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"These Are Astonishing Figures, Evidence Of A 1930s-Style Depression"

Tyler Durden's picture




 

Just a few numbers, courtesy of the Telegraph's Ambrose-Evans Pritchard:

Barnaby Martin, [Bank of America]'s European credit chief, said world asset markets may face a stress test as the US Federal Reserve starts to tighten afters year of largesse. “Our biggest worry is the end of the liquidity cycle. The Fed is done and it is preparing to raise rates. The reach for yield that we have seen since 2009 is going into reverse”, he said. 

 

Mr Martin flagged warnings by William Dudley, the head of the New York Fed, that the US authorities had tightened too gently in 2004 and might do better to adopt the strategy of 1994 when they raised rates fast and hard, sending tremors through global bond markets.

 

Bank of America said quantitative easing in Europe and Japan will cover just 35pc of the global stimulus lost as the Fed pulls back, creating a treacherous hiatus for markets. It warned that the full effect of Fed tapering had yet to be felt. From now on the markets cannot expected to be rescued every time there is a squall. “The threshold for the Fed to return to QE will be high. This is why we believe we are entering a phase in which bad news will be bad news and volatility will likely rise,” it said.

 

What is clear is that the world has become addicted to central bank stimulus. Bank of America said 56pc of global GDP is currently supported by zero interest rates, and so are 83pc of the free-floating equities on global bourses. Half of all government bonds in the world yield less that 1pc. Roughly 1.4bn people are experiencing negative rates in one form or another.

 

These are astonishing figures, evidence of a 1930s-style depression, albeit one that is still contained. Nobody knows what will happen as the Fed tries break out of the stimulus trap, including Fed officials themselves.

Or, as we showed it recently and far more simply, this:

And in other news, everyone is now bullish because for some inexplicable reason the "experts" continue to mistake the world's biggest equity bubble with the underlying economy.

 

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Wed, 12/10/2014 - 10:43 | 5536239 LawsofPhysics
LawsofPhysics's picture

Correct.  We have not be "saved from a depression", but rather, the Fed has done a fine job of simply hiding it (and enriching the 1% 400-fold in the process).

 

"Success" in the modern, progressive, world of finance.

Wed, 12/10/2014 - 10:51 | 5536283 GetZeeGold
GetZeeGold's picture

 

 

Fed has done a fine job of simply hiding it

 

EBTs have been a good crutch......but they can only do so much.

Wed, 12/10/2014 - 11:02 | 5536339 economics9698
economics9698's picture

The Fed did the same thing in the 1930's with the monetary base.  Keep the rich top 0.01% awash in cash and impoverish the peasants.

 

MB/GDP on FRED for those interested. 

Wed, 12/10/2014 - 11:10 | 5536365 John Law Lives
John Law Lives's picture

Graph: Gross Domestic Product/St. Louis Adjusted Monetary Base

http://research.stlouisfed.org/fred2/graph/?g=9wK

The site does allow for swapping the numerator and denominator to produce the inverse of this chart (i.e. MB/GDP).  It is alarming.

Wed, 12/10/2014 - 11:10 | 5536385 wolfnipplechips
wolfnipplechips's picture

We de-stimulized some folks.

Wed, 12/10/2014 - 11:26 | 5536447 Alea Iactaest
Alea Iactaest's picture

Thanks for the suggestion, economics9698, and thanks for the link John Law Lives. Eye opening, indeed.

(I sometimes wonder what the Fed does with the analytics generated by the searches and graphs people run off the FRED database. There must be a paper somewhere.)

Wed, 12/10/2014 - 12:23 | 5536675 nink
nink's picture

economic rectal feeding

Wed, 12/10/2014 - 12:51 | 5536795 Franklin Hatchett
Franklin Hatchett's picture

Could someone kindly elaborate on the significance of the chart given by John Law? I'm a little confused as to it's meaning. 

Wed, 12/10/2014 - 13:14 | 5536870 Crisismode
Crisismode's picture

 

 

"When I use a chart,' Humpty Dumpty said in rather a scornful tone, 'it means just what I choose it to mean — neither more nor less."

Wed, 12/10/2014 - 13:49 | 5536968 Colonel Klink
Colonel Klink's picture

OT: But yeah.....Republicans fully fund Zerocare and Amnesty.

http://www.cnsnews.com/news/article/terence-p-jeffrey/gop-cuts-spending-...

Wed, 12/10/2014 - 18:22 | 5538215 Jumbotron
Jumbotron's picture

Well of course.

It wouldn't be FASCISM if only one party participated.

