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Former Goldman Banker Reveals The Path To The Next Depression And Stock Market Collapse

Tyler Durden's picture




 

Submitted by Nomi Prins, author of "All The Presidents' Bankers", via NomiPrins.com,

A funny thing happened on the way to the ‘end’ of the multi-trillion dollar bond buying program known as QE - the Fed chronicles. Aside from the shift to a globalization of QE via the European Central Bank (ECB) and Bank of Japan (BOJ) as I wrote about earlier, what lingers in the air of “post-taper” time is an absence of absence. For QE is not over. Instead, in the United States, the process has simply morphed from being predominantly executed by the Federal Reserve (Fed) to being executed by its major private bank members. Fed Chair, Janet Yellen, has failed to point this out in any of her speeches about the labor force, inflation, or inequality. 

The financial system has failed and remains a threat to us all. Only cheap money and the artificial inflation of asset values can make it appear temporarily healthy. Yet, the Fed (and the Obama Administration) continue to perpetuate the illusion that making the cost of (printed) money zero by any means has had a positive effect on the population at large, when in fact, all that has occurred is a pass-the-debt-ponzi-scheme co-engineered by the Fed and big US bank beneficiaries. That debt, caught in the crossfires of this central-private bank arrangement, is still doing nothing for American citizens or the broader national or global economy. 

The Fed is already the largest hedge fund in the world, with a book of $4.5 trillion of assets. These will plummet in value if rates rise.  Cue the banks that are gearing up their own (still small in comparison, but give them time) role in this big bamboozle. By doing so, they too are amassing additional risk with respect to interest rates rising, on top of all their other risk that counts on leveraging cheap money.

Only the super naïve could possibly believe that the Fed and its key banks haven’t been in regular communication about this US Treasury security shell game.  Yet, aside from a few politicians, such as former Congressman Ron Paul, Congressman Sherrod Brown and Senators Bernie Sanders and Elizabeth Warren, the notion that Fed policy has helped bankers, rather than other people, remains largely divorced from bi-partisan political discussion. 

Adding more fuel to the central-private bank collusion fire, is the fact that the Fed is a paying client of the JPM Chase. The banking behemoth is bagging fees for holding and executing transactions on the $1.7 trillion New York Fed’s QE mortgage portfolio, as brilliantly exposed by Pam Martens and Russ Martens.

Wouldn’t it be convenient if JPM Chase was also trading this massive mortgage book for its own profits? Or rather - why wouldn’t they be?  Who’s going to stop them – the Fed? Besides, they hold more trading assets than any other US bank, so why not trade the Fed’s securities ostensibly purchased to help the public - recover?

According to call report data compiled by the extremely thorough website www.BankRegData.com, nearly 97% of all bank trading assets (including US Treasuries) are held by just 10 banks, led by JPM Chase with 43.80% and followed by Citigroup at 24.51% of all bank trading assets.

Last quarter, US Treasuries were the fastest growing form of security bought by banks, increasing by 26.3% or $72 billion over the prior quarter. As the Fed tapered, banks stepped in to do their part in the coordinated Fed-private bank QE game. In the past year, banks have added $185.8 billion of US Treasuries to their books, more than doubling their share of government debt.

Just seven banks comprised nearly all ($70.5 billion) of this quarterly increase: State Street Bank, Capital One, JPM Chase, Wells Fargo, Bank of America, Bank of NY Mellon and Citigroup. By the end of the third quarter of 2014, Citigroup, with $95 billion, was the largest holder of US Treasuries, followed by Bank of America at $54.8 billion and Wells Fargo at $37.8 billion from nearly zero at the start of 2014. Bank of NY Mellon holds $25.3 billion and JPM Chase holds $15 billion US Treasuries.

This increase in US Treasury holdings reflects another easy money element of our federally subsidized banking system. Banks take deposits from individuals for which they pay close to zero in interest, in fact, charge customers fees for keeping their money  (courtesy of the Fed’s Zero-Interest-Rate policy.) They can turn that around to make a cool risk-free 2.3% by parking the money in 10-year US Treasuries. Why lend to Joe the Plumber, when the US government is providing such a great deal?

But, the recent timing here is key. Banks only started buying US Treasuries in earnest when the Fed announced its tapering plans. Thus, not only are they participants in the ZIRP game as recipients of cheap money, they are complicit in effecting monetary policy. As the data analyzed so expertly by Bill Moreland at www.BankRegData.com makes clear, there has been no taper.  Thus, the publicized reason for tapering – better job and economic growth – is also bogus.

During the third quarter, Wells Fargo and Bank of America matched Fed purchases of US Treasuries, keeping the total amount of US Treasuries in QE land neutral. With such orchestration to keep rates down and the prices of US Treasury securities up, all the talk about whether the labor force is strengthening or inflation exists or not is mere show. Banks haven’t even propped up the labor market in their own industry. They chopped 11,400 jobs last quarter. In the past two years, they cut 57,236 jobs.  

No one in either political party mentioned any of this during the mid-term elections. Yet, our political-financial system has gone from the dysfunctional to the failed to the surreal. Speculation, once left to individuals and investors, is now federally sponsored, subsidized and institutionalized.  When this sham finally buckles and the next shoe falls and rates do eventually rise, the stock market will tank, liquidity will die, and the broader economy will plunge into a worse Depression than before. We are not there yet because of these coordinated moves and the political force behind them. But we are on a precarious path to that inevitability. 

 

 

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Tue, 11/11/2014 - 16:39 | 5437731 Pladizow
Pladizow's picture

This was all true 5 years ago!

Tue, 11/11/2014 - 16:39 | 5437741 ZoroAustrian
ZoroAustrian's picture

yep, but doesn't make it any less true now

and it sounds so much more true when Nomi Prins says it

Tue, 11/11/2014 - 17:09 | 5437868 Bad Attitude
Bad Attitude's picture

Things will really get sporty when the SNAP cards stop working - the sheeple will buy the official propaganda until they get hungry.

Forward (over the cliff)!

Tue, 11/11/2014 - 17:33 | 5437948 Calmyourself
Calmyourself's picture

Snap cards will work until a CME or EMP takes out the system, they just won't buy anything.

Tue, 11/11/2014 - 18:17 | 5438104 JamesBond
JamesBond's picture

The average member of congress could not read this article with comprehension.  Not only do we have low information voters, we have low information politicians....

 

 

jb

Tue, 11/11/2014 - 19:46 | 5438435 TruthInSunshine
TruthInSunshine's picture

http://en.wikipedia.org/wiki/Nomi_Prins

Nomi Prins is an American author, journalist, and Senior Fellow at Demos.[1] She has worked as a managing director at Goldman-Sachs and as a Senior Managing Director at Bear Stearns, as well as having worked as a senior strategist at Lehman Brothers and analyst at the Chase Manhattan Bank. Prins is known primarily for her book All the Presidents' Bankers in which she explores over a century of close relationships between the 19 Presidents from Teddy Roosevelt through Barack Obama and the key bankers of their day based on original archival documents, for her whistleblower book, It Takes a Pillage: Behind the Bonuses, Bailouts, and Backroom Deals from Washington to Wall Street, for her views on the U.S. economy,[2][3] for her published spending figures on federal programs and initiatives related to the 2008 bailout,[4] and for her advocacy for the reinstatement of the Glass–Steagall Act and regulatory reform of the financial industry.[5]

Tue, 11/11/2014 - 20:13 | 5438542 Bangalore Equit...
Bangalore Equity Trader's picture

Listen TIS.

Excellent comment. Can you teach me how to Ctrl^c/Ctrl^p?

Please?

Tue, 11/11/2014 - 21:40 | 5438843 TruthInSunshine
TruthInSunshine's picture

As long as you shave your vagina, testicles & back, and wax your upper lip, sugar tits/hermaphrodite dreamy.

Tue, 11/11/2014 - 21:43 | 5438857 Bangalore Equit...
Bangalore Equity Trader's picture

Oh Listen.

TIS.

