Thread: A note of caution for those with deposits in US Banks

Originally Posted by Butterfly

using a prediction of property bubble burst that everybody knew it was coming,

You didn't - and you have continued to deny its effects right the way throughout this thread.

Originally Posted by Butterfly

hardly means he will be right again for some other silly non-sense

I'd rather listen to someone who has been consistantly right, rather than who has been consistantly wrong, like you.

Originally Posted by bkkandrew

You didn't - and you have continued to deny its effects right the way throughout this thread.

I did, a long time ago, with plenty of others, TD didn't even exist back then

I only deny the silly linear projections that you are doing, and debunk the wishful thinking that you take as "facts", that's all

Originally Posted by Butterfly

Originally Posted by bkkandrew

You didn't - and you have continued to deny its effects right the way throughout this thread.

I did, a long time ago, with plenty of others, TD didn't even exist back then

How convenient.

Originally Posted by Butterfly

I only deny the silly linear projections that you are doing, and debunk the wishful thinking that you take as "facts", that's all

Do we really need all the links to all your posts denying what I said would happen would happen and then denying what was happening was actually, er happening. Especially the one in Iceland, that one was a hoot!

Originally Posted by bkkandrew

How convenient.

it's on ThaiVisa, since you love to stalk people and love the search function for this, you can try there

Second bank bailout plans condemned

A second bailout of the banks has been condemned as "the worst possible option" as reports suggest the Government is planning more intervention.



By Melissa Kite, Deputy Political Editor

Last Updated: 10:23PM GMT 03 Jan 2009


Alistair Darling, the Chancellor Photo: PA


Gordon Brown was reported to be preparing to pump billions more pounds into the banking system amid mounting evidence that his £37 billion part-nationalisation has failed to get credit flowing to home-owners and businesses.

As banks continue to restrict lending, Alistair Darling, the Chancellor, has been considering a range of options including cash injections and offering banks state guarantees to raise money privately.

From:

Second bank bailout plans condemned - Telegraph

As I predicted, the bailouts are not enough. The black hole of debt cannot be filled and the scary thing is that the people in charge are only now beginning to realise this.

Originally Posted by Butterfly

Originally Posted by bkkandrew

How convenient.

it's on ThaiVisa, since you love to stalk people and love the search function for this, you can try there

Where you described coming events as 'not a crash, more like a slow burn'. Some slow burn, I would love to see your description of the Santika fire!

Anyway, what's wrong with using the search function? Its what it is there for. If you don't want foolish posts to be found, refrain from making tham.

^ bailing out already ? come on you can do better than that,

Originally Posted by bkkandrew

As I predicted,

everytime you say that, you sound like an insecure child looking for some kind of emotional confirmation

it's hilarious

Originally Posted by Butterfly

Originally Posted by bkkandrew

As I predicted,

everytime you say that, you sound like an insecure child looking for some kind of emotional confirmation

it's hilarious

No matter how your heckling is angled, it still does not alter the truth of the statement...

^ I think you are confusing truth with simplicity

^And I think you are merely confused and perhaps a little simple.

.

The news from Japan, China, and the Pacific tigers has moved from awful to calamitous since the global industrial system snapped in October.

A raw reality is being laid bare. The mercantilist export model of the East is proving dangerously geared to the debt-driven excesses of the West. As we go down, they go down too. Some are going down even harder.

Japan's industrial output contracted by 16.2pc in November, year-on-year. "For an economy which lives from the prowess of its industrial exports, this is simply earthquake," said Edward Hugh from Japan Economy Watch.

Japanese exports fell 26.7pc. Real wages fell by 3.1pc, the seventh monthly fall. Taken together, the figures are worse than anything during Japan's "Lost Decade". They have a ring of 1931.

The fall-out in Japan has already shattered the authority of premier Taro Aso. His approval rating has dropped to 21pc. The cabinet is in revolt. The world's second biggest economy no longer has a functioning government.

Credit Suisse warns that Japan could slide into deflation of minus 2pc by the autumn. Since interest rates are already near zero, which means that real rates will rise as the slump deepens – the surest path to a liquidity trap.

Kyohei Morita from Barclays Capital estimates that Japan's GDP shrank at an annual rate of 12.2pc in the fourth quarter. "It's shocking," he says. Singapore has already reported. Fourth-quarter GDP contracted at an 12.5pc annual rate.

Taiwan's exports fell 28pc in November. Shipments to China dropped 45pc. Korea's exports dropped 18pc in November and 17pc in December.

"We are looking right in the face of an unprecedented regional depression," said Frank Veneroso, the investment guru.

