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The Fed's Dummy "Household Sector" Category Was The Source Of $712 Billion In Capital In Q1
The "household sector" plug in the Fed's Flow of Funds reports provides some very crude and often inaccurate fund flow data when it comes to the US consumers, but at least one can often get a sense of which way capital is flowing. As we continue spreading the data from yesterday's Z.1, we have initially focused on 'household" financial assets, which at a total of $45.5 trillion, represent two thirds of the total household sector's assets of $68.5 trillion (the balance is tangible assets which actually declined by $67 billion to $22,994 billion: as America gets wealthier, it is increasingly based on intangible "wealth"). The key components of Financial Assets consist of Corporate Equities, Corporate and Foreign Bonds, Treasury Securities, Total Deposits, and Pension Funds Reserves. Below we present the change in time over these asset holdings.
A casual glance at the change in the non-seasonally adjusted household financial assets reveals something strange: even as every tracker of mutual fund flows has repeatedly indicated that US investors are not only not investing in stocks, but are now increasingly redeeming funds from domestic corporate equities, the Fed will have you believe quite the opposite. According to the Z1, the household sector increased its Corporate Equity holdings by $329.4 billion, even as Corporate and Foreign bonds declined by $58.1 billion. Of course, the truth is completely the opposite: non-institutional investors have been taking money out of stocks and investing it in bonds. When one notes that Pension Funds allegedly also saw a $396.8 billion increase in assets, and then the lie is just complete. The question is why is this "plug" category so far off.
If one assumes that households were really at best flat, if not negative, participants toward stocks, then the Fed is essentially saying there was a vacuum of at least $330 billion that came from somewhere. It sure did not come from retail investors!
Continuing with the other imaginary NSA data, Treasury securities (ex. savings bonds) increased by $148.4 billion in the quarter. This is at least a marginally credible number. We will provide the other contributors to the Treasury category shortly. What is most disturbing for banks is that Total Deposits, after increasing by $101.3 billion in Q4 2009, fell by $104 billion in Q1 2010. Summing across these five categories, Equities, Corporate Bonds (decline), Treasury Securities, Total Deposits (decline) and Pension Fund Reserves, and we get a change of $712 billion in Q1 alone. What the source of this three-quarters of a trillion in new capital in the Fed's dummy category is, is yet another secret that the Fed will never disclose. In this market it is best not to ask questions: just take it for granted that somehow almost $1 trillion in purchasing power came in and lifted the market.
Below is the total notional of these abovementioned asset categories:
And below is the quarter over quarter change of categories in which the Fed needed the help of a dummy category to balance capital flows.
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And we ramp again end of day. Wonder where that buying power came from?!
Tape painting basterds
Don't forget that there are still enough "investors" that don't have a clue what is happening. Like here in Europe you would be amazed how few people actually know anything about the deficit debts of the Euro countries of the US.
I also seen a poll today where 51% of the people voted that the deficit problems are now a thing of the past! And that was on a financial site.
Don't look for logic in the stockmarket when you invest, because you'll soon end up broke.
+1000
Ask Blackrock.
I dunno about the rest of you guys, but I think it was the tooth fairy.
Pahleeze...do not use the politically incorrect term FAIRY...it is Tooth Investor...well...Douchinger who hates teeth would say Tooth Speculator and warn of a coming deflationary collapse in prices paid for a tooth
Those are paper teeth, not physical.
Tooth derivatives.
It was the sugar plum fairies.
Does anyone else get the feeling that Dow 10,000 will be defended at all costs?
...thinking the exact same thing the other day. gotta keep people off the phone after they get their monthly 401k statement.
just file it away and keep on people. nothing to see here.
They can try, but if 'they' were able to successfully do that, they would have done it back in 2008. The entire 2008 experience illustrates that there are limits to manipulation. A little rally here's expected, given how long the fake bull persisted. Most probable scenario requires a rally back into the 1100s to give the 200dma time to roll over. The fact that it was on such low volume proves its a fake-out, but there's no point getting over-anxious for the rollover.
They didnt get the big investment banks really helping until after they bailed them out.
But the fat finger as supposed to hit the + key not the - Key...
Um.. if the last month hasn't proved that, I don't know what else you need as proof.
