Financial Crisis

[Naam]

About 30-40% of UK and US debt has already been written off through QE. Sent from my iPhone using Thaivisa Connect Thailand mobile app

You care to post a link to data substantiating this claim.US debt is worse now that it has ever been, in fact doubling since 2008. Curious how you connect the dots to get to the point you claim. QE has nothing to do retiring debt. In fact, it is expanding US debt.

reading jokes such as "QE writes off debt" makes the morning cartoons redundant

[manarak]

reading jokes such as "QE writes off debt" makes the morning cartoons redundant

indeed!

but:

Posted Today, 06:01

senile Bettflucht?

[Naam]

Posted Today, 06:01

senile Bettflucht?

i'm getting up at 0400hrs. and that since 36 years, weekdays and holidays, summer and winter, rain or shine, dark or bright.

[farang000999]

Looming hyperinflation with interest rates near zero...

[midas]

IMF paper warns of 'savings tax' and mass write-offs as West's debt hits 200-year high

Debt burdens in developed nations have become extreme by any historical measure and will require a wave of haircuts, warns IMF paper

http://www.telegraph.co.uk/finance/financialcrisis/10548104/IMF-paper-warns-of-savings-tax-and-mass-write-offs-as-Wests-debt-hits-200-year-high.html

Happily we're not linked to the gold standard any more or we might have been in the same pickle as in the twenties depression.....which would have been avoidable today.

One can of course gradually evaporate debt through several measures.

Unfortunately for Europe one of the regular helpful factors......growth......becomes difficult or impossible with the demographics of receding or stagnant population.....as in Japan.

One wonders whether the Japanese, a smart people, and Europe, may gain growth through robotics instead of increasing population.

Cheeryble

But what kind of sentiment would that lead to in the global " financial system " ?

What kind of a financial system would there be in the future if it simply based on running up debts and then conjuring up ways not to pay the money back?

[mccw]

QE buys government debt/ bonds, which expand and pay off old debt. The new QE derived debt has the interest circled back to the tresurey/ government cost is net zero ie the debt has been retired/ paid off; where as the old debt/ non QE debt cost interest.

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[midas]

QE buys government debt/ bonds, which expand and pay off old debt. The new QE derived debt has the interest circled back to the tresurey/ government cost is net zero ie the debt has been retired/ paid off; where as the old debt/ non QE debt cost interest. Sent from my iPhone using Thaivisa Connect Thailand mobile app

but specifically where did you get the 30 to 40% figures from?

[mccw]

The wider US QE also amounts to a massive back door bank bail out too.

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[mccw]

QE buys government debt/ bonds, which expand and pay off old debt. The new QE derived debt has the interest circled back to the tresurey/ government cost is net zero ie the debt has been retired/ paid off; where as the old debt/ non QE debt cost interest. Sent from my iPhone using Thaivisa Connect Thailand mobile app

but specifically where did you get the 30 to 40% figures from?

Daniel Lieberman series

& the "stealth mega inflation trend"

Both put the write off at around 30-40%

Ie UK actual debt needing servicing is under 50% of GDP

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[Loptr]

You would think that with the Fed buying $40 billion a month in mortgage backed securities for the last several years, they would have worked off the backlog of toxic assets on the books of Fannie & Freddie. In fact, F&F have been turning a profit.

http://www.mydesert.com/article/20140104/BUSINESS/301040017/Fannie-Mae-Freddie-Mac-return-profit

It does not change the fact that the debt still exists. It has simply been shifted to the Fed's balance sheet.

[midas]

The wider US QE also amounts to a massive back door bank bail out too. Sent from my iPhone using Thaivisa Connect Thailand mobile app

yeah well anyone who regards that as being a panacea in any way, shape or form are delusional.

According to an article that will be out on 17th January from Matt Taibbi we are now living in a permanent bailout state based on a Ponzi-like confidence scheme

it was one of the biggest and most elaborate falsehoods ever sold to the American people………….

We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it.

http://www.dailykos.com/story/2013/01/05/1176631/-Matt-Taibbi-s-Stunning-New-Rolling-Stone-Article-Secret-and-Lies-of-the-Bailout

[Naam]

QE buys government debt/ bonds, which expand and pay off old debt. The new QE derived debt has the interest circled back to the tresurey/ government cost is net zero ie the debt has been retired/ paid off; where as the old debt/ non QE debt cost interest. Sent from my iPhone using Thaivisa Connect Thailand mobile app

QE = the perpetuum mobile of debt reduction.