Hall of Fame material bro. Hall of fucking fame. Excellent comment.

Tue, 11/11/2014 - 22:19 | 5438950 BringOnTheAsteroid
BringOnTheAsteroid's picture

From a completely bipartisan viewpoint TIS's comment above was quite funny.

Tue, 11/11/2014 - 23:56 | 5439182 markmotive
markmotive's picture

Fellow Goldmanite Abbey Joseph Cohen sees the S&P 500 at 2150 in 12 mths. So who's right?

http://www.planbeconomics.com/2014/11/abby-joseph-cohen-s-500-at-2150-in...

Wed, 11/12/2014 - 12:32 | 5440478 LooseLee
LooseLee's picture

The thought. Abbey Joseph Cohen---BUTTTARD UGLY. Never saw a market he/she didn't like. Phoney propagandist IMO.

Tue, 11/11/2014 - 20:40 | 5438645 IridiumRebel
IridiumRebel's picture

"The average member of congress could not read"

Stop there. You're good.

Tue, 11/11/2014 - 23:20 | 5439110 sylviasays
sylviasays's picture

"Yet, aside from a few politicians, such as former Congressman Ron Paul, Congressman Sherrod Brown and Senators Bernie Sanders and Elizabeth Warren, the notion that Fed policy has helped bankers, rather than other people, remains largely divorced from bi-partisan political discussion."

 

Democrat Senator Elizabeth Warren (aka fakehontas) supports the Export-Import Bank. The woman best known for demonizing big businesses nevertheless wants to maintain an outlandishly generous subsidy package for them. 

 


http://reason.com/blog/2014/07/18/elizabeth-warren-champion-of-the-people

http://reason.com/archives/2014/10/02/elizabeth-warren-sells-out-to-her-...

http://dailycaller.com/2014/04/16/elizabeth-warren-whines-about-coverage...

Tue, 11/11/2014 - 23:30 | 5439132 sylviasays
sylviasays's picture

"Yet, aside from a few politicians, such as former Congressman Ron Paul, Congressman Sherrod Brown and Senators Bernie Sanders and Elizabeth Warren, the notion that Fed policy has helped bankers, rather than other people, remains largely divorced from bi-partisan political discussion."

Democrat Senator Bernie Sanders, the only official Socialist in the Senate, is talking about running for president and fundraising like he’s actually about to do it. And where does Bernie get his bucks? Aside from the usual union donors, SEIU, teachers’ unions and the Association of Postal Workers, there’s American Crystal Sugar. American Crystal Sugar, a beet sugar agricultural cooperative, ranks as his fourth top donor. And what does the sugar beet group want? Sugar subsidiesIn 2012, the sugar growing and production lobbies have poured more than $2.1 million into influencing legislators like Bernie Sanders. American Crystal Sugar is quite unpopular with unions and the AFL-CIO is calling for a boycott of it, but it doesn’t appear to trouble the Socialist senator any.

 


http://www.frontpagemag.com/2014/dgreenfield/socialist-bernie-sanders-be...


Tue, 11/11/2014 - 22:58 | 5439059 Buster Cherry
Buster Cherry's picture

Same for those that just luuuuv Bitcoin.

Tue, 11/11/2014 - 23:01 | 5439062 Buster Cherry
Buster Cherry's picture

duplicate

Tue, 11/11/2014 - 18:08 | 5438061 shovel ready
shovel ready's picture

+1 for "sporty" - LOL

 

" Hungry people don't stay hungry for long..

They get hope from fire and smoke as they reach for the dawn.."

RATM

 

.... or they just die - ME

Tue, 11/11/2014 - 18:45 | 5438212 Itgoestoeleven
Itgoestoeleven's picture

Fire in the master's house is set!

Tue, 11/11/2014 - 23:01 | 5439061 teslaberry
teslaberry's picture

snap cards will never stop working. it is the grocery stores that will stop selling food. the cards will always have numbers in them to swipe on some screen. it's just the food won't be there to buy.

Tue, 11/11/2014 - 17:43 | 5437967 Escrava Isaura
Escrava Isaura's picture

 

 

Numbers bring me memories!

Let me give you some numbers that WILL really matter

 

Isn’t the population (just’ the population) growth—NOT including depletion of existing oil fields—about 3 times faster than the new oil fields discovered, if these projections for new discovered fields are to be believable, or real?

 

Isn’t BP, ExxonMobil, Total SA, Chevron, and Royal Dutch Shell ‘Projections’ are a total joke. Hyper scams to loot investors and small-operators through merge and acquisitions. Astounding fraud! Some of BP’s PAST ‘Projections’ track records shows over 300% miss.

 

Example:

Reports issued in the year 2000… the U.S. EIA forecast that total world liquid fuel supplies would reach 93.2 million barrels per day (mbpd) in 2010. The IEA forecast 95.8 mbpd.  Worldwide liquid fuel production for 2010: 87.1 mbpd.

The U.S. EIA report included a price projection for crude oil of about $28 a barrel for 2010 (adjusted for inflation).

http://resourceinsights.blogspot.com/2012/12/previous-long-term-government-industry.html

 

 

 

Tue, 11/11/2014 - 20:23 | 5438575 Bangalore Equit...
Bangalore Equity Trader's picture

Listen EI.

"Isn’t the population (just’ the population) growth"

For the love of Satan, have we not already discussed this 1 mil times? It's not the population that matters it's their "FUCKING" utility that matters! The value scale.

And the value scales of each individual is ordinal and here you try to preach that because of a lack of a particular resource that an individual's utility is diminished!

Get a fucking clue dambit!

Tue, 11/11/2014 - 20:23 | 5438576 Bangalore Equit...
Bangalore Equity Trader's picture

Tue, 11/11/2014 - 16:52 | 5437803 Aeternus
Aeternus's picture

This guy discovered that you CAN eat gold.

 

https://www.youtube.com/watch?v=Od9D6TECSa0

Tue, 11/11/2014 - 16:55 | 5437813 Aeternus
Aeternus's picture

This is the true way of the next economic collapse.

 

DOOOOOOM!

 

https://www.youtube.com/watch?v=2ddyThSL2fg

Tue, 11/11/2014 - 17:02 | 5437840 ParkAveFlasher
ParkAveFlasher's picture

We're all gonna die.  - Billy

Tue, 11/11/2014 - 20:22 | 5438568 BuddyEffed
BuddyEffed's picture

Get to da chopper!   

Now drop cash from helicopter!

Wed, 11/12/2014 - 00:00 | 5439191 ApparentlyAPseudonym
ApparentlyAPseudonym's picture

I believe this is the only way that growing inequity can be solved. Government short of direct representative government will never make any significantly redistributative redistribution to make up for the oppurtunity gap between the disinfranchised and the ownership class. The natural laws of economics mean that wealth will be always concentrated upwards, a trend which will accelerate as computers increase efficiencies and replace the workers (a major source of inefficiencies). I predict that shortly after the ownership class figures out that they have won all of the money, somebody eventually might decide that throwing cash from helicopters might actually do some good. But the only way the masters will ever do this, it would have to be voluntary. Some sort of corporate sponsorship on the individual or town basis. A new corporate feudal system. 

Wed, 11/19/2014 - 23:52 | 5468351 TheReplacement
TheReplacement's picture

A free market and rule of law provide all the natural redistribution that is manageable.  The natural law is that wealth will go to those who earn it.  If Jr is a retard then the wealth will move on.  If you steal your wealth you lose it for breaking the law in order to obtain it.  It really is pretty simple but it seems that simple people just want to believe they need some other dolt to take care of them and tell them what to do.

Tue, 11/11/2014 - 16:56 | 5437818 Jonathan Equine...
Jonathan Equine Phallus's picture

negative - 5 years ago QE was a temporary fix, because the economy is just like an engine, and it just needed some "gas" - that is... 'liquidity'.... that is, wink wink, nudge nudge, "artificial demand," that is...wink wink....  free money to the large international banks which own the NY Fed itself, a covert tax on labor, and an ongoing theft.

