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Reinko
328 Comments
More on Debt Supercycle Control
Good comment but most investors do not know exactly what M3 money supply is.
Mark, I have a question: In the year 2005 the Federal Reserve stoppen publication of the M3 money supply, where do you have your 17% figure from? If you could help me...
There are even economists that use all kinds of substitutes for the real M3 money supply.
Furthermore Mark; trying to explain to the public that the interest on debt and stuff like that is larger then the total US economy profit via M3 money reasoning is like explaining to Dubya that tax cuts are in fact bad for the economical position in the long run.
Better use the Federal Reserve flow of funds sheet from the Z1 release, here is the link:
www.federalreserve.gov...
Just add up the relevant columns (the first and the one before last) and we have at least 46 trillion US$ debt on the US economy. There is lots of more debt and hidden debt but the 46 trillion is a good starter because that number also gives a far to high interest level...
Album Sales Plummet 15%; Digital Sales Gain 45%
Here is your homework:
Go the the Federal Reserve flow of funds sheet, a link is here:
www.federalreserve.gov...
And arrive at the following conclusions:
--The entire US financial sector needs a rough 2500 billion of new debt in the new year.
--In the year 2008 the US economy will take the threshold of 50 trillion of debt on her own economy.
--If we use a reasonable amount of interest level, say 5%, the US econmy needs about over 18% of her GDP to pay for stabilizing the debt.
--Stop talking stupid music stuff and tell the folks that after taking the 18% level this fiat money system will die.
--Blame Alan Greenspan because in fact he is the one who did it.
--In the meantime solve the US obisety problem because I estimate there is a high correlation found between being very fat and being very relaxed about debt levels...
Music... Barry, where is your brain gone?
The Danger from Bear Stearns' New CEO
Go to the Federal Reserve 'flow of funds' page and here is the link:
www.federalreserve.gov...
Go to the one last column (total debt of the US financial sector) and observe we have Q on Q the next:
Total debt Q2 = 14855.0
Total debt Q3 = 15435.3 billions of dollars...
Well Barry, since you are only in the denial stage, let me do the simple to understand calculations for you:
15435.3 /14855.0 = 3.9% more debt in just one quarter.
If economical conditions stay the same in 2008 (and there is nothing that points to something else) we have for the full year 2008:
1.039^4 = 16.6% more debt needed.
This amounts to something like 2500 billion more debt needed and I only wonder when you will leave your state of denial...
Risk Model
In the first picture we see liquidity hanging low in the neutral zone where we all know that the big moving makers can always pump up liquidity at any desired range.
So the article is just a snap shot and nothing more.
Confusing Cause & Effect: Elections and Markets
Let me explain to you the McCain is the bigger idiot compared to Bloomberg:
Month in month out McCain asked for at least 200 thousand extra troups in Iraq while every one with a bit of brains understood this was not possible.
It took the McCain figure over six months to figure out that his wishes were not real; and today we know that (leaving special forces out because they are 'secret' in number and destignation) we only have 30 thousand extra in Iraq.
It was good news in NH: McCain won and this is good news because we need to bring another dumbhead to the White House and not some smart guy.
Ha Barry, it is carved in my mind when we had re-election of the Dubya thing: I advised the Iraqis to kill over one hundred of your slimy soldiers and so they did: 107 if my memory is correct.
And Dubya won his second term, wow how good for that nation...
If Presidential Candidates Were Stocks
The phrase (Dubya visit to Israel is guided by just 40 thousand of high explosives via air power today, thus relating politics and killing effeciently)
Is replaced by:
(Dubya visit to Israel is guided by just 40 thousand pounds of high explosives via air power today, thus relating politics and killing effeciently)
In this regard a pound is about 450 grams so we have about 18 thousand of kilo's of high explosives while there was no monitoring of the thing known as 'collateral damage' on the 43 targets of today...
If Presidential Candidates Were Stocks
Why not? They are technically highly advanced (just look at their air wing), they are highly innovative (Dubya visit to Israel is guided by just 40 thousand of high explosives via air power today, thus relating politics and killing effeciently) and most of all: They are the Power and the Glory.
Now this is better than gold, gold is just a stupid metal that is not highly innovative and in the future there are lots of other nations that need to be freed and, just by the way, have some commodities.
All these idiots that say it should not be Nasdaq listed, well they are just so pre 9/11.
More on Debt Supercycle Control
There is much more to inflation then just the consumer price inflation that is often stripped from food and energy because they are 'too volatile'.
But we live in a world where the Federal Reserve even does not publish the M3 money growth since 2005, but putting M3 money in the system is the core business of what the FED does!
