The Slow Burn

Discussion in 'Financial Cents' started by melbo, May 13, 2007.

  1. Jonas Parker

    Jonas Parker Hooligan

    Bear, if you ever wander into Deep East Texas, stop on by. If the sun's over the yardarm, the bar is open!
  2. ghrit

    ghrit Bad company Administrator Founding Member

    "That, me lad," as the old Irish uncle (a Driscoll, yet) once said, "is on plan, after I finish this beer." Cue me when you hit the west (or east, since that is where I am) coast and I'll be there.
  3. ghrit

    ghrit Bad company Administrator Founding Member

    Jonas said, and I respond:

    "As far as your question about the suit, if you were to go up to a "guy " on the street and offer him a suit for a gold coin, the "guy" (with any street smarts) wouldn't buy a suit from a street hustler, and probably wouldn't have a gold coin in his pocket to pay you anyway.
    So that may well be, but all else equal, the trade is the point. Granted, the example was a bit simplistic, but if I have a gold coin and need a suit (remember, this is SHTF material) I might go for it with appropriate precautions and a 45. There are wolves and sheep on the street.
    I go to a reputable store for my suits, and the salesmen wouldn't know the value of or what to do with a gold coin if I tried to pay them with it.
    In this day and age, he has no need to know. As a probably perfectly smart merchant, he'll learn the value of trading or bartering stock right quickly if he has to, or he won't be a merchant long.
    Look for increasing sophistication among the survivors as the economic meltdown of the currency in this country continues, however."

    Yup. You see the basic premise. Welcome on the skeptic's train. The tribe of believers is growing.
  4. Bear

    Bear Monkey+++ Founding Member Iron Monkey

    Cool!... My sister is in The Great State of Texas!.... next time I visit... I'll let you know...[beer]
  5. Bear

    Bear Monkey+++ Founding Member Iron Monkey

    I'll make sure I look you up... Last time I was visited a buddy in Philadelphia was years ago... nice drive through Amish country and up to New York.... that was many many years ago...
    Same here if you ever manage to "swim the big pond" and make it over here[beer]
  6. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Enough love and [beer] to each other. Let's get back to the demise of the USA and the thread we call "Slow Burn".

    [beat]on the head to all the [afro] (hippie love children!)

  7. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    <big class="pr">

    Greenspan: Euro Gains As Reserve Choice
    Monday September 17, 8:07 am ET <table border="0" cellpadding="0" cellspacing="0" height="4"><tbody><tr><td height="4">
    </td></tr></tbody></table>Report: Former Fed Boss Says Euro Could Replace U.S. Dollar As Favored Reserve Currency FRANKFURT, Germany (AP) -- Former U.S. Federal Reserve chairman Alan Greenspan said it is possible that the euro could replace the U.S. dollar as the reserve currency of choice.According to an advance copy of an interview to be published in Thursday's edition of the German magazine Stern, Greenspan said that the dollar is still slightly ahead in its use as a reserve currency, but added that "it doesn't have all that much of an advantage" anymore.
    The euro has been soaring against the U.S. currency in recent weeks, hitting all-time high of $1.3927 last week as the dollar has fallen on turbulent market conditions stemming from the ongoing U.S. subprime crisis. The Fed meets this week and is expected to lower its benchmark interest rate from the current 5.25 percent.
    Greenspan said that at the end of 2006, some 25 percent of all currency reserves held by central banks were held in euros, compared to 66 percent for the U.S. dollar.
    In terms of being used as a payment for cross-border transactions, the euro is trailing the dollar only slightly with 39 percent to 43 percent.
    Greenspan said the European Central Bank has become "a serious factor in the global economy."
    He said the increased usage of the euro as a reserve currency has led to a lowering of interest rates in the euro zone, which has "without any doubt contributed to the current economic growth."

    Thanks for ****ing US over Alan you cacksucking central banking, fiat money, foreign bank whore of a man!
  8. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    reenspan alert on US house prices

    By Krishna Guha in Washington
    Published: September 16 2007 19:40 | Last updated: September 17 2007 00:00
    US house prices are likely to fall significantly from their present levels, Alan Greenspan has told the Financial Times, admitting that there was a bubble in the US housing market. (Partly created by your damn policies over your 18 years at the helm!)

