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December 16, 2008



"If that much money is left in the monetary base, it would be extremely inflationary.”
This guy is a flaming genius. I guess adding $2 trillion to a $14 trillion economy would be about 14.7% inflation.

Gabriel Sutherland

I guess we can cancel "Deal or No Deal" now. It's replacement is right around the corner.

"Want Some Money"


If we assume that Obama wants to turn the economy around--a big assumption--how on earth is he ever going to get the independent thinkers in the mainstream media to talk UP the economy. It's been eight years since they've done that, so I don't know if they can remember how.

Rick Ballard

"I guess adding $2 trillion to a $14 trillion economy would be about 14.7% inflation."

Velocity would have to come off of zero for that to be true. It depends upon how adroitly Bernanke twists the spigot when velocity picks up. The dough can come out as quickly as it is flowing in.

What will you save on your monthly mortgage payment if you refi at 4%? More importantly, will you spend the difference or save it?


Cutting rates further is like pushing on a rope. It will have little effect. Stimulating the economy will probably lead to serious inflation once the economy gets running again.

The best solution might be to go through a recession, and come out the other side. But no politician is willing to admit that. So, short term solutions will lead to long term problems, like they always have.

Danube of Thought

On a somewhat related topic, LUN for an informative piece on why bankruptcy is the best route for the big three. But it's not the best route for the UAW, so the congress will not allow it to happen (just yet).


How about negative rates? Pay me to get a loan!

Rick Ballard


That's a nice synopsis by Zywicki. I think the President will allow just enough money for ZombieMotors to limp into the new Congress - where McConnell will magnanimously allow the Dems to use their majority to pass something which is opposed by a supermajority of the electorate. The electorate will then show its disapproval by staying out of ZombieMotors showrooms in sufficient numbers to get process going again in record time.



"I guess we can cancel "Deal or No Deal" now."

Never thought I'd sing the praises of booting people off of the "Survival" island.



I do think Obama wants to turn the economy around, because he knows he needs big money to implement those grand visions. As for talking the economy UP, I'm not sure there are enough "independent thinkers" to tip the scales. For the New York Times and their ilk, it's really just a practical matter of rearranging paragraphs in the coverage, and putting good news at the top for a change. The headline writers are probably bored stiff after coming up with gloom and doom for years and will enthusiastically embrace their cheery new mandate.

E. Nigma

Well, of course Bernanke can slow the growth of the money supply once the economy "takes off" again, but what if it doesn't "take off". Eh?

Today's word is: Stagflation.

Stagnant growth, with inflation. We all get poorer. The same "net" effect would occur if the economy was allowed to follow a natural supply and demand course, with growth to follow, but instead we will be treated to too much cheap money chasing too few goods and services.


Bush declares that he does not believe in free markets. Just now. Did he ever? For a minute? Well the rest of you fuckers don't either. So you should be happy giving each other blow jobs. Or maybe you can marry into the Koch family. Fuck the girls and fuck the guys. Go Bush! Go RINOs! Go bailout. Go motherfuckers.


For those that thought TCO was too stupid to learn anything...you were wrong...he has learned plenty from the Mr. and Mrs. Blago school of wanton cursing.


I heard TCO is really Mrs. Blago.


I'm going to hang this bailout around your necks like a burning South African necklace. You idjits remind me of the dotcom and Enron lovers.

Danube of Thought

I have no doubt that O wants to turn the economy around. What troubles me quite a bit is that he seems receptive to some of the daffier prescritions for "saving the planet," which will place a huge albatross around the nation's neck. He also seems receptive to the idea of Pelosi Motors, with all its predictably catastrophic consequences.

My hope is that he is smart enough to know not to do any of thus crap, in which cas it will be fun to see him dancing around his own amply recorded rhetoric.


TCO is "colorful".

He's also right on the 'effin money! Go TCO!

BTW, Where's my check dammit!


Charles Krauthammer on tonights Fox/Panel urged the President just that....$2B to carry the auto makers into the arms of the Democratic Congress.
I have not heard what onus a company's board of directors bears in this situation.
Does TCO get to rape them also?


for some comic relief at al gore's expense...


Bruce in Topeka, Kansas

The rate has been cut to such low levels because there are no "Decent paying jobs" left in the United States anymore. The Middle class is gone, and this is where the CEO's made their money from. With the Middle class having enough money to spend,and still live comfortably, we were buying cars, tv sets, washer/dryer combos, lawn mowers....now we cannot afford a car, so we live close to a bus route to take us to our menial job, we stop at the grocery store and get what food we can afford for our families, we don't go to the movies because we have no transportation, or money, because all the money is sitting at the top, overseas, and in the drug dealers hands. C'MON AMERICA...WAKE UP!


