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This Is The Government: Your Legal Right To Redeem Your Money Market Account Has Been Denied
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When Henry Paulson publishes his long-awaited memoirs, the one section that will be of most interest to readers, will be the former Goldmanite and Secretary of the Treasury's recollection of what, in his opinion, was the most unpredictable and dire consequence of letting Lehman fail (letting his former employer become the number one undisputed Fixed Income trading entity in the world was quite predictable... plus we doubt it will be a major topic of discussion in Hank's book). We would venture to guess that the Reserve money market fund breaking the buck will be at the very top of the list, as the ensuing "run on the electronic bank" was precisely the 21st century equivalent of what happened to banks in physical form, during the early days of the Geat Depression. Had the lack of confidence in the system persisted for a few more hours, the entire financial world would have likely collapsed, as was so vividly recalled by Rep. Paul Kanjorski, once a barrage of electronic cash withdrawal requests depleted this primary spoke of the entire shadow economy. Ironically, money market funds are supposed to be the stalwart of safety and security among the plethora of global investment alternatives: one need only to look at their returns to see what the presumed composition of their investments is. A case in point, Fidelity's $137 billion Cash Reserves fund has a return of 0.61% YTD, truly nothing to write home about, and a return that would have been easily beaten putting one's money in Treasury Bonds. This is not surprising, as the primary purpose of money markets is to provide virtually instantaneous access to a portfolio of practically risk-free investment alternatives: a typical investor in a money market seeks minute investment risk, no volatility, and instantaneous liquidity, or redeemability. These are the three pillars upon which the entire $3.3 trillion money market industry is based.
Yet new regulations proposed by the administration, and specifically by the ever-incompetent Securities and Exchange Commission, seek to pull one of these three core pillars from the foundation of the entire money market industry, by changing the primary assumptions of the key Money Market Rule 2a-7. A key proposal in the overhaul of money market regulation suggests that money market fund managers will have the option to "suspend redemptions to allow for the orderly liquidation of fund assets." You read that right: this does not refer to the charter of procyclical, leveraged, risk-ridden, transsexual (allegedly) portfolio manager-infested hedge funds like SAC, Citadel, Glenview or even Bridgewater (which in light of ADIA's latest batch of problems, may well be wishing this was in fact the case), but the heart of heretofore assumed safest and most liquid of investment options: Money Market funds, which account for nearly 40% of all investment company assets. The next time there is a market crash, and you try to withdraw what you thought was "absolutely" safe money, a back office person will get back to you saying, "Sorry - your money is now frozen. Bank runs have become illegal." This is precisely the regulation now proposed by the administration. In essence, the entire US capital market is now a hedge fund, where even presumably the safest investment tranche can be locked out from within your control when the ubiquitous "extraordinary circumstances" arise. The second the game of constant offer-lifting ends, and money markets are exposed for the ponzi investment proxies they are, courtesy of their massive holdings of Treasury Bills, Reverse Repos, Commercial Paper, Agency Paper, CD, finance company MTNs and, of course, other money markets, and you decide to take your money out, well - sorry, you are out of luck. It's the law.
A brief primer on money markets
A very succinct explanation of what money markets are was provided by none other than SEC's Luis Aguilar on June 24, 2009, when he was presenting the case for making even the possibility of money market runs a thing of the past. To wit:
Money market funds were founded nearly 40 years ago. And, as is well
known, one of the hallmarks of money market funds is their ability to
maintain a stable net asset value — typically at a dollar per share.
In the time they have been around, money market funds have grown
enormously — from $180 billion in 1983 (when Rule 2a-7 was first
adopted), to $1.4 trillion at the end of 1998, to approximately $3.8
trillion at the end of 2008, just ten years later. The Release in front
of us sets forth a number of informative statistics but a few that are
of particular interest are the following: today, money market funds
account for approximately 39% of all investment company assets; about
80% of all U.S. companies use money market funds in managing their cash
balances; and about 20% of the cash balances of all U.S. households are
held in money market funds. Clearly, money market funds have become
part of the fabric by which families, and companies manage their
financial affairs.
When the Reserve fund broke the buck, and it seemed like an all-out rout of money markets was inevitable, the result would have been a virtual elimination of capital access by everyone: from households to companies. This reverberated for months, as the also presumably extremely safe Commercial Paper market was the next to freeze up, side by side with all traditional forms of credit. Only after the Fed stepped in an guaranteed money markets, and turned on the liquidity stabilization first, then quantitative easing spigot second, did things go back to some sort of new normal. However, it is only a matter of time before the patchwork of band aids holding the dam together is once again exposed, and a new, stronger and, well, "improved" run on the electronic bank materializes. It is precisely this contingency that the SEC and the administration are preparing for by "empowering money market fund boards of directors to suspend redemptions in extraordinary circumstances to protect the interests of fund shareholders."
A little more on money markets:
Money market funds seek to limit exposure to losses due to credit, market, and liquidity risks. Money market funds, in the United States, are regulated by the Securities and Exchange Commission's (SEC) Investment Company Act of 1940. Rule 2a-7 of the act restricts investments in money market funds by quality, maturity and diversity. Under this act, a money fund mainly buys the highest rated debt, which matures in under 13 months. The portfolio must maintain a weighted average maturity (WAM) of 90 days or less and not invest more than 5% in any one issuer, except for government securities and repurchase agreements.
Ironically, the proposed change to Rule 2a-7 seeks to make dramatic changes to the composition of MMs: from 90 days, the WAM would get shortened to 60 days. And this is occurring at a time when the government is desperately seeking to find ways of extending maturities and durations of short-term debt instruments: by reverse rolling the $3.2 trillion industry, the impetus will be precisely the reverse of what should be happening, as more ultra-short maturity instruments are horded up, leaving a dead zone in the 60-90 day maturity window. Some other proposed changes to 2a-7 include "prohibiting the funds from investing in Second Tier securities, as defined in Rule 2a-7. Eligible securities would be redefined as securities receiving only the highest, rather than the highest two, short-term debt ratings from a requisite nationally recognized securities rating organization. Further, money market funds would be permitted to acquire long-term unrated securities only if they have received long-term ratings in the highest two, rather than the highest three, ratings categories." In other words, let's make them so safe, that when the time comes, nobody will have access to them. Brilliant.
The utility of money market funds has long been questioned by such systemically-embedded financial luminaries as Paul Volcker (more on this in a minute). After all, what are money markets if merely an easy, and 401(k)-eligible option to not invest in equity or bonds, but in "paper" which is cash in all but name (maybe not so much after the proposed Rule change passes). And as money markets account for a huge portion of the $11 trillion of mutual fund assets as of November (per ICI, whose opinion, incidentally, was instrumental in shaping future money market policy), $3.3 trillion to be precise, and second only to stock funds at $4.8 trillion, one can see why an administration, hell bent on recreating a stock-price bubble, would do all it can to make money markets extremely unattractive. In fact, the current administration has been on a roll on this regard: i) keeping money market rates at record lows, ii) removing money market fund guarantees and iii) and even allowing reverse repos to use money markets as sources of liquidity (because we all know that the collateral behind the banks shadow banking arrangement with the Fed are literally crap; as we have noted before, we will continue claiming this until the Fed disproves us by opening up their books for full inspection. Until then, yes, the Fed has lent out hundreds of billions against bankrupt company equity, as we have pointed out in the past). Money Markets are the easiest recourse that idiotic class of Americans known as "savers" has to give the big bank oligarchs, the Fed and the bubble-inflating Administration the middle finger. As you will recall, recently Arianna Huffington has been soliciting all Americans do just that: to move their money out of the tentacles of the TBTFs. In essence, the money market optionality is precisely the equivalent of moving physical money from TBTFs to community banks in the "shadow economy." Because where there is $3.3 trillion out of $11, there could easily be $11 trillion out of $11, which would destroy the whole concept of Fed-spearheaded asset-price inflation, and would destroy overnight the TBTFs, as equities would once again find their fair value. It is no surprise then, that the current financial system, and its political cronies loathe the concept of Money Markets, and have done all they could to make them as unattractive as possible. Below is a chart of the Net Assets held by all US money market funds and the number of money market mutual funds since January 2008:
Obviously, attempts to push capital out of MMs have succeeded: after peaking at $3.9 trillion, currently money markets hold a two year low of $3.27 trillion. Furthermore, the number of actual money market fund operations has been substantially hit: from 2,078 in the days after the Lehman implosion, this is now down to 1,828, a 12% reduction. At this rate soon there won't be all that many money market funds to chose from. While the AUM reduction is explicable through the previously mentioned three factors, the actual reduction in number of funds is on the surface not quite a straightforward, and will likely be the topic a future Zero Hedge post. Although, the impetus of managing money when one can return at most 0.6% annually, and charge fees on this "return" may be missing - the answer may be far simpler than we think. Why run a money market, when the Fed will be happy to issue you a bank charter, and you can collect much more, risk free, courtesy of the vertical yield curve.
Yet what is strange is that even with all the adverse consequences of holding cash in Money Markets, the total AUM of this "safest" investment option is still substantial, at nearly $3.3 trillion as of December 30, a big decline yes, but a decline that should have been much greater considering even the president since March 3 has been beckoning his daily viewership to invest in cheap stocks courtesy of low "profit and earning ratios" (that, and the specter of President's Working Group on Financial Markets). Could this action, whereby investors will no longer have access to money that historically has been sacrosanct and reachable and disposable on a moment's notice, be the last nail in the coffin of money markets? We believe so, however, we are not sure if it will attain the desired effect. With an aging baby boomer population, which would rather burn their money than invest in the stock market again and relive the roller-coaster days of late 2008 and early 2009, the plan may well backfire, and result in even more money leaving the shadow system and entering such tangible objects as deposit accounts (at community banks, of course), mattresses and socks. And speaking of the President's Working Group...