Wed, 12/10/2014 - 14:22 | 5537108 JohnG
JohnG's picture

 

 

The graph shows the horrifying extent of the fed's money printing.  In 1981, GDP was over 22 times the monetary base, now it is 5.  Said differently the currency emitted is backed up by 1/4 the productive capacity of the country currently than was the case in 1981.  Or how much overstated the GDP is in relation to bullshit CPI statistics.

I think it's even worse than the graph shows becuase of understated price inflation resulting in nonsense GDP "growth" that never really occurred.

 

Wed, 12/10/2014 - 14:53 | 5537221 economics9698
economics9698's picture

I like John's explanation above. 

To put it layman’s terms the Fed knows exactly what it is doing, it has done it before.  The Fed understands the gravity of the situation and the importance of keeping the rich in cash, and to keep widening the distance of the rich and the rest of us.  This ensures regime support from the people who count and will allow the privileged to buy assets for pennies on the dollar when the crash does come.

In the past hard economic times and exploitation by the government and Federal Reserve were forgotten because of WWII. 

One of four paths, austerity, not happening, inflation, we already have, it will get worse, bankruptcy, the best choice, not happening with this regime, war.

War is the preferred outcome for the sociopaths because it diverts almost 100% of the public’s attention away from the source of the exploitation.  The rich ... really do not care who wins the war.  If the USA lost they would pack up and move to a new host nation.  Money and power over millions of preasants is job #1.

Wed, 12/10/2014 - 11:35 | 5536494 Ms. Erable
Ms. Erable's picture

Does 'creating a treacherous hiatus for markets'  mean that public companies might have to do things (such as produce something of value or turn a non-adjusted profit) to justify their high valuations?

The horror!

Wed, 12/10/2014 - 12:42 | 5536753 GetZeeGold
GetZeeGold's picture

 

 

It's all coming along nicely now...

Wed, 12/10/2014 - 13:41 | 5536949 yrad
yrad's picture

“Ruled as unsuspicious”

 

Cus this happens all the time!

Wed, 12/10/2014 - 11:50 | 5536540 Mercuryquicksilver
Mercuryquicksilver's picture

JLL and Economics, thanks for making a relevant comment and link. Learned something new today.

Wed, 12/10/2014 - 11:02 | 5536345 eclectic syncretist
eclectic syncretist's picture

Wallstreet can now pull the carpet out from under nations feet at it's leisure.

Wed, 12/10/2014 - 11:04 | 5536350 economics9698
economics9698's picture

As long as people believe in their fiat.  When the fiat dies the ropes come out.

Wed, 12/10/2014 - 11:17 | 5536409 eclectic syncretist
eclectic syncretist's picture

I have a question, with a long intro, so please be patient.  Remember that companies have been using secured loans from banksters to buy back their shares?

http://www.zerohedge.com/news/2014-07-08/stock-buyback-shocker-companies...

And that companies are compounding this by using most of their profits to also buy their own shares?

http://www.zerohedge.com/news/2014-10-06/why-stocks-just-wont-drop-compa...

And this is all still going on?

http://www.zerohedge.com/news/2014-12-08/q3-buybacks-surging-these-are-t...

WHO IS SELLING THEM ALL THIS STOCK?  (ABOUT 1 TRILLION WORTH OVER THE LAST THREE YEARS)

WHAT IF WALL STREET IS LENDING THEM THE MONEY TO BUY BACK THEIR STOCK,....AND SELLING THEM THE STOCK TOO?  WHAT WOULD BE THE MOST LIKELY OUTCOME?

Wed, 12/10/2014 - 11:36 | 5536496 FreeNewEnergy
FreeNewEnergy's picture

OK, I'll take a shot at this, since it's something I've pondered recently.

The companies are buying their own stock back from investors. They could be hedge funds, the Fed, mutual funds, mom and pop, banks (they hold lots of shares, and I think that is your point). The problem I see coming is that these companies have to pay back what they borrowed, and, if they aren't wildly profitable, they will have to begin selling the very stock they bought.

I've always thought stock buybacks were bad decisions, and connotes a failure of management to utilize capital in it's most effective manner.

Since these companies have been buying their own stocks at near all-time highs, once they begin to panic, and start selling the stock they bought at $80, for $70, or worse, it will spread and crimp earnings in a very big way.

In other words, the only way stock buybacks are any good is if your stock keeps rising. If your stock falls, yo look like an idiot and have endangered the existence of the company.

That's the way I see it, and why I eventually see a major market crash as the only possible outcome from all the free money and wild speculation of the past six years.

Wed, 12/10/2014 - 11:47 | 5536508 LawsofPhysics
LawsofPhysics's picture

"If your stock falls, yo look like an idiot and have endangered the existence of the company."  ---

Correct and in a functioning market you would lose your job and wealth to pay back the creditors.