    In an interview ahead of the release on Monday of his widely-anticipated memoirs, the former chairman of the Federal Reserve said the decline in house prices “is going to be larger than most people expect”.
    But Mr Greenspan said that his successors at the Fed – who meet on Tuesday to set interest rates – would have to be careful not to ease rates too aggressively, because the risk of an “inflationary resurgence” was greater now than when he was Fed chief.
    Mr Greenspan said he would expect “as a minimum, large single-digit” percentage declines in US house prices from peak to trough and added that he would not be surprised if the fall was “in double digits”.
    Fed expected to cut rates

    The US Federal Reserve is expected to ease monetary policy this week, with its main interest rate expected to be cut by up to half a point on Tuesday. Economists differ about whether the US Fed Funds rate will be cut by 0.25 per cent or 0.5 per cent from the current rate of 5.25 per cent. The Bank of Japan is likely to keep rates on hold at 0.5 per cent on Wednesday.
    In the US, the regulator for US government-backed mortgage lenders Fannie Mae and Freddie Mac said rescue loans were not being arranged quickly enough for homeowners facing foreclosure.
    European Union finance ministers and central bankers also agreed on a set of principles for bailing out crossborder financial institutions, in the wake of the Bank of England’s rescue of UK mortgage lender Northern Rock last week.

    Mr Greenspan said house prices were probably already down about 2-3 per cent from their peak on a national level.
    However, he cautioned that it was very difficult to predict how large the ultimate decline would be.
    As Fed chairman, Mr Greenspan had talked about “froth” in the housing sector, but never said there was a bubble in the market as a whole. His successor Ben Bernanke has also avoided the word “bubble”.
    But Mr Greenspan told the FT that froth “was a euphemism for a bubble”.
    He said he still thought froth – a collection of bubbles – was a better description, because of the variation in house price appreciation in different local housing markets. But he said “all the froth bubbles add up to an aggregate bubble”.
    The former Fed chairman said the current turmoil in financial markets was “an accident waiting to happen”.
    He said the price of risk had fallen to unsustainably low levels beforehand, with investors addicted to asset-backed securities that offered some additional yield over Treasury bonds as if they were “cocaine”. Mr Greenspan said this demand induced the big increase in the origination of subprime mortgages by mortgage brokers.
    The rise in defaults on subprime mortgages was only the trigger that set off a broad re-evaluation of risk, he argued.
    Mr Greenspan said the off-balance sheet investment vehicles that issued much of the asset-backed commercial paper represented a “savings and loans disaster waiting to happen” because of the mismatch between their assets and liabilities. Mr Greenspan thought the issuance of asset-backed commercial paper ”is probably not going to get back to where it was.”
    They had “five-year maturity assets financed with 30-day commercial paper”, he said.
    The former Fed chairman said collateralised debt obligations – securities that slice up and repackage loans to meet the risk-appetite of different investors – “will never get back to the levels and structures that they were, because now everybody knows you cannot price them”.
    He added that in an innovative financial market “there will always be products that fail”.
    However, he said he believed that credit default swaps were “here to stay” and had demonstrated their capacity to diversify risk.
    Mr Greenspan said the flexibility of the US economy would help it cope with the spillovers from the financial crisis, but said the prospect of a negative wealth effect from housing meant this crisis was “trickier” to manage than financial crises that did not directly touch consumers.
    In his memoirs, Mr Greenspan, a lifelong Republican, criticises his party for abandoning its small-government principles, and warns that the trade-off between inflation and growth is likely to worsen.
  9. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Wonder when this is going to start hitting the US banking system!

    Bank seeks takeover as savers push it to brink

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    <!-- Print Author name associated with the article --><!-- Print Author name from By Line associated with the article --> Gary Duncan, Economics Editor, Greg Hurst and Siobhan Kennedy

