reduce other countries current account deficits. (Afterall they should balance although there appears to be a reasonably global current account deficit at the moment probably with Mars.)

A few reasons why this really makes sense - at present all the economic adjustment to correct imbalances is placed on deficit countries who often deflate their economies. If the deficit countries make all the adjustment then global growth will tend to the lowest possible outcome. If surplus countries reduce their surpluses then deficit countries dont need to deflate so much. Thirdly current account surpluses are basically 'beggar my neighbor' policies that will only be rectified through free exchange rate movement which there isnt.

So tax current account surplus countries to make adjustments to reduce them. It is a very old idea of Keynes but it seems to have been forgotten (maybe it deserved to be) but there is a good reason why it could be implemented now.

The Chinese US relationship is particularly destructive at the moment - large surpluses from an undervalued currency, lending back to the US keeping rates too low, boosting spending etc but ultimately destroying both economies. In particular Bernanke blames China for much of the crisis (I guess it is a lot easier than blaming himself) and it increasing looks like the US is acting as though it has absorbed substantial amount of debt, due to an overvalued currency caused by others, it has destroyed its economic growth rate and so really it is going to make no effort to repay those debts in good faith. (Anyone see a budget surplus or current account surplus forecast from the US over the next 20 years.)

Yes but they include some pretty significant “structural issues that have not been addressed.” ?

For example I would still like to know how they can redress the imbalance between what has

been up until now the worlds 2 biggest economies paying wages to people which are up 10 times

higher for exactly the same task undertaken by an equally well educated person ( if not better educated person )

in countries what will be the next 2 worlds biggest economies ? What steps can be taken to avoid a

significant fall in living standards in USA, Japan and even Europe because I certainly can’t see how you avoid that ?

I know you said in this thread a while back you don’t believe globalisation is a threat but I can't

see how you stop anyone shopping for the much cheaper version of anything ( even if it's only copy )

from China, India or anywhere else anymore so I can't see how USA and Europe can ever stop the rot of government taking on

more and more debt but without it’s citizens having any prospects of generating the revenues needed to repay it.

They don’t care because the problem can be abandoned for the next generations.

Edited March 8, 2010 by midas

[sokal]

Put down that Keynes book

Why dont you pick one up. He warned the US that taking on the role of Central Reserve Currency would destroy the economy and it is had gone from the largest creditor to the largest debtor. Worst still it now needs debt to survive.

He also warned the US that a central reserve currency backed by gold is essentially an oxymoron. Your proud of the USA's 8,000 tonnes but they used to have 22,000. It took them 4 years to turn into a debtor nation, 15 years to debase the gold standard.

So answer 2 simple questions. Name one credible economist who believes in the gold standard. I dont know of one. I assume you do and if you dont you might have to admit that there is a possibility it isnt a good idea.

Now here is a tricky one. How can a country act as a Central Reserve Currency without depleting all its gold reserves assuming its currency is backed by gold. Just theoretically? And you are not allowed to give destroying the Global economy as an answer.

When I say Keynes I mean keynes economics. Not Keynes the person specifically, I know he had allot of different takes on allot of things but the policy that happend to be named after him is what I am talking about.

[Abrak]

Keynes is a dead man as is Albert Einstein and Alexander the Great. all were great men in their time but some of their theories are not valid anymore as circumstances have changed and new facts have surfaced. why picking on them or holding up all their theories/teachings is a useless and timewasting undertaking beyond my comprehension.

I cant agree more. The problem with posting support for any economist on the internet is that everyone assumes you agree with everything they say. I cannot think of one economist that I really agree with entirely (maybe Sraffa but he only wrote about 3 books) and just because I support say Bernanke's handling of much of the crisis doesnt mean I dont recognize he actually caused it. Or Krugman who I dislike his fiscal policy etc. I do get slightly offended when these people are called idiots when they are obviously far more intelligent than us. I also think that Keynes very deep understanding of exchange rate mechanisms is very pertinent now. In most respects the US has given up taking on the responsibilities of being a Central Reserve Currency and it needs to be relieved from that responsibility if possible so that its economy can recover. Keynes also explains well why China's large surpluses are an act of bad faith towards the currency. I also generally think it is only worth highlighting where an economist has an interesting idea or policy rather than picking holes in what he has got wrong. I did not post Keynes's idea of taxing current account surpluses because it was Keynes's idea but because I think it is a good one.