You would then join the ranks of the unemployed, at least until you proved yourself again (which a truly smart person would).

Remember, "no risk no reward" right?

this is also why we now have so many idiots in powerful positions.

Wed, 12/10/2014 - 12:42 | 5536756 pods
pods's picture

Since we transitioned to Nerf Capitalism everyone has fun but nobody gets hurt.

pods

Wed, 12/10/2014 - 13:51 | 5536986 LawsofPhysics
LawsofPhysics's picture

"Nerf Capitalism"  --  Copyright this immediately!!!!!

Wed, 12/10/2014 - 14:06 | 5537052 Almost Solvent
Almost Solvent's picture

"nobody gets hurt"

 

:) - depends on what nobody means!

Wed, 12/10/2014 - 14:13 | 5537080 pods
pods's picture

Nobody=the 99%.

pods

Wed, 12/10/2014 - 15:28 | 5537350 rbg81
rbg81's picture

Tightening my arse.  

Anyone who thinks rates are rising is smoking something  Falling rates are  a 30+ year trend -- and it is happening for a reason: to finance the growth of the Entitlement State.  And the Entitement State is GROWING, not shrinking.  Therefore, I expect rates to continue to fall and go negative.  Because raping savers is the only way the Entitlement State can keep afloat at this point.

So things will continue to distort.  Capitalism as we know it is toast.  It was probably toast inn 1997 when the big bailouts started.

Wed, 12/10/2014 - 12:21 | 5536666 Jethro
Jethro's picture

That's pretty much how I see this too, and the reason why the stock market keeps climbing, and why fundamentals no longer matter.  It's no longer about mom & pop investors, but about the illusion "investing" in the stock market.  The banks/companies can't afford a loss because it will most likely bankrupt them due to leveraged bets, and the government is almost certainly complicit (along with their media puppets) in keeping the plebes in the dark.

Wed, 12/10/2014 - 14:34 | 5537160 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Of course they borrow at zero % and buy their stock back, thinking they would stop is like asking a lion to turn vegetarian. They can't and they won't and it's not really their fault. The fault lies with the people running the currency.

Wed, 12/10/2014 - 11:49 | 5536535 Notsobadwlad
Notsobadwlad's picture

It would be interesting to see the correlation between buybacks and insider selling and buybacks and major shareholders. All of this information is available after the fact but someone would have to do the grunt work of collecting the data from a site such as nasdaq.com and running the correlations.

Wed, 12/10/2014 - 11:56 | 5536563 Farqued Up
Farqued Up's picture

Just damn! I do believe you are on their trail.

Wed, 12/10/2014 - 12:21 | 5536669 piceridu
piceridu's picture

Isn't that the GM/GMAC model...or to be more precise, the US retail model?

Wed, 12/10/2014 - 12:23 | 5536677 nakki
nakki's picture

Here is what I think is happening. Companies buy back stock through cheap money bonds or profits. Banks sell stocks that they have in these corporations and buy bonds knowing that when stocks eventually get hammered they can just print FED money to buy stocks. If companies go bankrupt bond holders get first dibs on assets. Eventually banks own everything, or should I say THE BANK owns everything. What the FED has done is allow bubbles to form knowing this. Its a win, win for the people that own the currency. There is no risk at all.

Wed, 12/10/2014 - 13:00 | 5536812 eclectic syncretist
eclectic syncretist's picture

I would tend to agree with you here.  The bailed-out TBTexist banksters had insider information on when QE would kick in, and they bought distressed shares at the bottom in 2008-2009, and have been conniving to get companies to buy this stock back from them now that prices have recovered.  When they have distributed (sold short) all the shares they can they will simply stop lending to the companies (higher interest rates would accomplish this in a most ingenious way), and crash the market.  Many of these companies will then be owned by the banksters, who will only have to figure out how to avoid jail time (duh, bribes), or an angry populace (somewhat more delicate and risky, but offering up lower-level scapegoats is a time-tested option).

Where the hell is Matt Tiabi or that Flash Boys guy on this latest round of fraud?

Wed, 12/10/2014 - 12:58 | 5536813 eclectic syncretist
eclectic syncretist's picture

DP

Wed, 12/10/2014 - 17:29 | 5537983 tumblemore
tumblemore's picture

It's like Weimar. They either engineer situations where the banking mafia get to own *everything* or their behavior inevitably leads to economic busts and in the process of making sure they get bailed out every time - through bribing TPTB - they have money when everyone else is selling at fire sale prices so it ends up the same way.

 

Wed, 12/10/2014 - 12:26 | 5536690 NotApplicable
NotApplicable's picture

Who's selling? Pensions and every other retirement fund that has to liquidate in order to meet obligations.