 

Read from "As the Fed tapered, banks stepped in to do their part in the coordinated Fed-private bank QE game"

 

But, basially accepting your point - this shouldn't have fooled anyone 5 years ago, and unless you went to an Ivy for your economics or otherwise conflate your attitude toward government [MOAR] with financial systems as such...  you shouldn't be surprised that proof of coordination between the large banks and Fed/ECB is open and obvious now.

 

So treasuries are propped up, again obvious, and the taxpayer more in debt than ever to the same banks, of which there are fewer every year...again, not surprising, but the evidence Krugmanomics and mainstream NEO-keynesian thinking are deleterious to workers and the real economy is now absolutely obvious.  You're dealing with real group think and obdurate stupidity at this point.

 

You either have to tax the Fed, seriously, and/or break up the largest 5 or 6 banks or we end up with a world war in 3-5 years and sure, maybe sooner.  I think it's that simple.  While not 'all' wars are banker wars, they certainly have motivated, along with a small handful of political ideologies, most of the major wars of the past 100 years and arguably back to the wars of the early 1800s...



Tue, 11/11/2014 - 17:33 | 5437945 Professorlocknload
Professorlocknload's picture

So true. Wars are the back door through which all errant power escapes blame.

Tue, 11/11/2014 - 20:43 | 5438583 BuddyEffed
BuddyEffed's picture

Well, the economy analyzes better if you compare it to an electric circuit.

And I would bet my bottom dollar that Nomi has read this before :

http://web.archive.org/web/20111112074159/http://www.zerohedge.com/news/...

And I would win that bet.

If you want to see the links in the above article, just copy the link and paste it into a fresh page.

Tue, 11/11/2014 - 23:20 | 5439113 NoPension
NoPension's picture

Problem is, the human beans that benefit from the bullshit fantasy , top,bottom and middle; know that in order for the game to continue, and therefore their benefits, they must keep the fantasy alive. Even if they know it's all bullshit ( they do, mostly) , their bread is buttered by the game.

It really is like the Matrix.

Wed, 11/12/2014 - 02:35 | 5439390 Global Observer
Global Observer's picture

You either have to tax the Fed...

Currently the Fed pays some part of its profits to the member banks (which shows up as their income and taxed accordingly) and remits the rest to the US treausry. What exactly do you think "taxing the Fed" will achieve?

Wed, 11/12/2014 - 12:35 | 5440490 LooseLee
LooseLee's picture

I'm on whatever 'side' is against the bankers and corporatists....That simple.

Thu, 11/20/2014 - 01:19 | 5468551 TheReplacement
TheReplacement's picture

Can you repost those charts going back 30 years so we can get a better historical perspective of how big a move this is?

Tue, 11/11/2014 - 17:09 | 5437865 bmoreland
bmoreland's picture

Full artice describing chart here:

http://www.bankregdata.com/lab/comm_110714.pdf

Tue, 11/11/2014 - 17:48 | 5438002 ebworthen
ebworthen's picture

Nice charts, thanks.  FED/Bank coordination to prop equities and keep rates low at our expense.

Governor & the Plantation owners making certain we keep pickin' cotton and not causin' any trouble!

Tue, 11/11/2014 - 18:08 | 5438056 Taint Boil
Taint Boil's picture

 

 

bmoreland - you been here over 5 years and this is the first time I think I have seen you post. Wish I could post pics …. I’ll be good … I promise......

Tue, 11/11/2014 - 19:01 | 5438279 vote_libertaria...
vote_libertarian_party's picture

An interesting analysis would be part 2 of this.

 

How long until the banks use up their deposits available for buying the Treasuries?

 

If the Treasury is selling $80-$100B per month you would think it would soak up bank deposits pretty fast.

Tue, 11/11/2014 - 19:37 | 5438395 TimmyM
TimmyM's picture

There are a lot of moving parts here that this analysis has missed. You ask a good question about deposits but you have to look at loans as well.
The bottom line is the economy is not growing very fast and deposits are growing as savers get nothing from MMFs. -and maybe ZIRP would have happened without the FED, if we had let the banking system collapse, where would rates be?
So bank balance sheets are growing and without loan demand they buy Treasuries.
An argument can be made that QE is fairly irrelevant. It partially replaced the demise of the shadow banking system. And now banks have the liquidity to take the baton from the Fed. In the meantime we monetized a monstrous State.
But if we did not have all this unproductive malinvestment capital flow, perhaps we would have natural loan demand by now. And rates would be rising. But in a debt based monetary system growing loans creates deposits- say what?

Tue, 11/11/2014 - 20:53 | 5438672 franciscopendergrass
franciscopendergrass's picture

"The bottom line is the economy is not growing very fast and deposits are growing as savers get nothing from MMFs. -and maybe ZIRP would have happened without the FED, if we had let the banking system collapse, where would rates be?"

That's crazy talk.  That would mean we wont need the Fed anymore and the banks would have to compete.  "Freer" markets?  Speaking like that will get you put in prison

Tue, 11/11/2014 - 22:09 | 5438926 Dinero D. Profit
Dinero D. Profit's picture

Do you know what's great about having a nice sum in the bank?

Firstly, your safety-deposit box is free!

Better yet, when you walk in the officers (and tellers too) say, sugary sweet,  -Mr. Profit, and how are you today?'

'How are the Border Collies?'

'How's Mrs. Profit?

 

See?  The people at the bank make you feel like you're fabulously well-to-do.

That's priceless.

 

 

Tue, 11/11/2014 - 22:45 | 5439010 cnmcdee
cnmcdee's picture

ZHer's think about this...

TODAY:

 - Housing looses money.

 - Bonds make no money.

 - Stock market last place to make money.

 - Gold looses money in face of record demand by rampant blatant naked shorting certificates to dilute value of physical.  Delinkage begins now as physical $200 ounce > certficate gold..

 

2015 : Sometime during the year.

 - Stock market collapses for reason A. Shemita Year. B. Welcome to your neighborhood ebola. C. Elites take out Chicago to ignite war in Iran. 50% hit whatever.

 - Housing pricing collapses 60%

 - Bonds make no money due to ZIRP locking them back down.  Fed's double down on a 'Super QE' to fund the new war..

 - *ALL* assets denominated in US dollars collapse in value.  Depression begins.

 - Gold because it's supply is limited and it is a value commodity independent of the US dollar floats to $2500 / ounce. Why? Because it will be done of desperation.  When bonds pay no interest, and the stock market is down 50% people will buy it out of pure perspiration.

 

Therefore anyone who buys gold - now in physical should see a minimum increase in pricing of 100% while assets around them may collapse - giving it 4X - 10X the purchasing power it has now.

Buy Gold!!! - It will be the <only> value escape vehicle when the collapse comes in 2015 (which is a certainty!!)

 

Wed, 11/12/2014 - 03:20 | 5439420 Victory_Garden
Victory_Garden's picture

"That's priceless."

Priceless?

With all due respect, in the not too distant future, priceless will be a can of pre-fukushima tuna. If one wanted to eat gold, maybe get a pound of the yellow stuff for it.

One can of tuna fish will be priceless.

 

Tue, 11/11/2014 - 17:27 | 5437928 Eireann go Brach
Eireann go Brach's picture

This motherfucker better collapse on Colonel Obongo's watch, so we can add a stock market crash to his legacy!

Tue, 11/11/2014 - 19:38 | 5438404 Clowns on Acid
Clowns on Acid's picture

It won't. Thwey will crash it once a REP gets involved. Mybe in 2015 and blame it on a REP Congress. They have to keep both sides beholding to the banking masters, and Pres Obola is such a fuck up, that they have to start sticking it to REPs or they lose their leverage.

Tue, 11/11/2014 - 22:49 | 5439021 cnmcdee
cnmcdee's picture

'Guccifer' the hacker says elites emails shed light on a nuclear attack on Chicago planned for 2015..

Why do I give this credit?

