• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Is Credit On The Verge Of An Oversaturation "Perfect Storm" Implosion

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Fri, 06/10/2011 - 01:58 | 1357060 I think I need ...
I think I need to buy a gun's picture

gold revaluation by 7/1/11....this looks like a reset...

Fri, 06/10/2011 - 02:00 | 1357061 HungrySeagull
HungrySeagull's picture

When the Veterans are getting out by any means possible, including retirement... they are already speaking loudly without too many words that they are getting out while it is good.

Its the same as hunting. Make the kill, collect the good meats fast and be gone within the hour before Grizzly and Brown bears show up to contest you for the kill. They can close 20+ yards faster than you can load and make ready.

 

The sun is coming up, everyone is busy looting the junk yard and it wont be long before the dogs will start catching the slowest of the bunch struggling to make it to the outer fence.

Fri, 06/10/2011 - 02:10 | 1357072 Michael
Michael's picture

I love the smell of debt saturation in the morning.

Fri, 06/10/2011 - 07:13 | 1357251 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

It smells like self-destruction!

Fri, 06/10/2011 - 03:26 | 1357103 PhattyBuoy
PhattyBuoy's picture

+ PD bagholders

Fri, 06/10/2011 - 02:09 | 1357067 phungus_mungus
phungus_mungus's picture

Anyone up for a good game of shuffle board on the deck of the Titanic before she goes under for the last time? 

Fri, 06/10/2011 - 02:07 | 1357069 jmw_hobbes
jmw_hobbes's picture

reval as in up or down?

Fri, 06/10/2011 - 02:09 | 1357071 FreedomGuy
FreedomGuy's picture

For a nontrader, what is the result of all these things in terms of interest rates, credit availability, etc. for the general public?

Fri, 06/10/2011 - 06:51 | 1357229 equity_momo
equity_momo's picture

Put it this way , you might aswell take a loan out against your 401k and spend it on whatever is tangible now. Because all paper is going to burn , even the USD after it has one last , debt deflating gurgling rally.  Pensions? SS ? Stocks ? Bonds ? Fiat ?  It'll look like that inferno in Arizona.

Fri, 06/10/2011 - 10:16 | 1357732 RafterManFMJ
RafterManFMJ's picture

Aaaaaaaoooooooogaaaa! Aaaaaaaaaaoooooooooogaaaa!

Just requested MAX I can get out of my 401K. Paperwork inbound...

Fri, 06/10/2011 - 02:15 | 1357074 slow_roast
slow_roast's picture

A massive plunge appears imminent; the USD will rally and everything will suck wind.

Fri, 06/10/2011 - 02:19 | 1357077 zaknick
zaknick's picture

Please let this be the big one! Let me see the US become completely unglued!

Reap that whirlwind, bitchez!

Fri, 06/10/2011 - 02:33 | 1357084 JLee2027
JLee2027's picture

It would not be "just the US".  And if anything, the US will be the last man standing.

Fri, 06/10/2011 - 03:12 | 1357097 slaughterer
slaughterer's picture

Who composes the team at Black Rock Solutions who is selling this junk?  Are they disclosing all the risks associated with owning this junk leftover from the last crash?  Or do we have to send Carl Levin after them?

Fri, 06/10/2011 - 03:45 | 1357121 Yen Cross
Yen Cross's picture

 Over saturation? Wall streets next callword?

 

                  What a joke.   Yen (dot)

Fri, 06/10/2011 - 03:55 | 1357125 jtaskinen
jtaskinen's picture

About debt, one thing has been bothering.

Obama budget deficit 1600bn

War in Libya 2011 750bn

Stimulus 2011 300bn?

Slowing economy 300bn?

Total deficit 2011 circa 2.5-3 tr?

War in Libya could not have been included in the Obama budget in March, so the yestersdays number in FT needs to be added to the original deficit of 1600bn? On top of this we need to add the planned stimulus plus effect of slowing economy, I just gussed that each item would contribute 300bn.