Wed, 12/10/2014 - 13:50 | 5536985 corporatewhore
corporatewhore's picture

Interesting that you mention pensions.  Just saw on the news they've reached a deal to essentially "gut" pensions in order to keep the government running--multi state.  Obviously not gutting any govt critter pensions.  So now someone with 33 years and a 3k pension will have to deal with the new reality of seeing their promised benefits reduced.

Your promised job--reduced.  Your promised pension--reduced.  Your savings--reduced.  Your home value--reduced.  Your gas prices--reduced.  Food stamps--reduced (well, maybe on that one --will take some time to get through)  Unemployment reduced (done).

Deflation is rearing its ugly effects slowly but surely.

Wed, 12/10/2014 - 17:33 | 5537994 tumblemore
tumblemore's picture

If it's all going down I think they'd want to steal all the pension money first before they crash house prices (and buy them all at rock bottom prices) as they can steal the pension money by stealth.

Wed, 12/10/2014 - 13:52 | 5536990 gatorengineer
gatorengineer's picture

The answer in part is this is just taken out of the liquidity of the market.  Appl buying 40Billion in stock sounds like a lot, but its 5% of the float no big deal.

What happens is the price rises, EPS rise, etc...

What will be interesting is when any of the companies who have bought the stock have to sell it to raise cash.... IBM is likely first in this bucket.

Wed, 12/10/2014 - 15:30 | 5537362 Shizzmoney
Shizzmoney's picture

Its not so much the EBT, more like the DJIA and S&P debt fueled bubble which has helped fuel this faux unemployment.

Corporate debt has never been bigger; its even bigger than govt debt, and we don't even know how deep the rabbit hole goes because of shadow accounting.

Therefore, we have a bunch of newly created low-wage jobs with no sense of security.  And eventually, the bubble pops.  

Since Japan is the model, it might take some time.  Like 10 years.  But there will be serious blips; oil is one.  Q4 in 2015 will be another, IMO.

Wed, 12/10/2014 - 17:35 | 5538014 tumblemore
tumblemore's picture

Japan has a much more cohesive society though so that might effect the time scale.

 

Wed, 12/10/2014 - 10:52 | 5536288 ejmoosa
ejmoosa's picture

Hide, Extended, and Worsened. 

Wed, 12/10/2014 - 11:02 | 5536347 unplugged
unplugged's picture

the best slave is the slave that doesn't know he's a slave

Wed, 12/10/2014 - 12:01 | 5536588 Farqued Up
Farqued Up's picture

Like the slow boiled frog.

Wed, 12/10/2014 - 12:03 | 5536590 froze25
froze25's picture

And when they find out they are gonna be PISSED!  I guess that is why they are working so hard to get the guns away from the "slaves".

Wed, 12/10/2014 - 14:02 | 5537038 SeattleBruce
SeattleBruce's picture

Those of us who've taken the red pill (woken up to reality), need to keep working on the underground railroad to free the other slaves.

Wed, 12/10/2014 - 17:36 | 5538016 tumblemore
tumblemore's picture

and to get the various different ethnic groups fighting each other

Wed, 12/10/2014 - 12:48 | 5536784 Last of the Mid...
Last of the Middle Class's picture

Done since the Roman times, Bread and circus economy, steal all you can then throw bread to the few who would upset the apple cart to keep them quiet, such things as ebt cards and such. Never has a level playing field been such state sponsored propaganda.

Wed, 12/10/2014 - 14:26 | 5537137 NEOSERF
NEOSERF's picture

Or "let them eat cake" in historical parlance

Wed, 12/10/2014 - 14:43 | 5537186 luckylongshot
luckylongshot's picture

1n 2008 when the public stopped spending the Fed took over and started spending on behalf of the public. While this delayed the collapse in effect all it has done is  make the hole the conomy is falling into deeper and this will make the crash harder when it occurs. That most economists could not see this inevitable train wreck coming is shocking.   

Wed, 12/10/2014 - 10:44 | 5536240 jubber
jubber's picture

They can't raise rates.

Wed, 12/10/2014 - 10:51 | 5536275 Headbanger
Headbanger's picture

Oh they sure can

But they won't collect any.

Wed, 12/10/2014 - 10:53 | 5536295 GetZeeGold
GetZeeGold's picture

 

 

We can always commit suicide later.....let's not go there.

Wed, 12/10/2014 - 10:54 | 5536307 ejmoosa
ejmoosa's picture

Absolutely they can.

Newsflash:  The markets could set the rates just fine.  

Gas prices have fallen and risen and fallen again rather dramatically.  Guess what?  We never ran out of fuel.  Things rebalanced themselves accordingly.

The Fed's sstting rates helps to protect the losers and their malinvestments during the last bubble.

