Sunday, December 11, 2011

December 11 2011: Cash for Christmas


John Vachon Hotel Dacotah October 1940
"Grand Forks, North Dakota"


Ilargi: Over the course of the next few weeks, we will shift our efforts increasingly towards our new site, which should soon be ready to go. This will inevitably result in less hours put into the present site. Which will mean we will slim down the amount of material presented, though not the frequency (that would be pretty silly given what's going on out there). Please bear with us.







So I had this idea that I call "Cash for Christmas". Very simple, and no need to make it more complicated. My suggestion is for everyone, but certainly for those of you who live in Europe, to take out the amount of - cash - money you plan on spending on Christmas items, presents, food, charities etc. And then don't spend it, but keep it in your wallet. Pay for all your Christmas spending with anything you like, plastic, cash, or whatever, but not the money you just took out. Keep it.

I know many people will have thought I meant giving cash as a present for Christmas, instead of toys and trinkets. That's good too. But, preferably, don't use the cash you withdrew for yourself for that.

The reason behind my idea is the rising uncertainty in the banking system. There no longer is any reason to be overly confident that you will have continuous access to the money in your bank account. So it would be good to have cash available for at least some period of time, a week, maybe even a month, when other means, debit cards, credit cards, may be of limited use.

For many, if not most, this may -still- sound like a far out or far away scenario. And I'm not saying it absolutely WILL happen. And I have no secret inside information. Nor do I have the intention of unnecessarily scaring people. But things being what they are and where they are, I do think it's appropriate for The Automatic Earth to encourage people to think beyond the idea that no such thing could ever happen.

In this excellent video, Kyle Bass argues a point that I think we should all be aware of. Namely, that governments don't forewarn of drastic measures, if only because they can't really do that. They will always insist that all is well until it is not, or they would risk causing a stampede. The take away from that insight at this point is that we can't feel safe because our governments - or the main media that move in lockstep with them- haven't warned us.

We will need to inform ourselves. Which of course is what The Automatic Earth started helping you with close to four years and a 1000 posts ago.

What we've seen over the past few days is another, and this time especially, lukewarm summit in Europe. That ended with few concrete results other than a definite rift between Merkozy and British PM Cameron. All measures that were officially announced will be under legal scrutiny, both at EU level and at individual countries' level. A process, or multitude of processes, that can take years, during which time a zillion things can change or go outright awry.

What's more, nothing has been announced to help out European banks; but these are still in a lot of trouble. At the time of the coordinated central bank action a few weeks ago, there was a persistent rumor that a major financial institution had been about to fall over. Or even a whole group of large funds. That rumor hasn't died.

On top of that, on Friday, Moody's downgraded the top French banks, BNP Paribas, SocGen and Crédit Agricole. Also on Friday, news services in Holland reported that BNP Paribas will withdraw from the global mortgage market on January 1, 2012; that is, it will no longer accept new loans. A dramatic step for a bank with a substantial mortgage portfolio.

Like many European banks, BNP needs to either boost its reserves or shrink its balance sheet. First, because the EU requires them to do so, and second, because they need to cover losses. Still, to kill off one of your main revenue streams is a remarkable step. So, by the way, is the fact that BNP reportedly sold some $2 billion in swaps on France's sovereign debt. It may be legal to use public funds to bet on the demise of public funds, but it does raise a question or two. Desperate times, desperate measures, yeah, we get it, but .....

An indication of how bad the situation in the European banking world has become comes from Harry Wilson at the Telegraph:

Eurozone banking system on the edge of collapse
The eurozone banking system is on the edge of collapse as major lenders begin to run out of the assets they need to keep vital funding lines open. Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding.

The European Central Bank admitted it had held meetings about providing emergency funding to the region's struggling banks, however City figures said a "collateral crunch" was looming. "If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank.

Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding. [..]

Bank deposits with the ECB now stand at their highest level since June 2010 at €905bn (£772bn) as lenders withdraw deposits held with their peers and put them into the central bank. At the same time, banks in major eurozone countries such as France and Italy have become increasingly reliant on central bank funding. This follows the trend seen in smaller countries like Ireland where lenders have effectively becomes taxpayer-funded "zombie" banks.

Alastair Ryan, a banks analyst at UBS, said: [..] "The system at the moment hasn't got funding of a duration that allows it to function, so it's failing," [..]

Others think the eurozone banks are heading for a catastrophe and the worry is growing that a major bank could collapse within weeks. The results of the fourth round of European Banking Authority (EBA) stress tests conducted in just under 18 months pointed to a €115bn capital shortfall in the eurozone financial system, with German banks showing the most notable deterioration in their core capital ratios. [..]

The fear is the European authorities do not have the financial firepower to deal with the banks' problems. Analysts at BarCap say that even if the European rescue funds were able to raise €1 trillion of funding this would only meet the needs of the Italian and Spanish government and banks.

The European banking sector's problems are being exacerbated by a wave of asset sales as lenders look to dramatically shrink their balance sheets. UBS estimates eurozone banks could sell off between €3.7 trillion and €4.5 trillion of assets in the next three years.


Ilargi: These are the same banks that the same Harry Wilson reported earlier this week hold $2.35 trillion of toxic assets, $721 billion for British banks, and $700 billion for German banks. That last bit is reason for Germany to ponder nationalizing Commerzbank. Just like Spain wants to clean up $236 billion in "impaired" real estate assets in its banks. It's also why Greeks are emptying their bank accounts.

Friday's EU deal constitutes a - very sloppy - attempt at preventing future losses and deficits; it does nothing to address the true and most urgent problem: present losses. But that makes them no less real, or biting. And because they were once again not addressed by the politicians, they will be dealt with by the ratings agencies (expect a flurry of activity soon, certainly over the next 4 weeks) and the bond markets (who will have one field day after the other).

And in case you feel good because you happen to live in Britain, outside of the Eurozone, check out this chart from Morgan Stanley (via Business Insider) and tell me what you see.





Or if you feel good because you live in Holland, in the rich part of the Eurozone, by all means take a good look at this graph:





So there's why I thought "Cash for Christmas" might be a good thing to suggest to you. Not just in Europe, but certainly there. It's not going to hurt you. Well, unless you were planning to spend your last penny on gifts and/or booze, but then that wouldn't have been a great idea anyway.

Take out in cash from your ATM what you plan so spend for Christmas. And then pay for Christmas with other means and keep that cash in your pocket. Until at least, say, January 10 2012. At that moment, see what the world looks like.

Look, I know it's not for everybody, for various reasons. I realize many people are in a hard place financially. But if a major bank or financial institution fails soon, there's no predicting what will happen next. And a little bit of cash could go a long way. In helping you and your family get by, and also your friends and neigbors and those around you who are in need.














Eurozone banking system on the edge of collapse
by Harry Wilson - Telegraph

The eurozone banking system is on the edge of collapse as major lenders begin to run out of the assets they need to keep vital funding lines open. Senior analysts and traders warned of impending bank failures as a summit intended to solve the European crisis failed to deliver a solution that eased concerns over bank funding.

The European Central Bank admitted it had held meetings about providing emergency funding to the region's struggling banks, however City figures said a "collateral crunch" was looming. "If anyone thinks things are getting better then they simply don't understand how severe the problems are. I think a major bank could fail within weeks," said one London-based executive at a major global bank.

Many banks, including some French, Italian and Spanish lenders, have already run out of many of the acceptable forms of collateral such as US Treasuries and other liquid securities used to finance short-term loans and have been forced to resort to lending out their gold reserves to maintain access to dollar funding. "The system is creaking. There is a large amount of stress," said Anthony Peters, a strategist at Swissinvest, pointing to soaring interbank lending rates.

CreditSights' weekly funding report said the ECB had effectively become the central clearer for the region's banks as lenders are increasingly distrustful about funding one another.

Bank deposits with the ECB now stand at their highest level since June 2010 at €905bn (£772bn) as lenders withdraw deposits held with their peers and put them into the central bank. At the same time, banks in major eurozone countries such as France and Italy have become increasingly reliant on central bank funding. This follows the trend seen in smaller countries like Ireland where lenders have effectively becomes taxpayer-funded "zombie" banks.

Alastair Ryan, a banks analyst at UBS, said there would be "no Lehman moment" – or single catastrophic event – for the European banking sytem, but added that without a full backstop of bank liabilities by governments the system would "struggle to finance itself in the next year in a durable way". "The system at the moment hasn't got funding of a duration that allows it to function, so it's failing," he said.

Others think the eurozone banks are heading for a catastrophe and the worry is growing that a major bank could collapse within weeks. The results of the fourth round of European Banking Authority (EBA) stress tests conducted in just under 18 months pointed to a €115bn capital shortfall in the eurozone financial system, with German banks showing the most notable deterioration in their core capital ratios.

Moody's on Friday downgraded France's three largest banks, BNP Paribas, Credit Agricole and Societe Generale in light of what the US rating agency said were "liquidity and funding constraints". The banks' downgrade came despite Moody's acknowledging the three lenders could depend on a higher level of French taxpayer support in future.

Two weeks ago, rumours abounded that it was the near failure of a major French lender that had been the trigger for a massive co-ordinated intervention by the world's largest central banks to shore up the banking system.

The fear is the European authorities do not have the financial firepower to deal with the banks' problems. Analysts at BarCap say that even if the European rescue funds were able to raise €1 trillion of funding this would only meet the needs of the Italian and Spanish government and banks.

The European banking sector's problems are being exacerbated by a wave of asset sales as lenders look to dramatically shrink their balance sheets. UBS estimates eurozone banks could sell off between €3.7 trillion and €4.5 trillion of assets in the next three years.




Like it or not, the euro is doomed
by Hibah Yousuf - CNNMoneyMarkets

As European leaders unveil their latest plan to solve the debt crisis, economists and market experts aren't convinced they'll actually be successful.

At least one group says there are one too many obstacles and chances are, the currency union will break up, triggering an end of the euro as we know it. "Three years after the first 'once in a generation' financial crisis, we may now be entering the end game for a euro of 17 countries," said Graeme Leach, chief economist at the Institute of Directors, a London-based non-political organization comprising 43,000 business leaders worldwide, but primarily in the United Kingdom.

Incidentally, the U.K. was also the one country that staunchly opposed the latest deal, with Prime Minister David Cameron saying, "What is on offer isn't in Britain's interests." Early Friday, European leaders, including 17 members of the eurozone, which share the embattled single currency, reached a deal for a new intergovernmental treaty to deepen the integration of national budgets.

With the exception of the U.K., it appears the plan also has the backing of the majority of the European Union. But questions remain about the role of the European Central Bank. The ECB has been buying debt on a limited basis, as part of an emergency program, but there have been calls for more aggressive action.

Leach argues that the collapse of the euro is inevitable without the ECB's virtually limitless financial support. ECB President Mario Draghi has firmly said, time and time again, that the central bank's only mandate is to prevent inflation. "It's the ECB or bust," Leach said. "Unless the ECB begins to operate as a sovereign lender of last resort function, with massive purchases of eurozone public debt, the inexorable logic is that the eurozone will break up."

ECB willing to help banks, not governments
The latest moves are steps in the right direction, but much more is needed, say experts. "All of the harebrained schemes invented so far to resolve the crisis in euroland remain half thought out, unfunded and unimplemented...and therefore, still harebrained," said Carl Weinberg, chief economist at High Frequency Economics.

European leaders, particularly from France and Germany -- the eurozone's two largest economies -- have had very different views on the ultimate role of the fiscal compact, and the latest proposals are just "too little, too late, and miss the structural problem," said Leach.

Germany has been strongly opposed to sending the ECB down a path of printing money to stabilize Europe's economy. "Printing money is associated with hyperinflation, the collapse of the Weimer Republic, and the rise of Hitler," noted Leach. "From a German perspective the question is that, once the ECB has lost its virginity printing money, just how promiscuous could it become."

European leaders hash out crisis deal
And even if a "catastrophic event" changes Germany's mind, Leach says hurdles remain because "the ECB's balance sheet is already shot to pieces. It's massively over-leveraged." Though investors and experts alike expect the ECB to intervene for fear of the alternative, Leach doesn't think that a fundamental change is likely.

And with no other surefire way out, Europe's hard hit "Club Med" economies like Greece, Italy and Spain could be driven "to the point where they deem it in their national interest to exit the euro," despite the immediate economic, political and practical consequences. And it could happen in the next six months, he said.

Not everyone agrees. Evolution Securities analyst Elisabeth Afseth only sees a 10% chance of a euro break-up happening that soon, but agrees that European leaders have a lot of work to do, and kicking the can down the road only increases the risks of an end to the eurozone.

"In the short-run, it's beneficial for everyone to stay in the eurozone because the cost and pain of a break-up would be huge," she said. "But European leaders have to be careful in how they formulate the fiscal union. If the terms are all wrong, that's not good for the long run, and the danger of a break-up will remain."

Afseth said the fiscal union needs to focus more on boosting economic growth, rather than just pushing for budgetary discipline and fiscal austerity. And it needs to advocate for pooling the eurozone's debt together, so the region can issue eurobonds, another highly contentious topic among Europe's political leaders.

Despite the multitude and extent of the political disagreements that could lead to the eurozone's crumble in the near-term, more optimistic experts say Europe's leaders will likely find a middle ground to avoid the severe economic consequences.

"The political arguments are strong, but they come against a hard economic reality," said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh, Scotland, noting that the costs for a single country leaving the eurozone could amount to at least 15% or 25% of its economy, if not more.

World's largest economies
"A break-up could result in very major recession in Europe, and so it's hard to imagine how any politicians and governments could possibly make a conscious, voluntary decisions to leave the eurozone," said Milligan. But that doesn't mean it won't ever happen.

Milligan said leaders will likely lurch from crisis to crisis, and Europe's leaders will keep having to face complex political hurdles. "The chances that the eurozone will remain intact over the next several months are high, but the danger could get worse over the next couple of years, as they try and transition toward any sort of fiscal union," said Milligan. 




BNP Paribas Sold $2 Billion Swaps on France
by Abigail Moses - Bloomberg

BNP Paribas SA, France’s biggest bank, sold a net 1.5 billion euros ($2 billion) of credit- default swaps on the nation’s sovereign debt, according to data compiled by the European Banking Authority.

UniCredit SpA, Italy’s biggest lender, and Banca Monte dei Paschi SpA are net insurers of more than 500 million euros each of their government’s bonds, and Oesterreichische Volksbanken AG, the Austrian lender which has yet to pay interest on 1 billion euros of state aid received in 2009, has guaranteed a net 839 million euros of its national debt, EBA data show.

European leaders have blamed credit-default swaps for exacerbating the region’s debt crisis and have gone out of their way to prevent a payout of insurance on any euro area country. The European Union is moving closer to banning the use of derivatives on government bonds for any reason other than hedging risk.

“Some of this is trading rather than pure hedging,” said Gary Jenkins, head of fixed income at Evolution Securities Ltd. in London. “If European counties the size of France or Italy actually defaulted and triggered CDS, there would be total carnage and meltdown. It would be the end of the world, and at that stage it’s likely your counterparty would be the least of your worries.”

The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments fell two basis points to 360. Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s biggest lenders, have no net exposure through credit- default swaps to their government, EBA data show. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.


211 comments:

1 – 200 of 211   Newer›   Newest»
Nassim said...

Thank you Ilargi for that piece of advice - to take out some cash.