Because (and I have never been able to find the web reference but I remember it in detail) about a fellow dating a girl who would wake up in a trance back in 1999 and described with perfect detail the planes hitting the twin towers (which occured 2 years later.)  She then described a future event where a dirty nuke is detonated in Chicago near the Sears Tower, taking out 5 city block radius and burning the picture of 'The Farmers Daughter'  -   The entire thing will be blamed on Iran and we will proceed with a nuclear barrage of Iran the likes the world has never seen.  The half burned painting will become a iconic image played on CNN forever as well march off to war and martial law ensues.

 

Wed, 11/12/2014 - 03:33 | 5439428 Victory_Garden
Victory_Garden's picture

Yeah, heard that too. Thanks for the report. You forgot to mention that info supposedly came from the hacked bush emails.

When the bushes all fly south, it's time to duck and cover.

Nevertheless, one suddenly realizes that any story or lip-service sidestepping from the crashing dollar and planned collapse should be put into the prolly just another distraction from the shock of the planned crash of everything that is prolly coming sooner rather than later, bucket.

Meh, who cares. Got seeds?

 

Tue, 11/11/2014 - 19:11 | 5438308 TheReplacement
TheReplacement's picture

But now we can pin a number on it - $3.5ish Trillion.  That is what the ER is at right?  The Fed is out of bullets.  The TBTJ have a set amount of digital that they can throw at bonds.  Assuming $200B/qtr we can figure about four more years unless there is a need to accelerate purchasing (as we suspect there is and will be). 

Tick tock.

Tue, 11/11/2014 - 19:16 | 5438317 DavidC
DavidC's picture

Pladizow,
Given the NOTHING has been done in the meantime except to increase the amount of debt in a big way, it's more true now than it was 5 and a bit years ago.

DavidC

Tue, 11/11/2014 - 16:41 | 5437732 Q-Q-Q
Q-Q-Q's picture

When kicking the can down the road eventually you get to a dead end. I can't believe they have kept it pumped for so long.

Tue, 11/11/2014 - 20:34 | 5438619 Bangalore Equit...
Bangalore Equity Trader's picture

Listen.

Not to worry scrap aluminum cans are almost $1 US fucking Dollar a pound.

http://www.metalprices.com/p/ScrapAluminumFreeChart

Kick it bitchez!

Tue, 11/11/2014 - 17:49 | 5437743 OW My Balls
OW My Balls's picture

Thanks Nomi [for telling us shit that we already know] ~ Now do something useful & tell us how your fantasy football team is doing & who we should ADD/DROP this week.

 

Here ~ I'm gonna write a 'tell-all' book & publish it FREE for all you here on ZH to profit from...

 

Take a look at the CASINO GRID of all NFL games each week...

 

>50% of wager money on any team = PUBLIC MONEY

<50% of wager money = VEGAS/SHARP MONEY

 

Now ~ go to NFL refs and see who's officiating... If Clete Blakeman, Jerome Boger, or Carl Cheffers is on any game with >75% skew... Put your money on the side of the SHARPS [which usually means you're taking a DOG & points]... The previous INVINCIBLE team will all of a sudden develop a case of fumbles & yellow flags will rain from the heavens.

 

Alternately ~ If it's a Pittsburgh Steeler game, [where 90% of the money is on the Steelers], FADE them... Which would have won you a lot of money this past weekend vs. the Jets...

 

Pittsburgh owner [ROONEY] made his fortune running numbers & illegal gambling... Which is also why he received a special 'Ambassadorial' position by Obama after the '08 elections.

 

EDIT: Checking my own BS here...

 

I just checked with:

 

http://pregame.com/sportsbook_spy/default.aspx?sport=nfl

 

The NFL 'flexed' the Green Bay/Philadelphia game to a 4:25PM start time [you know ~ for 'television' & shit]... OMFG... Lo & behold ~ Carl Cheffers is on the flip card for that game [which means the PUBLIC, who saw Aaron Rodgers throw 116 TD passes in the first half on Sunday Night Football last week, now has to lay 5 1/2 points with Green Bay]...

 

You can't make this shit up...

 

All I can say is that if Vegas is LOSING in the 1PM games... Bet the house on Philly... Meanwhile... NOMI... Go back to polishing your nose & sticking it in rigged Treasury bullshit that nobody gives a FF about...

Tue, 11/11/2014 - 18:30 | 5438162 Dr.Vannostrand
Dr.Vannostrand's picture

Glad you are back! 

Tue, 11/11/2014 - 19:29 | 5438364 OW My Balls
OW My Balls's picture

I don't know what's fucking worse

 

Blind Martin Armstrong worshippers

Blind NomiPrins worshippers

 

JFC people ~ dig deeper.

Tue, 11/11/2014 - 20:34 | 5438624 Bangalore Equit...
Bangalore Equity Trader's picture

Listen.

Speak for yourself MF!

Tue, 11/11/2014 - 21:51 | 5438879 Super Hans
Super Hans's picture

One of the most insightful posts that I've read here on ZH in a long time. 

Glad to see more insight and less crazy!

Tue, 11/11/2014 - 16:46 | 5437769 Jonathan Equine...
Jonathan Equine Phallus's picture

Tax the Fed.

Tue, 11/11/2014 - 22:29 | 5438970 MontgomeryScott
MontgomeryScott's picture

Your statement is akin to the argument of those who wish to legalize drugs (and then tax them, thus giving some legitimacy to these errant ideas and chemicals)

FUCK the FED.

END the FUCKING FED!

BURN the motherfucker to the GROUND, then pour ACID all over it!

Capital punishment really DOES serve a purpose (the protection of those who would be victims).

Tue, 11/11/2014 - 16:45 | 5437770 NoDebt
NoDebt's picture

"They can turn that around to make a cool risk-free 2.3% by parking the money in 10-year US Treasuries. Why lend to Joe the Plumber, when the US government is providing such a great deal?"

Right.  So we're saying that's a problem then?

The Fed used to be the lender of LAST resort.  The Fed funds rate was designed to be HIGHER than the rates banks could borrow from eachother (the inter-bank lending rate).  Now it's the other way around.  The Fed has become the lender of FIRST resort.  Do you really think any bank is going to behave in a "normal" way with that structure in place?   

Putting it back the way it belongs would be painful and increasingly so the longer this goes on.  Meanwhile, the threshold of pain continues to drop.  To the point we are now where essentially NO pain would be tolerated.

End result:  the adjustment, whatever year that happens, will have only one knowable characteristic- it will be involuntary.

 

Tue, 11/11/2014 - 16:47 | 5437779 explosivo
explosivo's picture

Hegelian dialectic in action. This Prins person is playing her role like Bernie Sanders and Alex Jones are playing theirs. 

Tue, 11/11/2014 - 17:13 | 5437881 Jonathan Equine...
Jonathan Equine Phallus's picture

I'd wager a lot of money that 90% of people who freely utilize the term 'Hegelian dealiectic' never read a page of Hegel.

 

[I have - waste of time, though Philosophy of History isn't bad]

 

Prins is not playing a role.

 

Maybe you just got too lazy to be discerning, eh?

Tue, 11/11/2014 - 22:23 | 5438961 YuShun
YuShun's picture

Hegel’s Preface to the Phenomenology (e.g. Kaufmann’s translation)
is a seminal document.

 

Tue, 11/11/2014 - 19:30 | 5438371 Clowns on Acid
Clowns on Acid's picture

Explosivo diareao

Tue, 11/11/2014 - 16:49 | 5437785 Dead Man Walking
Dead Man Walking's picture

inflation is the solution

Tue, 11/11/2014 - 17:02 | 5437839 yogibear
yogibear's picture

Just wait until it triggers hyper-inflation.

Wed, 11/12/2014 - 03:55 | 5439441 Victory_Garden
Victory_Garden's picture

"inflation is the solution"

With all due respect, the simple mans simple solution is to simply make everything cost less.

Like 90% less and then the rothschilds forgive all the world debts. Every one is paid off by them to save their eternal souls after the deal is made.

Everyone is growing a garden and living more like the American Native Indians did 150 years ago in middle Turtle Island.