It is being defended at all costs
Yes, So what you are saying is The fed is doing wrongful things. Hell, you dont have to be Adam Smith to figure that one out. Bang, Zoom, Apple to the fucking moon, Alice.
Robert Shiller on double dip.
http://www.bloomberg.com/avp/avp.htm?N=av&T=Shiller%20Sees%20%60Significant'%20Double-Dip%20Recession%20Chance&clipSRC=mms://media2.bloomberg.com/cache/vpas4lAMXlNk.asf
WSJ:
"
U.S. companies are holding more cash in the bank than at any point on record.
The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963."
we should all pay attention to what they are doing..
save up as much cash as possible.
they are saving it to weather the storm.
That cash in companies isn't all on their accounts. Most of that money, about 95% are unpaid bills from customers. So that money is locked.
It acutally shows the risk those companies are in, as paying terms for example in Europe are now easely 90 to 120 days where 2 years ago that was 30.
Good point SD. My biz is in same situation. I am not spending or investing in anything right now. I am conserving cash, but, a larger portion than usual of that cash is in uncollected revenue. It is very grim. As I noted in an earlier post, my biz is my best indicator of economy. May was worst ever, June not shaping up so well. Part of my biz is considered "recession proof" , actually goes up when times are bad, but things are worse than bad. All parts of my biz are suffering now. If June ends up being as bad as May, might actually have to start thinking about cutting employees, first time ever. It is gut wrenching, my employees are more like family.
Another side note. Friend who is electrician, never out of work in 20yrs, got laid off a year ago, went to Union shop, at that time, longest waiting list he had ever seen, 40. Last month, waiting list was 700! These are large project electricians, not res electricians. He finally gave up looking for union electrician work and went to work for County transit system (public employee union) installing fire alarms in light rail cars for new transit system.
We are now seeing many of our largest customers either refusing to pay on time, or attempting to work out huge price reductions. Our Legal team is running on empty trying to keep up. Many of our contracts do run for longer terms and are based upon Software implimentations. Some have even purposely hurt thier own projects simply to delay acceptance, which is tied to our billing and revenue recognition.
So sorry bud. I quit doing biz with the only corporate customer I had cuz of shit like that. I would love to tell you all who that is, but I filed criminal fraud charges and want to lay low until then. I saw Lee Iacocca do the same with Chrysler on a company I worked for way back when. They just stop paying their bills, had a gal working full time just to try and get money out of them. Chrysler would endlessly request po's, confirmation of po's, ship docs, the whole farce. I used to get so mad when people would say how great he was, he turned Chrysler around by not paying the vendors. The funny thing was, the corp I was working for, owned by Goldstein, was supposed to lose money for tax writeoff. Sold it to nice midwest couple in similar biz, lied to them all the way about finances. The poor suckers bought the biz and it almost immediately bankrupted them. I hate all those fuckers! Had interesting experiences with Jack Welch too, took over corp I was working for, immediately cut R&D 15%, because "we can make more money on the stock market". Laid off a lot of scientists and engineers who created the products that built their wealth! They are all parasitical sociopaths. And they never seem to go away, it's the same fuckers now as it was 20/30yrs ago. But like Byrd being wheeled into Congress in his wheelchair, ya can't kill them! Yet.
Private sector cable company I work for just sent some of my people packing, the good ones. Have not seen any evidence yet of cuts for executive bonuses.
Companies are laying off the only people who can do any work, the people critical for actually OPERATING the company, while placing bonuses for the "cost-cutting" measures into their own pockets. Basically I look around and see guys having to leave because of this and you have to say this person's salary is going DIRECTLY into the bank account of one of the executives.
This is a huge problem in all sectors. The assholes who do nothing but go golfing, swing their dicks around and push paper suck the life out of companies. The people who do the real work are an endangered specie. And I know I will be under fire for this, but you people who "take the money and run" by trading on the corrupt markets are part of this. Any ethical person would quit this game. The unproductive people who get filthy rich on paper wealth should be executed, as in China, they are traitors. We are losing productive skills in this country at an alarming rate. And it has been going on since, at least, the 70's, when I started my working life. I have a lot of interesting examples like the ones in my previous post, with names you see in the news all the time. The thing I can't believe is that they are STILL around. I can't believe someone hasn't killed any of these fuckers yet. Or that they haven't taken their ill gotten gains and retired. HOW MUCH IS ENOUGH?