Can this be anywhere near the truth?

Fri, 06/10/2011 - 04:02 | 1357135 asdasmos
asdasmos's picture

"War in Libya 2011 750bn"

 

You sure you got that right?

Fri, 06/10/2011 - 04:07 | 1357140 Yen Cross
Yen Cross's picture

NATO loosers is more appropriate!

Fri, 06/10/2011 - 04:32 | 1357156 jtaskinen
Fri, 06/10/2011 - 04:41 | 1357165 asdasmos
asdasmos's picture

"US military operations in Libya are on course to cost hundreds of millions of dollars more than the Pentagon estimated, according to figures obtained by the Financial Times.

Robert Gates, the outgoing secretary of defence, said last month that the Pentagon expected to spend “somewhere in the ball park of $750m” in the 2011 fiscal year as part of efforts to protect the Libyan people."

 

Indeed. That would be million, not billion.

Fri, 06/10/2011 - 04:32 | 1357157 jtaskinen
Fri, 06/10/2011 - 11:19 | 1357976 mickeyman
mickeyman's picture


Obama budget deficit 1600bn

War in Libya 2011 750bn

Stimulus 2011 300bn?

Slowing economy 300bn?

Total deficit 2011 circa 2.5-3 tr?

 

You forgot to add 

End of the fiat currency system . . . priceless

Fri, 06/10/2011 - 04:05 | 1357132 asdasmos
asdasmos's picture

"1) It is never different this time"

 

I wonder if he is referring to Bernanke's playbook...

Fri, 06/10/2011 - 04:01 | 1357134 litoralkey
litoralkey's picture

Several of those CUSIPS are f**ked, and have 0 real dollar value.

THe CUSIPs had been held back from prior auctions, but they had to be jettisoned at some point.

Fri, 06/10/2011 - 04:27 | 1357150 Henry Chinaski
Henry Chinaski's picture

Great post.  One word summary: Ponzi

Around here, we don't skinny dip. We chunky dunk.

Good advice from Harley

 

Fri, 06/10/2011 - 04:28 | 1357154 Yen Cross
Yen Cross's picture

 Typical FROG. Junking me.

Fri, 06/10/2011 - 20:27 | 1360179 GoinFawr
GoinFawr's picture

Hey! (Grin)

Fri, 06/10/2011 - 04:52 | 1357173 juujuuuujj
juujuuuujj's picture

Welcome to debt deflation. Steve Keen said it first.

Fri, 06/10/2011 - 04:52 | 1357177 BlackholeDivestment
BlackholeDivestment's picture

...sure seems to be a lot of stormy weather hitting more often and with more frequency (HFT lol) and higher intensity ...lately. Rats leaving political office too. It's as if it's 2112 ...uh, oh yeah. http://www.youtube.com/watch?v=SGB5UjzmHLA&feature=fvst

Fri, 06/10/2011 - 05:32 | 1357197 dolly madison
dolly madison's picture

+1

Fri, 06/10/2011 - 04:55 | 1357178 Arkadaba
Fri, 06/10/2011 - 06:09 | 1357218 BlackholeDivestment
BlackholeDivestment's picture

...sounds real good loud, I needed that.

Thanks man...

Fri, 06/10/2011 - 06:36 | 1357225 Arkadaba
Fri, 06/10/2011 - 20:18 | 1360149 Arkadaba
Arkadaba's picture

I would love to see a google map of their route. Early Canadian punk band. 

And not man - grrl

Fri, 06/10/2011 - 07:14 | 1357250 JuicedGamma
JuicedGamma's picture

Theres nothing better than self locomoted speed thrills.

Fri, 06/10/2011 - 05:18 | 1357185 johngaltfla
johngaltfla's picture

And thus how the liquidity crisis will evolve. As the Fed liquidates its portfolio of crap, the valuation of the crap the banksters have been holding as "Tier 1 Capital" will decline at the same time the Fed demands they increase their capital requirements. The banksters will begin liquidating their equity and commodity portfolios and attempting to sell their junk bonds in a panic which only accelerates the process of asset price deterioration and feeds on itself.