 

Wed, 12/10/2014 - 11:06 | 5536357 ShorTed
ShorTed's picture

The Fed's sstting rates helps to protect the losers and their malinvestments during the last bubble.

 

100% correct, and as long as the banks own the Fed, rates will stay low to benefit the banksters and their .01% cronies.

Wed, 12/10/2014 - 11:22 | 5536422 LawsofPhysics
LawsofPhysics's picture

Yep.  precisely why rates will not rise.

Wed, 12/10/2014 - 11:08 | 5536367 LawsofPhysics
LawsofPhysics's picture

Bullshit.  Raise rates then and stop jawboning already.

In addition, where's my billion dollar loan at 0.25%?

moral hazard is a real bitch.

Wed, 12/10/2014 - 18:46 | 5536314 Dick Buttkiss
Dick Buttkiss's picture

"They can't raise rates."

So they won't, with a deflationary debt collapse to follow, then a helicopter drop — no, a fleet of these: https://c2.staticflickr.com/4/3378/3489301967_eb20954cd1.jpg — that makes QE look like child's play, and voila . . .

http://lh5.ggpht.com/_hVOW2U7K4-M/S2Z1C5BbjaI/AAAAAAABPcA/rmewKg-jluU/s7...

Wed, 12/10/2014 - 10:59 | 5536315 eishund
eishund's picture

"They can't raise rates."

Damn. U beat me to it.

Wed, 12/10/2014 - 11:16 | 5536404 Everybodys All ...
Everybodys All American's picture

They are getting to or at the point now where they are damned if they do and damned if they don't. If they want to destroy the dollar they will continue on this current path. I don't think that is the choice the Fed will choose. So get ready for another big economic downturn in the economy and as ekm1 has been saying triple Lehman.

Wed, 12/10/2014 - 17:41 | 5538032 tumblemore
tumblemore's picture

If they transfer enough toxic mortgage debt from the banks to the public for the banks to survive raising the rates then they'll crank the rates high, crash house prices and then buy the whole lot up at fire sale prices.

 

Weimar 2.0 (except this time with added diversity so people will be too busy fighting each other to notice them slipping away to Shanghai with their loot).

Wed, 12/10/2014 - 10:44 | 5536242 ekm1
ekm1's picture

As I've been saying over and over and over.

 

De-dollarization in process automatically leads to a 1930s world of de-globalization in process, hence depression due to less world trade.

 

This depression is a gift from bank lobby. Only Pentagon in alliance with Saudi Arabia can solve the problem, and they will.

Wed, 12/10/2014 - 10:46 | 5536250 LawsofPhysics
LawsofPhysics's picture

Bullshit.  American will get the shaft along with the U.N. and N.A.T.O.

 

It was good while it lasted, the demographics of the world are what they are.

Tell us what bank you work for already.

Wed, 12/10/2014 - 10:48 | 5536254 ekm1
ekm1's picture

mechanical engineer

 

US empire has a long way to go. Pentagon junta coming up again, same as in the 60s and 70s

Wed, 12/10/2014 - 10:50 | 5536264 LawsofPhysics
LawsofPhysics's picture

Then stop spouting such garbage.  You know damn well that that which cannot be sustained, won't be.

The Fed will keep increasing their balance sheet until the dollar and all dollar-denominated assets (including debt) blows up.

Again, the demographics of the earth is what it is.

Wed, 12/10/2014 - 10:55 | 5536303 Headbanger
Headbanger's picture

Too late!

And the M.E. above should know PV = nRT and YOU CAN'T PUSH A STRING! (unless it's frozen)

 

Wed, 12/10/2014 - 10:57 | 5536324 GetZeeGold
GetZeeGold's picture

 

 

(unless it's frozen)

 

Hold on.....I have an idea.

Wed, 12/10/2014 - 11:15 | 5536396 A Nanny Moose
A Nanny Moose's picture

Oh dear. Everybody have their fire extinguishers ready?

Wed, 12/10/2014 - 14:16 | 5537091 Almost Solvent
Almost Solvent's picture

I know TEPCO is building one already, but how about another giant ICE WALL!

Thu, 12/11/2014 - 16:07 | 5541344 mkkby
mkkby's picture

@LawPhys:

Stop worrying about the dollar.  Everybody else is in even worse shape.  When Italy, France, Japan and the UK "go Greece" and recover -- then, and only then, is the dollar in trouble.

The dollar and US markets are still the flight to quality, in relative terms which is all that matters.

Wed, 12/10/2014 - 11:16 | 5536403 BandGap
BandGap's picture

That's Chem E., not M.E.

E=MC^2 is where this is heading.

