Posted on 01/06/2010 7:38:37 AM PST by blam
The Gates Of Financial And Economic Hell Have Opened
Stock-Markets / Credit Crisis 2010
Jan 06, 2010 - 02:20 AM
By: Bob Clark
The abyss is widening, many have already fallen in. The Fat Boys at Goldman say they are doing God's work, do they really believe that. Maybe they know dark secrets we are not privy to. What does God's work entail? Stopping fear and panic? Holding up asset prices and presenting the illusion of a stable, recovering economy? If they fail, then hell will follow.
PHONY FUNDING
On the surface it appears that the Feds are creating a recovery with money borrowed from foreign lenders, it ain't necessarily so. Much of that money is actually printed by the Federal Reserve itself and given to the foreign entities who then lend it back to the U.S. Treasury.
Why, because there have been funding auctions that failed to attract enough bids, when it happens it throws a frigid pall of fear over the financial markets . Everyone holds their breath and steps back.
They can not let that happen again, one more time could be fatal. It is all a con, a phony recovery paid for by phony funding auctions. The foreigners don't want any more worthless paper from the U.S.A. that they know will never be paid back but what they do want is to get rid of all the garbage debt on their books from the likes of Fannie Mae and Freddie Mac, debt know as agency paper. So a deal is struck.
The Fed prints the money and takes the bad agency paper onto their books and the foreigners write a cheque using some of the new money they get to buy U.S. bonds, the treasury then pays them interest on the money they just gave them.
In March, the Fed got the idea they would avoid taking on that bad debt by cutting out the middle man and just printing the money and buying the bonds themselves. Remember how the poop hit the fan. The foreigners backed away [no kickback, no dough] and bond markets convulsed. They won't try that again.
They will keep printing money and they will keep faking the auctions, there can be no more failures. There is no way out. It is stealth quantitative easing.
100 year debt blow off
For 100 years it has been all about debt, debt finances growth and inflation finances debt. We are at a point now where a debt blow off has occurred. A blow off so large that it has torn the economic world order apart.
China a brutal, oppressive regime living in quiet poverty now has all the money and is still rising toward world dominance. The United States has destroyed it's manufacturing base and squandered it's resources.
It has abused it's world leader status and under minded it's hegemony advantage. In one generation it has become the largest debtor nation in history. Globalization has created very tough competitors, it is much easier to be a consumer.
Easy money has caused an explosion in the world population. Forget shortages of food and energy, think too many people. In the U.S. alone it now requires 400 billion dollars per month just to keep this monster alive. Papering over this puppy will take big inflation.
The final bill for this recovery is estimated to be 20 trillion dollars and so far it ain't much of a recovery. Add that to the existing debt and the numbers are staggering. At the same time, the average worker can't even find a crummy $30,000 a year job. Something stinks! The truth is the whole economic system stinks! Here are some basic facts.
Demand was artificially induced by the huge flow of credit which was mistaken for an abundance of liquidity by most economists and strategists. Now there is a huge over supply of everything.
Everyone that wanted a house got a house. Everyone that wanted to renovate did so. China has over expanded and is now taking quantitative easing to a new level.
[snip]
Sorry, blam, but this guy’s prose is pretty much unreadable. Can you give a one- or two-sentence summary of his point?
Seems a bit pessimistic to me.
Utter nonsense. Inflation didn’t hit Japan. Japan’s been printing far more money and going into far more debt than has the U.S.
Japan started Quantitative Easing back in 1989! For over 20 years Japan’s been running the printing presses and keeping interest rates near 0%.
Has Japan seen a post 1989 housing bubble?! Nope.
Has Japan seen hyper-inflation?! Nope.
The U.S. is copying Japan.
The U.S. is going to get something far worse than hyper-inflation.
Instead, the U.S. is going to get Japan’s deflation.
We're all gonna die.
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