The Group of Thirty
When discussing the shadow economy, it is only fitting to discuss the shadow decision-makers. In this regard, the Group of 30, is to the traditional economic decision-making process as the President's Working Group is to capital markets. Taken from the website, the self-description reads innocently enough:
The Group of Thirty, established
in 1978, is a private, nonprofit, international body composed of very senior
representatives of the private and public sectors and academia. It aims to
deepen understanding of international economic and financial issues, to explore
the international repercussions of decisions taken in the public and private
sectors, and to examine the choices available to market practitioners and policymakers.The Group's members meet in plenary sessions twice a year with select guests
to discuss important economic, financial and policy developments. They reach
out to a wider audience in seminars and symposia. Of most importance
to our membership and supporters is the annual International
Banking Seminar.
Sounds like any old D.C.-based think tank... until one looks at the roster of members:
- Paul A. Volcker, Chairman of the Board of Trustees, Group of Thirty, Former Chairman, Board of Governors of the Federal Reserve System
- Jacob A. Frenkel, Chairman, Group of Thirty, Vice Chairman, American International Group, Former Governor, Bank of Israel
- Jean-Claude Trichet, President, European Central Bank, Former Governor, Banque de France
- Zhou Xiaochuan, Governor, People’s Bank of China, Former President, China Construction Bank, Former Asst. Minister of Foreign Trade
- Yutaka Yamaguchi, Former Deputy Governor, Bank of Japan, Former Chairman, Euro Currency Standing Commission
- William McDonough, Vice Chairman and Special Advisor to the Chairman, Merrill Lynch, Former Chairman, Public Company Accounting Oversight Board, Former President, Federal Reserve Bank of New York
- Richard A. Debs, Advisory Director, Morgan Stanley, Former President, Morgan Stanley International, Former COO, Federal Reserve Bank of New York
- Abdulatif Al-Hamad, Chairman, Arab Fund for Economic and Social Development, Former Minister of Finance and Minister of Planning, Kuwait
- William R. Rhodes, Senior Vice Chairman, Citigroup, Chairman, President and CEO, Citicorp and Citibank
- Ernest Stern, Partner and Senior Advisor, The Rohatyn Group, Former Managing Director, JPMorgan Chase, Former Managing Director, World Bank
- Jaime Caruana, Financial Counsellor, International Monetary Fund, Former Governor, Banco de España, Former Chairman, Basel Committee on Banking Supervision
- E. Gerald Corrigan, Managing Director, Goldman Sachs Group, Inc., Former President, Federal Reserve Bank of New York
- Andrew D. Crockett, President, JPMorgan Chase International, Former General Manager, Bank for International Settlements
- Guillermo de la Dehesa Romero, Director and Member of the Executive Committee, Grupo Santander, Former Deputy Managing Director, Banco de España, Former Secretary of State, Ministry of Economy and Finance, Spain
- Mario Draghi, Governor, Banca d’Italia, Chairman, Financial Stability Forum, Member of the Governing and General Councils, European Central Bank, Former Vice Chairman and Managing Director, Goldman Sachs International
- Martin Feldstein, Professor of Economics, Harvard University, President Emeritus, National Bureau of Economic Research, Former Chairman, Council of Economic Advisers
- Roger W. Ferguson, Jr., Chief Executive, TIAA-CREF, Former Chairman, Swiss Re America Holding Corporation, Former Vice Chairman, Board of Governors of the Federal Reserve System
- Stanley Fischer, Governor, Bank of Israel, Former First Managing Director, International Monetary Fund
- Philipp Hildebrand, Vice Chairman of the Governing Board, Swiss National Bank, Former Partner, Moore Capital Management
- Paul Krugman, Professor of Economics, Woodrow Wilson School, Princeton University, Former Member, Council of Economic Advisors
- Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Economics, Harvard University, Former Chief Economist and Director of Research, IMF
and, of course:
- Timothy F. Geithner, President and Chief Executive Officer, Federal Reserve Bank of New York, Former U.S. Undersecretary of Treasury for International Affairs
- Lawrence Summers, Charles W. Eliot University Professor, Harvard University, Former President, Harvard University, Former U.S. Secretary of the Treasury
and many more. Given the choice of being a fly on the wall at a G7 meeting or that of the "Group of 30", we would be very curious to see who would pick the former over the latter. These are the people, whose "reports" and groupthink determines the financial fate of the world: their vested interest in perpetuating the status quo is second to none. Which is why we read with great interest a recent paper from the Group of 30: Financial Reform, A Framework for Financial Stability, released on January 15, 2009, deep in the heart of the crisis. While the paper has enough insight for many, non-related posts (we are already working on several), we will focus on the policy recommendations presented for money market funds.
Money Market Mutual Funds and Supervision
Recommendation 3:
a. Money market mutual funds wishing to continue to offer bank-like services, such as transaction account services, withdrawals on demand at par, and assurances of maintaining a stable net asset value (NAV) at par should be required to reorganize as special-purpose banks, with appropriate prudential regulation and supervision, government insurance, and access to central bank lender-of-last-resort facilities.
b. Those institutions remaining as money market mutual funds should only offer a conservative investment option with modest upside potential at relatively low risk. The vehicles should be clearly differentiated from federally insured instruments offered by banks, such as money market deposit funds, with no explicit or implicit assurances to investors that funds can be withdrawn on demand at a stable NAV. Money market mutual funds should not be permitted to use amortized cost pricing, with the implication that they carry a fluctuating NAV rather than one that is pegged at US$1.00 per share.
The phrasing of "with no explicit or implicit assurances to investors that funds can be withdrawn on demand at a stable NAV" should be sufficient to whiten the hairs of every proponent of money markets as a "safe" investment alternative. Yet what the SEC has done, is to take the Group of 30 recommendation, and take it to the next level: not only will funds not have explicit assurance of any kind vis-a-vis funding, but in fact, the redemption of said funds would be legally barred upon "extraordinary circumstances."
Rule 22e-3
Proposed rule 22e–3(a) would permit a money market fund to suspend redemptions if: (i) The fund’s current price per share, calculated pursuant to rule 2a–7(c), is less than the fund’s stable net asset value per share; (ii) its board of directors, including a majority of directors who are not interested persons, approves the liquidation of the fund; and (iii) the fund, prior to suspending redemptions, notifies the Commission of its decision to liquidate and suspend redemptions, by electronic mail directed to the attention of our Director of the Division of Investment Management or the Director’s designee. These proposed conditions are intended to ensure that any suspension of redemptions will be consistent with the underlying policies of section 22(e). We understand that suspending redemptions may impose hardships on investors who rely on their ability to redeem shares. Accordingly, our proposal is limited to permitting suspension of this statutory protection only in extraordinary circumstances. Thus, the proposed conditions, which are similar to those of the temporary rule, are designed to limit the availability of the rule to circumstances that present a significant risk of a run on the fund. Moreover, the exemption would require action of the fund board (including the independent directors), which would be acting in its capacity as a fiduciary. The proposed rule contains an additional provision that would permit us to take steps to protect investors. Specifically, the proposed rule would permit us to rescind or modify the relief provided by the rule (and thus require the fund to resume honoring redemptions) if, for example, a liquidating fund has not devised, or is not properly executing, a plan of liquidation that protects fund shareholders. Under this provision, the Commission may modify the relief ‘‘after appropriate notice and opportunity for hearing,’’ in accordance with section 40 of the Act.
Lots of keywords there: "fiduciary", "impose hardships" but most notably "permit us to take steps to protect investors." Uh, SEC, no thanks. We can protect ourselves. Your protection so far has resulted in the Madoff scandal, the BofA fiasco, billions in insider trading profits and not one guilty person, who did not manage to escape unscathed with merely a wrist slap in the form of some pathetic fine. With all due respect, SEC, any proposal that involves you acting to "protect" us should be immediately banned and any further discussion ended.
Especially in this case: what the SEC is proposing is simple - the entire market structure has been converted to a hedge fund. When investors hear the word "suspend redemptions" they envisioned a battered, pro-cyclical, leveraged, permabullish hedge fund, that suddenly "found itself" down 30, 40, 50 or more percent, and to avoid instantaneous liquidation, had to bar redemptions. Forgive us, but is the SEC confirming that the entire market is now one big casino, one big government subsidized hedge fund, where as long as things go up, all is good, but the second things take a leg down, just like any ponzi, nobody will be allowed to pull their money? Maybe Madoff should have created the same redemption suspension: his fund would still be alive and thriving, now that the government has become the biggest ponzi conductor of all time. And nobody would have been the wiser. But instead, the Securities and Exchange Commission, in discussions with the Group of 30, Barney Frank, and any other conflicted individuals who only care about protecting their own money for one more year, has decided, in its infinite wisdom, to make money markets a complete scam. And this is the gist of regulatory reform in America.
Conclusion
At this point it is without doubt that even the government understands that when things turn sour, and they will, the run on the bank will be unavoidable: their solution - prevent money from being dispensed, when that moment comes. The thing about crises, be they liquidity, solvency, or plain-vanilla, is that "price discovery" occurs all at once, and at the very same time. And all too often, investors "discover" they were lied to, as the emperor, in any fiat system, always has no clothes. Just like in September 2008, when the banks were forced to look at each-others' balance sheet and realize that there are no real assets on the left backing up the liabilities on the right, so the moment of enlightenment occurs are the most importune time: just ask Hank Paulson. Had he known his action of beefing up Goldman's FICC trading axes would have resulted in the "Ice-Nine'ing" (to borrow a Mark Pittman term) of money markets, who knows- maybe Lehman would have still been alive. Perhaps risking the cash access of 20% of US households and 80% of companies was not worth the few extra zeroes in Goldman's EPS. But we will never know. What we will know, is that now i) the government is all too aware that the market has become one huge ponzi, and that all investment vehicles, even the safest ones, are subject to bank runs, and ii) that said bank runs, will occur. It is only a matter of time. And just as the president told everyone directly to buy the market on March 3, so the SEC, the Group of 30, and Barney Frank are telling us all, much less directly, to get the hell out of Dodge. Alternatively, the game of "last fool in", holding the burning hot potato, can continue indefinitely, until such time as the marginal utility of each and every dollar printed by Ben Bernanke is zero.
h/t Geoffrey Batt
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Good point. They knew what they were doing was against the law so now they are getting around to making it legal after seeing the reaction it got.
They know they can get away with it.
