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lowrentyieldmakessense(honest!)

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Posts posted by lowrentyieldmakessense(honest!)

  1. Link

    Paul McCulley and Richard Clarida at Pacific Investment Management Co. (PIMCO) have written extensively about the Shadow Banking System and its growth. An extensive slide presentation on the Shadow Banking System can be found on my web site at TIPPING POINTS. I won’t go into the detail here, but suffice it to say that the shadow banking system collapse has created a massive hole in credit creation that central bankers can’t fill in the manner in which they presently appear to be approaching the problem. Of course appearances can be deceiving

    The problem has now reached crisis proportions and the central bankers know they must urgently act in a coordinated manner. Deflation now has a firm hand on the global economy and this must be reversed. I have been calling for a US Quantitative Easing QE II of $5T in my writings for some time. This amount is required for the US alone. The entire global requirement is three to four times this amount.

    The above chart serves as an illustration to simplify the essence of the Shadow Banking System . The international bankers prefer to refer to the process as Capital Arbitrage. An arms-length agreement allowed the banks to invest in a Structured Investment Vehicle (SIV) as an affiliate investment. The large spread that an SIV captured made it an excellent investment, but more importantly it allowed the banks to use their fractional reserve (10X) money creation abilities to buy risky securitization products without them appearing on their balance sheet. The banks received huge multiplier leveraged returns from the high yielding Collateralized Debt Obligations (CDOs) until the crisis imploded the game.

    HOW MUCH LEVERAGE WILL THE CENTRAL BANKER CHOOSE TO COMPOUND? => “x” times “y”

    When the financial crisis unfolded you may recall that then US Treasury Secretary Hank Paulson’s (former Chairman and CEO of Goldman Sachs during the explosion of Shadow Banking structures) first solution was to create a $100B Super SIV. The SIV leverage thinking was so entrenched that this was the first ‘go to’ solution to fight de-leveraging. If we were to jump forward to today when we are further along in increasing and unprecedented de-leveraging, what the central bankers need to replace the shadow banking system is a vehicle that will deliver the previous scale of leverage PLUS an order of magnitude more. The answer is the Bank of International Settlements. The SIV model is used as illustrated ‘Shadow Central Banking System’ above.

    With the use of the SDR ‘currency’, central bankers can compound fractional reserve lending.

    IT’S ALREADY HAPPENING

    It is my view this process is already well along. The following Bloomberg global money supply growth chart graphically shows this. As the circles indicate, once again money is flowing into the pipeline or at least into global bank reserves.

    CONCLUSION

    The advantage of this approach is:

    1. Leverage: Compounding money creation between banks

    2. Partial gold backing: Present BIS levels of 12.4%

    3. SDR: Offers a basket of currencies approach versus a single currency dependency.

    4. Former Communist bloc regime backing: China and Russia would likely support this approach for a number of reasons, which they have already expressed as short comings to the current global reserve situation.

    5. Reserve Currency: The SDR approach offers a migration path from today’s US$ reserve currency to an alternative bank reserve currency to a future global reserve currency.

    ok how do we stop em

    The following gave me concern when I first read it many years ago and something for you to think about:

    "...the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations."

    Professor Carroll Quigley

    Tragedy and Hope: A History of the World in Our Time (1966)

  2. its not going to be fun watching people realise they have been duped

    link

    Les Echos reported this week that 64% of French workers were retired by age 60. People working for favored state enterprises – such as the SNCF, which runs the train system…or for the “fonction publique,” which keeps people from getting anywhere – may retire earlier. They get extra credit for years worked in hardship overseas destinations – such as Tahiti, for example. And a French politician can get a pension after only 6 years in government. In the old days it was a lucky man who retired before his beard grows white. Now, if he plays his cards right, he could begin collecting a pension before his beard starts to grow at all.

    This information comes in the context of a great debate, “a parliamentary battle.” The French government has proposed a law raising the retirement age to 62. The socialists have proposed 150 amendments. Over at The Financial Times, meanwhile, the editors have devoted this week to their own great debate on the subject. “To tighten, or not to tighten – that is the question,” writes Martin Wolf.

    The rumbles in Paris and London are just two of many mock skirmishes going on. Neither side wants to aim too carefully at the real problem; they fear they might hit themselves!

    You’ll recall, the G20 – the USA dissenting – urged member states to cut public expenses. They pledged to cut public deficits in half by 2013 and to stabilize debt by 2016. But Hungary has already broken ranks.

    The big spenders insist that more spending is needed to protect the system. The cutters say more cuts are the thing that will preserve it. Neither has any doubt that the system is worth saving. That, precisely, is the target of today’s back page artillery.

    Otto von Bismarck would hardly believe what a smashing success his innovation has become. Practically every advanced government picked it up in one form or other. The little guy liked it because he thought it gave him something for nothing. And the welfare state proved him right. The expenses of the first generations in the system were easily supported by the larger, richer generations that came after. Leaders liked it too, because it made the voters more dependent and controllable: the masses wouldn’t revolt as long as their pension checks kept coming.

    Ernest Ackerman must have smiled broadly when he got the first US Social Security check for 17 cents in 1937. Since then, the checks got bigger and came earlier. More benefits were added – education, health care, parks, libraries, unemployment compensation… Ordinary people began to spend more time in universities than they did in bars. Health care services included evermore complicated and expensive procedures. Thousands were employed to regulate, control, protect and administer the public weal. Millions more were able to malinger and leech. One got a subsidy for his farm. Another was ‘disabled’ at work. And still another had his bank bailed out.

  3. link

    To repeal the legal tender laws, to prohibit taxation on certain coins and

    bullion, and to repeal superfluous sections related to coinage.