It reminded me of how I got wiped out financially by the revolution in Iran. The banks closed and got burnt by debtors.

I arrived in Amsterdam with less than $50 to my name. Fortunately, I had been promised a job over the phone with a large American firm and I ended up staying in a luxurious company apartment on the Herengracht for a while. :)

Last week, I took out some cash - just in case. Difficult to explain to my wife - although she lived through the Russian crash. The façade of normalcy is very convincing.

krollchem said...

European banks are also victims of the US Foreign Accounts Tax Compliance Act (FATCA) regulations on overseas accounts greater than $10,000 dollars. Most foreign banks are now forcing account holders who are either US citizens or "green card" holders to close their accounts. Inherited European accounts to US residents (e.g. European citizens living in the US) are being frozen by banks such as BNP , as they occur, and can only be converted to US dollars and shipped to US banks. The FATCA regulations for US accounts are just too expensive for the non-US banks to administer if they want to continue to use the FED discount window or have branches in the US. The main exceptions to the FATCA rule appear to be US residents who have accounts in the Chinese national bank, and for the obvious reason that the US Congress didn't want to make China mad!!!

Such forced funds transfers are leading to multi-billion dollars injections into US banks which can then be leveraged 40 fold and even re-hypothecated when re-invested in the US.

The FATCA rules apply to currency and commodities held overseas as well as asset transfers by US citizens and Green card holders to overseas banks. Any funds, excepting those of US service members and US government employees, are subject to a 30% withholding to cover taxes, thus recouping hundreds of billions in taxes each year. Those found hiding non-taxed funds will be assessed a considerable fine by the US.

FATCA regulations are even forcing US citizens living abroad, such as retirees, to consider turning in their passports in order to continue to receive retirement checks to non-US banks in foreign coumtries. Those who have duel citizenship, with one citizenship being US, are also subject to the FATCA rules (e.g. Israelis holding US passports).

Am I missing anything here?

freedom said...

From Mish:

Reuters reported ...

"Two ECB sources said the bank's governing council decided on Thursday to keep bond buying limited to around 20 billion euros a week and there was no need to review the decision in the light of the summit outcome.

"You will see some further purchases but not the huge bazooka that some people in the markets and the media are awaiting," one central banker said on condition of anonymity."

Quite frankly that is a pretty damn big bazooka.

Here is the math. 20 billion * 52 = 1040 billion euros, or 1.394 trillion US dollars.

20 billion does not sound like much until you do the math. The ECB has in its power ability to monetize about half of all maturing Eurozone government debt. That is not the unlimited bazooka that Sarkozy wants, but it is a lot of firepower and as I said, European taxpayers are at risk for the entire amount.

http://globaleconomicanalysis.blogspot.com/2011/12/britain-seethes-germany-sulks-france.html

Robert 1 said...

freedom said... 20 billion does not sound like much until you do the math.

Not being in the top 0.1%, one billion seems unimaginable to me. :-)

Robert 1 said...
This comment has been removed by the author.
Stoneleigh said...

krollchem,

Indeed, check out this piece as well:

The Attack on Accidental Americans

If you are a dual citizens with the US, even if you have never set foot in the country, your bank account in your own country is considered an illegal attempt to off-shore your assets. Tax liabilities will ensue. Trying to repudiate your US citizenship will take 2 years and will not cancel existing liabilities.

Don H said...

From my short novel: "After the Last Day"
Monday was a day of contrasts.

The banks did re-open, but not quite as advertised. There was no electronic or phone banking, no ATMs, and all over drafts were cancelled. Worst of all, withdrawal limits of fifty dollars per day were set. The limits were meaningless to about half of the customers, who were below water anyway. With overdrafts and lines of credit gone, they had no ‘money’ at all.

In spite of the limits a logistics problem quickly developed. The smaller, more remote, branches soon ran out of cash. Special armoured car deliveries were organized for later in the week and the problem was resolved, at least in the bankers’ eyes. Sharon went to the bank each day and took out the maximum until their account was drained. With their overdraft cancelled it was a matter of time until automatic withdrawals began bouncing, if the banks hadn’t already blocked them.

The banks all announced that they would be in contact with all clients to discuss amounts owing to them through credit cards, lines of credit and mortgages. The governments announced a decrease in interest rates to zero, but with the banks not lending money, it seemed meaningless. Those paying attention were dreading what the phrase “contact about amounts owing” would mean to them.

Alexander Ac said...

Regarding that 1 000 % debt/GDP graph from BI - they (Joe Wiesenthal) commented that since GB debt is so huge and they can still borrow so cheaply, the problem is not the debt itself, but the currency (regarding bond market problems in EMU countries).

I think GB is the next "Black Swan" and the crash might actually start there (or already had - MF Global)...

Alex

snuffy said...

The posts the last few weeks had me perform "due diligence"to what little I have.I have gotten very concerned about what appears to be headed this way.

Might be a hellava way to start the new year folks....

"The Idea" might be to hold it all together...till the new year

Its too cold for demonstrations now.."Occupie" Is down for awhile...and its looking like its going to get rough quickly boys and girls.

Those of us who are paying attention to the political class here were slightly shocked at the police state tip-off the senate gave....they were deadly serious about stripping ALL rights from everyone anywhere.It looks like its here .Now.

Luck...

Bee good,or
Bee careful

very,very careful.

snuffy

Greenwood said...

From the Economist

The moment, behind closed doors, that David Cameron lost his EU argument last night

Combined with

"(Cameron) was effectively asking for a softening of regulation on Britain's financial sector at a time when many voters and politicians believe banks are largely to blame for the crisis Europe is suffering and want tighter regulation on the sector."

Rumor has it that the banking center of Europe, what burnt out shell of it that's left, will be in Frankfurt, not London.

The UK is being cast a drift like a moldy crust of bread bobbing in the North Sea.

~

Ash said...

freedom,

Yes, but Mish fails to mention the fact that these are "sterilized" purchases by the ECB, meaning the value of bonds initially monetized must be offset by selling securities of an equal value in the near future. The ECB has so far claimed it cannot become a "lender of last resort" to EZ governments due to treaty restrictions and its single mandate of maintaining price stability (and "moral hazard", but I doubt that factors in much for anyone, anymore).

So even if we assume that the ECB will not be able to sterilize all of its purchases over the next year or two, it will still be monetizing significantly less than EUR20bn a week and, perhaps more importantly, the perception of sovereign bond investors on the solvency of EZ countries will remain unchanged. The question is really whether the ECB/Bundesbank will capitulate and monetize when the sovereign debt crisis "becomes" a full-blown banking crisis, which is right about now. So far, they're staying pat.

Greg L said...

What are the chances of a full out bank run/bank holiday of Europe impacting the situation here? Most people are looking at situation in Europe being remote from America and certainly the mainstream press portrays it as such, but I believe nothing could be further from the truth. Here in America, the press keeps a certain narrative alive about wars, American exceptionalism, the economic situation and etc. Yes, the media and the government have effectively merged with big business holding the controlling interest. So yes, they'll hold up whatever facade they can until events overtake it. I agree that there will be no warning with the crap hits the fan.

Considering that the banking system has gone to war against nations who've insisted on trying to operate outside of it, one wonders how long it will be before cash is outlawed and we're forced to go with digital money.

I think any country that's fortunate enough to remain outside of the global financial system will probably do just fine and may be not a bad place to be. I keep thinking about a country like Cuba whose been subject to US sanctions for years. They appear to have developed a system of life where they tend to recycle a lot, have minimal excess, have universal heath care and etc. That's not to suggest they're without problems, but since they're accustomed to hardships and the like, I suspect that you'll see less chaos in the place like that than you will here or in Europe.

scandia said...

@Nassim, Last week as well when Stoneligh said, " Whatever you have in the grip of the system is at risk." I withdrew my savings. The clerks were not as friendly as usual. They were surprised I wanted cash, not a transfer to my checking account. The tone turned sullen when I said I do not intend to spend this money,that the risk of a banking system collapse was high, too high for me to sleep nights.

I balanced the interest earned on the account against the current degree of risk. Ahem...the interest earned did not reflect the risk.

Hombre said...

Good advice!
I have a small stash since reading the "lifeboat" articles and plan to stash some more, not just for our house, but in case of a dire situation, for friends and neighbors as well--(those same folks who still seem to think everything will be ok soon as the "recovery" kicks in! LOL)

Community thinking will develop rapidly if things go bad, including sharing resources with neighbors and taking defensive preparations as well.
If it continues to merely slide slowly down, then nothing is lost in any case. "Be Prepared" is more than just a BSA motto. It's good advice.

Ash said...

As soon as I read this headline - Durban climate change: last minute talks produce 'historic deal to save the planet' - I thought to myself, "BS!". Sure enough, not more than a paragraphs into the article:

"The new deal means that for the first time every county in the world is committed to cutting carbon – although the legal wording remains vague and the treaty will not come into force until 2020.

Charities point out that the "Durban road map" is still too weak to stop temperatures rising above the "danger point" of 2C because it does not set tough targets for emissions cuts or a quick enough timetable."


But that just about sums it all up, doesn't it? Whether we're talking about the global financial crisis, peak oil, climate change or any other predicament doesn't matter. The M.O. of our political "leaders" and institutions is always the same, because they have never had to conceive of responding to such complex issues in such a short time frame.

So they try to do everything through international "cooperation" via treaties with vague wording, lax conditions and delayed implementation. Nevermind that the a trillion things can and will change between now and then that render every watered down agreement on paper meaningless within the next year, let alone the next ten. The only thing they have ever been good at is perception management, i.e. convincing everyone that no crises exist and buying time, and now they suck at that too.

Alexander Ac said...

Ash,

yes, any "climate deal" has to be bullshit from the start. I even did not bother to pay slightest attention to that meeting, and I AM climate activist (or I was?).

Economy not climate is what matters and "now" as opposed to "tomorrow" is what matters.

Why it should be otherwise?

Alex

Ash said...

Greg L,

"What are the chances of a full out bank run/bank holiday of Europe impacting the situation here?"

If you mean the economic/financial situation here - 100% chance. The links between Western banks are literally endless. A very good chance the sociopolitical situation will be impacted greatly as well. Despite equity markets being relatively small and lagging indicators of credit collapse, they still serve as the economic health meter for much of the "middle to upper class" public. Their crash also creates a self-fulfilling prophecy for struggling public businesses who have so far been able to avoid bankruptcy. Really, no part of the economy or society in general will escape the torrential downpour from collapsing credit markets.

jal said...

It appears that the businesses in the EU are limiting the amount of money that they have on deposits from the weak countries to the stronger countries, ie. to Germany.

For those who have money invested and know how to use the tax system then you might want to check out the following accounting manipulation to get “money for Christmas.”

Eg. you own a bond giving you 7% interest. You sell it to get your money back and invest it at 1%.

You now have a lost of 6%. ( the interest that you were going to get.)

That is now considered a business loss and is a tax deduction.

:-0

===

Greenpa said...

Reuben- re: herd behavior books- I really don't have a reading list to offer there. My own understandings and beliefs about human herd behavior (my preference- and avoiding the "herding" word, which is indeed confusing) comes from a lifetime of study and training as an evolutionary biologist and ethologist, with a major diversion into marketing (I give lectures), which you've already discovered.

Stoneleigh's recommendation on reading Prechter is good; his views come from a very different perspective, which is reinforcing.

There is one book I'd recommend; it contains the most cogent collection of actual science regarding the function of the human brain, both individually and in groups, I've ever found. By far.

That would be Philip Regal's "The Anatomy of Judgment", which is by way of being a cult classic among secular humanists.

http://tinyurl.com/c92fgn3

It's highly readable- but the information and correlations are extremely dense. I usually prefer to read 2-3 pages; and then digest it for a day or two.

Greenpa said...

Alexander AC - so young, to be so cynical!

:-)

While you're quite correct there is a huge amount of bullshit in international agreements, I wouldn't write off the international climate meetings so completely.

I was a presenter at #2 and #3; 1988/89. I know those people; both the scientists and the activists. Oh, yeah; and the politicians.

The thing to remember is- the politicians are different, at each meeting; but the scientists and activists are the same. And while I don't think they use my metaphor; they definitely work on the "pushing on icebergs" principle.

http://tinyurl.com/d9h2grs

They keep coming back; and keep pushing. And they're not going to stop. That can be very effective; in time.

Ash said...

Greenpa,

The problem is not with the people who show up, is with the system and institutional mechanisms themselves. There is simply no significant degree of top-down transmission from the good ideas of scientists/activists to the political institutions to the legal institutions of enforcement to the people of the "international community". Think about those levels as filters that progressively remove the productive substance of ideas generated at the international scale.

While China and India may say they are committed to significant reduction in carbon emissions and even put it in "writing", does anyone think they will actually sit by and watch their economies collapse and social fabric tear apart over 10 or 20 years just to honor some international agreement reached in 2011. Not a chance, and that's just one example. The scientists/activists can keep coming back and pushing all they want, but, like the combined powers of the world's CBs, they are simply pushing on a string.

Ash said...

Greenpa,

I just read your post. You say,

"So this big honking iceberg is edging towards you- and if it keeps going the way it is, it's going to crush your boat, which happens to have your family in it. Your boat is anchored fast; you can't just sail out of the way. Do you stand there and watch the berg come? Or do you push?"

I totally understand your sentiment here, and the point of your post in general. A major component of the Diamond project for ex., along with my personal education, is the idea of people applying force in all the right places to achieve maximum effect. At the same time, though, I believe sometimes we mislead ourselves by either over-generalizing or constructing metaphors/analogies that don't adequately capture the reality of the situation.

If the choice is between sitting around and watching an iceberg crush you and your family, or at least attempting to push it out of the way, then your metaphor makes sense. But is that really the choice? Perhaps the choice is where to direct our efforts - pushing against the iceberg or pulling up the anchor and moving our boat out of the way as quickly as possible. More likely, any iceberg/boat analogy to our ability to significantly mitigate the effects of current crises through top-down efforts will fall well short of capturing what is and is not possible (as probably does my "pushing on a string" analogy too).

Eliza Blue said...

@GregL

With regard to Cuba, you might be interested in the documentary "The Power of Community: How Cuba Survived Peak Oil."

http://en.wikipedia.org/wiki/The_Power_of_Community:_How_Cuba_Survived_Peak_Oil#External_links

@Greenwood and @Nassim
Thank you for your comments on earlier posts.

Greenpa said...

Ash- all true- but-

explain Gandhi to me, then. :-)

I'll guarantee everyone told him he was pushing on string- and he WAS - and - still the revolution happened.

I'll confess to being a bit of a Taoist-Confucian; ultimately, personal moral force and example are all we really have as tools. And- remember Women's Suffrage, and India- ultimately, that force CAN prevail.

With a huge amount of blood, sweat, and tears, to be sure.

I'm not in the least opposed to top-down policy fixes; the problem is finding a non-corrupt and sustainable policy tool; extraordinarily difficult just now.

And, I've got to say; it does look a whole lot like an iceberg coming to me; and there is nowhere to move the boat that will avoid it.

YesMaybe said...

Ash

They're referring to the Durban plan as a roadmap, cause that other famous roadmap has been so successful.

Lynford1933 said...