With putting less or more M3 stuff into the system they defend the target rate so one thing is clear: They must have a full oversight of how much they pump in to willing comercial banks.
Then why did the Federal Reserve motivate the stopping of publishing M3 money growth with the weird reasoning like:
M3 does not appear to convey any additional information about economic activity that is not already embodied in M2 and has not played a role in the monetary policy process for many years. Consequently, the Board judged that the costs of collecting the underlying data and publishing M3 outweigh the benefits.
Here is the source of that weird weird statement:
www.federalreserve.gov.../
We live in a strange world Larry, that's a fact!
5 Stages of Market Grief
www.sciencedirect.com/...;
or go to article number 12 on this link:
www.sciencedirect.com/...
Have fun reading it!
5 Stages of Market Grief
Also a very funny list, the 'return to a meaningful life' did bring a soft smile on my face...;)
By the way: In Oct 2001 (the 21th to be precise) I suddenly understood the DOW would go to 7000.
At that point in time it had not crossed the 10,000 level and was standing at something like 9,500 if I remember it correctly.
It even climed to 10,500 but I knew all I had to do was waiting.
The decline did set in and intraday low was something like 7194 so that was not bad. That was not a bad estimation.
Yet this time I am expecting similar numbers because this one is much more severe, if the entire financial sector indeed needs 2.5 trillion US$ debt as is expected, we are in deep problems...
As the return towards a meaningful live is done by me:
I am reading a very nice article about big market moves, it is a bit mathematical but not very deep or so (just a bit of the beloved log and easy to understand power laws). Here is the link, have a nice time reading it:
www.sciencedirect.com/...
5 Stages of Market Grief
But with the rest I can live: he has a good insight of what will happen if we do not have a sudden burst.
Yet my expectations, based on only Federal Reserve reporting, are that we will have a severe bust in this year numbered as 2008.
5 Stages of Market Grief
Of course you folks are a long way from capitulation, it is well known that Americans are always far too optimistic because otherwise they would not have picked up 48 trillion US$ debt levels on their own economy...
Well if you cannot deal with the yearly cost of this debt (just about 2.5 unpaid trillion US$ or just 2500 unpaid billion a year), why not throw in another 2500 pounder?
Here we go:
As usual go to the Federal Reserve flow of funds because we have good action over there lately, here is the link:
www.federalreserve.gov...
Go to the one last column of debt; the financial sector kind of debt:
It says:
2007 Q2 total financial sector debt = 14855.0
2007 Q3 total financial sector debt = 15435.3
Thus QoQ we have:
15435.3/14855.0 = 3.9% of debt growth in just one quarter for the entire US financial sector...
Hence on YoY we have: 1.039^4 = 16.6%
Well 16.6% of the outstanding debt equals to something like 2.5 trillion more debt needed in 2008.
David, can you tell me where this debt is supposed to come from?
Will it come from some 3, 5 or 8 billion M1 money throwers from the Middle East that suddenly think 'Wow, let's invest another 2500 billion'?
Please get real David, it is well known that the DOW traders do not know what will happen in the future. This is their problem and not mine...
Can a Fed Move Stop the Debt Supercycle?
It makes you wonder: why do they do that?
And the answer is amazingly simple: The break down of the old 'checks and balances' system is mostly found in the far too simple two party political sytem in the USA.
This is multiplied via the fact that US Presidents have to be someone that 'people can relate to' so some average six pack Joe will always win the elections. A guy like the former central banker also has to be some guy that 'people can relate to' and we all know what damage Alan has done...
But facts are facts and this year the total debt of the US economy on itself will pass the 50 trillion threshold and thus at an interest level of 5% this economy needs over 18% of her GDP just to pay for the interest.
Conclusion: Like all other fiat money systems this will crash.
It is sad that it is this way because good policies from the central banks could have prevented such a crash but now it's too late.
Bill Gross: Our 'Shadow' Banking System Needs a Fed Bailout
Although I follow economical and financial news for years I never knew there was an entire shadow system created with all that 'off balance' kind of stuff.
Of course it must not be forbidden for banks to have small amounts of 'off balance' things but the utter size of what we have at present is simply not accaptable.
Yet we are living in times (thanks to Alan Greenspan) where even the central banks have 'off balance' stuff (scroll down in the next Federal Reserve file):
www.federalreserve.gov...
I think it is time to cut the crap becauae as a normal investor you just cannot buy bank stocks because you do not know what you buy... (Just like banks do not want to leand money to each other any more without a reasonable spread.)
Can a Fed Move Stop the Debt Supercycle?
www.federalreserve.gov.../