The Treasury MMF back up lasted one year and was not used by anyone. Zip- no one.
The US Treasury made over $2B in fees from the MMF industry.
Reserve Fund did not qualify as the program was started after Reserve bit the bag er, buck. The Reserve Fund will pay 99 and 97.5+ cents per buck but there was a delay.The Treasury's MMF Guarantee program has ended but can be reactivated by a Treasury announcement.
http://treas.gov/press/releases/hp1147.htm
Wow. You've started the decade with the most important story of it, amazing.
In reference to printed FRNs though, they are definitely now different from MMFs and the safest place for your money is truly your safe.
You guys at ZH are doing a great job. Also, there are a lot of smart people on this site commenting. I am planning to move some of my money out of the US (I am a US citizen) and am wondering if anyone has done this and what countries and brokerage companies they chose and why. I want to own some foreign stocks in foreign currencies without the account residing here. I am not trying to evade taxes as I will report the accounts. I would like to keep it simple from a tax standpoint and not owe two countries taxes. From what I understand, Singapore and Hong Kong do not have short term and capital gains taxes on stocks. It seems I can open up a Hong Kong brokerage account from online (I am thinking of Boom Securities) but I have to show up in person to do that in Singapore. Can anyone confirm this or tell me if I am wrong and offer alternatives? (I already have PMs but I worry if the SHTF how do I get them out of the US)
Hello Simpleminded. Unfortunately I cannot answer your questions, but I find myself wanting to achieve the same kind of diversification that you do. I believe we are in need of a WIKI for investing from / living in / moving to a foreign country. (The topic of this post has pushed me further into the "somewhere other than the US" camp than ever before) Can anyone suggest a website to fulfill this need? Tyler, should we start a thread in the forums? What we find out about Boom Securities could be our first post. (I was not aware of that firm prior to your comment) Also, what was the name of the Singaporean firm?
One thing to consider is the "viability" of our new "host" country. I have heard Marc Faber say good things about Singapore and Malaysia recently, but I've had considerable "feet on the ground" time in Malaysia and the situation doesn't look that good to me. (I have not been to Singapore since the 90s) A quick look on wikipedia.org shows that Jim Rogers chose Singapore over Shanghai and Hong Kong for pollution reasons, but I suspect his decision was also influenced by each city's host government as well. Some here suggest Australia, but they are embarking on a terrifying Internet censorship campaign I cannot accept. Canada as well has a poor record on censorship (in my opinion) and is not necessarily the best choice for someone leaving the US.
Which country is the best place to be?
I found some brokerages in Singapore. I believe two of them have an office in Manhattan so maybe you can open an account there.
Singapore Market Trading: Phillip Securities- Brokerage Fees: 0.28%/ Min SGD$25
- Website address: www.poems.com.sg
Lim & Tan- Brokerage Fees: 0.28%/ Min SGD$25
- Website address: www.limtan.com.sg
OCBC Securities- Brokerage Fees: 0.275%/ Min SGD$25
- Website address: www.iocbc.com
DBS Vickers- Brokerage Fees: 0.28%/ Min SGD$25
- Website address: www.dbsvickers.com
Kim Eng- Brokerage Fees: 0.275%/ Min SGD$25
- Website address: www.ketrade.com.sg
UOB Kay HianGlad to hear of your interest in our little island! Here are some info that might be of use to you, and related links from the website of one of the larger brokerage firms in Singapore:
"For applicant residing outside Singapore
For applicant residing outside Singapore, in accordance with SGX-ST Rules, we require the application forms to be witnessed by a Notary Public or Commissioner of Oaths. Please also submit a photocopy of the valid passports (with at least 6 months validity), a declaration by the concerned Notary Public or Commissioner of Oaths as well as the mentioned deposit."
http://www.poems.com.sg/Account/ac_open.asp
Other useful links:
http://www.poems.com.sg/HelpCentre/faqAccount.asp?value=faq
http://www.poems.com.sg/HelpCentre/faqSettlement.asp?value=faq
All singaporean Consular-General/Embassy offices abroad provide notary services (for a fee, of course).
As a disclaimer, i'm not working for them. The official rules and regulations are out there... somewhere. But quite a pain to look for, so it's easier to just check the site of the broker i'm personally using.
Oh, and a few more things you should take note of before taking the plunge in our stock market:
- settlement is cash-only and due on T+3 business days (cutoff local time 5pm, GMT+8)
- stock warrants are of european type (redeemable on expiry only)
- short selling is not allowed under the law, so when bearish, buy puts or stay cash
- customer funds are required by law to be held in segregated accounts at an intermediary (usually local) bank
Hope this helps!
Can we please find out which Congressmen are sponsoring these bills?
We need to affix a name and face so the voters will know "who not to vote for next time".
We need a "target" list of Corruptocrats to run against them in the future.
It may be a long list and a "Target rich environment" however, we need to know these things too.
For instance is there a congressman or senator that would bring forth investigations or start actions against:
1.) BLS for falsifying data during a recession that the public needed to know to protect themselves, yet the numbers were fibbed to protect few,
2.) ANYONE associated with the Money Market activity or seizing of retirement investment accounts as stated by MsCreant, especially those that have brought it up to the floor, i.e. naming names,
3.) The whole Federal Reserve racket
4.) The toothless SEC
5.) The Freddie/Fannie fraud.
My bet is Kucinich. I know he is one of the most anti capitalists around, however, he does not like all this influence and money and favoritism going to the Banksters, and etc.
There has to be a good answer somewhere.
Is the entire U. S. Congress crooked???
Is Wall Street entirely evil?
I'm reading the actual document now. Deadline to reply and add commentary was 9/8/2009
However the place where you should have replied was rule-comments@sec.gov and include File Number S7-11-09 in the subject line.
Paper comments were supposed to be sent to Elizabeth M. Murphy, Secretary, SEC, 100 F Street, NE Washing DC 20549-1090 and in triplicate.
*gasp* I actually do my *OWN* homework and don't take ZH's word for everything, even if they are my heros (especially on days like this)
This looks like another late Fri night passages and Sat morning signings without public notice by the lamestreet media. My son keeps asking me "Is it time to go to Washington ...?" The day approaches when the Maoist in DC meet Maoan Justice, and maybe we can retreat to some semblance of the Republic our forefathers envisioned. But in the meantime PM looks like the way to maintain........
Bas-turds!!!!
I've already taken most of my "money" out of the financial system. Right now I'm short most everything with a little bit of investment money. The bulk of my money is invested in large quantaties of toilet paper and whiskey -- the new currency.
Short everthing except TP and whiskey.
A dollar is not 'money'. It is a promise to pay you an identical promise, backed by debt. As soon as you know this, it is easier for you to get rid of phony FRN's.
I am surprised that no one has mentioned the obvious profit potential that banks will have when people take out CASH ADVANCES on their credit cards to replace access to cash in their money market accounts.
perhaps it's just another tactic to scare money into Treasuries and/or FDIC accounts.
I wondered about this too, DH. If this were the case, I think they would have word of this plastered all over the mainstream media. We would not be hearing it at ZH first.
the preference is for orderly markets, hence not the media play. the smarter ones will slowly whittle the balance down. i got the hell out of mm funds back in mid 2000s.
obama and geithner, as i have previously mentioned, have done a little preaching about "saving" to the American consumer and it is being done to urge Americans into Treasuries. It'll be interesting to see if they do a WW 2 type of marketing campaign...instead of Rosie the Riveter, we'll have Benny the Boner.
Micheal Jackson changed his mind to his detriment. Lady Gaga is too controversial and Miley Cyrus too Disney. U2 isn't American, and even if Jerry were with us he'd never do it. We're screwed. Oprah? Geraldo?
.
There's only one person for this job:
BRING BACK VANILLA ICE!!
I am Chumbawamba.
I agree deadhead and I think we might see the first mentions of this as trial balloons before the State of the Union (which will be real theatre this year).
I agree with Deadhead. This is most likely meant to be a poke at the last of the big money still in mmkt funds. They've (Fed & Treasury) tried almost everything else already, but there are still 'stubborn fools' hanging around with their big money in mmkt making virtually zero return. If they won't go willing, it's time to threaten them into Ts and Bank deposits. These people don't need to read mainstream headlines to know what is new talk. No need to scare the old people who this isn't intended for, and who don't know the difference between mmkt and bank deposits.
I am very new here and this is my first post. Great site and inelegant interaction.
I am trying to pinpoint the rationale of moving money into a "local" bank or credit union. If the reason is that you are still going to try to squeeze some investment revenue out of this socialized lemon before the bottom drops out then I would say that is a pretty risky prospect.
My point would be that unless the bucks are physical then they are really not your bucks.
I would suggest to get rid of the entire thought of virtual monies and start thinking physical liquidities that can be bartered, traded, sold, or last resort rented.
Even a lot of these smaller banks were gobbled up by the FDIC at around 2 per week starting in February of last year and would be considered Zombie Banks which would also mean that to make the Run would end in futility.
There are no guarantees right now and to think in the Physical and not the Virtual would help ensure to keep your families bellies full.
Last note: Anything Government sponsored (Bailout) is taxpayer sponsored which I'm sure everyone is aware of. We have payed the banks to try to ensure that they will give out loans and credit all along charging interest rates back to us. In effect they have stolen our money and are charging us to get it back. Folks this can only end bad. This type of economics is not sustainable whatsoever. There is no magic fix and no light at the end of the tunnel. You can't cover a $20 bad check with a $40 dollar bad check.
+1
Physical, or bust!
Exactly.
That's why I hold massive quantities of toilet paper and whiskey. I have very little "money" -- currency or electronic.
You laugh now, but just wait. When the poop hits the fan, so to speak, I will have all the power.
Short everything except tp and whiskey.
When you said TP, I thought you meant FRNs!
Tyler and the staff at ZH,
Thank you for this important contribution. Well done
So, where is Beranke's name? And who do you think gives him the 'news?' And Krugman is on the list. Maybe thats why he got a nobel, to make his opinion have more weight?
ZH, you are fantastic!
Seems like the powers that be are putting rules in place so they are the only ones who can access your money.