As pointed out in these pages on ZH and elsewhere, it has never been a liquidity crisis, this was a solvency crisis. This is exactly what Chris Whalen at IRA has been warning about. Now those banksters and institutions (insurance companies and pension programs included) who claimed to have strong balance sheets will now be exposed because they have little to no cash flow along with deteriorating asset quality.

Gee, who'd of thunk it.

Fri, 06/10/2011 - 05:36 | 1357203 johngaltfla
johngaltfla's picture

and in a related story about bond auction failures from Europe (Via the WSJ)....

Bond Deal May Augur More European Travails

Fri, 06/10/2011 - 05:20 | 1357186 irishlink
irishlink's picture

What going to happen to all those poor people who ran out of stocks and into coporates and government bonds? Frying pan into the fire and then some.

Fri, 06/10/2011 - 05:21 | 1357187 Withdrawn Sanction
Withdrawn Sanction's picture

$1.9 B of $3.8 in face...what were the prices fetched?  That will tell us the relative quality of the issues sold, and by implication the value of those not sold.  This is the real garbabe in the Fed's Bear portfolio; is it any wonder no one wants it?

Fri, 06/10/2011 - 05:30 | 1357194 mberry8870
mberry8870's picture

Remember the ARS market in 2007-2008? 

Fri, 06/10/2011 - 05:32 | 1357198 johngaltfla
johngaltfla's picture

Hell, remember the MBS market in 2007-2008....

Fri, 06/10/2011 - 06:11 | 1357219 mberry8870
mberry8870's picture

True, but my point is that much like this market the ARS market was the "lubricant" needed to facilitate the continuing "malinvestments" in other markets e.g. the MBS in '07-'08 and equities today. This ain't going to end well.

Fri, 06/10/2011 - 05:47 | 1357208 Coke and Hookers
Coke and Hookers's picture

Gee well this week the Icelandic government sold $1 billion in bonds, mostly to US investors. The issue was at least 100% oversubscribed from what I understand. I think it says a lot about risk perception in the market now towards the US when bonds from bankrupt rock in the Atlantic sell like hotcakes while the almighty fed can't unload their junk.

Fri, 06/10/2011 - 10:19 | 1357730 epwpixieq-1
epwpixieq-1's picture

Considering that energy prices are and will be on the rise, Icelandic government bonds may good investment/hedge, especially considering that virtually all of the Iceland's electrical energy is produced by renewable resources.

http://www.greenchipstocks.com/articles/geothermal-energy-in-iceland/740

Fri, 06/10/2011 - 07:08 | 1357245 eddiebe
eddiebe's picture

Managed take-down so the elite can squeeze some more blood. Then they'll come to our rescue and take away the rest of our freedoms and options.

Better join the Storm troopers now, or get wiped out by them.

Fri, 06/10/2011 - 08:38 | 1357378 Bob
Bob's picture

Looks that way to me as well.  No surprise, of couse, that's how the system is set up.  They'll rescue us and leave it to their sycophants and useful idiots to fight off the "populist hoards" of entitlement-drunk "mouth-breathing socialists" demanding retribution, of which appropriately focused and severe taxation would be the quickest and simplest, and there will be further deterioration of the real economy and cuts in the social safety net while those sycophants and useful idiots lick clean the plates bussed from the banksters' tables.

Fri, 06/10/2011 - 07:42 | 1357277 oogs66
oogs66's picture

CNBC just mentioned CMBX

Fri, 06/10/2011 - 08:18 | 1357349 Re-Discovery
Re-Discovery's picture

Just wait until this collateral gets rejected for the overnight markets (if its being accepted now which you know some of it is.)

Fri, 06/10/2011 - 08:32 | 1357373 spinone
spinone's picture

This failure was intentional. The FED is the bad bank. It will be wound down over the next few years, once the dollar is no longer profitable for the FED stockholders.

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