HOW MUCH IS ENOUGH?
A parasite never quits until the host is dead or dies with the host.
Once you can tax a man. The only question after that is how much before he revolts.
Sorry, the revolt that everyone at ZH is looking for will never come to fruition. No way; no how. I will go out on a limb saying that. The parasites - most of the mortals that is - will die with the host - the Fed.
Recently, somebody I know, who is a good friend, who earns close to $150,000 a year, requested me to loan them some money as they are badly in debt and are behind on their payments. I would have helped them, but then when I looked into their current lifestyle I realized that no amount of helping them out will fix the inherent problem they have with their situation. How can you help someone get out of their debt when they do the following
I feel sorry for them, but there is no way I can help them with money, as I will either lose the money or lose the friend. I keep on telling them, tangentially, that they need to change their lifestyle if they want to bring the debt under control, but to no avail. I have, finally, given up. These are the same people who are going to get wiped out, if this charade cannot be continued any further and the system eventually collapses. I feel sorry for them, but no amount of straight talk seems to make them understand the gravity of the situation. How can you help such folks. They are doomed. All you can do is watch them, not make the same mistake and shake your head and walk away when the downward spiral drowns them. And it hurts to see your friends drowning, but you gotto survive to fight another day. And that's exactly what I am gonna do.
I agree, but those are people who are part of the problem, not the ones I define as "good people". I, too, have tried to help/warn some of my friends, who are exactly like the ones you described. I don't try anymore. The responsible, engaged, productive people who do not squander their lives and their wealth are the good people. And, yes, I am going to survive to fight another day. BTW, the drink and bong hit helped. :)
Yes, I hope the good people survive, for I will need them to rebuild whatever is left. Regarding the drones, I don't even bother anymore. They are going to copulate and die in the nuptial flight anyways. I am more interested in the "queen bees". I need them to survive this epoch. My carnal visit awaits.
By the by, I LOVE Indian Ganja and Bhang; that's some cool shit!!!!
This entire comment speaks directly to me as I am also an entrepreneur with the same exact type of friends.
I stopped wasting my breath quite some time ago and have instead put all my energy into strengthening my business and positioning when the next QE period rolls around.
Lol, yes, sorry, kinda lost it there for a minute. Need to go make a drink and hit the bong. I just get angry, cuz this hurts goodpeople, who work very hard for what they have, only to be sucked dry by the worms.
No, please don't apologize. It is entrepreneurs like you who have made America great. It is because of people like you that I am here. I am just a simpleton trying to figure out the best course of action. Hence, I pay great attention to what you all say, after all you have a finger on the pulse of the economy.
Moreover, I love your moniker. Doesn't matter if you are religious or not, but Kali is one cool lady. I would love to date one like her and even get married. The world needs more like her to get rid of rotten corpses that are running this system. I have always wondered about the myth that is perpetrated about her biting her tongue. It is said that she bit her tongue, which is a sign of grievous error in the Indian subcontinent, when she stepped on Shiva; and being an Indian woman it is sacrilegious to step on a man. But, what if she bit her tongue because she realized that Shiva, although married to Durga, had a clear glance of her **ssy. And that made her blush and bite her tongue. Something to think about, huh?
Kali, great points about the workplace. My parents raised me to work hard, be honest, and that gets you ahead. In the DP/IT field since the 70's, I always delivered the good products on-time, within budget and best of all they worked with happy customers and every time it's thanks here is your layoff notice or a made-up excuse to can you. Now the guys who were incompetent couldn't get their program code to work right or intentionally made it super complex so no one else could understand it - they kept their job! I refused to do that, it's a scum tactic. Never once did I see middle management get the ax. After nearly 20 years of that crap and numerous tries I gave up on a corporate career and went into Consulting and guess what, they lay off the good employees before the consultants, then lastly me, but still the executives keep theirs. One time higher up manager named "Denny" blew into town to motivate all of us because "Mr. H." on the board of directors needed X, Y, and Z. So we all busted ass, worked lots of overtime and delivered. Few months later they laid everyone off as a thank you. Now "Denny" did not survive he died of a inherited heart defect about a year later. Why was he working so hard on screwing everyone when he knew his time was short and should have been loving his family, who knows. Unbelievable, no wonder business is messed up. It's all ass-backwards and not how this country was built.