Give virtually no intestest to prudent people, threaten to lock it up..
It is saying, go out and spend it... they hope..
but to me it says they are scared !witless and prudent people should put money in gold or under the mattress/strong box might be 'safer' as being the safest options now left to them.
Behind the scenes of the regulatory change to prohibit non-redemption of MMMFs
Geithner: "I want to sell more Treasuries, dabmit!"
Treasury Toadie: "But, Master, China does not want to buy anymore.
And other foreign countries are buying less and less Tresuries!
What do we do?"
Geithner: "Maybe we can get some rich Americans to buy them!
Yes, some mutual funds or hedgies would do nicely!"
Toadie: "But how do we get them to buy more Treasuries?"
Geithner: "Simple.
We take care of the competition to Treasuries.
Like Money Market Mutual Funds, for example.
They suck up all the Americans FRNs, almost $4Trillion!
What could I do with $4Trillion!?!?!
We will send a Rotweiler SEC to chase those sheep out of MMMFs and into Treasuries!
BWAHAHAHAHAHA!"
Toadie: "Yes, Master, it will be done!"
Geithner: "Excellent. I just love doing god's work!"
Wash
Rinse
Repeat
The New Reg's will force sellers of equities to buy Gov't debt via MM funds, as these funds WILL reorganize (as per rule). This will also put them under the regulatory eyes of the feds.
Continued buying of Treasury debt is the ONLY THING that is important right now. The Fed can no longer be the buyer of last resort. They need to create a structure that will force risk adverse money into Treasuries in order maintain low rates, flatening the curve.
This will also, mark the real start of complete Federal control of our entire financial system. The Fed being the lender of last resort, will provide the rules for thier attempts to make investors whole.
There are a boat load of smart money guys that see this writing on the wall and will plan thier exit, but all the exits are being closed.
I have no idea where the money will go.
ZH, is right, They want to restrict your access to your CASH.
Cash is King during deflation and I expect the inflation/deflation debate to be settled soon.
Good luck
JST
Good points. My working model focuses primarily on the political environment - I watch trends reflecting popular sentiment very closely. My basic thesis is relatively simple & straightforward:
The first scenario suggests hyper-inflation, while the second IDs deflation. Thus, my investment/survival strategy is based purely on reading the public mood. Zero Hedge is a great site for thinking through & discussing financial/economic aspects. But if you're like me who thinks this whole thing hinges on We The People, then nothing is as effective as keeping ones ears & eyes open.
The herd is growing restless; which way will it surge? Your riches & survival is dependent on anticipating & seeing which way it breaks.
Can inflation exist in the event of...
An economy that contracts 20%+ y-o-y for five or more years?
And yet, has 15%+ of its population wholly dependent upon welfare, food assistance, unemployment insurance, retirement payouts, military salaries, gov't worker and contractor salaries?
What if the sum of all the products/services contracts more than real estate related deflation?
In other words, even if money supply contracts, if it contracts more slowly than the base of goods upon which it predicates--the outcome will be inflation, and perhaps even hyperinflation.
We are faced with a welfare system in disguise for so many households (gov't funding throughout), that the support of those transfer payments and interest service predict massive printing for sustenance. If tax base and unsubsidized physical economy fall away, the physical collapse function predict overwhelming inflation.
Monetary aggregates and financial instruments' speculation "turn the corner" on an exponential function while productive economy starves away in a negative exponential.
I don't see the second scenario as deflationary at all. OK, initially it'll be deflationary, but as people realize how badly they got fucked, the level of animosity in this country will turn downright ugly towards the regime, causing instability, possibly rioting and bloodshed, leading ultimately back to--you guessed it--hyperinflation.
I am Chumbawamba.
Current prices are only, just barely, being supported right now by massive, unparalleled Fed monetization activities and government deficit expenditures.
Even the slightest political push-back could dampen the, at present, uncontested ability of the PTB to utilize these dual monetary + fiscal mechanisms to (temporarily) pacify We the People.
Without this concerted support, true price discovery will unveil what many have been saying all along: prices (and the ability to service debt) correlate with income ie affordability. Thus, massive deflation.
Your hyper-inflation assumptions under this scenario require an extra step: lack of faith in FRNs. This may very be true at an intrinsic level, but if the Fed is precluded (again, the necessary condition being political opposition to theft aka "taking") from flooding the market with additional fraudulent tickets, then they in effect would become de facto representations of "wealth".
In this case, we are perhaps fortunate that FRNs are so widely used throughout the world. They may not have any true, underlying value, but if they are perceived as something like cigarettes, whiskey, etc, then they themselves simply become notationally representative tokens of "wealth".
Of course, everyone could flee from the $USD, in which case we would have hyper-inflation along with massive collapses in the prices of homes and other leveraged assets. Hence, guns, gold & gardens.
As for myself, I'm banking on my ability to explain somewhat complex concepts to help others understand what has happened; leadership if you will. The key is going to be community support & organization. I'm still healthy, in great shape, pretty strong and hold firm convictions. The dazed sheep are going to need help organizing and maintaining essential services (food, water, sewage, etc). I've got tons of neighbors I either personally know or keep an eye on who I've judged could help out in a pinch.
Like I said, I just want to make it through the bottle-neck. It will be the rush of a lifetime to get to participate and help form the new USA 2.0. All we have to do is dust off the original Constitution, make a few tweaks to preserve/ensure state sovereignty, and away we go.
The most important task in the life of a truth-seeker is to pass on the good stuff. Good work, benign canine.
Yes, it's the collapse of confidence that I assumed would follow such a blatant money grab that would result in hyperinflation. Again, not immediately, but come on: how many people are going to continue to stand for this bullshit?
As for as USA 2.0, I'm totally down, but I say we hand over full sovereignty to INDIVIDUALS, not States. Centralized power of any kind disturbs me. I do not consent to handing over the protection of my liberty and my safety to third parties: they invariably fuck it up.
On another thread somewhat recently, someone presented me with the conundrum: a big tyrant 1,000 miles away or 1,000 small tyrants 1 mile away? After mulling it over, I'll take the local tyrants. They're my people, my neighbors, and if someone comes to fuck with us (i.e. the one big tyrant) it'll be us against them. And as long as everyone respects everyone else there should be no problems. The troublemakers will get weeded out quick.
At any rate, +1.
I am Chumbawamba.
You may be Chumbawamba keep telling yourself that. However
in my view you are the business end of a horse. It's
not what you say but how you say that is so irritating
this makes it easier to ignore your rants as opposed to
considering any point your actually trying to make.
IMHO, the Framers had the notion of bicameral representation worked out really well until they blew it by designating the lower house as a national office.
What they should have done, and what will hopefully be done in USA 2.0, is to allow the states to assign whatever representatives they wish to both the Senate & House. (Following the same process of two senators per state and house representation proportionate to total national population.) The only national office would then continue to be President, elected by the same electoral college process to ensure state sovereignty.
Other than the two-term limit for president, I don't see how it's the business of some particular states to interfere with how any other states may wish to designate their respective senators and representatives and/or the duration/extent of their terms; it ain't my kuleana. I don't even care if/when they held elections. If they wanted to hold them during the 4 year interval for president, awesome, otherwise, again, it's none of my business.
If there's one thing we have learned from the failed USA 1.0 experiment, it is that we must at all cost prevent the usurpation of states' rights. Once Leviathan is initially enabled, it's only a matter of time until we reach the point we've reached today. You mention the primacy of individual rights, but how/why should that be mandated from a federal level? Again, that should be left to the states. If a couple want to practice discrimination, engage in fascist behavior, or otherwise be dicks, then an open, free market will quickly reduce them to penury. It is up to the citizens of those states to direct & control their own futures.
We must at all cost eliminate any hint of a federal central bank, a central federal tax, and any other federally mandated provisions other than those for common defense.
Between you, SWRichmond, and JR I have to take a breather and review. +freedom
What's your take on the constitutionality of the 17th Amendment and states' rights? After reading about I couldn't quite nail down how to explain to friends/family.
Representative democracy, which is basically an oxymoron, does not scale. Neither does democracy. Thus the/my conclusion: no large centers of power/control, none, nada, zip! If you're looking for something start with Libertarian Municipalism, Social Ecology (similar to Libertarian Municipalism?) or Participatory Economics: they all attempt to return the individual to the heart of power, though there are holes here and there...
I have no idea where the money will go.
The smart money will go (and is going) into precious metals and other wealth-preserving tangibles.
I am Chumbawamba.
I still believe the best place to live are these United States - that is, when we get to USA 2.0. Rather than leave, I'm going to try and wait it out. It doesn't seem possible that the game can continue much longer. I know many were thinking the same thing exactly 1 year ago, but that was before the Fed & Treasury blew their initial wad.
$5, 10, 15, 20, ? trillions later, and all we have to show for it are some (suspended) Wall St bonuses. Nothing, absolutely nothing has been done to address the fundamental requirements of restoring a functioning productive economy that generates real wealth, savings & employment. Rather, we're a sick, pale imitation of the failed USSR, all the way down to our very own versions of Pravda.
The next step down will bring forth calls for even more draconian, unlawful actions. The first time around, the PTB got a jump on everyone & fooled a lot of people - including many pros who have been around a long time and thought that they had seen everything. Hence the need for a place like ZH were people could console each other with a collective "I can't believe they just did that". However, now even the prols seem to be in on what's happening; it doesn't seem possible that the political power is there to pull off a repeat stunt.
If we do get the mother of all deflationary spirals, then say good-bye to USA 1.0 It cannot possibly survive a 30%+ contraction.
Power doesn't cede willingly.
The thing with contraction, especially in today's age, is that it's not likely going to stop. It's an energy thing. The infrastructure that we've built up is predicated on un-ending growth; it's operated based on economies of scale.
We're not only purged on the precipice of a collapse of one huge nation state, but several. This is epochal.
The debate about what form of "'money" is truly and inherently valuable can be summed up by the following quote.
Gold is the money of kings, silver the money of gentlemen, barter the money of peasants and debt the money of slaves.
"
The debate about what form of "'money" is truly and inherently valuable can be summed up by the following quote.