I think whoever is selling the dollar doesn't much like all these stimulation manuevers. We're going to wind up with a wrecked currency here pretty quick.


They are going to lay off a bunch of those federal employees, except for the people who are inheriting seats and jobs.

America is going broke and the federal employees are making millions. They are laughing at how stupid Americans are.

Soylent Red

The Middle class is gone

Bullshit. I, everyone I know, and all of my family are middle class. I live in a neighborhood, nestled in a city of middle class people.

I was through Topeka not all that long ago. I can assure you that there is indeed a sizable middle class there.

Even that noted Republican big money propaganda outlet, Time magazine, won't say the middle class is gone.



Well...you little JOMers were for the bailout. You'd rather have your babies die than admit you were wrong.

Charlie (Colorado)

“At some point, and without knowing the timing, the Fed is going to have to destroy all that money it is creating,” said Alan Blinder, a professor of economics at Princeton...

I'm not clear that's true: given that deflation right now is running at something like 18 percent a year (or, ex food and energy, only a measly 2-3 percent a year) it would appear that there's been a good bit of money destroyed already. In fact, hmmm, to a first approximation, it would appear something like, well, 14 percent.

As someone was explaining on the radio this evening, in teh stagflation days, we had slightly positive to zero growth and massive inflation; now we've got negative grown and massive *inverse* inflation. It shouldn't be too much of a surprise that was got us into the first situation would be what's needed to come out of the second.

Charlie (Colorado)

TCO must be on the wagon, no coprophagy yet.


I wonder if TCO will really get ticked off when the ONE starts spending not billions for car companies but trillions in entitlements and socialized medicine and all kinds of goodies for the special interests that elected him; the AFL-CIO, the NEA, the trial lawyers, the global warmers, etc. He is wasting his venting on peanuts here.

Danube of Thought

My vote is that this imbecile TCO get kicked off this site. He is utterly irrational, hasn't an idea in his skull, has a penchant for making assertions contrary to well-known fact, is incapable of responding to anyone or anything, and is a gross vulgarian.

TM, can you launch this pathetic fool into some other universe?


I did not have inappropriate contact with that bailout.


Thank you, DoT! You expressed my sentiments perfectly. There is no point to TCO - except as you stated - to be gross(ly) vulgarian.

A typical Liberal. Nothing at all upstairs, and always trying to compensate for a lack downstairs.

Rick Ballard

The Madoff scandal is getting a little deeper.

“Credible and specific allegations” were made to SEC staff going back to at least 1999, Cox said today in a statement. He asked the agency’s inspector general to lead a “full and immediate review” of the past claims against Madoff.

“I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them,” Cox said.

Now that's not something you hear every day from the head of the SEC.


I second DoT and Centralcal!

DoT, I think you missed most of his profane and vulgar remarks while you were away. He really is worse than you think. We try and ignore him but it is way past time for him to go.


I'm going to hang this bailout around your necks like a burning South African necklace. You idjits remind me of the dotcom and Enron lovers.

Wasn't it the DoJ of Demon Bush that got rid of Enron?


You fucking simpleton. That it not the point. The point is recognition of fundamental economic realities. Not sucking Bush's dick because he has an R next to his name.


Thank you for proving my point.


Oh, silly me. I thought the point was that you make no sense whatsoever.

I must have been mistaken.


Here's an interesting piece on GM and bankruptcy.



It's a meta argument, Ann, loveya.



LUN is a video and transcript by ABC News where an informant claims Blago was a bookie and paid off the mob before he was guv.

C.R. posted this on another thread.


I bet TCO was always a big government proponent and liberal hack who is now bleating like a stuck pig over small wounds inflicted by big bad Bush, not knowing that Obama is going to gut him like a sacrificial lamb and serve his head on a platter for Rev. Wright exhibit at service.


"The point is recognition of fundamental economic realities."

Since TCO has no notion of either economics or reality, this must be a fundamental brain teaser for him.

Rick Ballard


That's an excellent piece. It will come out something like that but GM is as dead as LTV was when it went Chapter 11. The UAW carries less political weight than the Steelworkers did when they broke the big steel companies.

