naked capitalism

Anonymous says:

What about the T. Boone Pickens story? It’s like the Onion wrote it.

http://jessescrossroadscafe.blogspot.com/2008/10/im-proud-to-be-okie-who-is-brokie.html

Anonymous says:

“i am not at all impressed by the jca article. the us federal government’s debt is ENTIRELY dollar denominated, meaning that it can always in a worst case scenario print its way out of trouble. the risk (if any) to the investor is inflation/devaluation, not outright default.”

No, default is possible, even if all sovereign debt is denominated local currency. The way it can happen is if wages for the bottom 50 or 60% of the population would not keep up with inflation, so inflation would reduce most people’s standard of living. And politicians can’t or won’t help those people in other ways, such as modifications to bankruptcy rules to reduce their mortgage debt or refundable tax credits funded by higher taxes on high net wealth or high net earnings. The bottom 50 or 60% will only tolerate so much inflation if reduces their standard of living, and the locally based high net wealth / earning will only tolerate so much high taxes to subsidize the lower and middle class. This isn’t to say a default would happen, only that it could. The odds seem rather low, but assuming the odds are zero with no analysis, is obviously foolish.

Anonymous says:

The question is what happens to after the unwind is substantially complete and money now flowing into treasuries slows, perhaps dramatically?

Funding the current account deficit could become a problem. The Fed would be forced to raise interest rates to attract continuing investment in treasuries and cause a catastrophy in mortgage rates and other loan rates.

Other soverign nations will be raising interest rates to prevent capital flight. Will the US continue to attract treasury buyers without competeing?

As far as a US Gov declared devaluation goes…Devalue against what is my question? The dollar is a floater except against some currencies with pegs. A new dollar could be issued with the old being traded at a per centage of the new. The world would take a haircut for trusting the dollar. The US would suffer a great deal if this were to happen.

The only way out of this disaster might be a new currency or dollar based on a basket of commodities, or?

baychev says:

ha! my favorite topic tennis is touched upon. my 2 cents:
there is no bias (except for famous or local players).
it is really hard to judge when a ball travels 180-240km/h bounces off the ground and deforms in the matter of miliseconds if it had actually touched the line a little or not. those judgments requiring milimers of precision have to be made as well from about 5-10 meters distance. the human eye hardly can distinguish more than 8 frames per second so give those guys a break, they do the best they can.

baychev says:

another interesting article. bear in mind this guy at least politically is quite pro-american. i was surprised to see him write all this.

http://www.ft.com/cms/s/0/6e23cdc8-a517-11dd-b4f5-000077b07658.html

Anonymous says:

anon at 8:24 am…

I was facing the same problem that you are. I am not a financial wizard but I knew in 2006 that stuff was going to hit the fan. My ‘investment adviser’ at Smith Barney advised me that Wall St Banks were ‘too big to fail’. I laughed at that notion and had all stocks sold and left in cash.

I bought physical gold with half the cash and still have the other half in cash. My plan is to purchase treasuries when the US Fed jacks interest rates, which eventually they will be forced to do, imo.

I am in no way connected to any gold or financial institution. Perhaps my plan will fail but it is the best that I could come up with that seemed fairly safe. In any case, had I remained in stock I would already be destroyed. Good luck!

Anonymous says:

EHP,

Is this not a pension thing not a perfect re-run of 2001-2. They are even using the same press releases…

doc holiday says:

This snapshot really pisses me off with the symbolic metaphor that suggests that global junk food has now entered the pet food chain, just like pet insurance, pet benefits, pet 401Ks and the incredibly stupid world of synthetic off balance sheet derivatives, like the recent CDS currency intervention crisis that brought these pets all to their knees. Everyone knew this was too good to be true, but everyone was too busy to stop and think about the consequences of socialized pet daycare and endless cash burn related to inflationary trends that were sucking the life out of a bottomless well of tasty malted milk-like savings account which everyone and their Moms thought was an infinite source of excess from which they could suck on like a canine pacifier.

When will this Hindenburg/Large Hadron Collider humanity stop — when will the blimp burn out and the greasy stains of this soiled and hairy era be washed away? The sins of The fathers are one thing, but the greed of these mothers is reproachable and one does wonder how this will be righted!

I feel better when I write about these things, but then when I see that snapshot, I just get pissed off even more and then go off on the need for union wages and speech therapy and socialism and globalization and, there, yah see, this is like the perfect photo for posters and the final challenge to not allow our world to goto these greedy dogs!

doc holiday says:

Oh My God, The Large Hadron Collider, put hair on My Children’s chest’s!

Mitchell says:

This is a way out-of-date observation in the fast-moving world of 2008 crisis finance, but I just wanted to say somewhere that the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (one of the Fed’s crisis lending facilities) reminds me of the Bear Stearns High-Grade Structured Credit Enhanced Leveraged Fund, one of the BS hedge funds whose failure was a harbinger of the credit crunch. Perhaps the principle is that anything which is that much of a mouthful is bad news.

And let us also remember MLEC (the Master Liquidity Enhancement Conduit, a stillborn proto-bailout). A comparatively short acronym, but for sheer dysphoniousness it’s rivalled only by SLORC, the old name of Myanmar-formerly-Burma’s ruling junta.