Gold is the money of kings, silver the money of gentlemen, barter the money of peasants and debt the money of slaves."
This explains why there are so few kings alive at the moment.
Nice. Anyone without Au or Ag is at best a peasant, but most likely a slave - because everything you own is based on debt.
It doesn't matter what they do, that money isn't going into tbtf banks or equities. They should just confiscate the money and give it to the skank of murkin, shittibank, or the squid already, that's where they're heading.
I work in France months at a time and it's a great place to live if your RICH! Mexico I have never lived only vacationed and I would never live there ever! If you think U.S. taxes are un-livable try Canada. Prechter seems to have a good handle on what is coming and Tyler is the one unveiling the coming events. Family and friends are all we really have and the only ones we can truely count on. I will make my stand here as a patriot I have no other choice. I love my country but, I don't have to love it's leaderless ship captain! Tyler's article really speaks to what is coming regardless of MMFs. BO is securing the lifeboats for his selected few, most likely GS!
Thank you Tyler!
Basing things on mere taxes is a bit simplistic. In Canada you at least get real services (of course, until it all melts down with the rest of the world); it's also not under massive debt loads like the US. But, whatever... people are free to harbor anti-socialist attitudes I suppose.
"BO" is only a continuation. The lifeboats were being filled a LONG time ago: mostly started during the Reagan administration. They're now being lanuched: this was inevitable (aren't we all trying to launch lifeboats? understand that 2/3 of the world's population lives on $3/day and then ask yourself if you're really all that special).
No one here should be surprised at the Maddoff outcome. Why should anyone be surprised about the fact that the game is being closed up and the chips called in? (remember: it's funny money, it's THEIR money/currency). The entire planet is operating as one big Ponzi scheme of growth, and it's starting to stall (due to more expensive energy).
The objective of all this schema is to force people and companies to invest in Treasuries, by eliminating any competitive investment vehicle.
USA have the need for somebody to buy huge amounts of T-bills in 2010 an subsequent years to keep the debt rolling.
Saturday, January 2, 2010
Inside and Outside the Box
http://inpoints.blogspot.com/2010/01/inside-and-outside-box.html
Other than inside and outside the box, what did this guy really say? He sounded a bit like BO with change and more change saying nothing of substance. Inside outside box oh, and inside and outside the box and btw inside and outside the box. You really have to listen to this ha!
You probably have to have had previous exposure to Warren Pollock's earlier work to understand what he's saying.
Basically he spent ten minutes explaining why the solution to our problems will come from "outside the box". In his terminology it's the "Great Reset" (i.e. revolution).
I am Chumbawamba.
I think we need an "evolution" rather than a "revolution." Revolutions just change drivers: look at the Bolsheviks; or, look at the Obamniatics (or, come 2012, look at the Palinatics [which would be the real pinnacle of the bottom of it all!]).
What I can't understand about ATG Jubilee is how he can possibly believe there is still "Rule of Law" in the US, given everything that has happened over the past couple of years.
That is a good sign for you. If you can not understand utter stupidity, then you probably have some level of intelligence.
i'm moving to poonville
This was put forth for comment in mid-2009
see:
http://www.sec.gov/rules/proposed/2009/ic-28807.pdf
from page 97-98:
"2. Request for Comment on Other Regulatory Changes
We also request comment on certain additional changes that we are considering but are not currently proposing, relating to the suspension of redemptions that may provide additional protections to money market fund investors.
a. Temporary Suspensions for Exigent Circumstances
Should we include a provision in rule 22e-3 that would permit fund directors to temporarily suspend redemptions during certain exigent circumstances other than liquidation of the fund? The ICI Report recommends that we permit a fund’s directors to suspend temporarily the right of redemption if the board, including a majority of its independent directors, determines that the fund’s net asset value is "materially impaired."
290 Under this approach, the fund could suspend redemptions for up to five days, during which time the fund could attempt to restore its net asset value (e.g., by securing credit support agreements). In the event that the fund could not restore its net asset value within that period, the fund would be required to begin the liquidation process. A fund would be permitted to exercise this option only once every five years. This "time out" could give money market funds some time during turbulent periods to assess the viability of the fund.
We request comment generally on whether we should provide this additional relief. Would it make money market funds less appealing to investors? Would it provide time for directors to find a solution? Or might it accelerate redemptions from shareholders once the suspension period ends, regardless of any action taken by the board of directors?"
"ZH provides me (and thousands more) with provocative, extremely intelligent and informative information. I am grateful. I then turn to the comments and find a lot of trash."
Sad but true, more so case every day...
I am not Chumbawumba either
As the article discusses.. One persons trash is another's treasure.
Guaranteed cure for what ails you: don't read 'em!
Such a large body of work whose primary intention is to make something seem unappealing is reason enough to look further. Especially when most of those doing the work have need of what the derided possess.
I'm trying to figure out whether there's any appeal in what you wrote, but, unfortunately I have to punt...
BTW - Details are never fun or appealing.
I slowly buying survival gear, MRE's with five year shelf life, water filtration, books on survival, eating wild plants, tying knots and how to slaughter game, don't forget firearms!
MREs? Have ex-lax on hand. Ask a soldier.
I can confirm that.
When I was in, every MRE came with a packet of peanut butter, jelly, or cheese spread. We all referred to the cheese spread as "The Plug".
View from Canada. It does seem that many of you have been seeing too many movies such as 2012. Most of you seem to be in fairly comfortable situations now. Everything is not going to collapse and we will not all be fending for ourselves as per disaster movies. Our world is remarkably efficient, most of us have never had a day when we went hungry. I will bet all your fridges are nicely stocked and most of you have a job to go to tomorrow where you will contribute to the overall good of all of us.
Now I am very surprised at this proposal regarding money market funds and trust it is only a trial balloon that goes nowhere. Remember the chaos that started when there was even a rumor that MM funds would go under a dollar. Your government has to be very careful not to cause an unnecessary panic. The next five years at least will be quite difficult.
The biggest problem I see is that despite all our hard work the unions that have so much power at all levels of government are going to drag us into a deeper hole.
The economic pie is big enough for us all BUT not if too many insist on cutting a piece that is far bigger than the amount they are entitled to by their part in creating it.
I feel sorry for you. I'm cool with you not agreeing with where I might see things heading, but to be so sure everything will always be all right and taken care of by the government, well, I hope I am falling for satire on your part, and I will wipe egg off my face, later.
I repeat, EVEN IF THE ECONOMY IS GOOD AND THE GOVERNMENT IS JUST, DISASTERS OF PERSONAL, LOCAL, NATIONAL, AND EVEN INTERNATIONAL SCOPE CAN HAPPEN. It is not unreasonable to be prepared for ugly contingencies. Mock us at your's and your loved ones' peril.
Also, it is clear you don't read the comments carefully. Many here posting are unemployed. You assume too much.
I have gone hungry. Only days at a time, most of it when I was a child, but I have gone hungry.
You assume too much.
Reply to Anon# 181483--'View from Canada'. Some people are'nt happy unless they are miserable. Yes, agree heartily that the paranoia is overdone--I can only see this as I myself shared their viewpoint years ago. No one cried foul when their homes appreciated in an unbridled manner, and when the stocks soared---but the herd mentality rules. Present day= hoarders, stocking up on ammo and MRE's...fearful of waking up nude, cold, and hungry. You cite Unions in a negative slant, but the problem lies not with organized labor. The wealthy are well insulated from this Depression, and have increased their worth at an obscene rate, courtesy of the GOP. They need to pay their fair share. Go ahead--flame me! Gold bugs buying physical have made me financially secure and apparently will continue to do so for some time ahead.
462 comments on TD's post must be a new record. If you feel the need to leave the USA, please go. If you voted for George Bush--you are truly an idiot, and you will be paying the price of that perfidy for years. The Republic can--and will survive! Spreading angst and fear is counter-intuitive.
"Our world is remarkably efficient"...I agree. Back to work.
I spend a bit of time up in Canada, in which case I say eh?
Canada is, if anything, a pretty diverse country. My take is that it's barely hanging together- ethnic tensions. As things get tighter, which they will, I suppose we'll see how it goes. The fact that its population is 1/10 the US gives it a bit of a better chance, though I don't think that it, as is the case with nearly all other countries, has much in the way of room to grow: face it, the US has some of the best agricultural land on the planet, and it's food that's one of the fundamentals for life (food, shelter, water- in the final analysis these are the metrics by which to measure).
Canada is starting to buckle too. I wasn't happy when Harper (ick) rolled out the debt, er ah, "stimulus" plan. Canada's like a smaller, more awkward* version of the US. * Between the British and French influences it's schizophrenic-like.
i need to find a job abroad and move out of this shithole country asap.
And that great quote creates one more dilemma for the morons in charge. What happens when they want to sell everything else, all at once and the exits are not big enough. They are setting the stage for a larger, more severe crash than the last one, just as we did in 1929 and in 1837.
Every man, woman and child for themselves is the call of the day.
Looks like preps will need to be accelerated, probably drastically. Damn! It's tough to prep and look for work (that may have some sustainable value in whatever environment we find ourselves in) at the same time. Come to think of it, since none of us can be sure exactly what the new environment will be, exactly what kind of work should I seek with regard to the bold face parenthetical above this? I am thinking organic farming (I do believe in peak oil), animal husbandry, possibly log cabin building but am open to suggestions, particularly from those who are further along in their preparations.
My suggestion is to stock up on toilet paper and whiskey, but that's just me. I have invested in large quantities (as in warehouse size, plural). These "investments" are not stored in urban areas for obvious reasons.
As a side note, when grocery store distribution breaks down and assuming you haven't stocked up on survival stuff, it might be helpful to know the location of the nearest grocery store distribution warehouse. Assuming you can get the gas to get there, I suggest getting there early as I expect these centers will be ransacked very shortly after people realize their neighborhood store is not open for business as usual. After that, good luck.
I'm not a nutrition expert, but I suspect that gold or silver are not on the FDA's list of good things to eat. But, if you need tp or whiskey, I'll be happy to trade with you, assuming you have a usefull skill, service or can provide one of life's necessities.