Love thy neighbor, as you love thyself.

Do unto others, as you would have them do unto you.

One silver dime buys a gallon of gas.

No house costs moar than ten thousand dollars.

No one is allowed to have moar than 80 millions dollars. The rest of the world money is equally divided amongst all the world's people. Every soul on board is a millionaire plantation owner.

Trade like they did in 1960. One silver dollar is one dollar, etc with each countries monetary system with special contests and awards for the most artistic engravings on silver and small gold coins to fairly trade with.

Rid the planet of all central banksters.

Get off fossil fuels.

Get off the big pharmaceutical drugs.

And much much moar could be done.

Easy peazy!

Who wants to save the planet?

 

Tue, 11/11/2014 - 16:50 | 5437786 HowardBeale
HowardBeale's picture

The big "banks" can only continue to make that zero-risk return as long as someone prints the money to pay it; and that is where the dollar will eventually die, there will be inflation of life's essentials, and alienation, starvation, and nobody's-gonna-fuck-with-my-family aggravation will set the stage for Dmitry Orlov's War Bands in the Twilight of the Oligarchs...

Tue, 11/11/2014 - 16:52 | 5437792 Dead Man Walking
Dead Man Walking's picture

The poor should just acquire assets. No problem.

Tue, 11/11/2014 - 17:46 | 5437993 Calmyourself
Calmyourself's picture

If they were smart they would start businesses ask Janet she'll tell you how...

Tue, 11/11/2014 - 22:54 | 5439040 cnmcdee
cnmcdee's picture

People don't start businesses and they definitely do not build them - didn't you hear from Hillary, GOVERNMENT starts businesses..

Tue, 11/11/2014 - 16:51 | 5437795 Rainman
Rainman's picture

Word is Madoff is pissed he gets two life terms for running only the 250th largest ponzi the world has ever seen !

Tue, 11/11/2014 - 16:54 | 5437804 RazorForex
RazorForex's picture

Don't worry about a stock market collapse, it ain't gonna happen. There will be another "9/11" type event somewhere and, well, you know the drill. Invest in anon crypto, Darkcoin etc...!

 

http://razorsforex.blogspot.com/2014/06/why-i-like-darkcoin-and-anonymou...

 

http://razorsforex.blogspot.com/2014/02/darkcoin-anonymous-cryptocurrenc...

Tue, 11/11/2014 - 16:54 | 5437807 Jack Sheet
Jack Sheet's picture

2009- collapse is imminent !

2010- collapse is imminent !

2012- collapse is imminent !

2013- collapse is imminent !

2014- collapse is imminent !

Tue, 11/11/2014 - 17:00 | 5437833 didthatreallyhappen
didthatreallyhappen's picture

collapse of your boner?

Wed, 11/12/2014 - 01:26 | 5439324 IridiumRebel
IridiumRebel's picture

It's like trying to call a heart attack on a shitty lifestyle fatfuck who smokes, drinks and eats McShit daily. He's morbidly obese but gleefully moribund to the inevitable. Everyone knows that fatfuck will have blood shooting out his nose on a rough climb of stairs one morning as his clogged aorta shits the bed. Problem is he may last to next week or next decade. It's gonna happen but nobody knows when. Until then, it's value meals, Kools and MD/20-20.

Tue, 11/11/2014 - 17:09 | 5437869 Jonathan Equine...
Jonathan Equine Phallus's picture

I advise you to buy a lot of 10 year treasuries.

 

really.

Tue, 11/11/2014 - 19:24 | 5438341 cornflakesdisease
cornflakesdisease's picture

The dollar will collapse as soon as we run out of zeros.

Tue, 11/11/2014 - 20:39 | 5438638 Bernoulli
Bernoulli's picture

Somebody said the same thing every year?

That's weird.

Tue, 11/11/2014 - 20:44 | 5438648 ekm1
ekm1's picture

Collapse has already occurred. Economy is dying due to QE.

Financial system must be partially wiped out so the collapse be reversed

 

Tue, 11/11/2014 - 22:56 | 5439047 cnmcdee
cnmcdee's picture

2015- collapse is emminent !

 - There fixed it for yah!

Tue, 11/11/2014 - 22:56 | 5439049 cnmcdee
cnmcdee's picture

2015- collapse is eminent !

 - There fixed it for yah!

Wed, 11/12/2014 - 01:57 | 5439328 Radical Marijuana
Radical Marijuana's picture

Jack Sheet, I presume that you must already know the relatively obvious:

The collapse will tend to work its way in from the periphery, and up from the bottom. For those nearer the core, and towards the top, there is no collapse ... yet ... For many who were further "outside" of the system, they have already become road kill. It tends to be young poor people, rather than rich old people, who are first crushed by any collapsing.

I REPEAT a link to 87 second video:

http://www.youtube.com/watch?v=wvcGM6maGGk

Exploding iceberg in Antarctica!

Bit by bit, the people that control the people that control the government of the USA have been hollowing the American economic system out … therefore, there must come some time in the future when that video above is a good metaphor for what finally has to happen. However, the difference is that the collapse of the American economic system is on an astronomically amplified scale, with consequences that are quite impossible to fully imagine.

(And correlations between nature going nuts,

at the same time as civilization goes crazy!)

There was very rapidly built a system of global electronic fiat money frauds, backed up by the threat of the force of atomic weapons. The collapse of a system of that ASTRONOMICAL SIZE no longer fits within any kind of common sense comprehension. Rather, we are looking at the magnification of lies, backed by violence, by trillions of times, … until the collapse into chaos of such an incomprehensible system would be psychotic breakdowns somewhere around quadrillions of times more insane than we could currently imagine.

The magnitude of the triumphs of the enforced frauds that built the currently established systems means that nobody can fully imagine what happens after the American Dollar and American Military become like flying unicorns and dragons, whose sheer preposterous unintelligibility seems the only thing still keeping them in the air ???

Tue, 11/11/2014 - 16:53 | 5437809 asscannon101
asscannon101's picture

That is one GORGEOUS headline pic...

Tue, 11/11/2014 - 16:56 | 5437822 eddiebe
eddiebe's picture

Janet is that you?

Tue, 11/11/2014 - 16:58 | 5437827 numapepi
numapepi's picture

The banks would say that all the treasuries they hold are reserves. They would argue that they are the best protected that they have ever been due to those very bonds. (Which are considered as good as cash because they are so liquid).

The problem is that everything is liquid until it is not. If some exigency came up, requiring many of the banks to draw on those reserves, they would have to sell into a market, where other banks and nations might be reticent to get deeper into. The market would become illiquid. Which of course undermines the very argument they are reserves.

Tue, 11/11/2014 - 17:26 | 5437925 Winston Churchill
Winston Churchill's picture

We had a little preview last month on the 15th of how liquid that bond market can be.

As soon as the Chinese no longer need the leverage of their UST holdings, they will

dump everything.Much sooner than you think it will be.

Lagardes mystical warning of 2014 being a year of great change still has 7 weeks to run.

Theres that seven again.

Tue, 11/11/2014 - 20:42 | 5438647 Bernoulli
Bernoulli's picture

Watch Friday 11 - 14 - 2014...

Tue, 11/11/2014 - 22:29 | 5438985 BringOnTheAsteroid
BringOnTheAsteroid's picture

You got me. Why?

Tue, 11/11/2014 - 21:48 | 5438875 Ness.
Ness.'s picture

I was going to upvote you Winston but I realized you already had seven and I'm superstitious.

Wed, 11/12/2014 - 07:46 | 5439567 Global Observer
Global Observer's picture

Banks can never become illiquid except in the short term. They can borrow as much liquidity as is needed from the Central Bank (the Fed in the US) at pre-announced lending rate (Fed Funds Rate in the US) as long as the Bank is solvent. All the claims of illquidity are leading to problems are bogus to cover up the problem of insolvency resulting from the drop in the market values of the assets they are holding. Providing liquidity to solvent banks is the primary function of the Central Bank.

