tag:blogger.com,1999:blog-4921988708619968880.post7555271057001107761..comments2024-02-28T22:03:57.237-05:00Comments on The Automatic Earth: Debt Rattle, January 25 2008Ilargihttp://www.blogger.com/profile/09698428009501267664noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-4921988708619968880.post-18873252193482240862008-01-29T15:50:00.000-05:002008-01-29T15:50:00.000-05:00Hi Stoneleigh. Nice site.Hey, it took me a while ...Hi Stoneleigh. Nice site.<BR/><BR/>Hey, it took me a while to figure this out regarding our (US) new tax rebate system and what it's all about.<BR/><BR/>I had just given my friend an explanation last week that the Fed loans money to banks overnight in the never-ending goal of keeping reserves at their absolute minimum level. However, recently as a group they have been falling below their Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-38063330314908164852008-01-26T12:19:00.000-05:002008-01-26T12:19:00.000-05:00Hi ilargi, like hydro-electric investment potash i...Hi ilargi, like hydro-electric investment potash is a sensible long term hold, but like any stock will be subject to the more immediate economic events you and Stoneleigh speak of. The question I would ask is, is this the time to hold this or any stock? (of course for the gambler playing the dips and peaks it could be remunerative, or maybe not?:)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-6555357302000789362008-01-25T21:34:00.000-05:002008-01-25T21:34:00.000-05:00Thanks ilargi. I have actually been a lurker on TO...Thanks ilargi. I have actually been a lurker on TOD since last summer, and just moved here last fall from the upper midwest. What better vantage point from which to observe TSHTF, than in it? My university job is probably safe until 2009 at least, but the tax revenue projections for after that are dire even before factoring in TSHTF. There was a fire in the luxury penthouse floors of the Monte Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-87672545092153077502008-01-25T20:53:00.000-05:002008-01-25T20:53:00.000-05:00IntheShit.Lowering rates to 0% is not that easy or...IntheShit.<BR/><BR/>Lowering rates to 0% is not that easy or profitable. In the current US situation, it would mean an instant halt to money influx from abroad. Which is what's keeping the tub afloat for now. <BR/><BR/>Yes, the rate cut this week is also a risk factor in that picture, but something they apparently think will work, albeit only in the short term. It's more about "the spirit of the Ilargihttps://www.blogger.com/profile/09698428009501267664noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-15027829637350185462008-01-25T19:58:00.000-05:002008-01-25T19:58:00.000-05:00Stoneleigh - thank you for your description of cre...Stoneleigh - thank you for your description of credit as an inverted pyramid. I have been trying to get my layman's head around the situation for a long time and the pyramid analogy is perfect. Indeed it makes it easy to understand how interest rates factor into play - if I loan someone $10 at 10% interest, the debtor is less likely to be inclined to risk loaning out that $10. Whereas at 0.5% Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-26651892936807841192008-01-25T14:28:00.000-05:002008-01-25T14:28:00.000-05:00Excellent article explaining how credit default sw...Excellent article explaining how credit default swaps work and what's wrong with them:<BR/><BR/><A HREF="http://articles.moneycentral.msn.com/Investing/SuperModels/ABadMarketYouAintSeenNothin.aspx?page=2" REL="nofollow">http://articles.moneycentral.msn.com/Investing/SuperModels/ABadMarketYouAintSeenNothin.aspx?page=2</A>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-66150786933576281462008-01-25T13:52:00.000-05:002008-01-25T13:52:00.000-05:00Leverage is indeed the key. A debt-based economy c...Leverage is indeed the key. A debt-based economy creates the appearance of a great amount of wealth as both borrower and lender feel the wealth effect of the money that changed hands. The borrower has the credit and the lender has an IOU of the same value, so he feels no less wealthy. If a million dollars changed hands, then there is now the appearance of $2 million as it appears on both balance Stoneleighhttps://www.blogger.com/profile/15099878430757036461noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-61275277273457196812008-01-25T13:12:00.000-05:002008-01-25T13:12:00.000-05:00Paula asked me in email why I (and others) have sa...Paula asked me in email why I (and others) have said that the entire debt structure is at risk. I told her it boils down to leverage and thus never knowing if one given financial instrument is backed by toxic paper or not. Further, most of the toxic trash was then used as collateral in other loans thus creating the cascading problem we see today. If Stoneleigh or ilargi (or anyone else for that Greyzonehttps://www.blogger.com/profile/03675706201111951125noreply@blogger.comtag:blogger.com,1999:blog-4921988708619968880.post-27428895638846204082008-01-25T11:50:00.000-05:002008-01-25T11:50:00.000-05:00Ilargi: Heinberg tries on economics, and it's an a...<I>Ilargi: Heinberg tries on economics, and it's an awkward fit.</I><BR/><BR/>If there are Peak Oilers who think everyone just wants to tend their cabbages and sit in the sun, and that running out of petrol will give them the opportunity to acheive that peacefully and happily, then Richard Heinberg is their one-eyed King.<BR/><BR/>Too long in the hot tub, Richard! Your brain is cooked.The Lizardhttps://www.blogger.com/profile/12044779666881689690noreply@blogger.com