    <!-- END: Module - M24 Article Headline with landscape image (d) --><!-- BEGIN: Module - Main Article --><!-- Check the Article Type and display accordingly--><!-- Print Author image associated with the Author--><!-- Print the body of the article--><!-- Pagination -->Full coverage of Northern Rock
    An attempt to organise a takeover of Northern Rock was underway last night as regulators, government and bank officials sought to rescue Britain’s fifth largest mortgage lender before the panic among its customers leaves it beyond salvage.
    The crisis-hit lender, which was thrown a lifeline by the Bank of England last week, was braced for a further stampede this morning by nervous savers desperate to withdraw their money in the worst run on a British bank for decades.
    Last night, however, the Bank of England boosted hopes that a leading banking group might be persuaded to ride to Northern Rock’s rescue.
    The Bank made clear that the loan facility which it has given to Northern Rock – allowing it to continue to remain afloat despite a cash crunch that has left it short of funds – will remain available to any institution that buys the lender.
    The unexpected move by the Bank could help to pave the way for a takeover that will save Northern Rock and prevent a further escalation of the crisis.
    The siege of Northern Rock’s branches by thousands of its 1.4 million customers nationwide was expected to continue this morning despite new pleas for calm led by Alistair Darling, the Chancellor, and Sir Callum McCarthy, chairman of the Financial Services Authority (FSA).
    Between £1.5 billion and £2 billion was pulled out of Northern Rock on Friday and Saturday after news broke of the Bank of England’s intervention. Online withdrawals continued over the weekend in the first known instance of an electronic bank run.
    Experts gave warning that the bank may ultimately see withdrawals of as much as £12 billion – half of its total deposits – as customers scramble to secure their funds. The rush will pile pressure on the bank’s management, as well as officials at the Treasury, Bank of England and FSA, to find a quick solution.
    David Cameron raised the stakes yesterday after the Chancellor had defended the handling of Northern Rock’s plight by the Government and the Bank of England. The Conservative leader used the crisis to attack the Government’s economic record and blamed Gordon Brown for fostering a culture of reckless lending. Mr Cameron will follow up his attack in a speech today at the offices of KPMG, the audit, tax and financial advisers, in Central London.
    Last night’s surprise statement from the Bank on the status of its loan guarantee lifeline will boost hopes that a rescue may be easier to complete than many in the City had believed. “We have agreed that any bidder would be able to take over this facility for any expired term that it left,” the Bank said.
    Until last night, the hardline stance taken by Mervyn King, Governor of the Bank of England, over any move that might be seen as bailing out institutions that have been reckless had convinced key City players that Northern Rock’s lifeline would disappear as soon as it was taken over. Confusion was fuelled by the news that a potential eleventh-hour takeover by Lloyds TSB had foundered after the Bank of England said that it would not provide interim support for Northern Rock.
    A leading City source said that Northern Rock had not been able to enter talks because it was assumed that the Bank would remove its support as soon as a takeover was agreed. The source added: “They [Northern Rock] have had lots of calls from all over the world . . . But before they can do anything, they have to sort out the inheritability of the credit line.”
    Last night the Bank insisted that it had never ruled out a transfer of the guarantees that it has given to Northern Rock to a potential buyer, and said that its statement was intended only to clarify the situation. Lloyds TSB remains a favourite candidate to lead a takeover although last night the bank refused to comment.
    Official sources played down weekend reports that Northern Rock might be broken up and its mortgage accounts shared out among other institutions. Speculation that the Newcastle-based bank could quickly become insolvent if its situation further deteriorates was also played down. “If we believed that Northern Rock was not solvent, we would not have allowed it to remain open for business,” Sir Callum said.
  10. ghrit

    ghrit Bad company Administrator Founding Member

    Greenspan also said that there is a recession coming, and while he hedged a bit, he said it won't be as bad as some think. The bank runs have started in a very small way, nervous nellies are starting a small time shift from the banks to the mattresses, I think.
  11. Tango3

    Tango3 Aimless wanderer

  12. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    rom The Times September 18, 2007
    Prepare for prolonged turmoil, says US Treasury Secretary