Ford may survive - especially after GM folds. The unions sure are good at killing or choking industries. They've finished off American shipping, strangled American railroads, forced the big steel plants to Korea and now are polishing off the automakers. You can sure see the progressive roots under the poisonous trunk and branches.

Danube of Thought

That clown ruins this site for me, and no doubt for others, and maybe that is his purpose. He's like a cockroach: it's not so much what he picks up and carries off, it's what he crawls into and messes up.

I thought there might be an arrangement whereby no one would acknowledge his crap, but there's apparently not enough solidarity on that score to make it work. I acknowledge that I am among the earlier ones to succumb to the tempation to respond.

So long as he is here the site is polluted, and it isn't much pleasure to try to engage--we just get hijacked by the lowest imaginable common denominator. Not fun anymore.

Gotta go.


re: Arrangement. If we spot Clarice on the horizon and it looks like she's packin', then we all clear out.

Speaking for myself, I kinda like TCO. When I see him, I think, "Oh, look. A pony!" All cute 'n' cuddly.

Soylent Red

Who is this TCO character anyway? I Greasemonkeyed him weeks ago.

DoT: I suggest you do the same.


DoT -- get TrollBlocker and the narcisolater. TCO simply disappears. And, as a bonus, all of narciso's extra carriage returns get removed as well...



Is that really DoT? Sure doesn't sound like him.. especially the "Not fun anymore"... "Gotta go".

And I have never known DoT to run off because of some small snail.

Hey, have you moved to Va yet?

Danube of Thought

Testing by Ann

Danube of Thought

Testing by Ann with no url

Soylent Red

VA move is now set back to March, by the highly efficient U.S. Army.

At least it will be spring when I get there. But it will be winter while I'm here. Net loss.

Danube of Thought

Did I ever tell you guys that I had a boss that gave me one of his "Purple Hearts" for being a loyal, hard working VP with street smarts!! LOL

I know most of my posts don't confirm it but he was right and that wasn't our DoT. :)


Oops, should of posted under me...Ann (See how easy that is...)


What is going on here?


For the longest time I haven't seen TCO, except in your mirrored frustrations. Get Greasemonkey and Troll Blocker 3.

The sin of the TCOs is that they do not contribute constructively, drive away good people who do, and skew the web experience for future historians.

Nevertheless, I appreciate TM's reluctant hand. While pistolas are for daily use to encourage people not to feed the trolls, the Eraser should be the last resort.

However, it is important to be clear: TCO performs here like a boor and an ass.


Sigh, Soylent--I'll keep the candle burning in the window a bit longer, I guess.


U.S. Dollar index down hard again this morning. At some point I hope somebody in govt gets the message. Probably not, though.



Oil's down big today to on the news that OPEC is going to cut? I'm a bit confused with the currency moves though. The sell off has been so sharp it looks more like central bank gaming than just the Fed pushing rates to zero.

Danube of Thought

"Did I ever tell you guys that I had a boss that gave me one of his "Purple Hearts" for being a loyal, hard working VP with street smarts!! LOL

"I know most of my posts don't confirm it but he was right and that wasn't our DoT. :)"

That wasn't me either. No idea what's going on here.



Do you follow Peter Schiff at all?

He's pretty much been calling for this exact thing to happen. Collapse of the dollar. It may very well be central bank manipulations, but it may not just be ours.

One big problem with his predictions though, is he sees China and Asia taking over, and, right now, they are imploding.


And now for the bad news:

The Examiner has an editoral today based on a study press-release(?) from David Walker etal. Yea, we're bankrupt. Interesting, from the press release, "the fiscal challenges posed by the rising costs of health care and retirement and near-zero household savings rate". Isn't pension contributions included as income (not savings) when calculating the savings rate? Here is the bad news from the Treasury.

And not to be out done, Politico finds a veteran from LTCM to really work his puzzler (and his book?) to make you want to buy a bottle of scotch and hide under your desk.


Oh, and the other thing that's a little disconcerting. You've got commodities, energies, the Dow, and the Dollar all down.

That doesn't feel good.


How many pensions are invested in the stock market?


DoT, was your last post yesterday at 9:39 or 11:09?

Rick Ballard

For those hand wringers concerned about hyperinflation just around the corner, here's how the Bank of Japan used interest rates, first to wring inflation out ('88-'90), then to try and halt deflation ('01-'07). The Japanese government has also "stimulated" the economy with a level of infrastructure spending that is close to unbelievable.