[midas]

Keynes is a dead man as is Albert Einstein and Alexander the Great. all were great men in their time but some of their theories are not valid anymore as circumstances have changed and new facts have surfaced. why picking on them or holding up all their theories/teachings is a useless and timewasting undertaking beyond my comprehension.

I cant agree more. The problem with posting support for any economist on the internet is that everyone assumes you agree with everything they say. I cannot think of one economist that I really agree with entirely (maybe Sraffa but he only wrote about 3 books) and just because I support say Bernanke's handling of much of the crisis doesnt mean I dont recognize he actually caused it. Or Krugman who I dislike his fiscal policy etc. I do get slightly offended when these people are called idiots when they are obviously far more intelligent than us. I also think that Keynes very deep understanding of exchange rate mechanisms is very pertinent now. In most respects the US has given up taking on the responsibilities of being a Central Reserve Currency and it needs to be relieved from that responsibility if possible so that its economy can recover. Keynes also explains well why China's large surpluses are an act of bad faith towards the currency. I also generally think it is only worth highlighting where an economist has an interesting idea or policy rather than picking holes in what he has got wrong. I did not post Keynes's idea of taxing current account surpluses because it was Keynes's idea but because I think it is a good one.

Abrak I think this must be the biggest oxymoron you have ever posted in this thread ?

If you " recognize Bernanke's actually caused the crisis " ( which many other people would also agree with now ),

how can he be more intelligent than even a “ A ” level Economics student? Either that or has absolutely zero integrity

which means you cant believe a single word he speaks.

And by the way – AUDIT THE FED !!!!

[Abrak]

When I say Keynes I mean keynes economics. Not Keynes the person specifically, I know he had allot of different takes on allot of things but the policy that happend to be named after him is what I am talking about.

I do agree that a lot of people justify some pretty lousy policies by calling them Keynesian. One thing to remember is that much of his policy recommendations were made when there was no monetary policy. And remember it is the oldest sales tactic in the book to justify doing something stupid by attaching a credible name to it.

Still you didnt answer my two questions on the gold standard. Actually the second one is the most important. I am not sure whether you think the gold standard is a 'con', whether you want to trash the whole system and start again, generate enormous personal wealth (well I guess you want to do that but I suspect it is not your reasoning behind it) or you think it establishes discipline (bet you cant argue that one) or stability and growth or that it is simply a little bit better than the potentially disastrous policies we have now.

[flying]

Credit Union Pays Savers to Close Their Accounts; Deposit Insurance

Makes Saving Accounts a Losing Proposition for Banks

Nevada Federal Credit Union has too much money and does not know what to do with it. Worse yet, sitting in cash is costing the credit union money.

Insurance premiums are the culprit. On top of any deposit premium paid to customers, insurance runs .4%. Yet short term treasuries yield .25%.

Nevada Federal sees no good lending opportunities so it is paying customers to close accounts.

Inquiring minds are reading Credit union: Pul-lease take your money.

Nevada Federal Credit Union has a deal for big savers: Withdraw your money and you'll get a bonus.

The credit union is investing in short-term Treasurys and earns about one-quarter of 1 percent on those government securities on average, but it was paying 0.4 percent to customers with savings.

In addition, the credit union expects the National Credit Union Administration to boost deposit insurance premiums by 0.15 percent to 0.4 percent this year.

For each $100 million in deposits, that premium increase will increase Nevada Federal's costs up to $400,000 yearly, Brad Beal, chief executive officer said.

Starting Monday, the credit union has cut the variable interest rates on deposits held by members that only save money to zero.

"We're losing money, and they are not making money," Beal said.

So the credit union will pay these savers a $25 bonus for withdrawing amounts between $25,000 and $49,999. The bonus jumps to $50 for amounts up to $74,999 and goes to $75 for larger sums.

Perverted System

The National Credit Union Administration (NCUA) and FDIC parasites siphon off deposit insurance money from good institutions not willing to take risks, to support institutions taking excessive risks.

In turn, banks and credit unions sitting with high levels of cash lose money on deposits and the customers make zero percent interest, thanks to the Bernanke Fed holding interest rates at zero.

Nevada Federal Credit Union is fed up with paying money to the National Credit Union Share Insurance Fund (NCUSIF) for sitting in cash, so it is paying depositors to withdraw that cash.

Is this a perverted system or what?

Mike "Mish" Shedlock

Edit: Link added.... Credit union: Pul-lease take your money.

Edited March 8, 2010 by flying