"If there is one part of the global disaster that is not reflected in today's massacred markets it is this Asian debacle. The source of the collapse appears to be above all a contraction in China."

One has to careful with Chinese figures. When I covered Latin America in the 1980s, veteran analysts watched electricity use to gauge economic growth since they could not trust official data. It is striking that China's power output fell 7pc in November.

Asia has clearly failed to use the fat years to break its dependency on the West. It has stuck doggedly to its export strategy – by holding down currencies, or by subtle policy bias against consumption.

In China's case it has let the wage share of GDP drop from 52pc to 40pc since 1999, according to the World Bank.

The defenders of this dead-end strategy are now coming up with astonishing proposals to put off the day of reckoning. Akio Mikuni, head of Japan's credit agency Mikuni, has called for a "Marshall Plan" to bail out America by cancelling $980bn of US Treasury bonds held by the Japanese state.

This debt jubilee does have the merit of creative thinking, but it is entirely designed to keep the old game going. "US households won't have access to credit they have enjoyed in the past. Their demand for all products, including imports, will suffer unless something is done," he said.

Let me be clear. I make no moral judgment on the "neo-Confucian" model, nor – heaven forbid – do I defend the debt depravity of the West.

A stale debate simmers over whether the Great Bubble was caused by Anglo-Saxon and Club Med hedonism, or by an Asian "Savings Glut" spilling into global bond markets and fuelling asset booms, as Washington claims. It was obviously a mix.

Two cultural systems interacted through globalisation, locking each other into a funeral dance.

The point is that this experiment has now blown up. Whether or not we slam straight into a global depression depends on how we – East, West, all of us – handle this.

Asia needs to fully wake up to the scale of the West's economic crisis - Telegraph

People do not realise the extent that Asia is falling off an economic cliff...

The past eight years of imperial overstretch, hubris and domestic and international abuse of power on the part of the Bush administration has left the US materially weakened financially, economically, politically and morally," he said. "Even the most hard-nosed, Guantanamo Bay-indifferent potential foreign investor in the US must recognise that its financial system has collapsed." He said investors would, rightly, suspect that the US would have to generate major inflation to whittle away its debt and this dollar collapse means that the US has less leeway for major spending plans than politicians realise.

From:

Willem Buiter warns of massive dollar collapse - Telegraph

Buiter was an MPC member and is widely regarded as one of the most unflappable economists of recent years. To hear him saying this is like seeing Ghandi reaching for the nuclear launch codes...

Treasuries Drop Amid Concern U.S. to Sell Record Amount of Debt





By Dakin Campbell and Gavin Finch

Jan. 6 (Bloomberg) -- Longer-term Treasuries fell for a fourth day, pushing yields on 10-year notes to the highest in three weeks, as concern the U.S. will sell record amounts of debt drove investors from the safety of government securities.
Benchmark 10-year note yields increased almost half a percentage point in a week, the most since September, on U.S. spending plans. Yields on notes and bonds climbed after President-elect Barack Obama told House Speaker Nancy Pelosi yesterday he favors a $775 billion economic package. This year’s note sales begin with $8 billion of 10-year Treasury Inflation Protected Securities, or TIPS, today.

“We saw tremendous gains last year and a lot of flight to quality built in, and now we are seeing some of that get sucked out of the marketplace,” said Tom Tucci, head of U.S. government bond trading in New York at RBC Capital Markets, the investment-banking arm of Canada’s biggest lender.

Full article here:

Bloomberg.com: Worldwide

And finally people realise that the FED is broke. There is too much debt to fund. I have only been saying this for 5-months.

We will now see yeilds rise further and further, as the debt mountain is shunned and the FED, in its dying throes races to print money to pay the vast and neverending bills.

And factories grind to a halt:

Factory Orders in the U.S. Tumble More Than Forecast (Update1)





By Timothy R. Homan
Jan. 6 (Bloomberg) -- Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are cutting back on investments as the recession deepens.

Demand fell 4.6 percent after a revised 6 percent decrease in October that was larger than previously estimated, the Commerce Department said today in Washington. The back-to-back decline was the biggest since records began in 1992.

Contuneud here:

Bloomberg.com: Worldwide

The phrase 'since records began' is being used a lot of late.

And an admission that the TARP was just shovelled into a black hole:

Banks’ ‘Catatonic Fear’ Means Consumers Don’t Get TARP Relief



By James Sterngold

Jan. 5 (Bloomberg) -- As the new owner of $172.5 billion of preferred shares and warrants in 208 U.S. financial institutions, the Treasury Department hasn’t succeeded in thawing frozen credit markets, leaving taxpayers propping up an industry that won’t lend to them.