Tue, 11/11/2014 - 17:02 | 5437841 trader1
Tue, 11/11/2014 - 17:07 | 5437860 Pareto
Pareto's picture

If I ever see a savings rate, say, even 4% ever again - it will be a fucking miracle.  It seems insane to me just saying that - something that would not not ever have been a consideration 20 years ago - is now the new normal.  ZIRP necessarily implies that your money is not welcome here.  How fucking far down the rabbit hole do we have to go to see the insanity of ZIRP - the destruction of the most important price mechanism on the planet?

I fucking HATE central banks - and you want to know why I hate them?  Because its bad enough I have to internalize the costs of their redistribution of wealth schemes, but, then I have to hear the bullshit eminating from political asshats who know only one thing - inflation is good, deflation is bad - but that they don't even understand what it is they are saying - and then worse, I have to hear about it from my broker(s) who barely have a high school education - that there is no other place you should be than in equities, and they look at you as if you're retarded because you're objecting to their simple linear thinking - objecting to their limited scope of understanding of ANYTHING.  Its like everything has been turned upside down - smart traded for dumb, saving and prudence traded for debt and spend, hard work traded for hardly working, "do onto others" traded for "do only onto yourself", commitment and purpose traded for indifference.

In my opinion, ZIRP is responsible for all of this "up is the new down, white is the new black, right is the new left" bullshit.

When you change money - you change everything - not just prices.  You change perceptions, attitudes, expectations, education, and you narrow the scope of innovation and possibilities and the productive incentives that follow.

Good - becomes evil.

Fuck the money changers.  END THE FUCKING FED!

Tue, 11/11/2014 - 17:44 | 5437986 explosivo
explosivo's picture

ZIRP has rotted out the entire core of the economy. Even worse is that interest rates have been artificially low for at least 20 years. There hasn't been any real capital savings and investment in a generation. That's why there is no real economy left. It's just a bunch of BS enabled by king dollar. When this thing collapses it will be worse than the Soviet Union collapse. 

Tue, 11/11/2014 - 23:03 | 5439060 cnmcdee
cnmcdee's picture

Think about this for a minute - the <ONLY> place anyone can  make <ANY> money is to be forced into the stock market...

  - what happens next year when the stock market collapses?  Don't think it will happen - we are in a Shemitah year and it has predicted with 100% accuracy ALL depressions and major recessions.  It has never missed.

So.  When the markets collapses in 2015 to some extent and fashion - where will the people go with what money they have left when everything is falling in value??

 - The answer is Gold.  Physical Bullion..

 - Gold will skyrocket in price simply because it is a hedge against a collapsing currency and collapsing asset values.  It is a independent 'currency' of sorts and they <can't print it!>  When you realize this you will realize <why> they have beaten it down so hard for so long - because had it taken root it would of upended the entire fiat federal reserve BS!!  So they naked shorted the certificates 100:1 against physical to drive down price. Why else are we running out of it in the face of world wide record demand..

 - Ironically they are making sure that nobody can get physical inside the border by deliberately running out of it - selling it to China and Russia.  They didn't plan that not!

Tue, 11/11/2014 - 17:11 | 5437875 Everybodys All ...
Everybodys All American's picture

These banks have to continue the charade on the new issuance every month and thereby month after month raising their margins and risks on these treasury bonds. This will not likely end well if one or more of the participants goes rogue or simply fails for whatever reason and is a forced seller. This sets up the same type of margin collapse in the markets of 29 that eventually caused the Great Depression.

Tue, 11/11/2014 - 17:17 | 5437893 Yen Cross
Yen Cross's picture

  Well, now we know where those excess reserve drawdowns at the Fed. are going.

Tue, 11/11/2014 - 17:36 | 5437955 huggy_in_london
huggy_in_london's picture

Cue the inflation.  It'll come now as the reserves are drawn down

Tue, 11/11/2014 - 17:19 | 5437896 buzzsaw99
buzzsaw99's picture

at least if they're buying treasurys we won't have to bail them out for that portion of their books

Tue, 11/11/2014 - 17:23 | 5437900 JustObserving
JustObserving's picture

This will end very badly with probably a depression followed by a major war.

What a well-written, well-argued expose of the sham that our land has become - Yet, our political-financial system has gone from the dysfunctional to the failed to the surreal.

Tue, 11/11/2014 - 17:23 | 5437907 SillySalesmanQu...
SillySalesmanQuestion's picture

Wow, one really does turn into a "hog at the trough" after working at GS.

Tue, 11/11/2014 - 17:24 | 5437915 Randy Goodnight
Randy Goodnight's picture

OT - Hey, when's the Ferguson grand jury verdict expected?  I'm feeling somethings going down soon.  Don't hear a thing in the media.

Tyler . . .you ready?

Tue, 11/11/2014 - 17:32 | 5437941 Winston Churchill
Winston Churchill's picture

Looks like today or tomorrow.

All quiet on the ebola front, too quiet, as they say in the cheesey westerns.

Tue, 11/11/2014 - 17:43 | 5437985 10mm
10mm's picture

Letting that Artic shit settle in. Riots in cold work in England maybe.

Tue, 11/11/2014 - 17:42 | 5437975 taketheredpill
taketheredpill's picture

 

 

Banks are buying Treasuries because they know that 

 

1) QE is dine and Fed can't do any more and;

 

2) When Equities do the Wyl-E-Coyote thang investors will be begging to buy 30-year bonds at 2%.

 

 

Tue, 11/11/2014 - 17:47 | 5437998 GreatUncle
GreatUncle's picture

Don't care no more ... why?

I train for war ... says it all really that is all my life became courtesy of UK gov never rest even at my age.

Now we wait because eventually it will happen, come on banksters kick off it will one day anyway.

Most will question the above statements I do not because in real terms even if I was hedging with gold (not enough I goad the bastards).

Tue, 11/11/2014 - 17:53 | 5438017 mayhem_korner
mayhem_korner's picture

 

 

The Fed is the apex of the Ponzi, the TBTF are the next ring down.  Guess who the bagholders sitting at the bottom are?

Tue, 11/11/2014 - 18:14 | 5438092 Fuku Ben
Fuku Ben's picture

What a coincidence the Black Cube on Nomi's website matches the color of her eyes

Tue, 11/11/2014 - 18:18 | 5438105 Rentier88
Rentier88's picture

Zzzz same doom and gloom for years...call me when you start seeing 2nd and 3rd tier countries tanking into chaos then you'll know it is getting soon to coming here in the US.  The weak chips will fall first and the hardest.

Tue, 11/11/2014 - 18:33 | 5438170 Temerity Trader
Temerity Trader's picture

Once again a naïve writer pens the same useless crap about “when” the Fed pulls back and rates rise. LMFAO! Rates will NEVER rise, the Fed will NEVER quit doing moar QE, and the government will NEVER quit deficit spending. This IS the ‘New Normal’, accept it! With every passing day the Fed bankers are more convinced their policies are the only thing preventing collapse. The multitudes worship them as gods. They have channel $5 TRILLION into the pockets of billionaires, millionaires and the average Joe’s 401K.

 

They cannot stop now, and we are never going back to the good ‘ol days. Get over it.  If they need to create more $ Trillions to facilitate more stock buybacks to move the markets higher, or write off student loans, or fund consumer and government spending, they WILL do it.  The bankers see deflation as their enemy and know that loose credit will usually create inflation.

To assume the Fed will one day stop and let it all fall apart is foolish. How can they?  Our cities would burn and they would be blamed. They will continue to provide implicit and explicit market guarantees; they have to. If faith in Fed ends and the markets tumble, the party is over forever.  Low paying jobs supplemented by EBT cards, ten year auto loans, easy credit, a new I-Phone every month, etc, are all part of the New Normal.  You can profit from the Fed handouts or fight it, and get a lot poorer.

Tue, 11/11/2014 - 18:48 | 5438229 In.Sip.ient
In.Sip.ient's picture

Most of America's cities are already a shambles

courtesy of these genius policies.

 

By the time this all blows up what exactly will be

left to "burn"???