 

Wed, 12/10/2014 - 11:41 | 5536503 HelluvaEngineer
HelluvaEngineer's picture

No, he was right.  A large portion of a real ME curriculum is fluid dynamics and heat transfer.

Wed, 12/10/2014 - 11:02 | 5536344 unplugged
unplugged's picture

correct -and per plan - which is to blow up the dollar and impose the new global currency/global totalitariasm/fascism

Wed, 12/10/2014 - 12:40 | 5536746 TheReplacement
TheReplacement's picture

All he's saying is there is a lot more that can be done on the military side of the balance sheet to hold off the end, not that the end won't come.

 

Edit:  Read more of his posts.  My bad.

Wed, 12/10/2014 - 10:53 | 5536286 Usurious
Usurious's picture

ekm, banksters/tankers are one and the same......your premise is incorrect

Wed, 12/10/2014 - 10:54 | 5536305 ekm1
ekm1's picture

No they are not and it is not a premise. It is reality.

They have never been the same.

Military always looks for lobbies to hire in order to manage the booty they bring in. That is world history, from Rome to British empire to USA.

Wed, 12/10/2014 - 11:46 | 5536522 Usurious
Usurious's picture

one does not exist without the other............

Wed, 12/10/2014 - 12:34 | 5536718 NotApplicable
NotApplicable's picture

"It is reality."

That one statement sums up every single down-vote you get on this site. You're so absolutely sure your opinion is reality that you cannot help but to be wrong, as you blind yourself to any and all alternatives.

For an engineer, you sure have a lot of trouble with logic. Especially given the false constraints you place upon it.

You seem to miss the fact that central banks "infinite checkbooks" are a far more powerful weapon than any held by the military.

Wed, 12/10/2014 - 12:46 | 5536777 ekm1
ekm1's picture

You don't understand how non-commodity money is created. Just by typing up on computers.

Military no longer needs bank lobby. They will hire new clerks to type up on computers creating money.

 

Oil lobby will manage the economy again now, not bank lobby

Wed, 12/10/2014 - 19:07 | 5538406 scaleindependent
scaleindependent's picture

EKM,

 

Why doe focus on banksters vs pentagoons?  Are they not Janus?

I mean, what difference does it matter who  you get raped and pillaged by?

The Pentagoons are no better than the banksters. Just look at Irak war mongering, or the recent revelations on CIA torture.  Do you prefer the NSA?

So basically I am asking why so much focus on the Pentagoons if it is all the same?

Wed, 12/10/2014 - 19:59 | 5538643 ekm1
ekm1's picture

Not the same because bankers have nothing. They only have computers to type up numbers on. Anybody can do that.

Wed, 12/10/2014 - 12:47 | 5536778 pods
pods's picture

ekm, military is now the enforcement arm of the banks. 

Way back when a military would plunder a conquered people. That was when specie made the world go round.  Now they conquer and bring in pallets of FRNs.

New paradigm.

pods

Wed, 12/10/2014 - 13:47 | 5536972 ekm1
ekm1's picture

The paradigm never changed.

Any oligarch needs to pay military for loyalty.

 

It will never change, particularly now that money is created by typing up on computers.

No need for bank lobby. 

Wed, 12/10/2014 - 16:20 | 5537366 pods
pods's picture

No need for bank lobby?

Who do you think creates the money?

Banks and government are married.

Government prints IOU, FED deposits it and gives FRNs, government pays military.

You could be correct in your insinuation (banks versus MIC) if either of these two situations existed:

1.  Currency was specie. (It's not)

2. Government issues currency (It doesn't)

pods

Wed, 12/10/2014 - 20:00 | 5538651 ekm1
ekm1's picture

no special skills needed to type up numbers on computers.

Bank lobby is not needed

Wed, 12/10/2014 - 17:47 | 5538056 tumblemore
tumblemore's picture

You're right there's never been any *need* for the banking mafia at all. It's all a scam. The key point though is belief. You'd need a) the MIC to understand that the banking mafia are destroying America and b) that they understand what a scam it all is and how Wall St. and the Fed and unecessary parasites.

 

I think the first is quite possible but the second takes the average person years to get your head around and so I wonder if there's time.

 

 

Wed, 12/10/2014 - 20:06 | 5538669 emersonreturn
emersonreturn's picture

ekm1, yesterday when i was trying not to watch the CIA casino, it occured to me that perhaps you may be right, and that obama and the bankers are trying to throw the military under the bus, and distance themselves in the mind's of the voters that they had nothing to do with any of the evil.  even though obviously every administration since roosevelt has been completely linked.

Wed, 12/10/2014 - 14:00 | 5537024 Bastiat
Bastiat's picture

They take (or "borrow" or "safekeep") the gold too.