Short everything except toilet paper and whiskey.
Toilet paper and whiskey -- the new currency.
TP will break down on its own in time. And, cloth is actually more portable (wash and re-use): yes, ick, but then again I'm understanding of lots of things that many would be repulsed by (try humanure).
And whiskey? I don't drink. Not now, but who knows, in the future you still might end up with me as a customer :-) Oh, how much are you stock piling? Maybe I should look for one last fling in stocks (though against my current religion)? :-)
The moral of the story, in one word(!): Tangibles (doesn't not include pieces of paper with dead prsidents on them, unless, that is, they are fully approved for TP use)
Thank you as always for bringing this to our attention. The pdf is dated July 8. The comment deadline is September 8. Anyone know what the current status is?
The ball is in the SEC's court--their move..
Marla,
This is a very important but nuanced issue.
I take issue with one very fundamental point - investments in MMMF are NOT cash, though investors would surely like hit to be so. Only banks can legally create demand deposits. The seminal paper outlining this was by Gerry Corrigan n 1982 when he was president of the Minneapolis Fed titled "Are Banks Special?" It can be found at http://www.minneapolisfed.org/pubs/ar/ar1982a.cfm
He writes:
"Only banks issue transaction accounts; that is, they incur liabilities payable on demand at par and are readily transferable by the owner to third parties. ... A case can be made that nonbank financial institutions incur liabilities that appear to have some or all of the characteristics of a transaction account issued by a bank. However on close inspection it appears that such instruments whether—MMMFs, retail repurchase (RPs) agreements, customer credit balances with brokers, sweep accounts, etc.—do not, at least in a technical sense, in fact possess the characteristics associated with the bank issued transaction account."
Further:
"The issue of whether money market mutual funds fit the definition of a bank—even at a conceptual level—is not so easy to deal with. Many such funds certainly appear to have all the characteristics of bank transaction accounts. In the case of the money market mutual fund, the critical distinction relative to a bank transaction account appears to be the extent to which the liabilities in question are payable at par. In the case of a bank deposit, deposit insurance, the capital of the bank, and the banks' access to alternative sources of short-run funding provide assurances that a depositor can withdraw dollar-for-dollar from the bank the principal amount deposited—even when changes in interest rates may have reduced the market value of bank assets.
In the case of the money market mutual fund the ability to pay out dollar-for-dollar the amount of the initial "deposit" is less certain. The fund itself does not have capital as such, and in the short-run it cannot easily tap alternative sources of liquidity to pay out to some shareholders thereby buying time for assets to mature or for interest rates to reverse course. As a related matter, the fund is not insured so that even though the risk of loss to the individual shareholder is small, it does exist."
Of course, as this was written in 1982, Corrigan was referring to RETAIL rather than INSTITUTIONAL money funds.
What has happened is that various institutional 2a-7 and 2a-7 "like" vehicles sought to provide investors with cash-like access to their money AT PAR with higher returns (by taking either credit, maturity or liquidity risk) than are available to institutions depositing money in banks, and without access to bank backup liquidity facilities.
Extendable-CP arrangements and CP investments in SIVs were designed for the same effect.
A question for you: what is your alternative proposal to the G30 and Treasury proposal? Should MMMF be allowed to pay out at par even when the NAV is really at a discount, creating "first-mover" advantages? This is clearly destabilizing in a crisis. Should MMMF (and institutional MMMF in particular) be granted free insurance? permanent access to a discount-window lending facility?
Should institutional MMMF investors be able to attain above-average returns on cash-like positions without the fund families paying the costs of being a bank (regulation, reserve requirements, insurance premia)? The moral hazard created in temporary guarantee of institutional MMMF is arguably quite large.
Why did you address this to me?
I think they forgot to read the most important part of any reading the author ha! That is the ultimate failure of any argument!
it is this fear which will keep Treasury rates low for some time.
The gold bugs' fud posts are not constructive to their cause. At the end of the day, if and when hyperinflation presents itself, the timing will be key. The Dow could stretch to 50,000 in ten years with a CPI of less than 2-3% and gold holders would have underperformed considerably. Right now, deflation is a bad economic data point or failed treasury auction away from becoming an in your face reality and until that fight is won there is no rush to buy gold with more downside it gold prices in the near term.
Many here also dont view the price of gold as the point but rather just the possession of it in a shit-hit-the-fan scenario. In that case, put 20% of your assets into gold so you can buy some necessities. I have a feeling that those with the least gold but the most brawn will get what they want anyway. Upper East Side Manhattan dwellers with hoards of gold will be lucky if they can survive the riots starting in "upper" Manhattan as they loot every store. Point being - gold is worthless in Armageddon. Buy a gun.
Think BIG dude!!
Gold bullets have that special quality about them ! Besides. The wealthy will not be home by then.
regards
Repeat after me: there is never going to be a "failed Treasury auction". Unlike that dunce Chris Darden, good attorneys/politicians never ask a question, rhetorical or otherwise, for which they don't already know the answer.
The prevailing political sentiment will have clearly dictated, well in advance of any actual auction, the potential demand (or lack thereof) for Treasuries or any other quasi-gov't guaranteed debt.
All one needs to do is watch, wait & listen. If the People still tend to follow/believe the propaganda message(s) being transmitted by the MSM, then we will continue to see gross monetization by the Fed. Thus, rates will stay low and offerings will continue to be successfully subscribed.
However, and this is a big however, if any incipient political push-back appears to be gaining momentum, then we may very well move into new uncharted territory where the Fed doesn't have free reign to do as they please. At that point, things are gonna get interesting, because it's gonna come down to crunch time between shelving an offering and/or having a auction failure.
The gov't will then be forced to play its ace in the hole, which is a limited shut-down and/or suspension of selected benefits. A little mob action may be all the PTB need to get people in line again to allow the Fed to monetize away.
Watch, wait & listen. The herd will tell you before even it knows itself which way this thing is going to play out.
I've gone over this same argument before.
The Fed does not have the tanks and guns. The government does.
The government will monetize its own auctions if it comes to the choice between that and default.
Yes, they will put the gun to the heads of the bankers. In a contest between the goldsmiths and the king, you bet on the king.
A deflationary crunch makes the US default and renders the USD of ruble-worth. The gov't in such a situation would seize assets immediately, would force monetization, will retake the monetary power because "those awful bankers at the Fed won't help."
The USG is, remember, the biggest debtor on the planet. If they have an auction fail and cannot fund, the Fed's SOLE product collapses.
Actually, it's vertical integration, with the Fed pulling the strings of the US corporation and the People as the bottom. Always getting...
I mean, they even put it in front of our faces and laugh at how stupid we are:
http://2.bp.blogspot.com/_a8YZnK_sJts/SVcSGL2ETHI/AAAAAAAAAIA/c-YIVSh8RO...
I have to wonder if we're not all of us feeding into each other's fears, and creating a kind of mini-mass hysteria. Saturday I bought another 1/2 oz gold and more 90% silver coins. I have seeds in the freezer, a handpump for the well, totes under the house filled with rice, beans, flour, sugar, powdered milk--you name it. I have 5,000 rounds of .22LR in the shed, along with 50 gals of gas in 5 gallon cans. And that's just the tip of it all. My garden will yield a 1,000 lbs of potatoes by June, when I'll replant in field peas. Sunday I bought a hand-tiller for the garden, against the day when I can't use my power tiller for want of gas. What if all of this is just crazy thinking? God knows plenty of folks went nuts over Y2K, and they're still yanking them out of their mountain caves today. Alot of my lib friends were batshit crazy over George Bush, and are purely deranged at any mention of Sarah Palin, as though she's going to train her moose-rifle sights on them, next. "But she's dangerous!" they say, "she's retarrrrded!". She's not an Ivy Leaguer like the last 4 presidents in a row. I want an uncouth Andrew Jackson for Prez, who'll angrily turn over the tables of the money-changer bankster lobbyist looters in Washington like some present-day Jesus Christ.
I want it to be done with authority!! Without apology!!
Disclosure: I take Geodon, 60mg/day to control BPD. Tuff stuff.
I actively picked apart the Y2K armeggedon scenario. It was easy: if there's a problem, move the clocks back a year. Now you have another year to deal with it. Problem solved.
But in all seriousness, it was a problem, but never an existential problem. I'm still owed a burger by a guy that may well be still hidden in the back woods of Oregon.
But this time, yes, things are altogether different this time. I'm still waiting for someone to come along and explain to me where I'm wrong here.
Just because it's a conspiracy theory doesn't mean it isn't true.
Sounds like you're well prepped. Good for you.
I am Chumbawamba.
I also suffered for quite some time under Bi-Partisan Disorder. I changed doctors. My friends recommended this guy in Texas. He told me exactly what the problem is. Ever since then I haven't been worried about the zeitgeist - I know our time will come.
http://www.youtube.com/watch?v=1XvKJu8gp64
Excellent fucking vid, man!
I am Chumbawamba.
Very good and the number of converts seem to be growing. But if in fact true, then a tribunal for the adjudication of war crimes is required immediately. The penalty for the crimes found to be treason is death. There is no room for compromise here.
How will this be accomplished? How will we sweep away the kangaroo courts, military zealot forces, suckups and power mongers????? Do you think they just roll over????
Interesting times now.
2010
It's been some time since I'd suffered from bi-partisan disorder. Although having voted for Ron Paul, I know that it's the system. NOTE: interesting to hear an inspirational song from a black person being used; as is all too common I see no people of color associated with most of these "cure the government" groups.
But, question 9/11? Hell yes!
They make some badass Ron Paul fans. Real Freedom makes sense to everyone - the more oppressed you are the more alive it makes you feel:
http://www.youtube.com/watch?v=63GiXzpfGhA
Carry a rifle and pay no tax.
GET ALL YOUR MONEY OUT.
(bank holiday coming to a currency near you)
Did someone mention bread and gold ? Lets review...
http://www.youtube.com/watch?v=FSinxXX6yXI
I was thinking to pull this out earlier but it's so easy. It's like the nuclear bomb of the gold argument. Better to use nuance and win them to your side rather than completely decimate them.
