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Sharp US money supply contraction points to Wall Street crunch ahead
Telegraph ^ | 08/19/08 | Ambrose Evans-Pritchard

Posted on 08/19/2008 1:09:25 AM PDT by TigerLikesRooster

Sharp US money supply contraction points to Wall Street crunch ahead

By Ambrose Evans-Pritchard

Last Updated: 6:02am BST 19/08/2008

The US money supply has experienced the sharpest contraction in modern history, heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.

Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959.

"Monthly data for July show that the broad money growth has almost collapsed," said Gabriel Stein, the group's leading monetary economist.

advertisementOn a three-month basis, the M3 growth rate has fallen from almost 19pc earlier this year to just 2.1pc (annualised) for the period from May to July. This is below the rate of inflation, implying a shrinkage in real terms.

The growth in bank loans has turned negative to a halt since March.

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Extended News; News/Current Events
KEYWORDS: creditcrunch; debt; economy; globalism; m3; moneysupply; trade
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1 posted on 08/19/2008 1:09:25 AM PDT by TigerLikesRooster
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To: TigerLikesRooster; Uncle Ike; RSmithOpt; jiggyboy; 2banana; Travis McGee; OwenKellogg; 31R1O; ...
M3 had been growing explosively for some time. Now it is set for a big(or steady) drop.
2 posted on 08/19/2008 1:12:49 AM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: TigerLikesRooster
That is this crazy talk.  There is no such thing as the M3. 

On a more serious note, does this mean issuance (net and or gross) of corporate bonds is now affecting market sectors outside of the financial sector?  Is $50 billion in a month large enough to be abroad contraction of net bond issuance?  The Fed's were selling some jive about the non-financial corporate world not being affected by the credit crunch as of early 2008.  Which didn't square away with the haircuts traders were taking on huge blocks of bonds.  I was hearing the exact opposite of the Fed's offical line in June from people working on commercial projects needing bond issuance.  I have a feeling the rating companies are about to be finally forced to properly and realistically evaluate the Commercial bond market. 

 

Federal Reserve Statistical Release, H.6, Money Stock Measures; title with eagle logo links to Statistical Release home page
Release Date: November 10, 2005, revised March 9, 2006
Release dates | Historical data | About


Discontinuance of M3
On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate.
3 posted on 08/19/2008 1:52:27 AM PDT by JerseyHighlander
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To: JerseyHighlander

Britain’s No.1 quality newspaper website

heightening the risk of a Wall Street crunch and a severe economic slowdown in coming months.

.
Does anyone wonder if their Democrat supporters like the BBC? We’re going into 3rd and 4th quarters, the slow down doesn’t happen till 1st quarter, if at all, President McCain doesn’t want to raise anyone’s taxes, and will drill here for energy independence, that’s best case scenario.


4 posted on 08/19/2008 2:38:26 AM PDT by Son House ( [ ]Obama=>LoseBothWars/Raise Taxes [X]McCain=>WinBothWars/CutPorkBarrelSpending)
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To: TigerLikesRooster

M3? I thought M3 wasn’t worth worrying about! lol


5 posted on 08/19/2008 2:41:35 AM PDT by ovrtaxt (This election is like running in the Special Olympics. Even if McCain wins, we're still retarded.)
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To: Son House

The author of this article is one of the men responsible for outing the Clinton machine in the 1990’s. Go check out his book on President Clinton.

At this point even BBC World News TV is harpooning PM Brown for his failure at Treasury and 10 Downing.


6 posted on 08/19/2008 3:03:43 AM PDT by JerseyHighlander
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To: TigerLikesRooster

The FED and foreigners pumped liquidity in June to replace the Banks capital losses, now the M3 has gone back to normal. No problem.


7 posted on 08/19/2008 3:54:44 AM PDT by plenipotentiary (Free the Oil, Topple the Saudis)
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To: JerseyHighlander

The fokking brits* never let the facts get in the way of a ‘good’ story!

Note...*BBC, Telegraph, Guardian and other socialist hell holes!


8 posted on 08/19/2008 4:33:35 AM PDT by CRBDeuce (an armed society is a polite society)
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To: JerseyHighlander
There is no such thing as the M3. ...On a more serious note...

Those Freerepublicans who actually and honestly believe in save and invest rather than borrow and spend should realize that the 20 year excursion in M3 has caused one of the most enormous market distortions in the history of finance.

Saving 5-10% of your salary for things you want is a losing game when the Fed is printing the money and giving/lending it to banks to loan out. You cannot save fast enough to beat real inflation or the inflation rate of assets, and you are much better off simply borrowing the money, plunking it into rapidly appreciating assets (appreciating rapidly because the Fed is pumping M3)and pyramiding your debt. Of course, this Ponzi scheme has to come to and end, and it did, with a thud. The underlying economy of living off of asset inflation generates a country of high-class welfare bums (low class actually because real street bums are at least honest about being unproductive).

9 posted on 08/19/2008 4:38:21 AM PDT by AndyJackson
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To: AndyJackson
Saving 5-10% of your salary for things you want is a losing game

This is one of the most insidious factors which has been undermining U.S. economy.