The "hyperinflationary result" of close to zero interest rates? Look">http://www.indexmundi.com/japan/inflation_rate_(consumer_prices).html">Look for yourself.

Hint: Those years where the line is under zero? Inflation wasn't a problem.

Oil dropped as low as 40.20 after OPECs risible announcement that they were cutting production. Cutting production is what every natural resource provider in the world is doing. It kinda follows that "lack of buyers" thingy.

Today's bubble: Gold and long treasuries. The difference between Japan and the US is demographics and habit. Our population continues to grow and not even pensioners will settle for a 2.7% 30 year yield.


Regarding the confusion of DOT's comments and the time frame--I believe Ann was having a bit of fun--or something.



Do you follow Peter Schiff at all?

Yes and no. He's been predicting Apocalypse Soon for a while, but his BRIC+commodities strategy was built on the shifting sands of US residential housing equity. And someone who finds Ron Paul somehow credible should be looked at with a skeptical eye even if he was "right" about US housing (which has spilled over to cars, credit cards, and commercial re, another "call" of his). I'll admit the depth of the crisis in US banking caught me by surprise but the idea that the US is going to go into some sort of dystopic "Mad Max" world is cartoonish and that those "Great Capitalists in China" are going to lead us to the promised land is delusional.

Collapse of the dollar.

Just a few months ago the dollar was worse off against sterling, the euro, and commodities. It should be noted that if the movement was out of the dollar rates would be going up on the 5, 10, 30, regardless of the Feds moves, and rates throughout the curve have been going down. Also, the US$ is used either as a soft or hard peg by over 70 other countries and the Fed has currency swap lines with 15 other central banks (which I think accounts for over $1 trillion of the balance sheet expansion inflation hawks have pointed out). Think of that as the US$ footprint globally-the Fed's balance sheet has gone international and the $2.5 trillion size isn't distributed only in the US ($14 Trillion economy) but around the world ($56 Trillion). The effect of it will be, even if other central bankers would like it to be different, to push interest rates down globally. The euro strategy (as some how an alternative to the dollar) will come under pressure as soverign spreads crack and the pressures in Greece spread to the other Mederterrian countries and Central Europe. The ECB will, after much talk and chin scratching, have to cut rates, probably in a more disorderly fashion than the Fed, to maintain their export industries, employment, and consumer spending.



*even if he was*-> even if Schiff were


Thanks Rich, your views are pretty similar to mine.

I think what's bugging me is not the loss of value in the dollar, but the speed of the drop.

Rick Ballard

"Isn't pension contributions included as income (not savings) when calculating the savings rate?"


Here is the BEA table for personal income. The BEA treats the net of 'Supplements to wages and salaries' (Line 6) less 'Contributions for government social insurance' (Line 24) as 'income'. Try and spend it.

"but the speed of the drop."


I'm with you there. The BoJ and the ECB better get off the dime and vacuum up some dollars. They will both lose competitive ground if they don't.


Hmmm, the dollar is back where it was about Sep, 15th.

Corn is $1.50 a bushel lower
Soybeans are $3.00 a bushel lower
Wheat is $2.00 a bushel lower
Live Cattle are $20/cwt lower.
Oil is $70 bbl lower.



I think what's bugging me is not the loss of value in the dollar, but the speed of the drop.

I'll kick the tires on that tonight, but thats why I think it is central bank gaming (or maybe OPEC?). The yen and euro over the last few weeks have rapidly streghtened against the dollar (the yen especially). One net result of this would be that oil will have dropped even more using yen denominated transactions-it could be a way to cut prices and boost demand for oil in Asia. Maybe, I'll have to think about it a bit?


And if everything else weren't bad enough, Robert Kaplan chimes in: "For that, after all, is the essence of a long and elegant decline: to pass responsibility on to like-minded others as their own capacities rise."

Yea!!! The Return of American Declinism. Can "the inordinate fear of Islamism" be all that far behind. CNAS has been described as Obama's "Pentagon-in waiting" and seems to have gotten its start as part of Soros' "think tank" building. Great, I feel safer already.


"Who is this TCO character anyway? I Greasemonkeyed him weeks ago."

Turds Collective Organiser


From Bloomberg

Dollar No Longer Haven After Fed Moves Rate Near Zero (Update2)
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By Kim-Mai Cutler and Bo Nielsen

Dec. 17 (Bloomberg) -- The world’s biggest currency-trading firms say the dollar’s appeal as a haven amid the financial crisis all but evaporated.