Midas, Roubini, Faber et al can finally relax. no more worries, all global financial problems solved, the circle is squared!

[midas]

incestuous whores the whole lot of them

JPMorgan Chase to pay $2.0 billion to avoid Bernard Madoff investigation: reports

JPMorgan Chase, the US bank used by Bernard Madoff who masterminded the biggest fraud on record, has agreed to pay about $2.0 billion to US authorities to avoid litigation, press reports said Monday.

http://www.rawstory.com/rs/2014/01/06/jpmorgan-chase-to-pay-2-0-billion-to-avoid-bernard-madoff-investigation-reports/

Edited January 7, 2014 by midas

[midas]

QE buys government debt/ bonds, which expand and pay off old debt. The new QE derived debt has the interest circled back to the tresurey/ government cost is net zero ie the debt has been retired/ paid off; where as the old debt/ non QE debt cost interest. Sent from my iPhone using Thaivisa Connect Thailand mobile app

but specifically where did you get the 30 to 40% figures from?

Daniel Lieberman series

& the "stealth mega inflation trend"

Both put the write off at around 30-40%

Ie UK actual debt needing servicing is under 50% of GDP

Sent from my iPhone using Thaivisa Connect Thailand mobile app

McKinsey Global Institute suggests the possible savings from QE fall well short of your 30 to 40% figures?

Study: Quantitative easing has saved US $1 trillion in debt

http://washingtonexaminer.com/study-quantitative-easing-has-saved-us-1-trillion-in-debt/article/2539130

Edited January 7, 2014 by midas

[mccw]

You would think that with the Fed buying $40 billion a month in mortgage backed securities for the last several years, they would have worked off the backlog of toxic assets on the books of Fannie & Freddie. In fact, F&F have been turning a profit.

http://www.mydesert.com/article/20140104/BUSINESS/301040017/Fannie-Mae-Freddie-Mac-return-profit

It does not change the fact that the debt still exists. It has simply been shifted to the Fed's balance sheet.

The debt still exists but it has been removed from the banking system and is no cost to the fed because it was bought with money created out of thin air with no interest due- so the effect is it may as well no longer exist

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[midas]

QE buys government debt/ bonds, which expand and pay off old debt. The new QE derived debt has the interest circled back to the tresurey/ government cost is net zero ie the debt has been retired/ paid off; where as the old debt/ non QE debt cost interest. Sent from my iPhone using Thaivisa Connect Thailand mobile app

but specifically where did you get the 30 to 40% figures from?

Daniel Lieberman series

& the "stealth mega inflation trend"

Both put the write off at around 30-40%

Ie UK actual debt needing servicing is under 50% of GDP

Sent from my iPhone using Thaivisa Connect Thailand mobile app

I think those that have questioned your post number #14459 have done so because rightly or wrongly, it could be read that you are implying that because of QE the debt problem ( in USA anyway ), has been " diluted " so there is less to worry about?

So perhaps should clarify what is the actual amount of the debt which the likes of these sources you quote say have been miraculously dealt with? Are you talking about $17 trillion or are you talking about $200 trillion that Professor Laurence Kotlikoff (plus more than 1000 economists, including 15 Nobel peace prize winners in economics.) say is the true indebtedness of the USA. .

Professor Laurence Kotlikoff discusses The Inform Act and the true size of the American Debt. "The country is in the worst shape than Detroit, it is basically bankrupt." China knows it and buys record amount of Gold this year.

Congress, to use these accounting methods to evaluate major proposed changes in fiscal legislation.

https://www.youtube.com/watch?v=S9FOfWKbhjQ&feature=player_embedded

(The INFORM ACT requires the Congressional Budget Office (CBO), the General Accountability Office (GAO), and the Office of Management and Budget (OMB) to do fiscal gap accounting and generational accounting on an annual basis )

Edited January 7, 2014 by midas

[mccw]

They are working out those numbers as savings from lowering rates from 4.8 to around 1%. Where as the figures I am talking about take in to account the fact that even a large part of that one percent due is actually net zero cost.