I was going to bring up GE--they moved their A/P early 2000's to Mexico and Bangladesh and (forget). We had an invoice for $400k, got paid 400k pesos, check cleared automatically, then had a hell of a time, since the invoice was "paid". Then we had the same problems as Charlie Rangel--those folks were speaking Spanish!
- Ned
That was probably Jack Welch again, he went to GE after my former corp. That's what I mean, these vermin never go away, they just move to a new host they can destroy.
If it's phoney, it won't last so who cares.
But how long won't it last? That is the key question.
I wish I were kidding.
I call BS on households actually buying them...
"...yet another secret that the Fed will never disclose."
Never? Jeez, I hope not. Why can't we one day watch BB dragged out of congressional hearings and frogmarched all the way to Leavenworth Federal Prison. There he could write 1,000,000 times on the blackboard, Bart Simpson style, "I was wrong to monetize the debt and lie about it."
Oh, right. That's just not going to happen.
Never mind.
They're gonna arrest BB King for this?
Where's mah cheeseburgah?
The Fed thinks it has the authority to purchase equities under the Federal Reserve Act, even though the act doesn't explicitly say so. And they're not too coy about it either, see for example
http://www.georgewashington2.blogspot.com/2010/01/is-us-government-buyin...
Apparently they don't see anything in the Federal Reserve Act that says they've got to tell the truth about it either.
"You can fool some of the people all the time,
and those are the ones you have to concentrate on."
Dubya
That's what he should have to write.
And why stop at a million repetitions? Don't be coy. He should have to write it at least 7*10^11 times.
Empirically, the multiplier is a negative number.
Empirically, the multiplier is a negative number.
Empirically, the multiplier is a negative number.
TD, you mean to say Central Planning doesn't work?
BS, I say, just ask the Soviets, uh, nevermind...
If I understand correctly, TPTB is pretty sure that Central Planning will DEFINITELY work once it goes planetary.
Problem thus far has been one of too small of a scale of planning and scope.
TPTB has never let me down otherwise -- so...
</sarcasm>
Wait, I am sitting on a PILE of their rubles because Douchinger told me that in deflation (what hit the USSR), cash is king!!!
I expect to go buy the whole country any minute now after all the defaults they had.
The Berskanky Family is not a 'household'?
Thanks again Tyler.
The beat goes on. "Oh will they never learn?"
Some of the cash for the US Treasurys is coming from organizations that were holding high yielding CDs that are expiring. They are now hunting higher yield than they get in their MM's in US T's verses locking in long term low CD rates currently.
I know of two cities that have started buying US T paper for the first time in history, to beat the rate they get on their guarrentied cash. While only a few million in each case, this was a zero event for either city before this crisis hit.
Can we change the name of Zero Hedge to Infinity hedge? We should encourage everyone on this site to just buy stocks Quintuple long leveraged since the market will never ever go down even with record outflows. And this is why the Fed does not want anyone looking at their open trading desk.
And this is why they crashed the markets during the flash crash. I am seriously considering just going long and taking all the free money they want to throw into this hole since inevitably since I have a guarantee from Bernanke that they will keep buying SPYs.
That is the logical answers is it not? Sure seems great right and very free markets to have all longs and no shorts..but then again the answer is simple. Then everyone would be long..and nobody would have to work..and nobody would have to research stocks..and nobody would have to be pessimistic of prices and then price discovery would not exist since it would be the equivalent of price fixing..PRICE FIXING..which is all the Fed does with monetary policy and now the stock market. All subsidized by the middle class with no regard for their welfare. Yet as history tells us then eventually all Fed programs and actions fail because you run out of money. We should all just get long until the next financial Senate hearings or until Ron Paul is elected President and then switch at Dow 67,000 and go short.
And here is why these fucking retards fail continously because even though this would be the simplest strategy to utilize it leads to the following:
- Funds all get long
- Shorts quit shorting
- Volume vanishes as we saw this entire meltup
- There are fewer participants
- The computers only trade with one another
- The day traders all get long because they feel as if there is nothing to fear.