 

 

Tue, 11/11/2014 - 19:20 | 5438327 cornflakesdisease
cornflakesdisease's picture

The currency?

Tue, 11/11/2014 - 21:56 | 5438893 Ness.
Ness.'s picture

This isn't jeopardy.  You don't have to answer in the form of a question.  The answer is... the currency! ;)

Tue, 11/11/2014 - 19:19 | 5438326 Clowns on Acid
Clowns on Acid's picture

For a little while....longer they are in control. The reset will be what ...war with Russia? That should be an economic boost right? talk about a broken window policy... 

Tue, 11/11/2014 - 18:35 | 5438181 Quaderratic Probing
Quaderratic Probing's picture

We raise tier1 requirement they have to buy bonds, once bought rates have to be pushed down for the life of the bond.

Go borrow some money and buy something

 

Tue, 11/11/2014 - 18:43 | 5438208 petedanels
petedanels's picture

I feel like these markets will rip everybody's head off when and only when there's enough complacency, save a black swan event.  

Tue, 11/11/2014 - 19:10 | 5438303 Raging Debate
Raging Debate's picture

A lot of ZH's were correct. Keep hedging but also make hay while the sun still shines. You want to come out the other side with some seed corn. The best hedge is health. If you are moderate of habits and exercise you will likely survive and regrow through anything. Keep helping your fellow man with an ear to understand.

Tue, 11/11/2014 - 20:37 | 5438635 fibonacci's claus
fibonacci&#039;s claus's picture

banks haven't even propped up the labor market in their own industry"............. 

priceless statement.

why not?

this is the revolution that has not been televised.

 

BASAL BOND!!!  

Tue, 11/11/2014 - 20:41 | 5438644 Baphod Zeeblebrox
Baphod Zeeblebrox's picture

the pot said to the kettle

Tue, 11/11/2014 - 20:43 | 5438651 JailBanksters
JailBanksters's picture

Order from Kaos, that's when you loose Control and Kaos takes over.

Welcome to the New World Order, their will be Order and it will be New World.

Banks already rule the World but the majority of people still think politicians do, the New World Order I don't think there will be a difference between a Bank and Politicians.

We can't and should not allow this to happen, if each country just whacked one banker per day they can be stopped. Somebody has to live next door one of them.

Tue, 11/11/2014 - 23:32 | 5439138 Bear
Bear's picture

In Europe this has already happened ... no one can tell ECB execs from EU execs 

Tue, 11/11/2014 - 20:57 | 5438682 khakuda
khakuda's picture

If I hear another so-called liberal/democrat/champion of the little guy say that zero rates and money printing has helped the little guy I am going to scream.  As for the NY Times and other liberal media, fuck them, too.  Instead of calling the Fed out on the impoverishment, debt slavery scheme for the middle class while they continue to enrich the well off, there has been almost no criticism.

I was stunned when I saw a stat that the average small pickup truck cost $23,000 in 2008 and now costs $32,000.  At first I was like, "How the fuck have the auto companies pulled that off in a tough economy?"  Then, it dawned on me that the almost non existent finance charges allowed by ZIRP and the extended tenor of the average loan allowed them to sell people a more expensive truck (by taking on more debt, of course) by keeping the average monthly payment flat.

There is no way this doesn't blow up in an epic way at some point downt the line.  Last time I saw a market like this, with almost no down days, was in the late 1990s.

Tue, 11/11/2014 - 21:01 | 5438704 SocialismIsCancer
SocialismIsCancer's picture

BINGO !!! I just completed a study of car dealer sales tactics - they have pushed the sales pirates through intensive slick training programs intended to max out the buyer's loan payment potential, pushing buyers to ignore the total cost of vehicle plus orgy of options added and instead just focus on the "affordable payments" to "get what you really want". They are real scumbags now. I buy all my vehicles from commercial truck sales - no slick deceitful manipulative sales tactics.

Tue, 11/11/2014 - 21:58 | 5438898 Super Hans
Super Hans's picture

Used car dealers are now placing GPS on vehicles sold to people with bad credit, to facilitate the inevitable repo.

Tue, 11/11/2014 - 20:58 | 5438690 eucalyptus
eucalyptus's picture

I'd let Nomi sit on my face as the world collapsed.

Tue, 11/11/2014 - 22:30 | 5438979 WTFUD
WTFUD's picture

@ eucalyptus What if it was the 2nd day of her cycle? Would you say ' fuck it ' i'm still going in?

Tue, 11/11/2014 - 21:07 | 5438717 SocialismIsCancer
SocialismIsCancer's picture

Another socialist parasite & thief trying to distract victims away from the real perpetrators & benefactors by blaming the bankers. The simple blatantly obvious reality is that ZIRP is TERRIBLE for banks because net interest margins, THE basis of ther profits, are at record lows, AND the BIGGEST beneficiaries of ZIRP are the Congress & the Treasury, which are issuing endless trillions of debt, and getting it all bought at record high prices and record low interest rates.

This author should be tarred and feathered, at a minimum.

Tue, 11/11/2014 - 22:56 | 5439044 Atticus Finch
Atticus Finch's picture

Actually, ZIRP is extremely beneficial to the banks. Any significant rise in interest rates would blow up the entire derivatives edifice controlled by these banks.

Tue, 11/11/2014 - 21:09 | 5438722 Atomizer
Atomizer's picture

One simple way of circling the wagons to restore the Constitutional Laws. Know your enemies. 

1) you can place such pressures on them, they'll run themselves into bankruptcy because they will no longer be able to pay off security payroll. 

2) connect with the Web of fraud. All the names and interlocking can be found. It only takes a sunny day and a magnifying glass to kill a insect. 

http://www.muckety.com/Query

Get busy..

Tue, 11/11/2014 - 21:12 | 5438735 MalteseFalcon
MalteseFalcon's picture

There will have to be some force external to the US "system" for things to change.  It is clear there will be no reform or change in course from within the system.

Or the US military will save the system by acting on other "players".

Tue, 11/11/2014 - 21:13 | 5438741 himaroid
himaroid's picture

If you look at that picture through a glass of tequila,

she looks pretty good with those hot red lips.

Tue, 11/11/2014 - 21:21 | 5438771 Notsobadwlad
Notsobadwlad's picture

I suppose that the whole problem of how to exit from the faux economy would be resolved if a 600 ft high wall of water instantly engulfed the coasts of this world.

Can you envision Lloyd Blankfein as Noah 2.0? Me neither.

Tue, 11/11/2014 - 21:26 | 5438793 Catullus
Catullus's picture

I don't really see the point he's making. So in place of the fed purchasing treasuries, a group of 10 banks picked up the slack. But the fed was buying bonds from those 10 banks during QE. Now they're not. So those 10 banks retain the bonds they would have otherwise sold in the QE auctions.

Duh?

Ok. So the fed holds these bonds. The treasury pays interest on them. This is recorded as profit and remitted back to the treasury. You've monetized the debt over time. THAT is why QE has ended. The interest payments on government debt is remitted back to the government in the form of revenues. It's like double buying the bond. You paid for the bond and exchanged someone else's leverage for cash. And now all interest gets cashed back to govt.

This is the bigger point: QE 2, Twist, a and QE3 were a complete waste. The fed just monetized good collateral

Tue, 11/11/2014 - 22:27 | 5438972 Ness.
Ness.'s picture

Our economy is based on credit. 

Courtesy of the FedRev of Philly website.

http://www.philadelphiafed.org/consumer-resources/publications/what-your...

 


Tue, 11/11/2014 - 21:47 | 5438868 cwwang
cwwang's picture

Why do I need a former Goldman banker to tell us this?  Isn't the whole darn Zerohedge blog is dedicated to this topic?

Tue, 11/11/2014 - 21:56 | 5438892 Smooth Criminal
Smooth Criminal's picture

I appreciate these types of articles as they definitey illustrate how truly fucked things have become, however we have been hearing the same shit since 2008.  I'm not debating the facts presented nor that the financial system is irrevocably broken, however I am getting sick and tired of hearing that the end is near.  I would never have imagined it would have lasted this long, but alas, here we are.  Bottom line, we are not "members of the club" and when the collapse happens we will just have to respond to the best of our abilities. 