QE buys government debt/ bonds, which expand and pay off old debt. The new QE derived debt has the interest circled back to the tresurey/ government cost is net zero ie the debt has been retired/ paid off; where as the old debt/ non QE debt cost interest. Sent from my iPhone using Thaivisa Connect Thailand mobile app

but specifically where did you get the 30 to 40% figures from?

Daniel Lieberman series& the "stealth mega inflation trend"Both put the write off at around 30-40%Ie UK actual debt needing servicing is under 50% of GDPSent from my iPhone using Thaivisa Connect Thailand mobile app

McKinsey Global Institute suggests the possible savings from QE fall well short of your 30 to 40% figures? Study: Quantitative easing has saved US $1 trillion in debt http://washingtonexaminer.com/study-quantitative-easing-has-saved-us-1-trillion-in-debt/article/2539130

Sent from my iPhone using Thaivisa Connect Thailand mobile app

[manarak]

Posted Today, 06:01

senile Bettflucht?

i'm getting up at 0400hrs. and that since 36 years, weekdays and holidays, summer and winter, rain or shine, dark or bright.

I was just teasing but 04:00 AM, gosh - that's earlier than I sometimes go to sleep!

[mccw]

The main risk now as I see it is not the debt and banking system collapse but inflation / cost of living rise while wages remain stagnant, the minor austerity in US & UK has just been for show basically and to check that inflation rather just creating a load of money and carry on as if nothing happened, politically not really tenable either- smoke and mirrors.

But the problem as I see it is the dilution of money and so the potential that remaining debts on a household level become unaffordable and defaults rise bit by bit eating away the balance sheets of banks and hurting consumer spending and businesses, tax receipts, along with the western demographic problem accelerating, which I think will lead to further money creation being needed down the line and through back doors, which in turn exacerbates the dilution of money. So we have a slow feed back loop to mass reductions in western living standards rather than a quick banking or currency crises.

Where it ends I don't know.

Maybe technology will save us- like solar power becoming so cheep we enter a new cheap energy based industrial revolution of 3D printed products of infinite individuality; a customised era of new individual manufacturing to replace this era of mass manufacturing and production line - but what that could do to jobs and the economy would be huge- 50years or so massive changes, entirely new dimensions possible. Or maybe we stag-flate back to past socio-economic norms of an elite asset owning class and a majority of poor- the tax systems as they stand in the west basically push the middle classes down so with out some change to boost wages simply passing on assets won't help because of the inheritance taxes, capital gains taxes etc.

The second scenario is in motion; while the tech saviour has yet to materialise, but is possible.

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[mccw]

Either way, holding physical assets is still the safty way- which is what I thought before also based on currency crises/ banking collapse risk scenario anyway- so my strategy hasn't change just my views on what's going on.

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[midas]

The main risk now as I see it is not the debt and banking system collapse but inflation / cost of living rise while wages remain stagnant, the minor austerity in US & UK has just been for show basically and to check that inflation rather just creating a load of money and carry on as if nothing happened, politically not really tenable either- smoke and mirrors. But the problem as I see it is the dilution of money and so the potential that remaining debts on a household level become unaffordable and defaults rise bit by bit eating away the balance sheets of banks and hurting consumer spending and businesses, tax receipts, along with the western demographic problem accelerating, which I think will lead to further money creation being needed down the line and through back doors, which in turn exacerbates the dilution of money. So we have a slow feed back loop to mass reductions in western living standards rather than a quick banking or currency crises. Where it ends I don't know. Maybe technology will save us- like solar power becoming so cheep we enter a new cheap energy based industrial revolution of 3D printed products of infinite individuality; a customised era of new individual manufacturing to replace this era of mass manufacturing and production line - but what that could do to jobs and the economy would be huge- 50years or so massive changes, entirely new dimensions possible. Or maybe we stag-flate back to past socio-economic norms of an elite asset owning class and a majority of poor- the tax systems as they stand in the west basically push the middle classes down so with out some change to boost wages simply passing on assets won't help because of the inheritance taxes, capital gains taxes etc. The second scenario is in motion; while the tech saviour has yet to materialise, but is possible. Sent from my iPhone using Thaivisa Connect Thailand mobile app

interesting........