And boom. We end up with nobody left to buy stock which is why we are a year later still barely over Dow 10,000. However now we have more skeptics and those who are learning how to game the market with buying into panic and selling only when you should have sold 6 days ago. Short..ride it down to resistance and rinse repeat. Shells are passes. That is why this cannot work and Hedge funds appear to be learning this and are likely developing strategies to decimate the markets since this blueprint has been out in the open for over a year. And when they attack the markets and all the fed buying does nothing is when it all ends. So for that reason I will stay short because I know all of the price markups in stocks are false and volume proves that to me on an INCREASINGLY daily basis. I will profit when this system ends and refuse to participate on principal because I am a believer of free markets and not even the Fed can doing anything short (pardon the pun) of distorting that concept. Screw you Fed and if you think an unlimited stack of chips will get you anywhere than you are only expediting the end of this beautiful nation. Now I am off to have 4 Jalapeno Mojitos and Tapas at happy hour on Bowery Street and I will spend the entire night enlightening a few more people into what our government is actually doing. Hallelujah..Holy Shit..Where's the TylenolYou should use asprin if you're going drinking - Tylenol and booze together is hard on the liver.
Just stick to booze. Aspirin and alcohol will lead to bleeding ulcers.
"The pearl...is in...the liver!"
Drinking coffee almost completely neutralizes damage done to the liver via alcohol. good to know for those 3 month benders..
That's excellent news for me.
My cirrhosis disagrees...
Folgers isn't coffee!
**ck, now you tell me . :>}
Nice work John, enjoy the Mojitos, and let's burn the FED to the ground...
I enjoy reading all your stuff. Watch it though:
1. Fighting the FED doesn't pay - I speak from personal experience
2. You will prove to be EVENTUALLY right, the problem is by that time you may be totally broke - I speak from personal experience.
My game plan now consists of buying gold/silver on the dips (physical ONLY) and sitting it out starving the beast. All the best.
You are correct about not fighting the Fed but I have been aware of that for months and CHOOSE to fight them because I believe they will prove to be unable to contain this coming disaster. Essentialy I am betting on their ineptness but I completely agree with you. Like Indiana and Temple of Doom inrefuse to drink the poison.
The only thing the Fed has going for them is getting funds and investors to switch sides. The fact that they do not want the world to see they own all the stock tells me they own the stock and I no longer need an audit. Their opposition is proof enough.
I believe in America. And I will go poor if need be believeing in free markets.
Although the Fed maybe the instrument, what you fight is an ideology based on a flawed philosophy that is out to "fundamentally change America". It is simply one of the tools of the trade. And yes, in this new age of "transparency", the lack of an audit is admission enough...
My plan also. Good on ya mate! Also drain savings, checking, everything, even if only to go to the vault and put cash in a safety deposit box.
Why let those azzhats use my money to destroy my country? Make em print!
WTF - This is scary.....
As a radio/intercom/ECM specialist in the Air Force I can appreciate your ZH name.
It was often that we used your acronym "Whisky Tango Foxtrot -- OVER"
There were many more, but my memory fades.
QE2 via the "Household Sector Dummy Fund". You knew it was going to happen.
Yet another reason why looking at tax reciepts seems to be the only reliable indicator anymore.
http://i46.tinypic.com/f4iiy8.png
Receipts/outlays for the first 5 months of 2007 - 2010. Note that I in no way use this for actual trading of equities.
Good chart confirms the VERY slight uptick from trillions in stimulus/backstops and where we are now. That is scary considering the stimulus is pretty much gone starting in Q3...
It's also completely wrong. Tax reciepts are dropping at a steady rate. You can see it sideways in every other data point. Unless they were yanking hundreds of billions out of swiss banks without making a fuss about it that chart is a LIE.
Mish has some comments about sales tax receipts... STAGNATING
http://globaleconomicanalysis.blogspot.com/
This is just data from the US Treasury website, fully acknowledged that there is some fudging going on, what I would argue is that the fudging techniques have been fairly consistent since at least 2001, and that this is therefore a fairly reliable indicator of what our economy is doing. And as the previous comment noted, that slight uptick is hilariously bad given how much QE has gone through our system.
I also want to again note that what our economy is doing has just about nothing to do with the DJIA or most other markets for that matter, so I really don't use this for trading purposes.