As a long time doomer and 'lifeboater' I believe my wife and I can withstand quite a downward change in the culture. We are both from the depression and understand saving and preparing for bad times; cash, food, water, arms, ability to cook and heat. The problem as I see it is the 300,000 other people in this area of the high desert. The high desert has no redeaming features for anyone that is not prepared. When things go to hell in a hand basket which sooner or later will happen they are not the least prepared. Most are spoiled rotten and dumber than a sack of rocks about any possibility of anything at all going wrong. It may get very 'interesting'.

el gallinazo said...

"I'll gladly pay you Tuesday for a hamburger today"

J. Wellington Wimpy

Greenwood said...

I don't know if there is a metric for this but I'd like to see some chart or measure of productive industrial infrastructure vs sovereign debt.

Greece having very little productive industrial infrastructure vs a huge sovereign debt contrasted against say Germany with a huge productive industrial infrastructure and a relatively moderate sovereign debt (at least compared to other Euro zone countries)

For having been bombed flat and cut in two during WWII, Germany sure did rebuilt itself in 60 years and reunite pretty impressively.

Can't say the same for England or several other EU countries.

The collapse of global banking will be devastating but not the same as having your actual country carpet bombed into knee high rumble.

People still needs a certain amount of 'stuff' to exist, even at a much lower standard of living. This stuff has to be made somewhere by someone. Germany seems far better positioned to 'rebuild' than most EU countries. They've done it twice last century and seem like the 'energizer bunny' in their ability to 'soldier on'.

Much of the EU seems to run on the 'mañana' principle and lacks the focus to rebuild anything much less a devastated financial banking system.

When the smoke clears from this first round of deflating contraction, it will be like the tide going way, way out, you'll be able to tell who really has a bathing suit on.

~

Greenpa said...

ah, joy. A little escallatio from Pakistan:

http://tinyurl.com/bsdsfc5

Not the behavior one has the right to expect from one's allies. So- then what?

Jeffrey said...

I am glad to see the subject of cash posted as I am trying to put into practice the manta "hold cash or cash equivalents" but am looking for some definition on "cash" and ideas for holding strategy. I can read this as cash in the bank or cash in hand.
If you live in an apartment with no place to bury, it can be nerve wracking to keep much cash where you live. Let's say you have $150k. Would a reasonable strategy be to hold $135k as cash in a checking account in a local credit union, $10k as paper cash in a safety deposit box there and $5k paper cash in your home.
Also I found the talk by Ann Barnhardt interesting, especially the part about getting out of your 401K. I had the broker move mine out of investments and into a money market fund which was told had the lowest risk and the greatest liquidity. Even so, it is not under my control and I would have to get permission of my employer to actually take possession of it and put in my credit union as cash. I am kind of on the fence about this.

Franny said...

@Jeffrey
A credit union account is not cash, it is a loan to an entity that may or may not be open for business and handing out cash when you need it. For any that you do not feel comfortable having at home, I suggest an account with the U.S. Treasury at treasurydirect.com It is the safest place.
Likewise, your 401k money market account is not exactly safe, depending on what instruments it holds. Some are big holders of European bank debt. For 401k money I would see if your plan offers a short term US government bond fund, the shorter term the better. NOT long term bonds, too much interest rate risk.

scandia said...

Speaking of pushing on a string CBC Radio One had a fantastic interview with Olafur Grimsson, President of Iceland, this morning. Grimsson was the man in a very hot spot who decided to hold a referendum and let the people of Iceland decide whether to bail out the private banks. He was perhaps
" selling his book ", that being Iceland, but he made several interesting comments. He spoke of the pressure by all European gov'ts/institutions to bail out. His reasons for not doing so were it is not fair to saddle citizens with a debt they didn't create and to bail out the banks is contrary to free market ideology. Grimsson believes failure is a necessary part of reality.
He said that fortunately Iceland recognized early that the crisis was not just economic but also political and social.Early on he could see that the banking crisis was destroying the social cohesion. He describes his position as going against pervaling orthodoxy by allowing failure, devaluing the currency and SHIELDING THE POOREST.
When asked about current investment he said there is too much interest in investment in Iceland. Rio Tinto is investing 1/2 billion dollars. IT has been booming. He was surprised to discover that when the banks failed all the talent they had employed became available for innovation. Apparently previous to collapse IT couldn't compete against the banks for engineers, computer programmers etc. He went so far as to say a too big to fail banking sector actually undermines development and innovation in the economy.
His closing comment was a zinger. " If we sacrifice democracy for finanacial expediency we have a very dangerous journey.

Greg L said...

>>>If you mean the economic/financial situation here - 100% chance. The links between Western banks are literally endless.<<<

Oh yes Ash, I definitely believe that and I also believe that most people don't realize the extent of the linkage and will not be prepared as a result. I've been pretty much convinced that what ever is going to occur will occur within the next couple of months if not sooner. There's no risk in preparation, but major risks if one is not prepared.

Hombre said...

I reckon Alex Ac's point was this...
The climate may get us this century, or in a few decades, but long before that the ponzi economic collapse will plunge us into a fight for our very lives.
So where should our focus be? On the weather? Or... on self sufficiency, community, and some semblance of versatility and survival?

el gallinazo said...

That should read treasurydirect.gov

As the European banking system implodes, USA shadow banking, AKA money market funds are sure to "break the buck." Not the safest place to stash your wad. While in the MSM "cash" is used quite loosely to include checking accounts and money markets, on TAE, it refers to small pieces of a linen cotton blend with pictures of dead white men on it. Cash equivalents refer to Treasury bills (as opposed to notes or bonds). Consider anything in a SDB to be property of the bank. If one must use a broker, try to pick one that is owned by the depositors.

Greg L said...

>>>With regard to Cuba, you might be interested in the documentary "The Power of Community: How Cuba Survived Peak Oil."

http://en.wikipedia.org/wiki/The_Power_of_Community:_How_Cuba_Survived_Peak<<<

Thanks for this link Eliza. I watched a portion of the documentary and will go back to watch it in its entirety later today. Here's a better link:

http://video.google.com/videoplay?docid=-1721584909067928384

Cuba's response to the Special Period is not only interesting but instructive on what needs to be done in response to the impending crisis we face. By conventional measures, Cuba is an economic basket case, but that's in the context of the existing economic paradigm which we all know is imploding. From what I understand, there is an excess of highly educated folks in Cuba, particularly in the medical and science areas and I suspect that this combined with its experience responding to US sanctions and the Special Period will give it distinct advantages in the new economic paradigm that will emerge. The biggest advantage is the survival of that society as they've a huge head start on preparation not to mention a value system diametrically opposed to our system. A place like Cuba may not be a bad place to be about right now.

Thanks again for the reference.

Nassim said...

So this big honking iceberg is edging towards you- and if it keeps going the way it is, it's going to crush your boat, which happens to have your family in it

Greenpa,

Perhaps you should get your boat out of the way.

BTW, I have ordered "The Anatomy of Judgement" - $1 plus shipping on Abebooks. I look forward to seeing what it is all about. It must be good since it is the only book a certain Greenpa recommends on Amazon. :)

Greenpa said...

Ash- here's a little insight into a person, and the inner dynamics of the decisions at Durban:

http://tinyurl.com/brdl8kc

Now- I would not, of course, take this all at face value; but it's the sub-surface news.

My take on the "value" of the "agreement" - is NOT that it's going to generate effective compliance or policy. What it might be, however, is an effective push on the iceberg; and it might be a piece of herd management, that was knowingly set up to be just that.

If you go back to the early days of the Kyoto Protocols - which we can agree has resulted in not much real action- the initial response from the hard-nosed non-signatories was that it was pointless, impossible, a pure waste of time, etc.

I would contend that the general world response to the ideas in the Kyoto Protocols has actually shifted, in the meantime- and in the desired direction. There's a little more guilt, among US citizens and even politicians, that we are not signatories. A LOT more pride from those who are- and increasing pressure from them for others to join. And real anger, from those who made real efforts.

It's a little change in the herd movement, and herd attitude.

This new agreement, for all that it's "legally binding" (a hilarious concept in any international agreement) will likely result in little hard action- but it might in fact succeed in moving the herd mentality further in the necessary direction. That just might be all they're really hoping for; and it would be a non-trivial achievement.

And keep the Montreal Protocol in mind. It worked, still works. All that it could be- or all that it needs to be- no. But far better than nothing; which seems to be all we can hope for at the moment.

jal said...

Find out if you can get your 401k

http://www.irs.gov/retirement/article/0,,id=162416,00.html

Retirement Plans FAQs regarding Hardship Distributions of 401k

Generally, if a 401(k) plan provides for hardship distributions, the plan will specify what information must be provided to the employer to demonstrate a hardship. Most 401(k) plans use the "deemed necessary" rules described in Q&A-2 above, so that inquiry into the employee's financial status is not required.

scandia said...

RE the radio interview with the President of Iceland I forgot 2 important comments.
Firstly when former friends were putting the screws to Iceland they opened dialogue with China. He says the dialogue with China was surprisingly " sophisticated, that the Chinese responded with goodwill toward Iceland.
Finally in the actions taken Iceland set up a special prosecutors office to prosecute fraud/corruption in the banking system. Oh why oh why has a special office not been established in any other country? At least not that I've heard of.

verisimilitude said...

Looking at the graph ilargi has posted ( G10 Debt Distributation) it seems that US and Canadian government or public debt to gdp is sroughly equivilant but from the figures below Canada public debt to GDP seems to be aprox one to three, while the Us debt to GDP is about one to one. I wonder how accurate the rest of the graph is ?

=============================================
http://www.davemanuel.com/canada-debt-clock.php

$570,501,558,723.00 CDN

Last Updated: November 15th, 2011

------------------------------------------

http://www.google.ca/search?q=Canada+GDP&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a

$1.57 Trillion US dollars at current prices - 2010

================================================

http://www.brillig.com/debt_clock/
US public debt is about $ 1 5 , 0 6 2 , 6 0 3 , 3 7 8 , 6 0 6 . 3 2
----------------------------------------------------
http://www.google.ca/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:USA&dl=en&hl=en&q=us+gdp

US GDP is about 14.58 Trillion dollars

Ash said...

Greenpa,

I hear you, but all I see in those MSM articles about the agreement is 99% spin, and maybe 1% substance. Of that 1% substance, I'd say its a safe assumption that only .01% will ever be sustainably implemented and enforced. When we get down to such low percentages, we have to ask ourselves whether its really any better than nothing? What about the sense of false hope and complacency that will be created by this agreement as it is presented with 99% spin?

Like Bass and Ilargi mentioned in the lead post, the role of governments, international institutions and MSM these days is to find ways of keeping the dire truth from their citizens, at all costs. These late night, last minute public relations deals may be more about that than anything else. Frankly, it's very hard to trust these emerging-from-late night-summit bastards anymore. And when you say this,

"There's a little more guilt, among US citizens and even politicians, that we are not signatories."

I simply fail to see that right now, or at least fail to see it lasting anyway, as more imminent economic threats are borne out. The same is even more true in the former rapidly developing countries. Seriously addressing issues like climate change require a whole lot of sacrifice by industrial economies, in a time that is permeated by nothing but sacrifice. Perhaps I'm just in a more cynical mood than usual right now, but it's not all bad.

The more failure that occurs at the top, the more people realize the fallibility of those institutions and begin to see other options for working towards their goals outside of the system. That may require a significant reduction in it expectations on their part, but it doesn't make their actions any less meaningful. Instead of exerting pressure on the top-down institutional system, they will exert pressure from the bottom up, and with a lot of effort and a lot of luck, they may actually move a few communities and/or nations out of the iceberg's path.

Bill 1962 said...

I'm only about 4 years from Social Security eligibility. If I'm understanding you folks correctly, then you'd recommend that I take my benefits as soon as I turn 62.

I don't see the short term Treasury call. With inflation at 2-3%, you're earning negative real return. I want to be safe, but negative returns are hard to stomach. It's like walking around with a holes in your pockets and dollar bills falling out the bottom of your pant legs.

Why not stick with a conservative corporate bonds? I could buy a Proctor and Gamble 2029 maturity bond with 8% coupon and 4.25% yield to maturity. That's a nice 120 bp spread over 30 year Treasuries. At least I'm almost on par with inflation in that case. And I'm backed by a company sitting on a record amount of cash.

p01 said...

It's like walking around with a holes in your pockets and dollar bills falling out the bottom of your pant legs.

The alternative is no dollar bills in any pockets, Bill. You decide.

Bill 1962 said...

p01

The alternative is no dollar bills in any pockets, Bill.


I'm all for being conservative during uncertain times. We live in uncertain times. But investing in Proctor&Gamble bonds is hardly wild eyed speculation. Most would hardly even consider P&G bonds an investment decision. P&G has record cash on its balance sheet. They could lend banks money if needed. Even if you assume the worst -- A Depression (possible) -- Proctor and Gamble gained market share during the Great Depression. They increased spending on advertising and gobbled up the remaining demand as weaker competitors were forced off the playing field.

verisimilitude said...

Bill, as long as you feel confident you can get out of them with at least a whole skin up to that maturity date, then I would take the chance. But, just for fun, you might try imagining how increasing inflation rates could affect the intermediate term selling price of that bond during that 18 years.

Ash said...

Bill,

The name of the game right now is to avoid as much credit risk as possible. If inflation is running negative for a few years (as it tends to do during a severe deflation), the real rate of interest on debt-assets will be higher than the nominal rate. Cash and cash equivalents will preserve purchasing power much better than depreciating assets, with relatively minimal credit risk over the next few years. HY corporate bonds, otoh, will carry immense credit risk during this time. Perhaps some companies are better equipped to handle the stresses than others, but are you really willing to bet your savings on your ability to pick the winners from the losers? I'm not.

Phil said...

I didn#t realise that TAE was this influential:

Swedbank says ATM queues in Latvia due to false rumours

:-)

John Day said...

It seems as though we are all feeling the weight of the wave of history which looms over us, about to crash. I have been feeling it lately.
We need to do more than just not extinct ourselves in WW-3, in this crisis.
I have been worried about that scenario, and we all must, but a realization has dawned on me in recent months, that this is only the beginning of all that we must do. It will be taken for granted that we didn't extinct ourselves, just as we take it for granted now.
We have a whole lot more to do, and much of it is not even visible yet.
We will really need to be on our best behavior, and work together cooperatively.
This forum is an example of a considerate and helpful community.
I "lurked from Spring of 2008, until sometime in 2009, posted something for the Ann Frank issue, something for Ash's post about us boomers ruining everything, donated back in 2009, and spent a couple of "Franklins" helping Stoneleigh give her talk in Austin in 2010. I hope I'm allowed on with this post. It's all so confusing...

Ash said...

And speaking of totally useless treaty "agreements", we come back to the regional bloc that was supposedly leading the way with international cooperation on issues such as climate change, human rights, etc. - the EU, which may no longer exist within a year.

Bundesbank rejects Europe's IMF funding ruse

"Europe's leaders agreed in Brussels to mobilise the reserves of the 17 national banks of the eurozone system to finance the IMF, hoping that this will then lever fresh money from China, Japan, and other global powers.

Andreas Dombret, a Bundesbank board member, said Germany's central bank cannot take part in any form of covert funding for EMU states in trouble through the bank-door of the IMF, saying further money can be used only to support the normal operations of the Fund.

"The money cannot migrate into some sort of special pot that is used exclusively for Europe. That would be a clear breach of the prohibition of monetary financing of states. The German Bundesbank has explicitly ruled this out," he told the Handelsblatt newspaper.