Wed, 12/10/2014 - 11:07 | 5536359 lunaticfringe
lunaticfringe's picture

Do engineering students still have to take English classes in college?

Wed, 12/10/2014 - 11:28 | 5536463 Suisse
Suisse's picture

Yes.

Wed, 12/10/2014 - 11:58 | 5536570 HelluvaEngineer
HelluvaEngineer's picture

Yes, with an emfasis on mispeling common words.

Wed, 12/10/2014 - 12:48 | 5536783 BidnessMan
BidnessMan's picture

George P. Burdell says rite on...

Wed, 12/10/2014 - 10:48 | 5536267 BandGap
BandGap's picture

We'll all get the shaft. The only parameters yet to be decided are how long and how hard a shaft.

 

Wed, 12/10/2014 - 10:55 | 5536311 ejmoosa
ejmoosa's picture

If the UN gets the shaft, at least we got something out of it.

Wed, 12/10/2014 - 10:48 | 5536265 geekz_rule
geekz_rule's picture

hes right about de-dollarization, just wrong thinking that there is a plan to reverse it. SA and Pentagon will NOT be saving this.

thre is NO messiah, no invisible man in the sky, no one riding in on a white horse tosave any one.

us is toast, thats the plan, that will be the plan, that is the result

Wed, 12/10/2014 - 11:35 | 5536480 Alea Iactaest
Alea Iactaest's picture

Say he's wrong. Say he's dead-ass wrong. But do the thought exercise anyway. Let's pretend that Saudi Arabia gets the Pentagon going and they stir up a little action that -- by happenstance -- leads to increased demand for oil and reduced supply. (And I can think of a few very easy ways this could occur.)

First, consider whether there are any parties that would like to see this happen. As a matter of fact there are many. Next, consider the possible outcomes and the likely winners and losers.

I'm not saying this will occur. But it's nonsense to apply a 0% probability.

 

PS - Why so little commentary about Israel making a run into Syria last weekend? Who is really pulling the strings in the ME?

Wed, 12/10/2014 - 12:09 | 5536619 Jethro
Jethro's picture

Israel/SA benefit directly from an unstable Syria.  Plenty of Jihadis travel from all over the world to go die in Syria, and Israel/SA don't have to really lift a finger.  All the work is beeing done by both the Assad regime and whomever is fighting against the Assad regime.  Israel/SA can cheer for both sides and maintain status quo.

If Israel/SA/Gulf States fund ISIS, then they have some amount of influence over the Jihadis.  Whoever provides the least funding gets the most blowback in the form of terrorist attacks.  Buts this only lasts as long as ISIS is dependent on external material/cash flow. 

For ISIS to attack Iran right now would be pretty stupid...even for a goat/boy-violating jihadi.  While fundamentalist Sunnis hate Shi'ites with a passion, I'd wager that they aren't willing to commit their resources to attacking Iran until they can effectively control their own boundaries/resources yet. 

Wed, 12/10/2014 - 10:54 | 5536302 Stoploss
Stoploss's picture

Uh, bud.  The US military has thrown in the towel.   Saudi's are about to be on their own.

ISIS bearing down on their ass right now.

Wed, 12/10/2014 - 10:58 | 5536325 ekm1
ekm1's picture

Saudis can destroy isis in one week by bombing indiscriminately, unlike US air force which cannot bomb on children.

 

Isis is attacking Iran's border right now making Khamenei shit in his pants and sending air force to bomb isis inside iraq.

Nobody will stop isis as long as they do that

Wed, 12/10/2014 - 11:31 | 5536473 conscious being
conscious being's picture

If you haven't jumped the shark already, that was it right there.

Wed, 12/10/2014 - 12:50 | 5536792 pods
pods's picture

It wasn't Fonz jumping the shark that was the problem, it was the nutters he was wearing. Only Magnum could pull off wearing nutters.

Speaking of Fonz, Merry Christmas to you and yours if you are still knocking around!

pods

Wed, 12/10/2014 - 11:44 | 5536513 Spanky
Spanky's picture

USAF can't (or won't) bomb children (indiscriminately)?

What are you smoking? There's a small mountain of evidence, both historic and recent, that says otherwise.

Wed, 12/10/2014 - 18:14 | 5538182 Meat Hammer
Meat Hammer's picture

unlike US air force which cannot bomb on children

Uh....WHAT?!?!?!

Go home, ekm...you're drunk.

Wed, 12/10/2014 - 11:12 | 5536393 MaxMax
MaxMax's picture

Short history lesson: World War II revived the economy of the USA.  After the war, much of Europe and Japan's manufacturing base was destroyed while the USA still had all their factories.  That powered tremendous growth in the USA for a long time.  Now we have over capacity all around the world and lots of countries have nukes.  Not so easy to have a world war now.