Yep. Lee Adler over at the WSE relies on that as well.
A close friend on mine called her rep at Infidel Funds, said she wanted out of the funds and was told in no uncertain terms it was a very bad idea, that he was the expert, and that the treasury fund only yielded 1/4 %.
She was intimidated, but asked for paperwork. He said none was needed and to just hold on.
She insisted and he said he would send her some (on her choices).
So there.
that he was the expert, He said none was needed and to just hold on.
These are 2 warning signs.
"Fool me once fool shame on me, fool me twice and ahh um oh fool me twice and ah I wont be fooled again"
George Bush
I wonder if those household financial assets totals ($68.5 trillion) are pricing real estate at pre-crash levels. I suppose they are since they price their own MBS that way and assist the banks in doing the same. Ah the wonders of creative accounting fraud. Hey, I've got a little patch of land here that's worth a $million dollars.. there's no market for it, but pay no attention to that.
The only htings I am "investing" in are guns, food, lead and high speed lead delivery devices.
They can keep their fucking treasuries. Fiat is doomed and the market is a fraud. The sooner the sentient beings walking around out there figure this out, the sooner we can build something real out of the smoking ashes.
I've been learning a lot about wheat lately. Wheat, beans, and .223.
7.62
A cross between liar's Poker and Musical Chair's
C'mon now, ZH, enough with this hysterical shit.
With the MASSIVE increase in wages from this monster recovery, people are FLOODING into treasuries. The people out there have trillions to spare from all the green shoots and good times.
I posted the bulk of this on another thread, but with the number of posts Tyler is making, it may never be read.
Ben is monetizing the debt. Agreed?
How long can this go on? Who knows.
More importantly, what happens when it can't be monetized any longer?
Quoted from "It's the Debt, Stupid":
The run from US treasuries will spark the run on debt.
There is the root of the problem. Debt is infinite, potentially. Nothing real in our world is.
And we all live in the real world.
Debt will collapse.
Physical gold will recapitalize, as equity.
"It's the Debt, Stupid"
But I thought when you bought stocks it meant you were part owner in a company and not just a unsecured credit card to be tossed in the trash at bankruptcy. LOL
When you buy stock, yes, you own the company and its balance sheet. You own its DEBT. If it is in a negative position, so are you. Why would you pay $100 to own a negative net worth? This is the problem with Wall Street bank stocks. The banks are insolvent, yet people pay real capital every day to own some negative equity. It's like burning your principle to get a small yield for a limited time until everything falls apart. The only other option you hope for is another sucker to come along and pay you even more for your negative equity.
I do realize you already know this, but there are doubtless many out there who think their stocks are somehow "safe".
Remember this?....Japan Airlines is worthless! Worse than that, it is underwater, an operational slave to its debt, by $8.8 billion.
This is where the debt regime has left us. With empty, hollow shells of corporate entities enslaved to produce revenue only to service their debt and pay executive bonuses. What if those executives decide to leave their vacuous corporate shell like a hermit crab abandoning his home, for greener pastures of equity? That debt, the $8.8 billion plus the value of all of JAL's "shell"... that is what we hold as wealth inside the financial system! It is gone, not there, if they walk away. At least $8.8 billion of it is gone. Just like an underwater homeowner walking away from his home. If the debt-slave quits, the value illusion is gone!
The entire financial industry is marked to model, myth, illusion, whatever... just not reality. Amazing that we even get a story like this, exposing a small portion of the gap between reality and "high finance".
At least we are getting some honesty with regard to the real value of JAL. How about the rest of the economy? How about the banks? Who's debt do YOU hold as wealth? How is THEIR balance sheet doing? Do you have any idea?
Gold is pure equity... no one's debt. No one to walk away. No one to default in bankruptcy. Nothing to liquidate in an attempt to recapture 10 cents on the dollar.
But don't worry. JAL won't quit. It is deemed too big to fail. That means the printing press will guarantee not only the debt-slave service, but the executive bonuses as well (to keep the slaves in the field).
Next up, the idiotic concept of too big to fail will bring down the currencies themselves. And once again, gold is not only immune, but highly levered in the OPPOSITE direction.