Mr Dombret said the Bundesbank's share of any such IMF package would be €45bn and is "inherently risky". It would require an indemnity of some kind from the German parliament. This in turn would breach the €211bn ceiling already set by the Bundestag on EU bail-outs.

Mario Draghi, the head of the European Central Bank (ECB), raised similar concerns last week, warning that the ECB is not willing to use the IMF as a conduit for covert sovereign rescues in Europe.
"

Chas said...

I'm still conflicted on whether I should pay off my mortgage. If I do, I'l still have over 2x my salary.

The paper is being held by local bank. If I have money on deposit with them that covers the mortgage, I should be okay, right?

Bill 1962 said...
This comment has been removed by the author.
Bill 1962 said...

Ash
are you really willing to bet your savings on your ability to pick the winners from the losers?

I think you can safely pick some of the winners with minimal inside knowledge, a healthy dose of cynicism, and wisdom borne from years of watching the system work.

To pick winners from losers you need to think beyond pure economics of matters. The economics certainly favor a large multinational like Proctor and Gamble. Cash on hand, global branding, deep institutional access to top tier corporate debt underwriters -- all of these factors tip scales heavily in favor of P&G over its competitors during tumultuous times.

But, that's only half the picture. What position does Ohio occupy in the US political spectrum. How many US Presidents have failed to win Ohio? Who are the largest purely private corporate employers in Ohio (exclude quasi-private health care employers)? P&G is #6 employing about 15000 people. Compared with the Ohio's #1, #2, and #3 private employers (low-end retail and groceries), P&G is a high paying private employer (median salary $85000). Within Cincinnati, it is the power broker. How many Republicans have won in Ohio without carrying Cincinnati? Zero.

It's important to consider the companies that hold implicit political backstops. Once you've factored that into the equation along with balance sheet analysis, then you know where to gain risk premium over Treasuries.

Greenpa said...

Pakistan news item #2 for today, from Japan:

http://tinyurl.com/745w9sr

"A Pakistani retired general says a North Korean military officer gave him 500,000 dollars in a bid to build ties with the Pakistani military on nuclear and missile development.

"Ziauddin Butt, who headed Pakistan's intelligence agency and the army in the 1990s, made the comment in an interview with a local TV channel.

"He said a North Korean military officer visited him in the mid-1990s and offered him a bag containing 500,000 dollars. At the time, he was in charge of procuring weapons and equipment for the Pakistani military."

My point with all this Pakistan stuff; the "buzz" in the MSM can indicate building pressures and directions; it can be intentional releases to justify actions- or not. Just- there's a lot of Pakistan stuff floating around now...

Ash said...

Bill,

If you feel that kind of fundamental analysis of companies gives you a large edge in your investment decisions, then I understand why you feel the way you do. I think most here would agree with me, though, that those economic and political fundamentals won't make a whole lot of difference given the scale of downturn we will be facing, i.e. I wouldn't be in the least bit surprised if a company like P&G gets pounded or even goes bankrupt despite all it has going for it on the surface. Despite many underlying similarities, we are not going through a repeat of the Great Depression. This worst of this one will be much more forceful (i.e. more deleveraging and higher unemployment), more widespread and more quickly felt.

Joe in NC said...

Obama just said on 60 minutes he saved America from ever having to bail out financial institutions again (Dodd-Frank). I feel soooo relieved.

.

Anastasia said...

Hi Ash,

If you're predicting things that didn't happen during the great depression, then on what are you basing your certainty about what's coming? What is your historical basis? If you're predicting things that didn't even happen back then, I just don't see it. I read Amity Shales book on the Depression and we're no where near depression statistics. Depression unemployment was over 25%. We're at less than 9%. NPR just reported that online Chistmas gift sales are breaking records. These things don't fit the extremity of your vision for an event that doesn't have a historical basis in modern times.

verisimilitude said...

Bill 1962


It's important to consider the companies that hold implicit political backstops."

Ever hear of a company called Nortel?

Jeffrey said...

Franny,

I guess I have not understood the subtleties of cash. I still don't understand how what is in the credit union is different from a treasury security. I thought they both just electronic accounts representing physical dollars.

Regardless I appreciate the information. I will look at the treasury direct site in more detail but when you say open an account you mean buying bills, notes or bonds. Which one I don't know.

Imagine you are writing TAE finance for dummies. That is what I need. Thanks.

ben said...

merseyside dock action

this is a photo of the earth first! liverpudlian port shutdown in 1991, in response to the importation of rainforest hardwoods. avian activists on cranes in the background. old-fashioned, almost-friendly-looking arrest in the middleground; an officer and a gentleman; smile!; it's almost as if the gentleman will be released as soon as the photographer lowers his camera. the three-legged, two-headed officer in the foreground elevates perspective by creating a nice, dark vanishing point in the form of stacked lumber-ends.

i hate verisimilitude

Joe in NC said...

I'm struggling with the idea of president Obama saying on 60 minutes that he saved the US from any more bailouts. If I understand Ilargi correctly, there will no doubt be bailouts before the election. Why would he make a statement like this on 60 minutes if he knew this was not true. Did his adjusters/handlers take a vacation?

.

verisimilitude said...

Hi Anastasia

"We're at less than 9%. NPR just reported that online Chistmas gift sales are breaking records.

2011 Consumer Confidence and Expectations Poll Results - Compare to 2009 - 2010. Not good!

BTW I am saving gas and aggravation by shopping on line ... and spending less that way!

A Fall Guy said...

re: "historic climate change deal in Durban"

What's needed for all these complex crises is "action now" to achieve "results later" (complex systems have time lags and thresholds beyond which change is rapid and/or permanent).

Politicians generally do things backwards: they want "results now" for "promises of actions later" (beyond this election term or even the next couple in case they are still around). I guess part of the problem has been that the latter approach has worked to a degree in the past.

verisimilitude said...

Ben says:

"i hate verisimilitude"

Well pal, me too! What we really like arround my place for rhyming lyrics comes by way of The Moon

Ash said...

Anastasia

There are several different factors that suggest the current GFC will be worse than the GD (leaving aside energy/environmental/geopolitical/sociopolitical issues).

1) The private debt-GDP ratio in the US before the GD reached levels of about 100-150%, which is at least twice as small as those reached in 2005-07.

2) Sovereign debt/GDP ratios were not much of an issue during the GD, while now they obviously are for some of the largest economies in the world.

3) Similarly, the speculative bubble leading to the GD was limited to stocks, while the sub-prime bubble has extended its reach into just about every other asset class out there.

4) The global banking, industrial and corporate systems were not nearly as integrated (inter-dependent) in the GD as they are now.

5) The lack of any significant industrial manufacturing sector that can be put back to use and help offset the economic contraction from deleveraging.

6) Demographic trends in the developed nations where more and more resources from younger generations are needed to support the retirement of older generations.

All of these factors and more strongly suggest that the ongoing GFC at its worst will be much worse than the GD at its worst. The government's numbers on inflation, unemployment, etc. cannot be trusted at all, and most alternative estimates show that the situation right now is much worse than the mainstream makes it out to be. We cannot predict exactly how bad it will get or when, but there is little doubt in my mind that true US unemployment could reach 20%-25% in the next few years.

Rates like that are already developing in European countries, such as Spain, where youth unemployment is upwards of 40%. As austerity continues to take its toll over there, and over here, unemployment and deficits will only get worse in a self-reinforcing, positive feedback spiral of debt deflation and economic contraction. It will get real ugly, real fast, to the extent that it's not already.

Ash said...

France fears credit rating cut despite bid to ease eurozone crisis

"France, the second-biggest economy in the eurozone, was the only AAA country singled out for a possible two-notch credit downgrade because of growth predictions seen as too optimistic, the threat of recession, budget cuts judged to be inadequate and the exposure of its banks to the sovereign debt crisis in Greece, Portugal, Italy and Spain.

A Reuters survey of 13 economists found 11 thought France would be downgraded by one of the major ratings agencies within the next three months. That would cause serious difficulties for Nicolas Sarkozy's 2012 re-election battle because he has staked his campaign on his personal ability to lead France out of the economic crisis.

A downgrade could push the government to hurriedly introduce a third austerity plan, after two rounds of limited budget cuts and tax rises in recent months. Unlike Britain, France has focused chiefly on tax rises rather than sweeping spending cuts. "If we lose the triple A, I'm dead," the president was recently reported saying in private."


If FrAAnce is downgraded, their domestic political issues will be the least of Europe's worries. It effectively means one less country that contribute any significant capital towards the bailout funds, and Germany is simply not going to bear the cost alone. When French bonds are impaired, there will be no possible way for policymakers to kick the can further and prevent a widespread banking crisis across Europe that inevitably makes its way over to this side of the pond.

bosuncookie said...

Verisimilitude

YesMaybe said...

Jeffrey:

When you make a deposit at your bank account (whether it's a credit union or not), what's really going on is you lend them the money. Then they lend that money and more out to other folks (since it's a fractional reserve banking system) using their computers... the same computers that show your balance. If your money in the bank really just represented cash, one could ask where the cash it represents is? But there is no answer, because of the double-counting involved in fractional reserve banking.

This is a key point in many articles here, that debt and money are not really the same. They are pretty much interchangeable during an expansion, but not during a contraction.

Now, a government bond or whatever (I don't know the differences between the various treasury instruments) is also debt, not cash. The difference is it's owed to you by the government rather than the bank. So it's really just a matter of the view that there's more risk of a bank not paying its debt to you than the US government (Ilargi and Stoneleigh don't have that much confidence in the FDIC when things really get bad). This faith which people have in the US government means its bonds or notes or whatever are closer to cash on a money-ness scale, so they are sometimes spoken of as cash-equivalents.

bosuncookie said...

Our “friends” live modestly, hand-to-mouth, in suburbia. No savings. One of them has SS and state retirement funds totaling $2k per month. What other meager income is from the underground economy. Only debt is mortgage, with $168k balance. Mortgage, taxes, and insurance eat up $1.6k per month.

So what are our “friends” doing relative to this “Cash for Christmas” post? Any excess funds will be withheld from checking and deposited in backyard bank. Other funds used to pay bills will be managed this way: funds for groceries, gas, and easily-paid local bills will be kept in backyard bank; until a better idea presents itself, distant bills will be paid using their credit union’s electronic bill payment service. Any checks received will be deposited in the credit union, but quickly managed as above, removing cash per this scheme.

Feedback for our “friends”?

verisimilitude said...

bosuncookie said...

"Verisimilitude"

Hey dude that site gots no rectitude?!

bosuncookie said...

Hey, the did put a little caveat:

For more near rhymes, try searching OneLook.com for words ending with *ude

Such as...


Words and phrases that rhyme with tude: (111 results)

1 syllable:
blued, booed, brewed, brood, chewed, clued, crude, cude, cued, dude, feud, food, glued, gude, hued, jude, lewd, mood, nude, plude, poohed, prude, rhude, rood, roode, rude, ruud, screwed, shooed, shrewd, skewed, sood, spewed, stewed, stude, sued, trude, ude, viewed, who'd, wooed, you'd

2 syllables:
abboud, abood, aboud, accrued, allude, bird food, blood feud, buy food, canned food, canoed, cat food, collude, conclude, construed, debuted, delude, denude, dog food, elude, endued, ensued, eschewed, exclude, extrude, exude, fact mood, fresh food, health food, imbued, include, intrude, likud, mahmood, mahmoud, mahmud, maksoud, masood, masoud, nonfood, obtrude, pet food, preclude, protrude, pursued, renewed, reviewed, seclude, shampooed, snack food, spoon food, subdued, tattooed, unglued

3 syllables:
ballyhooed, breakfast food, common mood, devil's food, finger food, frozen food, misconstrued, rabbit food, takeout food, yongchaiyudh

4 syllables:
convenience food

5 syllables:
dehydrated food, imperative mood, indicative mood, miraculous food

6 syllables:
delicatessen food

progressivepopulist said...

Just wanted to offer a tip for the backyard bankers (and future backyard bankers)

4 inch Schedule 40 pipe 10 feet- $14.50
Schedule 40 4 inch caps- $7

4 inch PVC sewer drain pipe 10 ft- $10
4 inch sewer drain caps- $2.40

If you have multiple "accounts" the difference on the cost of caps adds up pretty quickly, but as I hope El G will hopefully back me up on this, for the purposes of water tightness the sewer drain pipe is about the same as the schedule 40.

Nassim said...
This comment has been removed by the author.
Ruby Claire said...

It wasn't necessary to get going last The month of january. You don't have to give up the retail center or make all your presents. You may not even have to depart your credit charge cards at home.

Financial forms

el gallinazo said...

Jeffrey,

When you put money in a checking account or savings account, you are essentially making a loan to a bank. You do not legally really possess that money any longer. The bank may play with it to their advantage (or not). Checking accounts are demand accounts, and under normal circumstances, banks are suppose to release the money against your checks or withdrawal immediately. If a bank goes belly up, they are no longer responsible for returning the money in your account. You fall into a special category of creditor. That is why the FDIC was developed during the depression, although community banks and credit unions do not use the FDIC, but rather have a different insurance GSE (I forget the exact name) which at the moment is in better shape financially than the FDIC relative to the amount of deposits it insures.

The FDIC is nearly bankrupt at this point. Additionally, the TBTF banks have pushed through a law that their derivative gambling wagers have seniority over retail deposits. Welcome to the wonderful world of finance fascism. What this means basically is that when these banks tank, the depositor accounts will be wiped out 100%. I&S have stated with total assurance many times in the past that the FDIC will be overwhelmed and will not make good the retail deposits in a timely fashion. I agree with them. By this point of financial triage, the elites will have more pressing priorities with money and credit. The FDIC is broke before the top of the order has appeared at the plate. It threw out its arm warming up.

So why is treasurydirect.gov superior? Basically because the currency of the USA is supported by the treasury debt, as in money is debt in the current system. If the treasury defaults, then the value of the dollar goes to zero. It would mark the end of meaningful international trade and finance for the country including oil imports. So from the standpoint of the elites, it is the most essential institution to protect in order to insure their interests. As a little guy hiding in treasuries bought directly from the government, you are a lamb hiding in a herd of ornery bison, and less likely to be attacked and defrauded by the circling wolves (such as Jon Corzine). A treasury default would be totally a political decision in the USA as they could always force the Fed to print the money to cover. While most consider monetization of the money supply a partial default, at least you maintain some value unless total HI kicks in. Now that we appear to be on the edge of a snowball of deleveraging, probably to be triggered by Europe, the USD should actually increase its purchasing power for the next few years.

el gallinazo said...

Bills, Notes, and Bonds are just govspeak for the duration of the "instruments." (Don't you love the smell of newspeak in the morning). I believe that a Bill is one year or less. One approach is to divide your savings in half, and then put each half in a counter rotation. Such as buy 13 week t-bills and run them in two batches maturing every 6 or 7 weeks. That way you should have access to half your savings every 6 weeks or so. The idea of staying in Bills despite the nonexistent interest (as opposed to say 30 year bonds), is that you should never have to try to sell it into the secondary market, but rather just wait for it to mature and send it back to your bank at 100% of face value. Thus you are immune from the future bond dislocation when interest rates shoot up and the market value of bonds tank. Treasurydirect.gov has been very efficient so far at wiring requests to your bank, less than 24 hours. Then you could withdraw it in cash in a day or two from the bank, which would limit your window of jeopardy of your money in a bank. It's a good idea to have three bank accounts tied into td.gov, so one of the banks might be functional when you need to get your money.