I am Chumbawamba.
What's sad is that people are using energy to dig for gold rather than to plant/raise food.
viet nam made paper gold trading off limits .margin speculation with paper.. they still encourage buying real gold ;;;
gold every where has value,, it is not up to any one to determine this, it is extracted with a price .. fiat is extracted with your hide ..
the overwelming pavlovian dog gruel has infected the brains of the keynesian mush people .\
those who protest the owner ship of gold silver. will rue the day of of their inability to precieve monetary policy and the governments buying gold.
even at 1600 and higher .. making gold impossible to buy for the common man,, silver will then take its place as a monetary metal.
at 2500 gold even some here will will decide that it may have been a good idea to buy.. at 3500 panic .. at 4000. dread..
the dumpster
As an Aussie I'm speaking/writing more as a spectator than a participant but this is hilarious!!
I can see the Mexican drug run Government setting up fences & patrols to keep all the 'Illegals" out!
The IMF selling 'its' gold to fund tent cities for those Americans whose houses are now dacha's for Asian s on holidays.
American women searching the web for better funded Asian/ African husbands. (with or without kids in tow)
The article that started this thread is not surprising. 'They' want you to withdraw your cash now & spend, spend, spend. 'They' have elections coming up.
regards
Funny in its sarcasm. But it being the holidays and all, if you said this shit to me when I had a few drinks in me (it being the holidays and all) I would have beat you until blood came out of your asshole.
Stay in Aussie land "mate"
But is it really all sarcasm? Reverse remittances are occurring- Mexico to the USA (http://www.nytimes.com/2009/11/16/world/americas/16mexico.html).
Speaking of Mexico, it's a key in all of this in that its oil exports are going to plunge due to its rapidly depleting Cantarell oil field (http://www.reuters.com/article/idUSTRE55F4HK20090616 and this graph: http://tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUSM...). US gets roughly 10% of it's oil imports from Mexico (Canada is first at almost 22% (http://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbbl_m...); I'm not thinking that Canada is going to be able to pick up the slack in Mexico's drop-off.
Anyway, the future of the US isn't looking all that bright, esp with the energy squeeze coming fast and furious.
But also a remark on what others in the world think of the USA. Including those we consider allies and important trade partners.
I think it will be very bad, but perhaps not all that bad. Nonetheless, it will be wise to have some cash at home, some gold and / or silver too. Plus, if the whole thing goes down the drain, then really nothing will save you, not even gold. Food, water, shelter, and perhaps a gun is what it will be about. If it get's that bad, those who can deal with extreme tough times will survive. But, life as we know it, isn't coming back. No way in hell.
How long before they realize that they need to do the same thing with bond mutual funds in general? This is really why they want to make retirement plans mandatory with x% automatically contributed into the plans. Then the default investment will be a Treasury bond fund, which if the Treasury bond market implodes, they'll freeze the funds or create a massive tax on redemptions.
But the most obvious observation may be missing here: the Federal Reserve is a complete failure. The Fed's only real responsibility is to be the lender of last resort. If the SEC is just going to prevent bank runs via government fiat, then the whole thing is a waste. 96 years, guys. Hell of a run, but this is over.
it costs 2 cents to print a FRN, and thats what they are worth, compared to a 1913 dollar
Long article, but good. I will be contemplating this for some time. This did catch my eye, though:
Oh, the irony. Earlier this weekend, there was a post about fraud being confined to Fannie Mae and Freddie Mac. The quote above more closely represents what is going on here. The banking elite are sucking the weatlh out of this country. Not content with ruining housing and the currency, they now focus on money markets. Until we put the banksters in our collective cross hairs, we will continue to be their slaves.
This is another effort to force capital into accepting RISK. Another effort to inflate another asset bubble, to create an inflationary environment not just to get the lumpen consumeriat to spend again and take on debt, but to allow the highly-overleveraged to more easily survive while still maintaining their leveraged positions.
Either that or this is merely another tirck to keep the entire Ponzi scheme that today's economy has become going for a short while longer.
It's trite, and a truism, but gold, as the one unencumbered asset class, looks better and better.
Never mind Suze Orman & Sheila Bair: go LONG shoeboxes...
I'm trying really hard not to exercise my right to junk your comment, because my over-riding respect for your God-given right to state your opinion prevents me.
I am Chumbawamba.
Naughty Chumba,
You know you agree with most, if not all, of that comment. :-)
I know, but s/he provoked me :)
I am Chumbawamba.
What did Krugman do to get there ?
The MIT-Princeton Axis.
Paul Krugman, Professor of Economics, Woodrow Wilson School, Princeton University, Former Member, Council of Economic Advisors. Krugman earned his B.A. in economics from Yale University in 1974 and his Ph.D. from the Massachusetts Institute of Technology (MIT)
Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Economics, Harvard University, Former Chief Economist and Director of Research, IMF, Rogoff was the Charles and Marie Robertson Professor of International Affairs at Princeton University.
Stanley Fischer, Governor, Bank of Israel, Former First Managing Director, International Monetary Fund he obtained his B.Sc. and M.Sc. at the London School of Economics from 1962-1966 and his Ph.D. at MIT in 1969, all in economics. He was a professor at MIT from 1977 to 1988, and wasBen Bernanke's Ph.D. thesis advisor.
Ben Bernanke He received his Ph.D. in economics from the Massachusetts Institute of Technology in 1979. His thesis was named "Long-term commitments, dynamic optimization, and the business cycle" and his thesis adviser was Stanley Fischer. tenured professor at Princeton University in the Department of Economics. He chaired that department from 1996 until September 2002, when he went on public service leave. He resigned his position at Princeton July 1, 2005. Dr. Bernanke served as a member of the Board of Governors of the Federal Reserve System from 2002 to 2005, and was Chairman of the President's Council of Economic Advisers, from June 2005 to January 2006. On February 1, 2006, he was appointed as a member of the Board for a fourteen-year term and to a four-year term as Chairman.
Paul A. Volcker, Chairman of the Board of Trustees, Group of Thirty, Former Chairman, Board of Governors of the Federal Reserve System.
There may be others but you get the picture.
All blow boys to the banking elite.
The Fed has stocked academia with its shit spewing stooges for the last 40 + years.
I recall using bottles of vodka as a currency in the collapsing USSR. This is tangible and can be stored for a while. Most people use it (especially in the times like this). It works for small projects like fixing your stove...
In 1991 Russian government went ahead with a currency reform. Overnight, all deposits were frozen (for a year or so). All 50 and 100 rouble notes (the highest denomination) were declared invalid and void and only small amounts of those were allowed to be exchanged. The officials declared that only criminal groups use large amounts of these high denomination bills, so good citizens would not suffer. I was lucky having my savings in US dollars at the time :)
BTW, at the time having gold at home (except for personal jewlery) and/or trading on a 'black market' has been illegal (punishable up to death).
Gold is harder to use if populace is not get used to it. How exactly are you going to pay for staff with gold? What kind of coins? Are you going to carry a scale around to weight pieces of gold?
When I lived in Poland, a friend told me (in 1994) how he built his home using vodka. He wasn't a big drinker, so he used his monthly allotment (I seem to remember it was 2 or 3 bottles) to bribe some guys who passed his lot every morning as they delivered bricks to a construction site. A certain amount "fell off the truck", the boys got their vodka, and two years later my friend had built the house of his dreams.
This guy told me a ton of incredible stories about life in Poland during "the good old days"; little did I know that my own kids may be facing such a future. I would never in a million years have believed it, and neither would my Polish friend, who saw America as a source of unambiguous good in the world. something to be emulated and admired. I feel so deeply ashamed that we haven't lived up to his vision of what we're supposed to be. What we've lost is incalculable.
They don't call it the "American Dream" for nothing! Totally unsustainable. Outcome totally predictable.
But, your story is one that brings a valuable lesson: co-operation and patience. Thanks!
I might point out that you must be referring to corruption. The breakdown of the Rule of Law.
The American Dream is to simply be protected by the Rule of Law to do with your time and resources as you see fit, in an unrestricted fashion. When politicians exclaim, "hard-working Americans" it is lip service. Not all Americans work hard. Maybe they would under different circumstances, but nobody is forcing them to go out and make something of themselves. We have Detroit as an example of decades of entitlement. To have a dream and work for it is of your own creation.
Sorry for asking a question not entwined in conspirarcy nerdism or involving gold, but:
Why is this old news? Didn't Reserve Primary Money Market already stop people from pulling their money out? How does this proposal change things?
This, however, does disturb me greatly.
Great post.
Why all the fuss? But it does disturb me greatly.
Check
Interesting article in terms of the potential effects if all or part of the proposed changes occur. After reading the proposed rule-making document, the context is provided - not directly sinister in intent, but then we all know how good intentions (whether genuine or subterfuge) have helped paved the way to very undesirable places over the past decade. Definitely something I want to follow, as I keep at least a year's living expenses in mm funds as an emergency stash. Dire emergency preparedness doesn't assume mm funds, but food, water, guns, ammo, and cash in paper and metallic form.
But the responses to some commentors really took me aback. I expect some rough and tumble on any internet site, especially where you have a core group of usually intelligent and passionate posters and commentors. They are what make this site one that I enjoy reading on a regular basis. But the complete lack of any sense of alternate legitimacy and civility to some posts (I don't agree with your ideas, therefore you are a complete idiot) seemed to run more rampant here than usual, but is part of a drift I have noticed on more and more posts.
I actually enjoy reading comments and articles that are contrary to my opinions and perceptions, because every now and then, I run across an interesting observation that makes me rethink where I am, if only for a little bit sometimes. Yes Virginia, intellegent people can see things very differently. And hopefully they can respect those differences, if not agree with them.
Lack of civility probably due to the holiday season. Markets closed for three days, nothing to trade, everyone is getting a little batty. Volume and volatility have been slow for two weeks. Not much action. Many people just spent two weeks with their spouse. That will drive one nuts. Peoples attitudes should improve tommorrow when more people return to work and volume picks up. Hopefully, there will be big moves one way or the other that will get everyones blood flowing. Or maybe, its because we just had a full moon.