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    <!-- END: Module - M24 Article Headline with no image --><!-- BEGIN: Module - Main Article --><!-- Check the Article Type and display accordingly--><!-- Print Author image associated with the Author--><!-- Print the body of the article--><!-- Pagination -->Investors should brace themselves for a prolonged period of market turmoil, Henry Paulson, the US Treasury Secretary, said yesterday as he held emergency meetings with the Chancellor and the French Finance Minister.
    Mr Paulson flew to London to discuss the financial crisis with Alistair Darling as markets remained in the grip of anxieties over the continuing toll from the global credit squeeze.
    Speaking after talks with his counterparts in France and Britain, Mr Paulson insisted that the global economy remained strong despite the seizures in interbank lending, but admitted that the American economy would take a knock from the turmoil.
    After meeting Christine Lagarde, the French Finance Minister, Mr Paulson said: “It will take a while to work through the turbulence in capital markets.”
    Mr Paulson acknowledged that bad lending practices were to blame for the present financial crisis, which has been triggered by the high number of American homeowners falling into arrears on their mortgages.
    However, he added that “the whole world, including the US, has benefited from . . . credit availability”.
    Ms Lagarde had called for new rules to prevent a repeat of the credit turmoil, but Mr Paulson argued that “we want to make sure we don’t rush to judgments”.
    Mr Paulson ruled out an immediate recession, saying that the United States’s economy would continue to grow in the second half of the year, despite the country’s housing slump.
    The Treasury Secretary said that the credit crunch was the result of bad lending practices rather than any problems in the real economy. “We are already seeing modest reductions in the strains in some markets,” he said.
    Mr Paulson described his country’s economy as “diverse” and “healthy”, with inflation controlled and growth good, and expressed confidence that growth would continue in the second half of the year. He said that the decline in US employment in August, the first drop in four years, had not been a surprise, “given where we are in the economic expansion”.
    However, the financial turbulence will “extract some penalty” from the US economy, he said.
    Turbulence in capital markets across the globe and the slump in US property prices are expected to force the hand of the US Federal Reserve Bank today to cut interest rates by at least a quarter of a percentage point, to avert the chance of a US recession.
    Some analysts believe that the Fed will bow to pressure from financial institutions and make a half-point cut. (Hence the $60 per oz increase in gold over the past 10 days!)

    Mr Paulson declined to comment on the Fed’s meeting, saying that he had “great confidence” in its Chairman, Ben (Helicopter) Bernanke.
  13. melbo

    melbo Hunter Gatherer Administrator Founding Member

    gold hit $727. I'll run and hide soon, bad mojo
  14. Bear

    Bear Monkey+++ Founding Member Iron Monkey

    But it's still not really worth anything....

    "because you can't eat it"

  15. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    <big class="pr">AP</big>
    Congress Asked to Lift Debt Ceiling

    Wednesday September 19, 11:28 am ET
    By Martin Crutsinger, AP Economics Writer <table border="0" cellpadding="0" cellspacing="0" height="4"><tbody><tr><td height="4">
    </td></tr></tbody></table>Paulson Tells Congress the Current Debt Ceiling Will Be Hit on Oct. 1 WASHINGTON (AP) -- Treasury Secretary Henry Paulson told Congress on Wednesday that the federal government will hit the current debt ceiling on Oct. 1.He urged quick action to increase the limit, saying it was essential to protect the "full faith and credit" of the country, especially at a time of financial market turmoil.
    The current debt limit is $8.965 trillion. Unless Congress votes to raise that ceiling, the country would be unable to borrow more money to keep the government operating and to pay debt obligations coming due. The United States has never defaulted on a debt payment but the decision on whether to raise the debt ceiling often sparks a prolonged political battle in Congress.
    In his letter to congressional leaders, Paulson said that according to data now available, the Treasury expects to hit the current debt ceiling on Oct. 1 -- the first day of the new federal budget year. However, that projection does not take into account maneuvers the government often has to employ of withdrawing investments from certain trust funds to create room for extra borrowing until Congress finally approves a debt increase.
    "The full faith and credit of the United States, to which we all remain committed, is a national asset and a cornerstone of the global financial system," Paulson said in his letter. "In light of current developments in financial markets, which would be exacerbated by uncertainty in the Treasuries market, I urge the Senate to pass the legislation reported by the Finance Committee to increase the debt limit as soon as possible."
    The Senate Finance Committee earlier this month approved increasing the limit on the national debt to $9.82 trillion. That boost of $850 billion would be the fifth increase in the government's borrowing limit since President Bush took office in 2001.
    The national debt is the total accumulation of annual budget deficits, which must be financed with borrowed money.
    Democrats blame Bush's tax cuts and the war in Iraq for pushing the debt to record levels. Republicans defend the tax cuts, saying the deficit is now on a downward trajectory in part because of the economic stimulus provided by the tax cuts.
    The House approved an increase in the debt limit in May when it adopted the annual congressional budget resolution, but the full Senate has yet to act to raise the limit.