    IN THE HOUSE OF REPRESENTATIVES

    Mr. PAUL introduced the following bill; which was referred to the Committee

    on

    A BILL

    To repeal the legal tender laws, to prohibit taxation on

    certain coins and bullion, and to repeal superfluous sections

    related to coinage.

    1 Be it enacted by the Senate and House of Representa2

    tives of the United States of America in Congress assembled,

    3 SECTION 1. SHORT TITLE.

    4 This Act may be cited as the ‘‘Free Competition in

    5 Currency Act of 2009’’.

    6 SEC. 2. REPEAL OF LEGAL TENDER LAWS.

    7 (a) IN GENERAL.—Section 5103 of title 31, United

    8 States Code, (relating to legal tender) is hereby repealed.

  4. that 'physical paper and coin' is also debt money. It just happens to be taxpayer debt rather than individual private debt.

    There isn't any money and hasn't been for a very very long time.

    People have been furiously pretending that there is real money (especially on this forum) but there isn't any. Gold ran out in about 1650.

    where did it go

  5. Human beings only began eating wheat 12,000 years ago.

    There are many docs who now believe that the human gut simply cannot tolerate gluten. This results in allergies, asthma, hayfever, IBS, coeliacs disease, inflamed colon, etc, etc.

    Giving up wheat for 60 days can dramatically improve the above conditions but it is hard as so many foodstuffs contain wheat/gluten.

    As for corn, the texture is nice but for most people it simply goes straight through the body and often comes out the other end looking no different than it did on the plate. The human body simply cannot digest corn.

    youre not wrong

    big business do well out of wheat though

  6. Tp be fair, the problem is not merely socialism, it's statism.

    Socialism is just a subset of the idea that it's okay or workable in the longterm to use the state to get stuff done.

    they have been quite good at getting people to believe that if you dont believe in the welfare state then you are an evil uncaring nasty. When the evil and uncaring nasty ones are running the show

  7. Adam Smith had the wisdom to see the state has its part to play.

    The enlightened self-interest of a collection of individuals is very good - up to a point.

    Beyond that point one needs society and a bit of socialism and isn't it called a "mixed economy"?

    I think the trick is to keep the socialism bit on the smallish side but it is needed because bankers don't understand hospitals.

    there is no middle ground we either have freedom or servitude - you may think its ok to have a bit of theft but it just grows until the money runs out and then it collapses.

    the social safety net is a con. The elite do very well out of socialism but the average worker doesnt.

  8. less than 50k in 1997 i think

    things can only get better

    From the report 'It predicts Sheffield will lose 7,014 jobs from the city's current 82,891-strong public sector workforce between now and 2016.'

    I fail to see how losing 10% of the jobs will save 25% of the budget. 10% over the next 6 years is just normal attrition with minimal replacement.

    The real story is the increase from 50,000 to 83,000 (assuming the 50,000 is correct) during Nulabour's spendfest.

    ok it may have been closer to 55k than 50k but still

    link

    I was in Sheffield last weekend. The city centre skyline there is very public sector, with lots of buildings adorned with logos like UfI and Sheffield Hallam, alongside the massive DWP and DCSF base at Moorfoot (pictured).

    Sheffield has seen a 55% increase in public sector employment over the last decade - just one of the findings in our latest report.

    Over the past decade, the growth of lots more UK cities has been boosted by big injections of public cash. Almost 70% of the 1.2 million net additional jobs created in UK cities between 1998-2007 were public sector jobs. Right now, the public sector provides one in four jobs in UK cities - even more in cities like Swansea.

  9. QE Cash is QE cash, this cash has gone to the holders of the bonds, who will probably re-invest not spend, otherwise why would they be holding bonds other than a return of investment such as a pension fund or similar.

    This will not get into the real economy, if they thought it would they would QE, its all about keeping long term and short term yields down on asset prices such as bonds maybe house?

    Anyway the recievers of the QE cash ain't going out and buy a row of two up two downs, or 5000 Jaguar cars or 100,000 plasma TV's or a big shp at Tesco's.

    So QE cash will not be the cause if hyperinflation, its all about yields, interest rates will be kept as low as possible for qas long as possible so the debt lingers and wages stay deflated, we are just gonna get poorer and poorer, work longer and longer for less.

    So spend you savings and get used to it!

    P

    confidence

    link

    Loss of confidence in a currency can be brought about by many reasons, but there is one constant factor. When hyperinflation has occurred in modern history EVERY economy involved was decimated as and when it occurred.

    It has never been caused by “Demand-Pull,” but always and without exception caused by “Currency Induced Cost Push Hyperinflation.”

    The nonsense being spread by the F-TV taking heads is that the Fed is out of ammunition to fight deflation. That is raving BS. The Fed can and will do QE to infinity which is restricted as a tool by nothing whatsoever. The ECB will not be far behind the Fed.

    Argue all you want, but this is exactly what is going to happen starting now. Stop being glib. Study hyperinflation in modern times listed below before you ask me to explain it one more time.

    What is out there today QE wise is enough to result in hyperinflation as confidence falls in currencies due to two characteristics, QE and volatility.

    history

    link

  10. It's to protect the children you see. If you don't agree you must be a paedo with something to hide, right? Oh there is some talk of fines and other bat $hit thinking.

    http://www.bbc.co.uk/news/uk-politics-10709128

    Is there any proof to back up Mr Davies claims that thousands of perverts are doing this? How many and out of how many pre paid card users? 10%, 1%,0.5%, 0.1%, 0.01%, 0.001%? :ph34r:

    looks guilty to me

    davies_1415702c.jpg

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