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Sunday, May 25, 2008

The sky may actually be falling

Check this baby out:

I'm not sure exactly what it means, but nonetheless, I'd like to thank the government economists who have gotten us to this point. You folks are doin' a heck of a job.

Comments (10)

Looks as if Mr Simplot took it with him.

The spike is largely the result of the Term Auction Credif Facility (TAF), which was the Fed's response to the liquidity crisis. The Fed stepped into the gap created by financial institutions that were unwilling to lend to each other as they shored up their own balance sheets.


Here's a more representative chart of where we stand versus recent history of bad loans.

It's not the beginning of the end of our banking system; it is the Federal Reserve Chairman's LOUD ANNOUNCEMENT that he's willing to flood the market with easy money in order to avoid a panic induced crisis.

What's worse, government economic figures may be way too rosy, according to this guy:


It's not the beginning of the end of our banking system; it is the Federal
Reserve Chairman's LOUD ANNOUNCEMENT that he's willing to flood the market
with easy money in order to avoid a panic induced crisis.

In other words, that inflation is going to go through the roof. Stock up on tuna fish and get ready for $10 a gallon gas.

Deregulation works so well.

Er ... thanks for catching up to my March 17 post. (see link) I'll be glad to forward them to you in future, if you can use 'em. ;-)

Didn't we all promise to hold hands and never look down as we might discover our monetary system is an art form.

Congress works so well.

Congressional Problem Creation


A David Wu glossy last week touts his support for the "Comsumer Oil Price Portotection Act" which prohibits trading in energy futures unless the buyer can accept physical delivery of oil.

This moves Congress to yet a new and higher lever of stupidity. Only the most ignorant of the ignorant can have such a lack of understanding as to support such a cockamamie idea.

Wu is a the perfect member of the dumb club who would champion this stupidity.

As long as our GDP growth rate is 1/3 to 1/2's the growth rate of China, India, and Brazil, the U.S. Dollar will continue to depreciate.

Greenspan kept post 9/11 federal funds rate too low, for too long, which helped the banks/brokers to pump out the housing bubble.

You can blame Bush for Greenspan's decisions (Bush agreed with the necessity to pull all the stops to avoid a recession), but I don't know how you blame Bush without blaming the Congress for being asleep at the regulatory switch.

America's dependence on imported manufactured products is as much Clinton's fault as Bush's. The trade deficit has as much to do with our falling dollar as money supply.

Congress could always fix the loophole for pass-through deposit insurance for brokered deposits. Setting a maximum of 100 grand in guaranteed deposits, in aggregate per natural person depositor, seems amply equitable to me.

Anti-Capitalist risk-avoidance-transference games never seem to go away, they just get refined and expanded.

(What to do? . . . pause . . . Blame China, Blame Oil, Blame _____.)

Let's not forget the politics about capital gains tax cuts, as asset prices hyperinflate (in lock step with effective wage deflation) by reason of loose money (loose money equivalents, and options and the like) and risk-transference rather than by reason of anything remotely related to entrepreneurship.

On the bright side: Be thankful the flood of overpaid MBAs did not become Doctors; like Doctor Death who should have instead become an MBA where anomalies could just be framed as accounting problems.

Creating artificial reasons to have "confidence in the banking system" to induce deposits, guaranteed deposits, is a problem in and of itself that masquerades as a cure.

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