JAL faces $8.8 billion excess debt if liquidated: source
TOKYO (Reuters) - Liabilities at Japan Airlines Corp (Tokyo:9205.T - News) would exceed its assets by as much as $8.8 billion if Asia's largest airline by revenues were liquidated, a source with direct knowledge of the matter said on Friday.
The estimate of JAL's negative net worth, calculated by a government-led task force in charge of its restructuring, underscores the depth of the problems facing the airline as it seeks aid from banks and the state to avoid bankruptcy...
Well done, thank you nuinut.
Do you remember the 1985 movie Wall Street? In it Gordon Gekko liked to buy whole companies through the stock market, shut them down, break them up, and then sell off the pieces. He had figured out that the pieces were more valuable than the whole. Remember in the end of the movie he went after Blue Star Airlines? My, how things have changed in 24 years.
On Friday we learned that Japan Airlines is now completely worthless. Its net worth is now NEGATIVE $8.8 billion!
Did you know that on Friday people were still buying JAL at a market capitalization price of $3.4 billion even though it was worth [NEGATIVE] -$8.8 billion? One thing I know for sure; Gordon Gekko would NOT have been interested in this one.
Which begs the question, how is the rest of the (publicly traded) economy doing after 24 years of debt accumulation?
This is where the $-debt regime has left us. With empty, hollow shells of corporate entities enslaved to produce revenue only to service their unsustainable debt. What if the owners of JAL decide to leave their vacuous corporate shell behind like a hermit crab abandoning his home, for the greener pastures of a fresh start? That debt hole, the $8.8 billion, is what we hold today as wealth!... inside the financial system! It is gone, not there, if they walk away. Just like an underwater homeowner walking away from his home. If the debt-slave quits, the value illusion is gone!
Which is why the system won't liquidate. All it would take would be 2 months into mass liquidation to see such aweful haircuts that everyone would leave every company and market. So instead they try new systems, Amero, Carbon Credits etc. By being tied together in credit defaults you not only have to fight say 40,000 people not wanting to go to liquidation but millions of people intereconnected and tied together with their fortunes on the line. This is a gang that will get facsist in a heartbeat and attempt to only justify it with agreement numbers.
So we do exactly what we did in Great Depression. Pretend it's not a problem until it locks up again and crashes harder. Then we stay locked in the struggle till enough people slip into world war mode to kill off enough debt participants to unlock the system.
I don't think there's anyone left on this thread, Heph.
Heph, Heph... you still there?
Oh, well, guess I'll turn out the light.
nope, i am still here. You still there?
I agreed very much with the sentiment of your mini-thread up there with Kali.
> If the debt-slave quits, the value illusion is gone!
That's what the subprime and now the strategic defaulters are doing.. quitting, en masse, no longer wishing (or able) to play the role of debt slave. Do you think the people on the receiving ends of those income streams will forget what these dead-beats have done ? I think not. I think we will get debt wars, and an alternate peonage arrangement, like for instance the offenders being socially ostracized, not allowed to take part in the public money system.
In the West, "the debtors" are now not only the majority, they are in power... and have been for more than half a century.
They will be ostracized, will lose control of "the public money system" and their creditors "will not forget what these dead-beats have done." But it is not the subprime dead-beats and the "strategic defaulters" that are in the most trouble. It is the entire Western debt system and its Socialist political class.
Bernanke always absolves the Fed of its role in the financial crisis by saying that the cause was a savings glut in Asia.
Now, if this is the case, and the system was awash in liquidity, why did the Fed lower interest rate and keep them there for long?
to punish those savers for having caused the crisis (and to teach them a lesson). :-)
+1000
Ben = clueless = Liar
"...then the Fed is essentially saying there was a vacuum of at least $330 billion that came from somewhere."
It was printed.
In a time of universal deceit, telling the truth is a revolutionary act.
George Orwell
Which can getcha labelled a terrorist and disappeared without recourse, rights, Habeas Corpus, counsel or trial. Poof! Gone!
Truther, Oath Taker, Revolutionary, Terrorist.
The game is rigged, simple as that. The chain of filth that perpatrates this fraud should be lined up and publicly stripped of wealth and power, then soundly beaten.
http://www.stungunstopepperspray.com/
Buying support continues ...
DOW updated charts:
http://stockmarket618.wordpress.com
http://www.zerohedge.com/forum/latest-market-outlook-1