Td.gov is not a substitute for bank closures and holidays. You still need cash in Backyard National. It's just the most effective of way of preventing the great white cozines from actually stealing you money right out of your account. As Bill Black titled his book, The Best Way to Rob a Bank is to Own One.

Nassim said...

Bill 1962,

Please check out the composition of the Dow Jones Industrial Average

Sure, Proctor & Gamble joined it in 1932. However, how many others from that era are still on the DJIA? The answer is two - General Electric and Exxon.

27 companies that were on the DJIA have been displaced since 1932.
If you think the future is going to be less risky than the past, I have some news for you. :)

BTW, if you think P&G's products are somehow irreplaceable, let me disabuse you. Here are their main segments:


Beauty segment


Grooming segment


Health Care segment


Snacks & Pet Care segment


Fabric Care & Home Care segment


Baby Care & Family Home Care segment



I cannot think of any product in these segments where the raw material amounts to more than 10% of the cost of the final product. These are products entirely dependent on a well-off populace watching TV for 3 hours per day and prefering an easy life to making-do. These fantastic gross margins are largely consumed by marketing, advertising, packaging, distribution and managerial costs - costs that will have to disappear. The labour component and high-tech components are close to nil.

Let me give you an example. My dad, during WW2 - when no makeup was obtainable - made lipstick for fun for his lady friends. He could produce high-quality lipstick every bit as good as the best French makes for pennies per pound in his lab - of course the packaging was non-existent.

Much later on, he would mine and grind talcum powder by the hundreds of tons - it was used to dilute pesticides. Talcum powder comes from a mine just like coal. He would tease my mum that his talcum powder was finer and of better quality than the stuff she bought, at great cost, from famous suppliers. She could feel it and accepted that it was better but did not change her habits.

All I am saying really is that there is a huge amount of ignorance and brain-washing going on and that is P&G's real business model.

el gallinazo said...

progressivepopulist said...

4 inch is really overkill and difficult for the inexperienced to work with. I recommend either 2 or 3 inch. Two and one half is best, but difficult to find. Two inch puts a little convex curve in the bills but it is very compact. Don't skimp on the glue, but give it plenty of time to dry before you add anything, as it will dissolve polyethylene. You can speed up the drying with a hair dryer if you are type A. When you glue on a fitting, give it a quarter turn to improve the seal. Also recommend that you only cap one end and use a female threaded adaptor fitting and a teflon tape wrapped plug on the other. Use a PVC plug and not metal for obvious reasons. Then you do not have to hack saw off the end every time you wish to access it. Also place the bills double enclosed in one quart zip lock bags with the air squeezed out. If you can find some small silica gel bags to include for moisture, so much the better, but in my experience not essential unless you have sweaty hands when you handle money :-)

PP, listened to your your Wolff WBAI mp3 download and thought it worth while. Thanks for the link.

--- said...

What is curious is that anyone takes govt mouthpieces at face value concerning their putative benevolent motives towards climate change. One would thing that the mendacity of the financial situation would render all of them beyond credibility for anything. Yet even the skeptical public nods in agreement about climate change accords. As if any politicians ever voiced a sincere word. Or had an on/off switch for the guile.

A call-in radio program recently featured a meteorologist who raised the subject of competing claims on climate by various nations with geoengineering tools, scientists and capabilities.

Perhaps it is yet another case of follow the money:

"More significantly, two major Arctic routes - Russia's Northern Sea Route and Canada's Northwest Passage - have opened simultaneously, giving shipping companies a glimpse of a potential future of reduced journey times and costs by avoiding the Suez Canal. The Arctic was recently crossed in a record eight days by an STI Heritage tanker powering from the United States to Thailand.

Meanwhile, the eyes of some country and company leaders have been widening over the prospect of reaching previously inaccessible hidden oil and gas reserves beneath the Arctic seabed.

Depending on your point of view, the eagerness to capitalise on the loss of ice to drill for a new fossil fuel resource is either blackly amusing or a reflection of the human race's inability to come to grips with the damage it is doing to the planet - or perhaps both. If you ask a scientist for evidence of man-made climate change already affecting physical systems, the most frequent response is: look to the Arctic.

"More significantly, two major Arctic routes - Russia's Northern Sea Route and Canada's Northwest Passage - have opened simultaneously, giving shipping companies a glimpse of a potential future of reduced journey times and costs by avoiding the Suez Canal. The Arctic was recently crossed in a record eight days by an STI Heritage tanker powering from the United States to Thailand.

Meanwhile, the eyes of some country and company leaders have been widening over the prospect of reaching previously inaccessible hidden oil and gas reserves beneath the Arctic seabed.

Depending on your point of view, the eagerness to capitalise on the loss of ice to drill for a new fossil fuel resource is either blackly amusing or a reflection of the human race's inability to come to grips with the damage it is doing to the planet - or perhaps both. If you ask a scientist for evidence of man-made climate change already affecting physical systems, the most frequent response is: look to the Arctic.

To put things into context, some quick facts and figures: Arctic temperatures have risen at nearly twice the pace of the global average over the past 50 years. The past five years have been the five lowest for sea ice cover since satellite data was first collected in the 1970s.

http://www.hillsnews.com.au/news/world/world/general/on-thin-ice/2295032.aspx?storypage=0

el gallinazo said...

Nassim

Brilliant.

--- said...

Appendix: Ice Breaker Ships are part of the puzzle of rapid melting of both North and South Poles. Breaking up ice flows, they leave chipped ice which melts faster than large expanses. Global Warming has accelerated since the advent of the icebreakers (http://www.marineinsight.com/marine/types-of-ships-marine/top-5-biggest-ice-breaker-ships-in-the-world-in-2011/).

el gallinazo said...

CHS has a particularly good post today.

http://www.oftwominds.com/blogdec11/Wall-Street-marketing12-11.html

pasttense said...

Jeffrey:
Instead of one credit union you should split the money in three or so institutions.

Chas:
I think you should go ahead and pay the mortgage off. The general view on this blog is to get rid of your debts (assuming you have an adequate short-term emergency fund)

Sean said...

So where should I put the retirement money? My 401K only offers a money market or a bond index fund among its "conservative" investment options. Which is more conservative? The money market yield is 0.2%. But what is there's European Bank commercial paper in there? Who knows what the bond fund is holding. The annualized return is 2.8%. On a yield comparison basis, the money market looks like the better option but I just don't know. Ideas/thoughts from comments section are very much appreciated.

Bill 1962 said...

Good retort on the P&G idea. You're probably right.

What about the social security I've been paying into for all these years. Will it still be there for me in 3-4 years? Are they going to cut me off just when it's my turn to retire?

ben said...

LG, i just bought 16" of 4-inch PVC. why is it hard to work with? i got two end caps so will have to go back for adapter and screw cap if i end up sticking with 4-inch. thanks for teflon tape and quarter-turn tips. it's fairly cold out - will it matter much moisture-wise if i'm sealing it up inside where it's warm? i do have dessicants.

Nassim said...

el G,

Since you were in the plumbing business, perhaps you already know this.

Our favourite sink/drain deblocker is called Mr Muscle - it costs around $15/litre or $15,000/ton. I suspect the ingredients cost around $500/ton - 3% of the shop price. In fact, you can make your own by reading this page - Drano and doing a few experiments.

It has always amazed me how many people go in for farming as a way to guard their futures. I cannot think of anything that is more difficult, long-term and risky. Anyone who makes cheap soap, detergents or beauty products for his community is on to a winner. :)

Alexander Ac said...

Two interesting news:

First, whatever happened to "nuclear rennaisance"?

France's state-owned nuclear reactor maker Areva is set to announce large losses, the French industry minister says.

and second: Unemployment concerns UP, global warming concern DOWN:

Unemployment is the world's fastest-rising worry, a BBC World Service survey covering 11,000 people in 23 countries suggests.

Nassim said...

Alexander Ac,

For political reasons, France has perhaps the cheapest electricity in Europe. If the EDF had German prices, the accounting profits would be astronomical - Germany's electricity price is almost twice that of France.

However, accounting profits are ignoring a lot of the costs and risks that fall on the rest of society so I am not suggesting that nuclear is a cheap option.

Alexander Ac said...

Nassim,

thanks, interesting. Global nuclear power output peaked in 2006-7, I am not 100 % sure we will surpass that value... what is your opinion?

TAE Daily said...

Ratings agencies making threats (and biting off more than they can chew).

Telegraph Blog

10.42 "It's not just the censure from Moody's this morning that is making people worried about possible downgrades - eyes are on rival credit rating agency Standard & Poor's which last week warned the eurozone of a downgrade if it is unable to come up with a viable plan.

With Moody's firmly of the view that leaders have not yet come up with the measures needed (see 07.45 on this blog), the question is, is the S&P axe about to fall? Jean-Michel Six, the chief economist of S&P Europe, said this morning:

Quote 'Time is running out and action is needed on both sides of the equation, on the fiscal and monetary side ...

[But] There is probably yet another shock required before everyone in Europe reads from the same page, for instance a major German bank experiencing difficulties in the market.

Then there would be a recognition that everyone is on the same boat and even German institutions can be affected by this contagion.'"

p01 said...
This comment has been removed by the author.
p01 said...

ben said...
LG, i just bought 16" of 4-inch PVC


Reading in a hurry it registered as "ben bought an LG "many inch" HDTV and now he's telling us about it" We're so screwed! I'm so outta here!
:-)

TAE Daily said...

Guardian blog

"Italy's three largest unions have called a three hour general strike for private sector employees today – to be held by workers at the end of their shifts – after Italian prime minister Mario Monti turned down their demand last night to go easier on pension cuts and the taxation of home owners in his austerity budget.

The three unions, CGIL, CISL and UIL, will also call strikes for bank staff on December 16 and for public employees on December 19.

Monti's emergency budget, which contains tax rises and spending cuts totalling €30bn, will be debated in parliament this week and may be finessed through amendments, with Monti hoping he has not exhausted the goodwill of MPs towards his technical government.

If unions are on the war footing now, they may get even more upset next week when Monti starts work on his planned reform of the labour market in Italy, part of his promised bid to free up the Italian economy. "That," said a CGIL spokesman this morning, "is a very delicate subject.""

An Eaarthly Planner said...

Just heard this story on NPR this morning: Unpaid Bills Land Some Debtors Behind Bars. It's the return of debtors' prisons. I'm thinking this is not a good sign....

TAE Daily said...

The European Union has Cracked. Good.

"The breaking of the EU at an all-night summit last week, where British prime minister David Cameron vetoed changes to the EU Lisbon Treaty, is a healthy sign that politics can assert itself over the slavish routines of Euroland. Until this crack occurred, the EU had been using the full force of statecraft to deny new facts and to enshrine failed doctrines in a world where reality had changed.

...As I have recently argued, the EU’s old ways and routines of doing things are increasingly destructive. They have actually fuelled the economic crisis because one of the key roles of EU institutions is to try to deny and suppress inconvenient economic and democratic facts.

...The EU split has taken place because the Euro crisis and the rivalries between the global powers (Germany, France and Britain) left little room for bureaucratic manoeuvre, and therefore politics exploded into the open. The big shifts of last week actually expressed a changing reality, rather than that reality being suppressed beneath euro-pieties, as has happened so often in the past.

Most accounts of how last week’s talks failed tend to take the technocratic view that Cameron ‘miscalculated’, as if this were all a matter of slide rules or spreadsheets. In truth, Cameron took a decision, as did the French and German leaders. It was an unusual decision, because it meant that the structures of the EU were no longer able to accommodate or hide the clash of interests around the Brussels table. If the EU had worked as normal last week, then it’s likely we would have heard nothing about the debate at all – instead, another ‘world-saving deal’, with an even shorter lifespan than the last one, would simply have been handed down to us, the childish citizens with our disruptive political tendencies."

Lauren said...

If debtors are to get jail time, it will probably be in privately owned and run for-profit prisons. So, this will be an additional way to turn debt into GDP - the original purchase on credit and now the feeding, clothing and housing of the debtor? Sounds like a plan to me.......

Hombre said...

I&S... Great bunch of posts here of late... El G, Nassim, Greenpa, and all the rest! Glad I had a little more time than usual to check in.
Tip o' the hat from this ole hombre.

Debt crisis live - David Cameron prepares to tell the Commons why he rejected EU treaty change amid deeper Coalition splits, while markets fall as faith in EU plans for resolving eurozone debt crisis fades.
http://tinyurl.com/758huuf

Chas said...

My IRA money is in Fidelity's short-term Treasury fund (FDLXX). I can buy T-Bills through Fidelity. Is there any advantage in doing that?

Ash said...

Lauren,

"Sounds like a plan to me......."

That actually may be more of a plan than you think. What better way for multinationals to reduce costs than to increase the US prison population, re-outsource labor to those prisons and pay them debt-slave wages (or make them work off their debt)? The prison system is the symbol for all that modern institutional society has become, along with the military apparatus. The question is how long before they go down with rest of this society, and what will they do in between.

TAE Daily said...

What's worse than air traffic controllers or airline pilots who don't get enough sleep? Here's what.

In Euro Era, Opening Bell Is a 2:30 A.M. Alarm

"Gone are the days when traders showed up to work just before the New York Stock Exchange opened at 9:30 a.m. Now, Wall Street has an unofficial opening bell: the 2:30 a.m. alarm clock.

“We have a new credo: carpe noctem — seize the night,” said Douglas A. Kass, a hedge fund manager who routinely sets his alarm for precisely that time to scan the headlines coming out of Europe. All last week, the musings of the German chancellor, Angela Merkel, and other European leaders put the markets on edge. “You are almost forced to get up and watch the goings-on,” he added.

...The other downside? It is hard to fall back asleep once the adrenaline from trading starts pumping. Even so, Mr. Gorman said it was worth the price: “You can’t get the same feel for market psychology looking back at the charts in the morning as when you are up,” he added.

...That is the main reason that Brad Alford, the chief investment officer of Alpha Capital in Atlanta, rolls over in bed, grabs his iPad and glances at the Bloomberg market feeds with one eye, sometimes two, before the sun comes up. Or why Mr. Kass trudges over to his poolside home office in Palm Beach, Fla., to e-mail hedge fund friends about the latest troubled country du jour. “There is a pretty active cabal in those early hours,” he said.

It is also why Al Moniz, a European bond fund manager at Fore Research and Management in New York, has been waking up at 2 a.m. at least several times a month, and expects even more bleary-eyed nights next year.

“It is probably going to get worse,” he said. “I don’t think there is any end in sight.”"

Jeffrey said...

El G,

Thanks so much for your explanation of cash, debt, banks and all. I have been looking at this site for a year now and have not seen this kind of useful information. Maybe it is in previous posts but as there is no search function I would not know. A lot of news is posted here which has its place but I think many need practical how to information as well. I am much more prone to make donations when I see practical information posted.

Having multiple banks and timed treasuries makes sense. Now I have to figure out the mechanics of how to move credit union funds to treasuries.

p01 said...

Jeffrey said...
I have been looking at this site for a year now and have not seen this kind of useful information.

Here's a good video on debunking money:
Debunking Money Damon Vrabel.