Sorry for the rant, but how many more fucking "insiders" are going to spill the beans and nothing ever fucking changes or transpires.

Tue, 11/11/2014 - 22:03 | 5438910 Creepy A. Cracker
Creepy A. Cracker's picture

Seriously.  WAY too many "the sky is falling... but not for another two days from now" articles.

Tue, 11/11/2014 - 22:48 | 5439018 bardot63
bardot63's picture

It is changing and it is collapsing.  You just haven't read that in a big headline on the front page yet.  And you won't, even as it happens.  If you are waiting on mass media to tell you what's going on, this is what you'll get:

       WORLD ENDS TOMORROW IN DISASTROUS CALAMITY

             Women and Minorities to be Most Affected

 

Tue, 11/11/2014 - 22:24 | 5438907 Creepy A. Cracker
Creepy A. Cracker's picture

All of this depressing talk about the next depression has me depressed...

Tue, 11/11/2014 - 22:08 | 5438924 AdvancingTime
AdvancingTime's picture

Surreal is a good word to describe the current farce masquerading as an economy. The authorities are acting primarily to prop up governments as well as the economy by saving the financial system. It is important to remember these authorities are politicians and bureaucrats that want increased power and influence, and guess what, they may have hit the jackpot.

Those in power have joined with the banks to create the "Financial-Political Complex" that promotes the current financial policy and supports banks that are "to big to fail". More on this unholy union in the article below.

http://brucewilds.blogspot.com/2012/10/the-financial-political-complex.html

Tue, 11/11/2014 - 22:29 | 5438977 AdvancingTime
AdvancingTime's picture

Part of the end game might be what is sometime described as a liquidity trap where the economic efficiency of credit is beginning to collapse and the additional money poured into the system coupled with lower rates can no longer drive the economy forward.  When this happens we are at the end game.

At some point the return on loaning money is simply not worth the risk!  Why do you want to loan money if most likely you will never be repaid or repaid with something that is totally worthless? When this happens the only safe place to store wealth will be in "tangible assets" and the only lenders will be those who print the money that nobody wants.

The collapse of credit can pose major problems such as what we saw when many sellers were forced to demand payment up front before shipping goods in 2008. More on this subject below.

http://brucewilds.blogspot.com/2014/06/the-economic-efficiency-of-credit-can.html

Tue, 11/11/2014 - 23:34 | 5439052 chindit13
chindit13's picture

As QE wound down, who picked up the slack (and kept rates steady)?

---China maintains about the same purchase profile, primarily using the Belgium account set up after Geithner granted them Primary Dealer status…China’s UST holdings remain near the all-time high (no impact)

---Banks riding the curve by using deposits to purchase USTs (slight impact)

---Japanese institutions re-allocating in the wake of Abenomics and the collapsing yen (impact)

---Banks slowly drawing down “Excess Reserves” held at the Fed (impact)

---Russian Oligarchs fleeing Putinbombics and the collapsing ruble (impact)

---Eurobanks and institutions moving out of the EUR (impact)

These moves need not be either ordered or orchestrated, as each party has an incentive to buy, some to earn money, others to protect pre-existing positions.  Rates rise when one or more of these parties change course or run out of money.

Let it breathe.  It’s not over yet.

 

Tue, 11/11/2014 - 23:15 | 5439100 razorthin
razorthin's picture

I've been saying that the taper was a big lie!  It had to be.  And here is your proof.

Wed, 11/12/2014 - 00:24 | 5439233 earleflorida
earleflorida's picture

The path to isolation via the "AMERO" ,is where America's heading?

Obama's, Immigration-Reform' regarding Mexico is right on schedule with the USSA having at least a 15-20% Latino population (documented/ undocumented) by 2020.

The training of a Amer/Mex underground army had begun years ago-- now solidifying. There will be a coup d`etat of Mex/Amer trained mercinaries changing the corrupt government and annexing it to the USSA with full citizenship for all Mexican's. The deposed government will gladly except USA terms as will the USA except Mexico's terms.

Canada is already in the fold with France and Britain unable to augur any endorsement from the non-existent EU!?! 

Since, the beginning of WWII and the birth of Communist China and the USSR, America realized its timeline would be shortened as a superpower. Just as France and the British succumbed to the cost of globalizaion and were no longer global powers with america taking the reigns. But, as history dictates[?] less than a century later we are 'fighting'[?]for our very survival, ready and willing to hand over the baton of this       reincarnated Potemkin [Cremia?] Village, this pyrrhic victory, as the world yawns?... this moronic, ironic fa[d]ted, jaded... destiny?!?

'The Amero Conspiracy of 2025'

http://forextrading.about.com/od/forexhistory/a/amero_conspiracy.htm

jmo

 

 

 

 

 

Wed, 11/12/2014 - 00:31 | 5439248 Esculent 69
Esculent 69's picture

Not really OT but found these two things intersting in the overall discussion of economic collapse.

First i found an old Turd post that, when some sort of tech analysis was possible, it was amazing to see the manipulation.  Plus the accuracy of Turd's predictions are quite note worthy. 

http://www.tfmetalsreport.com/blog/3520/literally-sick-my-stomach

Second is a reminder of how we really got here and how all of this has been a smoke screen to cover up the real issue facing the world and this country. Listen to Kanjorski as he describes the real nature of the events that took place.  Not to metion the conspiratorial aspect of his dates he sites.  

http://www.youtube.com/watch?v=pD8viQ_DhS4&feature=related

He says it was around Sept 15 08, which was a Monday and the day Lehman "oficially" declared bankruptcy.  He then say on Thursday, which if that week would've been Sept 18, 2008, that there was a drawn down of money market claims to the toon of $500 billion and would've resulted in a loss of $5.5 TRILLION.  

This was the suspension of the desposits that actually took place on Sept 11 2008 the following week when the Fed knew Lehman was bankrupt. 

On June 30, 2008, money market mutual funds had total assets of $3.3 trillion of assets. Among these assets, money market mutual funds held $701 billion of commercial paper, or about 40 percent of all commercial paper outstanding. “Breaking the buck” at the Reserve Primary Fund caused investors to question unnecessarily the soundness of other money market mutual funds.

Irrational runs on money market mutual funds began. For the week ending on Wednesday September 17, 2008, investors redeemed $145 billion from their money market mutual funds. On Thursday September 18, 2008, institutional money managers sought to redeem another $500 billion, but Secretary Paulson intervened directly with these managers to dissuade them from demanding redemptions.

http://www.jec.senate.gov/republicans/public/?a=Files.Serve&File_id=7372...

Edit - Forgot to mention that Kanjorski ends that clip by saying, "somebody threw us ( the united states) in the middle of  the atlantic ocean. and we're trying to determine the closest shore and if we can swim that far. We just don't know. "

 

Wed, 11/12/2014 - 01:44 | 5439336 aquarian1
aquarian1's picture

We all have always known that the Fed is owned by the banks and its actions have always been and will always be for the benefit of the banks.

Where has Nomi been?

Why would politicians talk about something they can't change and aren't interested in changing? They have been bought with campaign contributions from corps which include banks. Are are interested only in benefiting the corporations and will always be.

Where has Nomi been?

 

Wed, 11/12/2014 - 07:06 | 5439543 geekz_rule
geekz_rule's picture

monopoly was always the true goal. I can only laugh out loud at the "socialist" shrieks.

its pretty simple kids. P < P + I

that was all that was needed to set this game in motion. a centruy later.. we near its completion.

aint no saving it either.

Wed, 11/12/2014 - 08:13 | 5439596 EemieMeanieMinieMoe
EemieMeanieMinieMoe's picture

Endeavor to persevere.... https://www.youtube.com/watch?v=rsL6mKxtOlQ

Do NOT follow this link or you will be banned from the site!