10 posted on 08/19/2008 4:44:55 AM PDT by TigerLikesRooster (kim jong-il, chia head, ppogri, In Grim Reaper we trust)
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To: JerseyHighlander
You wrote:

That is this crazy talk. There is no such thing as the M3...Discontinuance of M3 On March 23, 2006, the Board of Governors of the Federal Reserve System will cease publication of the M3 monetary aggregate.

But the posted article wrote Data compiled by Lombard Street Research shows that the M3 ''broad money" aggregates fell by almost $50bn (£26.8bn) in July, the biggest one-month fall since modern records began in 1959.

It doesn't claim to the the 'official' Fed numbers, since, as you point out, the Fed isn't releasing them anymore.

But it is the nearest *reconstructed* equivalent.

Cheers!

11 posted on 08/19/2008 5:30:49 AM PDT by grey_whiskers (The opinions are solely those of the author and are subject to change without notice.)
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To: TigerLikesRooster

Good. About time.


12 posted on 08/19/2008 5:45:27 AM PDT by LS ("Castles made of sand, fall in the sea . . . eventually." (Hendrix))
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To: TigerLikesRooster
This is one of the most insidious factors which has been undermining U.S. economy

I saved hard while serving in the military for graduate school only to discover upon returning to the US that what was a big pile, after jimmy carter (and burns) got done with it it was not such a big pile.

Because of Greenspan's misadventures I could have taken those funds pyramided them into an enormous real estate empire and I would be retired with a yacht and houses in the Mediterranean and a ski resort in the location of my choosing. Instead I got a degree and work for a living, as I know must. it is amazing that this little thing about M3 can turn saving, investing and working from commendable goals into a game for suckers.

Greenspan has no idea how much one human being can despise another.

13 posted on 08/19/2008 8:58:09 AM PDT by AndyJackson
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To: TigerLikesRooster; JasonC

Jason,

Isn’t this exactly what you have been saying?


14 posted on 08/19/2008 10:51:06 AM PDT by Freedom_Is_Not_Free
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To: TigerLikesRooster; M. Espinola; Travis McGee
Must see video on FOX

Corrupt Henry Cisneros Says Fannie & Freddie Are Solid and Mozilo is 'OK' too!

Cisneros was Bill Clinton's scandal-plagued former housing secretary who resigned in disgrace. He was the very definition of corrupt Democrat trash. Cisneros landed right on Angelo Mozilo's lap. People, you always need to follow the money. The money will lead you to the truth . . .

LOL, LOL, LOL ! !

15 posted on 08/19/2008 3:50:36 PM PDT by ex-Texan (Matthew 7: 1 - 6)
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To: JerseyHighlander; AndyJackson; grey_whiskers
M3 is no big mystery. One economist has been tracking the real M3 even though the Fed stopped keeping records. Failure to keep records violated several federal statutes. Similar conduct is even called 'obstruction of justice' in major criminal cases in today's courts. .

Of course, nobody dares to question the mighty Fed. That would be considered tantamount to treason and trading with terrorists in today's D.C.

Take a Peek Here and Scroll Down Click the first graph: Eye opening, nicht wahr ______ ?

Mr. G and Mr. B ought to be locked away in a dark root cellar with starving raccoons, in my view.

16 posted on 08/19/2008 4:09:45 PM PDT by ex-Texan (Matthew 7: 1 - 6)
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To: JerseyHighlander

>There is no such thing as the M3.<

Are you saying that because the Federal Reserve System decided to cease publication of the M3 monetary aggregate that money isn’t being printed and/or that it is not possible to determine the actual M3 figures?


17 posted on 08/19/2008 6:13:21 PM PDT by B4Ranch ("Don't pick a fight with an old man. If he is too old to fight, he'll just kill you"--John Steinbeck)
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To: B4Ranch

I was being sarcastic, in a Baghdad Bob sort of way.
Post 16 shows one estimate of the M3, there are several private individuals and institutions that are publishing their own M3 estimates. Volcker came out recently supporting one particular independently published calculation for M3.

The “Federal Reserve” as an economic data collection and research institution still tracks the M3 for internal use inside the Fed, i.e. , Fed funded researchers can still access the components.

The Fed stopping publication of M3 will be seen (or is already seen) as one more sign of the Hubris of the triple bubbles of the 1990’s 2000’s.


18 posted on 08/19/2008 7:22:54 PM PDT by JerseyHighlander
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To: JerseyHighlander

I missed the satire .....duh.

Anyway they can hide the truth they’ll do it.


19 posted on 08/19/2008 7:41:39 PM PDT by B4Ranch ("Don't pick a fight with an old man. If he is too old to fight, he'll just kill you"--John Steinbeck)
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To: Freedom_Is_Not_Free
Yes...

Other shoes to watch out for - GM and Ford are in deep trouble. Credit default swaps (CDS) that protect against loss on corporate bonds, will get hurt if either or both has to go through a bankruptcy filing. GM's debt is currently trading like C rated junk, on the edge of default. It isn't easy for financial companies that wrote CDSs on GM paper years ago, to get out.

20 posted on 08/20/2008 5:52:56 AM PDT by JasonC
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