There are six parts, make sure you see them all, and maybe renaissance 2.0 (which Vrabel does not believe in anymore). There are probably many people getting awakened, and those who have been awakened some time ago take this information for granted. It's always good to post it again. Personally, I'm not posting laconic comments because I think I'm smarter than everyone and they should RTFM (read the freaking manual), but because that's the way I am: I've become a very cynical asshole, and I admit it.

Ilargi said...

Eurozone to adopt Higgs Boson as new currency

In an attempt to solve the debt crisis in the Eurozone, the Higgs Boson is to be adopted as the new currency. Difficulty in producing the particle, and the fact that it may not even exist are sure to increase its value, which should boost the Eurozone's troubled economy.

The Higgs Boson may be found in CERN's Large Particle Accelerator in the next few months. It is likely to only exist for a few microseconds at a time. If adopted as a currency, this will be an advantage as it will be impossible for inflation to affect it.

It should also be a bonus during international financial transactions, where computers that recognise its scarcity will sell it at extremely high prices. It is estimated that one Higgs Boson will be enough to fund the government budgets of the Eurozone for an entire year - if only the particle could exist for so long.

Germany are not keen on the proposal, as France controls Europe's supply of Higgs Bosons, and therefore would be able to act as the banker of Europe.

China is working on its own particle-based currency, and it is likely that in 2012 it will begin using the electron as money. This should fuel the electronics industry, and could eventually lead to a punitive tax on all atoms.



.

TAE Daily said...

The ratings agencies' dump-on-the-EZ trifecta is now complete.

Guardian blog

"Just hitting the newswires now -- rating agency Fitch has downgraded its growth forecasts for 2012, and predicting a very bleak year for the eurozone.

Fitch now reckons that the eurozone will grow by a paltry 0.4% during the next 12 months, due to "increased fiscal austerity measures and deteriorating financial market conditions", leading to a squeeze on credit.

Italy is likely to fare particularly badly, with Fitch predicting that its economy will contract throughout the year - as Mario Monti starts to implement economic reforms and cutbacks.

Fitch also warned that the "probability of unfavourable outcomes is high" - not only could the eurozone crisis worsen, efforts to cut America's deficit could also stumble. In short:

'Downside risks dominate at this current juncture.'"

Franny said...

@Jeffrey and rest of the board. I have been out of pocket doing family things but it looks like el g. has answered most of the questions in the meantime and I agree with everything he said (esp. re: my typo of treasurydirect.gov). A few more thoughts:

The mechanics of using treasurydirect.gov as your savings account are fairly simple. You open an account, link it to your credit union(s), make sure the funds are in your credit union account, and they go on TD and buy the T-bill you want. I might buy four week T-bills. If I want access to cash on very short notice, I would prefer to hold Zero Interest Certificate of Indebtedness, which as the name implies, pays no interest, and has no duration -- you can redeem it (send the money back to your CU) on one business day's notice. You can't buy ZICI directly, you have to buy a T-bill and specify that at the end of 4 weeks it should be rolled over into ZICI instead of sent back to your CU account. If you want to be able to access money on one week's notice, you can build a ladder of 4 week bills, 25% in each week. Make sure you specify to re-purchase the same bill at the end of the four weeks (or ZICI) or the money will be sent back to your CU account.

Since rates on 4 week bills occasionally go negative, I prefer ZICI.

Re: having a mortgage where the paper is held by the local bank where you have your savings account. This is not particularly safe. Your mortgage note is a negotiable instrument. Your bank could sell it tomorrow. Then your bank could go bankrupt on Wednesday. You could lose your deposits but still owe a stranger on your mortgage note.
re: FDIC and CU equivalent. While it is likely that Congress would order the Fed to print money to back them up (e.g. buy bonds from them) it is not guaranteed and would possibly require an Act of Congress. A bit of risk there. The Fed already backs up the US Treasury by buying it's bonds as needed, pursuant to existing statutory authority, so an account at the US Treasury is safer.

Re: paying off your mortgage vs. keeping some cash for emergencies -- my personal feeling is that having some emergency cash is very important. I would rather have 3 years of mortgage payments in my treasurydirect.gov account than use that to pay down my mortgage. Holding an ultra-low fixed rate 30 year mortgage is a bet that after a deflationary period that won't last 20-30 years, we will see much higher interest rates/hyperinflation. It is a gamble.

Re 401k money market account -- don't panic. The Fed has backed up money markets in the past and will probably do so again. The Fed can print money and probably will to avoid a collapse of the money markets. This would not lead to any kind of hyperinflation, it would just cushion the blow of deleveraging/deflation. Just my opinion. It wouldn't hurt to ask your employer to include an all US Govt. short term bill option to the plan. If enough people ask they might do it.

Ash said...

DavidCameron addressing Parliament

Sure, the UK is a corrupt cesspool of international banksters wading in the City of London, but, nevertheless, the US Congress could use some of its Parliamentary spice!

The Speaker has already interrupted to calm people down four times...

David Cameron: "It was either a treaty of all 27 countries with proper safeguards for Britain or a separate treaty with British maintaining it's position.

We went seeking a deal of 27 and I responded to Germany and France's proposals in good faith, genuinely seeking to reach an agreement.

I do not believe there is a binary choice for Britain where we make concession after concession or lose our place at the heart of negotiations."

Chas said...

Franny, that's very helpful.

Can you comment on the safety of a short-term Treasury only fund versus holding T-Bills directly?

How about the safety of buying from Treasury Direct versus a buying via a broker?

jal said...

@ Ilargi said...
Eurozone to adopt Higgs Boson as new currency

hehehe
nice higg story.

http://indico.cern.ch/conferenceDisplay.py?confId=150980

On Tuesday at 14:00 Prague Winter Time, there will be a CERN webcast at which we will hear about some new and strong yet inconclusive evidence for the existence of the Higgs boson.

You can find some info at

http://resonaances.blogspot.com/2011/12/tinker-taylor-soldier-higgs.html

scandia said...

@TAE Daily, re rating agencies, Iceland's president spoke about how the rating agencies were giving Iceland a high rating right up to their banking crisis. He said they were wrong then so what makes them right now.

el gallinazo said...

Ben,

Four inch requires more strength than smaller pipe and it might be hard for an elderly woman to use. For a young, strapping lad like yourself, no problem. Also, the fittings set up very fast, in summer temps (or tropics) and depending on your brand of glue, in a matter of seconds. But this is not an issue really with non-directional fittings. Can be a huge pain with elbows and tees playing beat the clock. When putting on the fittings, warmer is better. Just get it on all the way fast and give it its quarter turn if using 4 inch. Another factor is that smaller is easier to hide and carry.

Nassim,

Most of this stuff is sodium hydroxide, which is dirt cheap. The second incarnation of my plumbing career took place where 95% of my clients had septic tanks or aerobic digesters. These chemicals are not bug friendly, so I never used them. I earned my money the old fashion way and often cut a socially unattractive image (see the great sawzall massacre). I am with you, and always like to study my purchases and not pay a 1000% mark-up to the marketing shills. Being a bulk drug dealer for many years, I also had the inside track on what was really going on with the so called "ethical" pharmaceutical industry and the generics. A lot of the ethicals had a Chinese connection and were de facto generics. And FDA standards were identical and actually enforced back in the 80's and early 90's.

Franny,

Thanks for your additions. We had a discussion here quite a few months ago as to whether actual bills had a safer condition than money in ZICI from a legal standpoint, though in the age where Jon Corzine runs amuck, it may not make much difference. We didn't come to a conclusion, but the case was strong enough that I left enough in ZICI to last me several months and laddered the rest. I am too brain dead to roll them every four weeks as a ladder.

The greatest problem for newbies with td.gov is getting caught with the default. When you buy a bill, the default setting is to send it back to your corresponding bank automatically upon maturity. You have to tell it at the time of purchase either to roll it or send it into ZICI at maturity. If you have the luck of the unIrish, your money might be sitting in your checking account on the day that your bank goes belly up. While banks are totally essential to using td.gov, the game plan is to keep the money in your bank for the shortest duration possible.

Also, I am not sure of this, but I don't think the Treasury is selling bills at negative rates. I think these rates are for the secondary market. If you actually bought a 4 week bill from td.gov at a negative rate, I would be curious to know it.

Ash said...

scandia,

re: ratings agencies

They are like the analysts at major banks who have recently been producing some relatively candid assessments of how bad the economic/financial situation really is right now (relative to what those same people were saying a year ago). The reason is quite obviously to put enormous pressure on politicians and central bankers to do what they want them to do. Despite their unforgivable motives, though, they are not wrong.

We shouldn't look to them and say, "the ratings agencies are telling us things are bad, so things must be bad", but rather, "the ratings agencies are finally telling the public what we already knew to be true". Such as, "austerity is bad for economic growth". Or "deficits are only going to get worse". They wrap it all up in nice conditional language, of course, and some agencies have more accurate assessments than others.

Personally, I feel that they are going to regret being so candid, because the medium-term political pressure just isn't enough to offset the short-term pressure they put on financial markets, especially if they go through with many of these downgrades. They have sort of trapped themselves into a situation where they have to follow through at risk of losing all credibility (again), but if they do follow through, the whole situations gets even more out of their control than it already is.

el gallinazo said...

Gold tanking big time today. Rumor has it that European banks are selling their gold or using it as colateral to raise dollars. This is interesting as it reinforces I&S stated position on PM at the earlier stages of the deleveraging panic. Silver down but much less. This adds strength to the rumor as silver is not collateral for major banks. Only money for us pissants.

scandia said...

@Ash, I used to think that the rating agencies were fact/data based,that business persons:) wouldn't pay for ratings if said ratings had been corrupted.
No doubt my thinking has been corrupted as I perceive the rating agencies being employed on the sovereign battleground. When they give a negative rating I wonder who has fired the rating bazooka to weaken opposition to the NWO agenda.
I feel rating agencies playing with my emotions.
Right Stoneleigh???

ben said...

p01 sed,

"Reading in a hurry it registered as "ben bought an LG "many inch" HDTV and now he's telling us about it" We're so screwed! I'm so outta here!
:-)"

shopping's up 37pc from 1954.

i never thought it would be you of the mimetic handle, paul, to misread that.

:)

i guess LG has always been my ebonics/basketball culture interpretation of el g. otherwise known as Big L (lifeboat material :P). i'm stickin wit it.

that the nickname appears to be a corporate personhood irony is unfortunate. let us cleanse ourselves.

Franny said...

el g., I just checked the recent bill auction results page you are right on the no negative rates. I missed the legal discussion on ZICI's -- do you recall which post?

@chas -- I don't have any opinions re: safety of brokers or funds, just that TD is obviously the safest option.

ben said...

awesome, LG. thanks. i'm gonna downsize.

el gallinazo said...

Franny,

It goes back maybe 4 months and Chas precipitated it. Not really worth the time to find it as not very fact based and nothing was really resolved. Just a possibility that an actual bill is more **concrete** than funds in the treasury "sweep" account.

Ben,

Re LG. Every year I resemble a refrigerator more.

2.5 inch grey electrical conduit is much easier to find than that size in schedule 40 plumbing and is at least as good. But electrical threads on fittings are not tapered so are less waterproof than plumbing threads. Electrical conduit and plumbing PVC are the same size, but one still would have the problem of finding a plumbing female adaptor and plug. But if you choose to cap both ends, then electrical would be fine.

Greenwood said...

Hey, it looks like it takes a couple of cartoon bears to explain MF Global to the masses.

I suppose this is because most of the 99% have the attention span of small rodents and need things explained like they were children in front of a Saturday morning cartoon show.

I guess most will view this piece as evidence of a 'bear market'.

Make that a Bare Market.

~

el gallinazo said...

Greenwood

Nah, MF Global is so easy to understand that it can all be spelled out as a 1950's comic book ad.

http://www.flickr.com/photos/expd/6499394491/

Greenwood said...

ETF And Central Bank Gold Lent To Banks Being Relent Into Market?


I guess the central banks lending gold out are seeing it 'Rehypothecated'(lending out the same gold as collateral to more than one party simultaneously) on top of every thing else.

Forget brass balls, they have gold balls.

File this under 'multiple claims' to the same underlying wealth

~

ben said...

the fridge, thanks for following-up on that. if i were to saw into a capped conduit i'd be accessing some money anyway right and could stand to lose and inch or so of length.(spare caps.) somehow portability hadn't occurred to me. touchdown!

ben said...

Ports update: Oakland shutdown. Vancouver shut down. Portland shut down (terms. 5 and 6). Longview shut down. LA/Long Beach partially shut. SD: arrests.

gonna head on out for the second shift in a couple hours. community building (and dividing) don't you know.

el gallinazo said...

Iran Military Practicing Straits Of Hormuz Closure

One third of the globe's crude oil in tankers goes through this 54 km wide (at its narrowest) channel. Hmmm....

http://www.zerohedge.com/news/iran-military-practising-straights-hormuz-closure

el gallinazo said...

Jeez Ben

Yuse guys are gonna cause a shortage of toxic pink pandas at Walmarts.

ben said...

hey kids. pink pandas? fuggedaboutit! and i'll be damned if them asians ain't eating our grains, too!

p01 said...

Speaking of LGs and stuff, I've been bargain-hunting for another e-book reader since I always have important stuff in twos and I consider this very important stuff (along with some flash cards stored in small water-tight aluminum pill-shaped containers, which contain lots and lots of books). You would not believe how much prices are dropping, and they still cannot sell the stock.

The depression is here, for sure.

SecularAnimist said...

I'd call the port shut down largely a success so far. Though reports are still coming in.

Everywhere north of LA was successful in shutting down their ports.

Apparently, there was quite a little showdown brewing in Long Beach. It's sounds like it was quite a mess, blocked highways, hundreds of police in riot gear, heavy rain, etc..

http://occupywallst.org/

I'm suffering a nasty head cold or I would be at the protest SD. We had a weak showing when measured against other occupys but decent for SD. Looks like the police gave us quite a beating today and smashed some cameras. No arrests though.

It's time to start flinging wrenches at this system.


The only solution is world revolution

Cheers

Alexander Ac said...

Have you seen?

If Silver Goes Down All Hell Will Break Loose In ThePhysical Market: Silver Investment Update

Doomerish peak silver presentation?

Cheers,

Alexander Ac said...

Oh yes, and...:

The European Death Spiral

cheers from Slovakia :-)

Sean said...

Capital Controls and Exchange Controls.

I would love to learn more on-the-ground details of people who've lived through a financial crisis. Hungary 1946, Bolivia 1986, Bulgaria 1996 etc -- There are countless other examples. Pick your favorite Latin American country and pick any date in the 1980s to early 1990s and you can probably find an example. Pick Eastern Europe and the early 1990s for others.

How did seemingly mundane and routine aspects of everyday life change in terms of:

1) routine transactions at the bank, buying groceries, buying/selling jewelry, exchanging for precious metals or foreign currency?

2) How difficult was monetary exchange among currencies, precious metals, everyday goods and services. Was exchange legal and easily conducted? impossible? illegal but widely done in the open? conducted rarely and only in the darkest of shadows?

2) Were foreign exchange restrictions imposed? How were they enforced? Were there private money exchangers as well as government money exchangers? Were punitive bid/ask spreads imposed to discourage exchange? Were Punitive exchange taxes imposed?

3) How overt was the black market and how did it typically operate?

4) How easily were bills exchanged and broken up. For example, you've got a 100,000 bill and you just bought a dozen apples for 90,000. Was it difficult to obtain the 10000 unit bills at that point because currency turnover was occurring so fast?