  16. Jonas Parker

    Jonas Parker Hooligan

    Drudge Reported today that the latest Zogby poll showed congress' approval rating at 11%. I'm amazed that 11% of the citizens in the U.S. are so stupid as to approve of congress...
  17. ghrit

    ghrit Bad company Administrator Founding Member

  18. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    ghrit, you are right on all your accounts. The reality is our politicians are addicted to spending and then blaming the other party for the problems. They are addicted to opium, but Other Peoples' Money. Its so easy to spend...let's do it for the children.

    Only 60 Trillion of debt when you take into account all the unfunded future entitlements. What's another trillion for the children to pay off after the next great depression.
  19. Clyde

    Clyde Jet Set Tourer Administrator Founding Member

    Fears of dollar collapse as Saudis take fright

    By Ambrose Evans-Pritchard, International Business Editor
    Last Updated: 8:39am BST 20/09/2007

    <!--NO VIEW-->
    Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.
    <table><tbody><tr><td>China threatens 'nuclear option' of dollar sales
    <table align="center" border="0" cellpadding="0" cellspacing="0" hspace="0" width="600"><tbody><tr><td width="600"><center>[​IMG]</center></td></tr><tr><td class="caption"><center>Ben Bernanke has placed the dollar in a dangerous situation, say analysts

    </center></td></tr></tbody></table>"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.
    "Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.
    The Saudi central bank said today that it would take "appropriate measures" to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.
    As a close ally of the US, Riyadh has so far tried to stick to the peg, but the link is now destabilising its own economy.
    <script src="" language="javascript"></script>
    The Fed's dramatic half point cut to 4.75pc yesterday has already caused a plunge in the world dollar index to a fifteen year low, touching with weakest level ever against the mighty euro at just under $1.40.
    There is now a growing danger that global investors will start to shun the US bond markets. The latest US government data on foreign holdings released this week show a collapse in purchases of US bonds from $97bn to just $19bn in July, with outright net sales of US Treasuries.
    The danger is that this could now accelerate as the yield gap between the United States and the rest of the world narrows rapidly, leaving America starved of foreign capital flows needed to cover its current account deficit - expected to reach $850bn this year, or 6.5pc of GDP.
    Mr Redeker said foreign investors have been gradually pulling out of the long-term US debt markets, leaving the dollar dependent on short-term funding. Foreigners have funded 25pc to 30pc of America's credit and short-term paper markets over the last two years.
    "They were willing to provide the money when rates were paying nicely, but why bear the risk in these dramatically changed circumstances? We think that a fall in dollar to $1.50 against the euro is not out of the question at all by the first quarter of 2008," he said.
    "This is nothing like the situation in 1998 when the crisis was in Asia, but the US was booming. This time the US itself is the problem," he said.
    Mr Redeker said the biggest danger for the dollar is that falling US rates will at some point trigger a reversal yen "carry trade", causing massive flows from the US back to Japan.
    Jim Rogers, the commodity king and former partner of George Soros, said the Federal Reserve was playing with fire by cutting rates so aggressively at a time when the dollar was already under pressure.
    The risk is that flight from US bonds could push up the long-term yields that form the base price of credit for most mortgages, the driving the property market into even deeper crisis.
    "If Ben Bernanke starts running those printing presses even faster than he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems," he said.
    The Federal Reserve, however, clearly calculates the risk of a sudden downturn is now so great that the it outweighs dangers of a dollar slide.
    Former Fed chief Alan Greenspan said this week that house prices may fall by "double digits" as the subprime crisis bites harder, prompting households to cut back sharply on spending.
    For Saudi Arabia, the dollar peg has clearly become a liability. Inflation has risen to 4pc and the M3 broad money supply is surging at 22pc.
    The pressures are even worse in other parts of the Gulf. The United Arab Emirates now faces inflation of 9.3pc, a 20-year high. In Qatar it has reached 13pc.
    Kuwait became the first of the oil sheikhdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth.
  20. Jonas Parker

    Jonas Parker Hooligan

    And look at PMs climb... silver 13.45 up .52, gold 737.40 up 16.70 as of this post. The slow burn is picking up speed, maybe?
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