While inter-bank lending rates have fallen since Congress approved the $700 billion Troubled Asset Relief Program on Oct. 3, most bank lending to consumers remains tight and interest rates high. The average credit-card rate was 14.33 percent on Dec. 16, according to IndexCreditCards.com in Cleveland, almost unchanged from 14.41 percent in October 2007.

More at:

Bloomberg.com: Exclusive

Taxpayers pay the bill, but get no benefit (apart from another bill, one suspects...)

Originally Posted by bkkandrew

taxpayers propping up an industry that won’t lend to them

And who would want to lend to them? They all have a lower credit rating today than they did a year ago.

It isnt rocket science.

Banks should be encouraging people to come through their doors and open savings accounts for the difficult times that lie ahead.

Originally Posted by Spin

Banks should be encouraging people to come through their doors and open savings accounts for the difficult times that lie ahead.

Interest rates are low.

Instead of putting money under mattresses, people are buying Treasuries at 0%, which is losing money.

Originally Posted by Milkman

Interest rates are low.

Sadly yes but i think the fact savers are not getting any interest is an aside compared to what will happen if the lending system does break down completely.

Originally Posted by Spin

Originally Posted by Milkman

Interest rates are low.

Sadly yes but i think the fact savers are not getting any interest is an aside compared to what will happen if the lending system does break down completely.

Hmmm, the higher yeild rates on T-bills now suggest people are realising what I save been saying for some while - that that the game is up for Government debt too. Investors face the stark reality of losing their money through a FED default or their investment inflated away when the printing presses are whirring at high speed...

Meanwhile....across the pond

BRITAIN'S banks are to receive more of your money so they can continue to not lend it to you, it has emerged.

The banks say a second bail-out will be essential if they are to achieve their medium-term strategic goal of having all the money and throwing you out of your house.

Treasury sources admitted the initial multi-billion pound bail-out had not unlocked the credit markets as hoped and so the banks may now have to be filled with £10 notes until they burst.

Economists say this policy of 'quantatative bursting' will mean some money will eventually have to be released from the building so bank employees can at least get to their desks.

The government hopes this money will be picked up in the street by consumers who will then spend it on Jaguars and fine china.

A Treasury spokesman said: "Most of the banks have just piled the first lot of money in corridors and cleaning cupboards, although HBOS does seem to have spent quite a bit of it on magic beans and aromatherapy oil.

"We did plant the beans in the hope a massive beanstalk would appear which would then lead to a magical, golden egg-laying goose-type scenario. But that didn't happen."

He added: "We think the beans may have been eaten by a homeless man, or possibly a crow."

from here

Originally Posted by Spin

Banks should be encouraging people to come through their doors and open savings accounts for the difficult times that lie ahead.

not an option, the only way to achieve this would be to increase interest rates on deposits, money saved is money not spend, and that would have a dramatic effect on Aggregate Demand, and would "contract" Money Demand. Cost of borrowing would become high and distorted. Something you don't want now, like pouring oil on fire.

Originally Posted by bkkandrew

Hmmm, the higher yeild rates on T-bills now suggest people are realising what I save been saying for some while - that that the game is up for Government debt too. Investors face the stark reality of losing their money through a FED default or their investment inflated away when the printing presses are whirring at high speed...

What a complete non-sense. If investors were expecting the Fed to default, they wouldn't accept the 0% interest rate they have now, the spread risk would be huge, and the Treasury yield on short term notes and medium term notes would be highly positive. This is not the case today. As usual, talking out of your ignorant ass.

Originally Posted by Spin

Im a bit confused about all this talk of inflation. If this money that is being printed is largley being given to companies who are hoarding it to avaoid bankruptcy then how will that money ever trickle down into the economy to cause inflation.

That's right, it won't in the short term as everyone is adjusting his spending pattern and business investment, but it could in the long run once everyone realize that the storm has passed.

Originally Posted by Butterfly

Originally Posted by bkkandrew

Hmmm, the higher yeild rates on T-bills now suggest people are realising what I save been saying for some while - that that the game is up for Government debt too. Investors face the stark reality of losing their money through a FED default or their investment inflated away when the printing presses are whirring at high speed...

What a complete non-sense. If investors were expecting the Fed to default, they wouldn't accept the 0% interest rate they have now, the spread risk would be huge, and the Treasury yield on short term notes and medium term notes would be highly positive. This is not the case today. As usual, talking out of your ignorant ass.

As usual, you can't read my post properly, can't make a coherant argument, so decide to hurl insults.

The key word in my post was 'realising', i.e. before they did not realise. Now that this realisation is setting in the spread risk is increasing and will increase from here on in.