A life on the ground experience either 1st hand, 2nd hand, 3rd hand or whatever would be very interesting.

Random google searches on this don't easily turn up fine-grained stories of what its actually like. Most writing is from the ivory tower discussing the pros/cons of international monetary flows in the age of financial globalization.

I want to here about life at ground level, not the ivory tower.

ben said...

SA, been wondering whether we might have lost you to Occupy. great to have heard from you recently. got "SD: arrests" from #occupytheport tweet. guess it was wrong. regarding long beach, when i told my stepdad a couple weeks ago about 12/12 he was primarily concerned about what would become of his morning coffee and Times on that date. he lives in san pedro and his diner is chuck's in long beach. (his prius is the embodiment of jevon's paradox. his and my mom's dentist is a 400-mile drive to the bay area.) between the two is the port and one through-road. i imagine he tried anyway this morning and failed, and that what i assume would be the clusterfuck on the far side of the st. vincent thomas bridge sent his vehicular A-type personality into overdrive. i do believe he wouldn't have given up though and doubled back to take the surface streets up through wilmington and around. i had to remind him in our conversation that san pedro is The longshoremen town in LA but i think it was beside the point as he was too busy thinking logistically. this is from the man who introduced me to marcuse's 'one dimensional man' about a decade ago.

el gallinazo said...

Greenpa and Scandia

Iceland's situation is not nearly as rosy as some would paint it.

"Vulture Capitalism": Iceland’s New Bank Disaster

Michael Hudson contributed to this report.

http://www.globalresearch.ca/index.php?context=va&aid=27673

Of course I find the term "vulture capitalism"
defamatory.

Also, it appears that US troops are starting to amass in Jordan on the Syrian border. Looks like the CIA couldn't find enough unemployed al Qaeda fighters in Jordan to do the job with air support like they did in Libya.

http://www.boilingfrogspost.com/

This is the blog of Sibel Edmunds, former FBI Turkish translater turned whistleblower.

Her last update:

Update 2: Another journalist with a major mainstream media publication was told by his editors that there would be no coverage or follow up on these developments.

I think Hilary is pushing for next year's Nobel Peace Prize, now that non-blond women are on a run.

Sean said...

Hi El G,

I'd imagine you must know some folks in Mexico who lived through the 1982 peso devaluation and the 1994 tequilla crisis. If you're willing to share what there experiences were like in terms of financial exchange and currency controls, I'd love to hear about it.

Also, I think I remember that you mentioned living for a while in Argentina. Did your friends ever discuss how life on the ground (it's daily transactions etc.) changed during the bouts of hyperinflation during the 1980s as well as the depression and unpegging of the peso to the dollar in 2001-2002? What kinds of currency controls/foreign exchange controls did they see? Did black markets proliferate? Did they see/experience the economic breakdown in their own lives and did it affect their longterm expectations for future well being?

I understand if you don't want to share that kind of stuff. But since it appeared that you're one of the few with 2nd or 3rd hand stories of what crisis feels like, I'd love to learn what you've learned.

Glennda said...

Thanks for the afternoon reading on T bills. I'll try to implement some of that, since at 70 I need to start taking it down anyway. I'm in a small CA bank (Mechanics) since it permits me to use use business services for my retail shop. I still have a small account at Wells Fargo where my IRA is parked. Is a big bank a reasonable place to use for T bills? Will a small bank tank like all banks? I plan to move half of it to the small bank for T bills. I could open a credit union account for part of it. Would a credit union be safest? My IRA is laughably small though, so may just use the two existing accounts. Tomorrow is my day to go to the bank.

Soon I'll be going down to Occupy Oakland to help close the port's evening shift. I'll report back on anything of import.

p01 said...

@Sean

I could personally talk all day long about how things have deteriorated in my native Eastern European county. Hell, I could start a blog and charge for "premium content" enrollment to my enlightened experiences.
Let me say only this: IT DOES NOT MATTER, BECAUSE THE SOCIETY WAS DIFFERENT, AND THE ZEITGEIST ALSO. This is crucial for future approximations. What will happen now with the Western world has never happened before, and besides deflation in US (and maybe, just maybe in Canada, depending who institutes the emergency provincial governments) no one knows how it will be.

scandia said...

@El G. Perhaps President Grimsson was dancing around the vulture capitalism in Iceland when he said there is " too much interest " in investing in Iceland.

Sean said...

P01

I'd still really enjoy any of your observations about life in your native eastern euorpean nation. Whether or not those experience apply to this situation doesn't exactly concern me. Some things are interesting regardless of whether or not they can be applied to my own circumstances. Your experiences fall into that category for me, so if you're willing to share, either here or in another venue, i'd be more than interested to read.

el gallinazo said...

The Bears do a truly excellent job explaining MF Global in such a way that even your idiot brother-in-law could understand it. But if they used "alleged" one more time, I would have lost it. Under 11 minutes.

http://www.youtube.com/watch?feature=player_embedded&v=jLt05sN7vK0

Glennda,

I don't totally understand your last post, but if you were referring to treasury bills in td.gov, you can tie as many banks to your account in td.gov as you want. The first one is very easy. Additional ones require some paperwork, but to protect you, and not really odious. When you want to send some money back, you have a choice of picking any of the banks. If one is belly up, you pick another.

Greenwood said...

Global Finance 101 Where are you?

Ah, thanks for the memories.
~

--- said...

All along, it seems, I was wrong, saying your money can't keep you warm. Big finance news here folks...

OK, a mason friend who works with a master mason on Tulikivi soapstone kuchenofen heaters (http://www.google.com.mx/search?q=kachelofen&hl=es&pwst=1&prmd=imvns&tbm=isch&tbo=u&source=univ&sa=X&ei=hYbmTtPjH4mJsQKm25iUBg&ved=0CD0QsAQ&biw=1280&bih=675) quoted another mason who was working on the ceramic fired houses, that with a kuchenofen in a ceramic house, the entire structure could be heated by a single (very large) candle placed in the masonry heating unit.

On a whimsical misprision, I decided to see just how much of a heater I could create with a single candle. Here is the prototype, now two days old with frequent modifications: a 10" votive candle between two masonry block pilings, with various materials suspended over it has been the basis of the experiment. Meanwhile I parse the internet to learn what I can about thermal conductivity of various materials, and get interested in porcelain, ceramic and copper. Specifically, I have had this large old-fashioned dinerware set kicking around that I periodically threaten to put into a garage sale. No more. The current model is an inverted porcelain platter, a layer of pennies, another platter, another of pennies, etc., until we are now seven high on one stack and counting.

Meanwhile the place stays toasty despite a gnawing, bitter cold snap (I refuse to try the heat option on the AC unit here in desert country).

For the past two days these changing stacks have kept the place toasty. Two candles, two stacks of material.

When I learned that silver has a higher conductivity index than copper, I placed part of the silverware set under the top platter in the stack, and surprise: every level I go up, the heat seems to be equivalent in the metals.

Having checked with an engineer friend, this should not be the case due to the law of thermodynamics concerning heat loss. I have begun to toy with the idea that some kind of field like a weak electricity might be working between layers of coin. Anyway I long since dispensed with the cast iron. This growing porcelain/precious metal coil is working better than those things.

Perhaps, iconoclastic readers, the best possible solution would be the largest item of porcelain in the house: the commode. Elevate it on a strong armature to allow the candle to heat its cavities, then fill the bowl with gold and silver?

I don't have the wealth to try it but if anyone else does, I would be most curious to hear back.

Tell Cheryl the money's workin' fine.

Nassim said...

Global nuclear power output peaked in 2006-7, I am not 100 % sure we will surpass that value... what is your opinion?

Alexander Ac,

I think that nuclear power is largely off the menu in the West. I don't believe that India can hold itself together and build these things on the necessary scale - the corruption and chaos of that society is truly massive. The only country that might build stations on the necessary scale to tip all the other declines is China. However, China has its own set of problems too. Australia allowing more uranium mining is not going to change much.

NZSanctuary said...

Phil said...
Swedbank says ATM queues in Latvia due to false rumours

Future news: "We would have fought our way out of the recession if only those blogs and social media sites hadn't spread baseless rumours about the state of the economy and panicked the plebs into bank runs"


Greenpa said...
My point with all this Pakistan stuff; the "buzz" in the MSM can indicate building pressures and directions; it can be intentional releases to justify actions- or not. Just- there's a lot of Pakistan stuff floating around now...

As with Iran, it could be that TPTB are just covering their bases at the moment. Perhaps they have a pre-defined date that they would like to initiate moves on some of these countries, but the constant stream of negative news may also just serve to slowly brain-wash populations into believing the hype and change sentiment in favour of un-defined future events.

progressivepopulist said...

I hate to belabor this, and though I hadn't considered smaller diameters of pipe (I already had both some 4 inch schedule 40 as well as a bunch of 4 inch drain pipe laying around), it seems that 3 inch schedule 40 caps still cost $4.40 each and the pipe is a few cents more than 4 inch sewer. So it appears that 4 inch sewer drain pipe is the way to go unless you want to fiddle around with stuffing bills into a 2 inch pipe.

I'm really not looking to be difficult, I'm just trying to make life easier for folks who are likely to show up at Lowes or the Home Despot where they will be lucky to receive much in the way of assistance. If you know what you are looking for and you know what it will cost you, you won't wind up spending more than you need to or wasting time looking for something that might not be readily found at the big box stores.

4 inches also gives one ample room. A 1 quart mason jar will fit inside a 4 inch pipe. I just sealed both ends with (glued on) cap and when I need to get access to the contents a hacksaw will do the job of opening, though threaded caps seem a good idea for some "accounts" where more frequent withdrawals are anticipated. I prefer multiple "accounts" in various locations.

el gallinazo said...

PP

It is essential not to use any metal. I think all mason jars have metal lids.

The Anonymous said...

"P01 said...What will happen now with the Western world has never happened before, and besides deflation in US (and maybe, just maybe in Canada, depending who institutes the emergency provincial governments) no one knows how it will be."

And yet, you have told us (with 100%+ certainty) precisely when it will be...

SecularAnimist said...

Hey Ben, the tweet was correct, SD did have a few arrests. As reports come in it looks like there was a lot of violence and arrests all around. They just arrested about 50 protestors at SDSU. They actually pulled out the terrorist card regarding potential bombs being in personal belongings.

Supposedly SD is going to try and shut down the port tomorrow again. I've been trying to decide when/if I wanted to personally provoke the system into showing it's fangs. Maybe it will be tomorrow.

Anyway, I'd post more but I have a 4 and 6 year old climbing all over me sticking imaginary spiders in my ears. Apparently it's hilarious.

Cheers

bosuncookie said...

Argentinian take on collapse issues here: http://ferfal.blogspot.com/

Promoting his book, but still some good stuff.

Greenpa said...

El. Gal- yeah, I saw that exact article on the new bank situation in Iceland; here? Not sure.

Yeah, it stinks. My hope though, is that the Icelanders, who just went through this once, will not be fooled this time either, and will tell the new bankers to once again stick it where the sun don't shine. Note that "approval" of the current government, that allowed itself to be bullied into this, is at 10%. That's a bad number anywhere, but in Iceland- they've just BEEN there, and acted.

I'm praying they act again. It's an ancient con -"Your honor demands that you honor your debts!" Never mind you were tricked and manipulated and vastly overcharged.

Friends in Iceland- just say no. And throw those bums out.

Ash said...

Greenpa,

You catch this one? Could Canada have any worse timing?? I guess they've been talking about pulling out for some time and it's no surprise, but still, they didn't even let the propaganda from the Weekend's "last minute deal" at Durban sink in!

Canada first nation to pull out of Kyoto protocol

"Canada on Monday became the first country to announce it would withdraw from the Kyoto protocol on climate change, dealing a symbolic blow to the already troubled global treaty.

Environment Minister Peter Kent broke the news on his return from talks in Durban, where countries agreed to extend Kyoto for five years and hammer out a new deal forcing all big polluters for the first time to limit greenhouse gas emissions."

jal said...

Companies are suppose to be sitting on more cash then ever before.

Where do you think they have their cash?

Since they have more than $100,000 or $250,000 then you can bet that your problem with the FDIC insured deposits are going to be irrelevant compared to the companies losing their cash reserves and working capital.

jal

jal said...
This comment has been removed by the author.
. . said...

I'm nearly certain deposit insurance is available for deposits over 250,000$.

I'm sure there would be, most of us have never been in the market to know about it though.

el gallinazo said...

Tyler Durden had me rolling on the floor laughing this evening about the US drone captured by Iran. Well, it seems that Obama wants it back. He asked them to return it. Really!! You can't make this shit up.

"Great, the only problem is Iran will never return it, as they have already indicated, for the simple reason that it has already been reverse engineered 5 ways from Sunday somewhere deep in the bowels of one of China's unpopulated cities, which just doubles as a very populated military intelligence base. The only good news is that within 6-9 months every American will be able to buy a personal stealth drone for a new low, low price at their friendly neighborhood Wal-Mart. Our only concern is whether FoxConn will be able to handle the supply of both iPads and straight for re-export drones: it would be ironic if this massive military embarrassment ends up as being a catalyst to short Apple."

Joanna said...

It's an ancient con -"Your honor demands that you honor your debts!" Never mind you were tricked and manipulated and vastly overcharged.
...............

I always say 'never let 'em hang you with your own rope'.

Dishonorable people know how to manipulate people with honor. Don't fall for it.

Nassim said...

... nearly 100,000 U.S. troops are on the ground in Afghanistan, often stationed in difficult-to-reach outposts that depend on pallets of food, water, ammunition and fuel that are dropped by parachute out of cargo planes.

U.S.'s Afghan Headache: $400-a-Gallon Gasoline

Clearly, they didn't think of that before getting involved.

Ian said...

Cash For Christmas.

This is really a flip-flop, neither 'Arthur nor Martha' comment - with a foot in both camps.

The author wants to alert the reader to the possibility/probability of a financial collapse. And says:

‘So take out a few dollars in cash – not too much, mind! Just enough to last you a month or so. Oh! Did I mention, just the Christmas shopping money..Use your CC and keep the cash.. Easy does it! Don’t be alarmed! Everything is (almost) OK…but…just in case be little, but not a lot, alarmed...just ..well, cautious’. Just in case. Did I mention, ‘Just in case’? ‘Coz you never know, do you? And how was your day today? Good? That’s good.

Feel better now?

It’s like being a little bit pregnant.

The truth is:

THE SYSTEM IS BROKE. IT ‘AINT FIXABLE.
WE’RE ALL F@#@#@# DOOMED!!!!!
HEAD FOR THE HILLS!!!
THAT IS, AFTER YOU RUN TO THE BANK - TODAY!!!
TAKE OUT THE LOT!!! AAARRRHHHHH!!!!

Disclosure: I am not a troll (I think - not sure what a troll is)
I use my own email address – same for a decade
I can be disruptive but it isn’t intentional
I reserve the right not to follow my own advise

Rototillerman said...

Since we seen a number of reports on the Occupy movement, I found this posting on Naked Capitalism quite relevant:

The Anti-Occupy CIA Connection

Kurt

Online Accountancy Service said...

Thank you for this post.
Those of us who are paying attention to the political class here were shocked slightly at the police state tip-off the senate gave....they were deadly serious about stripping ALL rights from everyone anywhere.It looks like its here now. I don't that is good.
www.accountancyhere.com

AO said...