Oh, and also, my favorite explanation for occasional incivility: the world economy is on the brink of collapse. Some people overlook that one. Thought I should take the time to point it out, just in case anyone needed a reminder. It's so easy to become complacent these days when up is down and left is your other right. I'm confoozed myself.
Oh, and one more: there are a lot of clueless, if not outright disinformation agents lurking around here. They need to be strung up immediately. If you are just an innocent bystander, then you should read more comments and do research before posting - otherwise we will consider you evil. Sorry, it's just the default these days.
'Trust no one.' Or else:
http://scifiparenting.com/wp-content/uploads/2009/07/ijfire.jpg
Nice pic Wings!
"She's a Nazi" "How do you know" "She talks in her sleep"
Yeah! Nice quote.
GOLDMONEY.com.
Get your money out of standard vehicles and vote with your feet before they lock it up.
So, if I want to liquidate my money market and BUY equities, I can't do that either? Man, this government is pathetic
You can legally take $10,000 across the Canadian border without having to claim it - in cash,or gold,etc.
And you should do it every time you travel.
One caveat: try taking two hundred "$50" gold American Eagles ~ legal tender! ~ instead of $10,000 in Federal Reserve notes. I am waiting for a court challenge, to see if the authorities can treat them as $220,000 or as $10,000. It is important we know this, because to prohibit legal tender coins from leaving the country would put the administration in a box. We'd have capital controls. The face value on the coins would become meaningless, and the coins could no longer be legitimately considered "legal tender". Gold ownership would be de facto outlawed.
I was curious to see if someone was contested by TSA or immigration for attempting this.
Is it worth $210,000 in headaches?
I mean, it's all well and fine to do some data collection, but it's going to cost a fair amount of time and money, esp if you come out on the short end of the stick. NOTE: if you don't declare and they tag you then you're going to be put through the grinder.
I'd advise to just make multiple trips. I think that it's only prudent to spend more time with the people who you are eventually going to be exchanging your gold with, eh?
BTW - one can wire transfer funny money up there (have to open up an account first- can't use just any account unless you're a resident though; and, your interest will still be reported, though I'd say that that's a small cost to pay for more security).
As I recall, Bernanke wants to REVERSE REPO money market accounts(and has been testing this) by swiping money market cash and handing the brokerages worthless Treasuries in exchange. You can imagine the brokerage nightmare of having to explain that the cash has been confiscated by the Federal Reserve with complicity by the Treasury. So, hell, make a rule and blame RUNS as destablizing. This is a typical act of desperation in the ebb of power. Like gold, cash accounts can be confiscated and swapped with worthless treasuries and LOCKED UP.
And obvious roadblock to safe money policy and directing the sheep into equities-and flooding the system with held cash.
Correction: unlike gold, "cash accounts can be readily and easily confiscated and swapped with worthless treasuries and LOCKED UP." (emphasized words mine) Gold cannot be so readily and easily confiscated.
Neither can cash for that matter, but I highly recommend you stay away from FRN as they can still inflate it into nothing, or the public can hyperinflate it into oblivion. Better to go with real money.
I am Chumbawamba.
While I agree that this may be opening Pandora's Box, the focus should be set on the "extraordinary circumstances" language.
This is effectively saying that in the event of a crisis ("extraordinary circumstance") we will halt redemptions so as to provide the powers-that-be the time necessary to devise a plan to make everyone whole.
If you were a money manager and panicked at the tipping point of the current crisis, you lost -- big time. If you sat on your hands; the Feds, playing the role of the white knight, not only bailed you out but made you a deputy hero.
To ignore the fact that most financial crisises are psychological events unique to human beings is to ignore yourself.
relax... everything is fine. go back to your beer drinking and football games.
I too agree that the crooks and the system have hit the wall and we're all screwed. I've even gone so far as to start preparing for the worst as well, but an idea keeps haunting me and I wonder if it has been addressed in here somewhere. [I'm fairly new to ZH]... Like a martial arts fighter uses his opponent's weight and inertia against him, is it possible that since the entire world is tied to the dollar, that just a near collapse of the dollar will destroy most of the other major economies of the world to the point that we remain the strongest by default ? I've read some stats regarding china's massive labor force and mighty industry having trouble keeping their workforce employed and that they may face some major problems if there's nobody left to buy their goods. They may have all of the capitol, and industry production, but if there's no wealth left for anyone else to buy their stuff, what do they do with all of those people over there.... Just a thought.
This is why many nations have been moving their reserves away from the dollar and into other currencies or commodities, and gold. Sure, some will still get hit, but the ones that diversified early will probably weather the shock a lot better.
China will re-focus itself internally. They have a huge market to themselves there. Same with Europe. Pretty much the rest of the world will be OK, and the US will likely suffer the most internally.
We shall see.
I am Chumbawamba.
Long-term Europe and China are also dead in the water. All of these entities are short key resources, mainly oil. China does, however, have a fair amount of minerals, though having the ingredients for the cake and no oven doesn't really get you to the party...
China has set iself up for a massive bubble explosion with its need for insane growth levels. In order to "deliver" to its masses it is needing to grow at something around 9%. That's doubling of their economy every 7 1/2 years or so. Although no growth rate is sustainable, 9% is way, WAY unsustainable; meaning, this thing is going to blow out rather quickly: they've been on this tear since about 1992 (http://www.chinability.com/GDP.htm); over this time it has been the US that has abetted this activity the most.
But... China's ability to consume internally isn't all that great. Its consumer class is still rather small: I'd argue that consumer classes are really only possible when one has sufficient trade surplus; China's trade surplus will diminish over time as it consumes more internally (while still having to shell out increasing more for oil imports). Its efforts to maintain, let alone grow, their consumer class doesn't look all that promising.
I don't believe that Europe can internalize like China, not even for a short while, and especially with a collapsing US consumer. Energy plays another big factor for Europe: Russia will tend to do fair, but its exports of natural gas will taper off as its reserves decline and its internal consumption picks up; this will result in higher energy prices to Europe, not something's that's attractive when you're struggling to pull out of a "recession."
ZeroHedge
How do I sign up for the new premium content? Is there a monthly service or something?
Happy New Year!
Do not posses more gold than you carry in your colon.
-Hildegard of Slovania
There is a better free market way to protect money market funds from runs:
http://alephblog.com/2008/10/04/a-proposal-for-money-market-funds-and-more/
Runs would not be possible, and people would be forced to realize that MMFs do possess credit risk.
As Tyler and Marla pointed out months ago, the FED has been playing with reverse repos on money markets. The FED has swapped(practicing about a month ago) confiscation of cash money hoarded in money markets and flooding the markets with dollars by swapping that cash with US treasuries and other toxic junk(or maybe even just obligations.) Ben Bernanke, the helicopter, wants access to cash accounts when needed. This is basically the cash equivalent to the "gold confiscation " act in the 30's-except now with FIAT dollars. Remember, the US dollar is just a "share" in the system. It's not yours, it's their "money" and if you do not use it they way they want your to use it then they will just take it back. Barney Frank(whore to the banking system) has also proposed that the FED have access to near 4 trillion dollars in new TARP-type liquidity as well. Banks get whatever they want, when they want. At some point they run out of ammo, but by then a nice big war with Pakistan or Iran will juice the economy.
Remember, the US dollar is just a "share" in the system. It's not yours, it's their "money" and if you do not use it they way they want your to use it then they will just take it back.
Exactly! And people need to realize that someone else is calling the shots, and that as long as you are in THEIR game THEY are going to set the rules (and, people shouldn't whine about it- rather, they should NOT play [what is clearly a rigged game- really, why whine when you know it's rigged? pick up whatever you can and leave the game- you're not going to be able to make them change the game, else it would no longer be that game, and the chips wouldn't mean anything at That point anyway!]).
Just thought I would post this for those who are unsure or have a false notion of what a Federal Reserve Note is and what real money is.
http://www.fame.org/HTM/Vieira_Edwin_What_is_a_Dollar_EV-002.HTM
They want to encourage risk. The more you gamble at the casino the more they win, even without crashes now with the huge commissions they make thanks to people simply participating. The problem is that the next time everyone loses, every WILL lose. Can't encourage risk with increasing risk.
Great article.
Great article; I wonder who wrote it though, Tyler or this dude
http://xiam007.blogspot.com/2010/01/market-has-become-one-huge-ponzi-sec...
TYLER,
You need to look into this. Unless this is one of you...
that would be ironic if Zero initiated a google takedown (justified but still ironic)
merely yet another unauthorized autoresyndicator. we have many. we don't pursue action against them as they appear like weeds.
Learn something new every day here. I tried to google this and had no luck. If anyone passing by understands this and has a moment to explian, I would be grateful. I don't have the imagination to understand why anyone would do auto syndication or autoresyndication. What is the gain to copy someone else's work and put it out, "auto" no less.
Hey survalists, is there someplace else for you to talk survival tactics, this keeps coming up in commentary here? Nothing against, seems like a great idea, as it really cost little to prepare some and even if whole system does not unravel, we should all be more prepared as many things could require such preparedness, storm, power outage, earthquake, flood, Internet outage, terrorist attack etc...
However, it seems off point here...could you just mention your ideas, link to some other pertinent survival social network, and move on.
ZH has real good financial dish here and it would be nice to stay on topic and spread the word about these plans. Transparency and sunshine are our only hope to reform. If you think reform is unattainable, that our goose is already completely cooked, fine, move on to some revolution or bunker...but in mean time, I'd like to try fight this crap and appreciate what ZH is exposing.
One thing I think we can do is bang on Dylan Ratigan, Huff Post etc to spread the word on this abomination, this goes beyond just the harm to indvidual citizens, as it seems to me that this could take system down rather than protect it. Soon no one will trust anyone, as individuals will realize govt is such a corrupt "referee", providing them NO protection from powerful insiders, and then individuals will do logical thing, trust no one, let alone law enforcement/crimainl courts/civil courts and we will all be in bunkers. If we can convince our corrupt masters they can't just do this without a fight, while there will still be much corruption, we might maintain some level of viable commerce and credit.