The U.S. currency slid to a 13-year low against the yen today and had its biggest one-day decline versus the euro after the Federal Reserve reduced its target interest rate yesterday to a range of zero to 0.25 percent, the lowest among the world’s biggest economies. CMC Markets said today the currency’s prospects appear “ominous.” State Street Global markets said the dollar’s outlook has been “undermined.”

“The dollar has been under heavy downward pressure,” said Robert Minikin, a senior currency strategist in London at Standard Chartered Bank Plc. “This move is very well-justified and has a long way to run.” Standard Chartered is preparing to cut its dollar forecasts, Minikin said.

Yesterday’s rate cut brings the Fed’s target to below the Bank of Japan’s for the first time since January 1993. U.S. policy makers repeated plans to buy agency debt and mortgage- backed securities and said they will study buying Treasuries, a policy known as quantitative easing.

The dollar fell to 87.14 yen, the lowest since July 1995, before trading at 87.45 yen as of 3:51 p.m. in New York, from 89.05 yesterday. It depreciated to $1.4437 per euro from $1.4002 and traded at $1.4366, the weakest since Sept. 30.

‘Ominous’ Outlook

The dollar is likely to decline “longer term,” analysts including New York-based Ashraf Laidi at CMC Markets wrote in a report. “Prospects ahead appear particularly ominous for the world’s reserve currency once global economic stability starts to build up.”

The Fed’s debt purchases will cause the dollar to weaken to $1.4860 per euro, analysts led by Robert Sinche, New York-based head of global currency strategy at Bank of America Corp., wrote in a report yesterday. The Fed reduced the scarcity of dollars and investors slowed the deleveraging process, which drove the currency to a 2 1/2-year high against the euro in October, Sinche said.

“Those temporary supports for the dollar appear to have eroded,” Sinche wrote. “Aggressive quantitative easing by the Fed should add to U.S. dollar supply globally and undermine the value of the dollar.”

State Street Global Markets, a unit of the world’s largest money manager for institutions, said the Fed’s move is “perilous” for the dollar as investors accumulated an “extreme” long position on the currency, or bets it will climb.

Record Low Yields

“This implies a significant potential for a dollar unwind if the real money community attempts to chase price,” Hong Kong-based strategist Dwyfor Evans wrote today in a report. The shift toward quantitative easing “has undermined the U.S. dollar significantly over recent weeks.”

The dollar’s decline against the euro compares with a similar move in the early 1990s, indicating the U.S. currency may weaken to a record low of $1.65 late next year, Citigroup Inc. strategists Tom Fitzpatrick in New York and Shyam Devani in London wrote in a research note.

“If it walks like a duck and talks like a duck … it’s a duck,” Fitzpatrick and Devani wrote. “The dollar walks and talks like a currency going back into its bear market.”

The dollar declined 11 percent against the euro and 8 percent against the yen this month as yields on two-, five-, 10- and 30-year Treasuries fell to record lows, encouraging investors to look outside the U.S. for higher returns.

“The dollar is going to struggle while it has low yields,” said Roddy MacPherson, the Edinburgh-based head of currency strategy at Scottish Widows Investment Partnership Ltd., which manages the equivalent of $152 billion. “We’re looking to add to our short dollar position if U.S. yields continue downward.”

UBS Stays Bullish

MacPherson said he moved toward a short dollar position, or a bet it will depreciate, against the euro in the past four days. The currency may end next year at $1.40 per euro, he said.

For UBS AG, the world’s second-largest foreign-exchange trader, demand for cash amid the freeze in bank lending will support the currency. The Libor-OIS spread, a gauge of cash scarcity favored by former Fed Chairman Alan Greenspan, was at 140 basis points today, or about 14 times its average in the five years before the credit crisis began.

“There is still a premium on liquidity, which will be supportive to the dollar even in the current environment,” said Geoff Kendrick, a senior strategist in London at UBS.

Goldman Sachs Group Inc. said investors can profit from the dollar’s decline by selling the currency for its Canadian counterpart.

The U.S. currency’s drop is becoming “broader-based,” Jens Nordvig, a New York-based strategist for the U.S. securities firm, wrote today. “Temporary dollar demand from deleveraging and funding flows has come to an end. The prospect of aggressive quantitative easing is starting to have a significant negative impact on the dollar.”


I do not know how to use the Hellgate gold ; my friend tells me how to use.

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