Systemic risk in both a epidemiological and financial context is transmitted by infectious nodes and susceptible pools. The edge connectivity of an infectious node is only one factor that should be considered when modeling transmission rates. Recent empirical studies have demonstrated that in many contexts, the infection susceptibility of the connected pool can be a more important factor in determining the observed transmission rate. Threat scoring that fails incorporate pool susceptibility into the prioritization of nodes may result in a loss of transmission blocking efficiency.

Alexander Ac said...

Right now 10-year Italy bond yields are 6.66600

there must be freeze in hell:-)

Nassim said...

AO,

I am trying to understand your piece and how it might apply to my concept HIV Networks

Can you please give an example, or a reference. Some of us are a bit slow. :)

Nassim said...

U.S. jails are to charge inmates up to $142 per night to stay there in an attempt to balance their budgets.

Those incarcerated in Riverside County, California, will have to pay for their bed and board under the means tested initiative, the largest so far in America.

Officials have become outraged after watching wealthy celebrities like Lindsay Lohan sent to jail at taxpayers’ expense.


Go to jail… and pay $140 a night: Inmates to be charged bed and board to help balance the books

Glennjeff said...

Threat scoring that fails "TO" incorporate pool susceptibility into the prioritization of nodes may result in a loss of transmission blocking efficiency.

The little words are important AO.

TRANSLATION:

Infectious disease is transmitted from HOST to susceptible TARGET. Often TARGETS are part of a larger population that have a predisposing set of characteristics that cause a predisposition to disease transmission.

The WEAKNESS in the TARGET population may be of greater significance in disease transmission than the virility of the disease (or the infectious potential of the transmitting HOST.)

Where is our old freind Gravity?

Glennjeff said...

.....and failure to to recognize this may limit our ability to prevent a pandemic.....

Glennjeff said...

Perhaps I should mention that I do not view this situation as an acute infectious outbreak but rather as an example of chronic degenerative illness.

p01 said...

Thank you, The Anonymous, for reminding me to make my bold 2012 predictions (it's about that time of the year):

"Number A": T.E.O.T.W.A.W.K.I.

That's all my crystal ball shows for next year.

TAE Daily said...

LHC has really stepped up its game of late.

LHC: Higgs boson 'may have been glimpsed'

"The most coveted prize in particle physics - the Higgs boson - may have been glimpsed, say researchers reporting at the Large Hadron Collider (LHC) in Geneva.

The particle is purported to be the means by which everything in the Universe obtains its mass.

Scientists say that two experiments at the LHC see hints of the Higgs at the same mass, fuelling huge excitement.

But the LHC does not yet have enough data to claim a discovery.

Finding the Higgs would be one of the biggest scientific advances of the last 60 years. It is crucial for allowing us to make sense of the Universe, but has never been observed by experiments.

This basic building block of the Universe is a significant missing component of the Standard Model - the "instruction booklet" that describes how particles and forces interact."

Alexander Ac said...

Czech prime minister (Petr Nečas):

"I won't allow to shift the responsibility of IMF loan to Czech Central Bank (ČNB)"

cheers,

scandia said...

@Ash, re Canada pulling out of Kyoto I was wondering why they did so with such fanfare( Cdn media saturated with prideful Harperites) when the treaty expires in only a year.
I think I know the answer which is Canada pulled out to avoid paying the fine for emmissions beyond agreed targets. I have not heard how much that fine would have been.
Does anyone else have that number?

p01 said...

@Sean
It's worth listening to Orlov comparing US to USSR (posted before):
Crossroads Lecture on “The Fall of the American Empire”
My personal opinion is to listen to Nicole Foss - How I Prepared My Home for Peak Oil and Economic Uncertainty, because my stories might give you a much more romanticized perspective. People were really much closer in poorer societies (except in poorer societies whose culture was destroyed by imperial "democracy"-for-resources, "monopoly money for freedom" or "communism because it sounds nice" acts).

By the way, the only anarchic communities left in Europe are the place where some small-time monarchs are "retiring" in these tiring times: Wild Carpathia

Ash said...

scandia,

"The right-of-center Conservative government of Prime Minister Stephen Harper, which has close ties to the energy sector, says Canada would be subject to penalties equivalent to C$14 billion ($13.6 billion) under the terms of the treaty for not cutting emissions by the required amount by 2012."

http://www.reuters.com/article/2011/12/13/us-kyoto-withdrawal-idUSTRE7BB1X420111213

scandia said...

I recommend the new post up by London Banker
"Banks are lawless dictators.Whose side are the police on?"

@Ash, Wow 12B is a big number for a nation with a deficit but then we have a Peter Kent taking 45K helicopter rides to go fishing. So I guess if Canada can afford to finance Kent's pleasures they can afford to pay the Kyoto bill. If the gov't can't find the money maybe Kent can. He does seem to have a fiscal carte blanche..Or maybe we could have sold that Versaillesque fake lake created to titillate the G20 to some drought striken country with some gold reserves to trade for water?

TAE Daily said...

Guardian Blog

3.16pm: "Still on the markets and the price of oil has spiked 3% amid unconfirmed rumours that Iran has closed the strategically important straits of Hormuz in the Persian Gulf. One third of the world's sea-borne oil passes through the straits but an Iranian military exercise seems to have resulted in them being blocked.

So, are we in for an oil shock? Just what the global economy needs."

Greenwood said...

Waaa! Waaa! The U.S baby wants it's bottle back, I mean it's drone.

Imagine if Iran sent a drone over the U.S. and asked for it back.

This is pitiful grade B surreal street theater at it's worst.

Your drone was hacked by 14 year old Iranian 'gamers'.

They didn't 'shoot it down', they landed it.

hahahaha

Finder's keepers, losers weepers.

~

TAE Daily said...

(Telegraph)

"Angela Merkel has rejected the possibility of raising the funding limit of the European Stability Mechanism, the successor to the EFSF bail-out fund. The ESM is due to come into effect in the middle of 2012 with a €500 billion pot."

Alexander Ac said...

Oil prices are up 3 dollars per barrel as Iran prepares his ships for possible military intervention? more on ZeroHedge...

If that happens, oil prices will shoot up, I think (despite credit crunch?)

cheers,

Greenwood said...

Headline from ZH

Update: It's Not On Just Yet: Iran Denies Earlier Reports:... Iran Closes Straits Of Hormuz, Oil Explodes

Ya really want your drone back bitchz?

~

Greenwood said...

Onion-like Update:

Obama has his "Man Card' revoked for groveling;

Spotted begging for his toy back on playground.

~

el gallinazo said...

Strait of Hormuz

This was a sloppy and probably intentional use of English to influence oil futures. Iran is conducting military exercises aimed at closing the Strait. The exercises will not interfere with current tanker traffic. This is just a shot across the bow. I have been saying all year that Iran will shut the Strait if attacked. Would not be surprised if Russia turned off the gas and oil to Europe as well diverting some of it to China to compensate.

I think we will see a US boots on the ground invasion of Syria, probably in January or February. The planners want to get Iran completely surrounded before proceeding against it. I think the rush to finalize operations of the giant "FEMA" detention camps by KBR in the western USA is based on the social effect that an oil crisis will have on the economy as well as building antiwar sentiment caused by the upcoming invasion of Syria and attack upon Iran. An infantry invasion of Iran will be a tough nut to crack. Syria will be a lot easier. Notice the MSM outrage on the Syrian "crackdown" on civilians, necessitating once again the need for humanitarian bombing of civilians. Reinforces my contention that Amy Goodman is a covert CIA asset.

verisimilitude said...
This comment has been removed by the author.
verisimilitude said...

Comment From: The Automatic Earth

Blogger verisimilitude said...

Obama's position in rejection of the Keystone had more to do with keeping clear of Canada's rejection of Kyoto than it did with any concern for Keystone's probable effect on the environment. I feel the expansion of the Tarsands are key in Herr Harper and his bubba buddy, Obama's, thinking.

p01 said...

Geez, I'm sick of all this bozos hunting bosons. It's all over the news!
Honestly, has anyone looked in the box where the cat is supposed to be, or not?
:-)

TAE Daily said...

Guardian Blog

"There could be some significant developments in Greece today. Reuters is reporting that it is even further away from balancing its budget than ever after the deficit widened in the first 11 months of the year by 5.1% to €20.52bn.

It quotes Capital Economics analyst Ben May saying:

'The recession will be deeper than the government and the troika [EU, IMF and ECB] are expecting. Greece will struggle to reduce its budget deficit and will come under more pressure for austerity. There is certainly a risk that Greece may well come to the point it decides it might be best to default.'

The IMF is giving its latest update on the situation at 7pm."

el gallinazo said...

Re Greece

The beatings will continue until morale improves.

Re Higgs Boson

It's sort of heart warming that the Higgs Boson will be verified just as the power company turns off the juice to the LHC. Almost like an American war adventure. Declare victory and leave.

verisimilitude said...

El Gal

"The planners want to get Iran completely surrounded before proceeding against it.

So are you talking WWIII?

Just on a minor tactical point what is that blue wobbly thing that links Russia to Iran called? Something out of Narnia? Seriously I do not think either China or Russia would stand for any invasion of Iran and it will be more a case of the US playing silly buggers in order to distract and confuse, in particular, it's home audience.

Eliza Blue said...

Re: climate change

http://www.washington.edu/news/articles/climate-change-stirs-perfect-moral-storm-prof-says

"Gardiner is on sabbatical this year, currently in the Netherlands and later in Oxford, where he will do further research on a subject that forms a chapter in A Perfect Moral Storm — geoengineering, defined as intentional intervention in the Earth’s climate system on a global scale.

“My thesis would suggest that that’s where we’re going next, and chances are we won’t behave that well in that sphere either,” Gardiner said."

This last sentence in the article brings to mind Fitts' comments about the 2004 Indian ocean tsunami.

Greenwood said...

“My thesis would suggest that that’s where we’re going next, and chances are we won’t behave that well in that sphere either,” Gardiner said."

Remember the part in Fantasia when Mickey thinks he's so slick with the brooms and fetching water?

The Sorcerer's Apprentice

~

newgrowerjoe said...

Nice planet while it lasted.

Shock as retreat of Arctic sea ice releases deadly greenhouse gas
Steve Connor
Tuesday, 13 December 2011
Dramatic and unprecedented plumes of methane – a greenhouse gas 20 times more potent than carbon dioxide – have been seen bubbling to the surface of the Arctic Ocean by scientists undertaking an extensive survey of the region.
The scale and volume of the methane release has astonished the head of the Russian research team who has been surveying the seabed of the East Siberian Arctic Shelf off northern Russia for nearly 20 years.
In an exclusive interview with The Independent, Igor Semiletov, of the Far Eastern branch of the Russian Academy of Sciences, said that he has never before witnessed the scale and force of the methane being released from beneath the Arctic seabed.
"Earlier we found torch-like structures like this but they were only tens of metres in diameter. This is the first time that we've found continuous, powerful and impressive seeping structures, more than 1,000 metres in diameter. It's amazing," Dr Semiletov said. "I was most impressed by the sheer scale and high density of the plumes. Over a relatively small area we found more than 100, but over a wider area there should be thousands of them."
Scientists estimate that there are hundreds of millions of tonnes of methane gas locked away beneath the Arctic permafrost, which extends from the mainland into the seabed of the relatively shallow sea of the East Siberian Arctic Shelf. One of the greatest fears is that with the disappearance of the Arctic sea-ice in summer, and rapidly rising temperatures across the entire region, which are already melting the Siberian permafrost, the trapped methane could be suddenly released into the atmosphere leading to rapid and severe climate change.
Dr Semiletov's team published a study in 2010 estimating that the methane emissions from this region were about eight million tonnes a year, but the latest expedition suggests this is a significant underestimate of the phenomenon.
In late summer, the Russian research vessel Academician Lavrentiev conducted an extensive survey of about 10,000 square miles of sea off the East Siberian coast. Scientists deployed four highly sensitive instruments, both seismic and acoustic, to monitor the "fountains" or plumes of methane bubbles rising to the sea surface from beneath the seabed.
"In a very small area, less than 10,000 square miles, we have counted more than 100 fountains, or torch-like structures, bubbling through the water column and injected directly into the atmosphere from the seabed," Dr Semiletov said. "We carried out checks at about 115 stationary points and discovered methane fields of a fantastic scale – I think on a scale not seen before. Some plumes were a kilometre or more wide and the emissions went directly into the atmosphere – the concentration was a hundred times higher than normal."
Dr Semiletov released his findings for the first time last week at the American Geophysical Union meeting in San Francisco.

Lynford1933 said...

CH4+ 2 O2---> CO2+ 2 x H2O

Flick your BIC

Lynford1933 said...

Seriously ... and yes this is serious. Methane will only burn in a rather narrow range of gas/air ratios which would not be met with free methane from the sea floor.

LynnHarding said...

Finally - El G - you are in my area of expertise! Plastic caps can be bought for Mason Jars. Raw milk producers use quart and half gallon glass jars with plastic lids that they do not reuse. I have accidentally turned jars upside down and found that they do not leak if the tops are on really really tight. I wonder whether they might take on water as time goes by, however.
BTW - my new Bison hand pump (made in Maine) has been installed and it works great. I can pump 4 GPM into my 60 gallon tank so we have water for us and the animals and the garden when the lights go out. Next is to do one of those neat hot water systems we discussed several threads ago.

el gallinazo said...

Just to keep up with the bleeding edge, our (and the US Dept.of State) favorite corporate gang of murderers, Blackwater, has changed its name again, this time to Academi. You can get a Ph.D. from them for as few as 10 notches on your assault rifle. Women and children count double. Applications may be found at an internment camp near you.

scandia said...

I just had an idea I'd like to pass on to the Occupy movement.
Nothing original but I think " flash mobs " would be an effective and charming way to communicate. I know I love to watch flash mob videos of singers, some mobs dance...better than camping out in a permanent location and a whole lot more fun.

el gallinazo said...

Drive by photons

MIT group photographs a laser pulse as it saunters by.

http://www.youtube.com/watch?feature=player_embedded&v=EtsXgODHMWk

ben said...

true, lynneharding - i bike-trailer home from the drop-off house our raw milk half-gallons. i lie them on their sides and the plastic lids hold. i was under the impression that the farm is reusing the lids.

hi scandia. i'm personally not a fan of singing flash mobs. i'd rather political flash mobs, which i think are supposed to be called smart mobs, were used for something more substantial. but this may be because i'm not confortable as an entertainer. regarding the camps, the absolute best part about Occupy to me were/are the working communes it established. yours, disagreeably. :)

scandia said...

@Ben, I'm not an entertainer either. The technique can be adjusted in form and timing...
I do appreciate the community building aspects of the Occupy movement but did and do think the urgent purpose now is to get the message/warning out.
I guess I'm saying that would be my purpose if I was a participant.

RBM said...

Thanks el G for the photon sauntering link.

Re: The Higgs Boson AKA 'the God particle'.

I don't expect this to really turn out. Whatever they find they may well misinterpret the data as they are so intent with expectations.

Assuming 'something' is found, whatever it is, I won't be excited, by this single event. To me the context is 'it's one more step' on the journey.

Ant Whisperer said...

http://www.youtube.com/watch?v=BEVc3AZcvXI

Gerald Celente is predicting economic martial law in 2012.

TAE Daily said...

.

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