You dont consider the main risk now as being the debt and banking system collapse......... while Professor Kotlikoff warns that by expressing their concerns to Senators and Congressmen on a bipartisan basis “ virtually the entire economics profession is sending the equivalent of the letter Albert Einstein wrote to Roosevelt warning of a potential nuclear threat from Germany” ( from his interview )

Pretty startling difference of opinions there.

Edited January 7, 2014 by midas

[Naam]

Posted Today, 06:01

senile Bettflucht?

i'm getting up at 0400hrs. and that since 36 years, weekdays and holidays, summer and winter, rain or shine, dark or bright.

I was just teasing but 04:00 AM, gosh - that's earlier than I sometimes go to sleep!

urly burd katches ze wurm

[Naam]

Eurozone periphery’s borrowing costs tumble

Borrowing costs for the eurozone’s crisis-hit countries tumbled on Tuesday after a surge in investor demand for Irish government bonds allowed Dublin to easily raise almost half its funding target for this year.

Yields on government debt, which move inversely with prices, fell sharply in Spain, Portugal and Greece as well as Ireland after investors placed €14bn of orders in an offer of 10-year Irish bonds.

http://www.ft.com/intl/cms/s/0/81243b24-7780-11e3-807e-00144feabdc0.html

[mccw]

"Italy is looking sick today.

According to stats that have just come out, the unemployment rate has risen to a 37-year high of 12.7% in November.

Youth unemployment jumped from 41.4% in October to 41.6% in November."

-

Biz insider app

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[SheungWan]

"Italy is looking sick today. According to stats that have just come out, the unemployment rate has risen to a 37-year high of 12.7% in November. Youth unemployment jumped from 41.4% in October to 41.6% in November." - Biz insider app Sent from my iPhone using Thaivisa Connect Thailand mobile app

During the last 12 months Italy government bond yields have declined.

[midas]

"Italy is looking sick today. According to stats that have just come out, the unemployment rate has risen to a 37-year high of 12.7% in November. Youth unemployment jumped from 41.4% in October to 41.6% in November." - Biz insider app Sent from my iPhone using Thaivisa Connect Thailand mobile app

Spain has risen to 55% and they expect an even higher unemployment rate

We haven't seen the bottom yet and employment will continue falling in the first quarter," said Jose Luis Martinez, strategist at investment bank Citigroup.

The figures, from the National Statistics Institute, mean Spain's jobless rate is twice the European Union average

.

http://www.bbc.co.uk/news/business-21180371

[SheungWan]

Spain

During the last 12 months Spanish government bond yields have declined.

[midas]

"Italy is looking sick today. According to stats that have just come out, the unemployment rate has risen to a 37-year high of 12.7% in November. Youth unemployment jumped from 41.4% in October to 41.6% in November." - Biz insider app Sent from my iPhone using Thaivisa Connect Thailand mobile app

During the last 12 months Italy government bond yields have declined.

Big deal….. So what? How many people does that benefit and how exactly does it fix the country's woes?

Italy’s president fears violent insurrection in 2014 but offers no remedy

His latest speech is a veritable Jeremiad. Thousands of companies are on the “brink of collapse”. Great masses of the working people are on the dole or at risk of losing their jobs. Very high rates of youth unemployment (41pc) are leading to dangerous alienation.

“The recession is still biting hard, and there is a pervasive sense that it will be difficult to escape, to find a way back to full growth,” he said.

http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/100026297/italys-president-fears-violent-insurrection-in-2014-but-offers-no-remedy/

Edited January 8, 2014 by midas

[midas]

Spain

During the last 12 months Spanish government bond yields have declined.

Foreigners’ renewed appetite for Spanish sovereign debt pushed the average yield paid by the Treasury last year down to 2.45 percent, half a percentage point below the levels of 2012, and the second-lowest level after the 2.15 percent paid in 2009.

However, the impact of this in savings for the government in terms of interest payments was offset by the absolute increase in outstanding public debt to close to one trillion euros

http://elpais.com/elpais/2014/01/07/inenglish/1389095292_478848.html

[mccw]

Just what I was talking about. Sentiments power over the grim facts.

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