Also, if the FED raises rates, they kill what is left of the economy.  They are trapped.

 

Wed, 12/10/2014 - 11:33 | 5536476 _disengage_
_disengage_'s picture

WW2 saved us. Keep repeating it until we WANT WW3. For the children and the economy.

Wed, 12/10/2014 - 11:41 | 5536482 John Law Lives
John Law Lives's picture

"Now we have over capacity all around the world and lots of countries have nukes. Not so easy to have a world war now." - MadMax

Excellent point, MadMax.  General Kevin P. Chilton, the head of the US Strategic Command from 2007 to 2011, reportedly stated in 2010 that, “Throughout the 65-year history of nuclear weapons, no nuclear power has been conquered or even put at risk of conquest.”

Waging a world war these days... might not prove too stimulative to the economy.

Wed, 12/10/2014 - 18:19 | 5538200 Meat Hammer
Meat Hammer's picture

Also, if the FED raises rates, they kill what is left of the economy. 

They kill what is left of the serfs' economy.  Their economy, where they inflate asset prices and then get a tap on the shoulder so they can get out early before it collapses, convert to cash, and buy everything back at pennies on the dollar, will always exist.

Wed, 12/10/2014 - 11:36 | 5536487 ejmoosa
ejmoosa's picture

The US military has not thrown in the towel.

In fact, militaries across the planet will be the final step towards economic recovery. 

First, they will demand lots of materials to prepare for war.

Then they will destroy much of the infrastructure that is not needed.

Then that infrastructure will need to be rebuilt.

We need destruction of excess resources as well.

That will stop this deflation monster in it's tracks.

What better way to stop the deflating oil prices than to take Saudi Arabia off the market entirely?

 

Wed, 12/10/2014 - 12:19 | 5536644 LawsofPhysics
LawsofPhysics's picture

Your scenario can only happen if the calories are available for all that destruction and rebuild.

Unfortunately, they are not.

The first to use tactical nukes effectively will be the "victor", in so much as there is a victory to be had..

Wed, 12/10/2014 - 13:43 | 5536954 TheReplacement
TheReplacement's picture

The key is to have wars that don't involve nuclear powers opposing each other actively.  As long as we can pull off Iraqs/Syrias/Ukraines there is hope for change!

Wed, 12/10/2014 - 14:04 | 5537041 Bastiat
Bastiat's picture

Krugman, is that you?

Wed, 12/10/2014 - 11:13 | 5536395 nuubee
nuubee's picture

Saudi Arabia's decision to keep pumping is actually a huge F**-U to the United States. No one says this, but it's the damn truth.

Wed, 12/10/2014 - 12:28 | 5536694 ekm1
ekm1's picture

No. It is done in coordination with pentagon to harm iran and russia

Wed, 12/10/2014 - 14:11 | 5537067 viahj
viahj's picture

don't forget Venezuela

Wed, 12/10/2014 - 12:33 | 5536709 Spanky
Spanky's picture

Perhaps...

But it also could be possible that SA is acting on behalf of the USA to punish Russia, Iran, Venezuela... The financial carnage in the oil patch is merely a side effect (and perhaps a useful one if the majors want to acquire independents at an attractive price). 

On the other hand, if this really is a f*** you from SA to the USA, SA is hurting its own immediate interest (if their budget break-even is ~$90/bbl and actual production cost is ~$30/bbl) in an effort to maintain market share (thus future price control) as their fields deplete...

Why do this now if the pain also falls on themselves in both the short term (increased budget pressure) and long term (greater depletion at a lower price) when they could simply cut production to maintain higher prices?

Surely they realize shale oil's production profile is not a long term threat... The tar sands? Or are they defending their petro-dollar reserves (not to mention the petro-dollar itself) from a Russian-Chinese energy alliance denominated in rubles and yuan by attempting to break the Russian economy in concert with US and EU sanctions?

Wed, 12/10/2014 - 13:45 | 5536962 TheReplacement
TheReplacement's picture

Perhaps any of those.  Perhaps SA is preparing to switch sides (for China?) or any of a series of strategies. China sure seems to be benefitting.  Not sure who else really is (short term). 

Wed, 12/10/2014 - 15:11 | 5537287 Spanky
Spanky's picture

Again, perhaps...

But just consider the fate of other nations attempting to break away from the petro-dollar... Iraq and Libya both immediately spring to mind.

Russia, however, is no push over and has nuclear weapons. I doubt the Russian-Chinese oil and gas deal was reached in the few short weeks after the US and EU decided to implement sanctions -- this was a long planned deal in the works (and of course the US knew about it). Ukraine is merely a pretext, but while US/EU sanctions alone had a relatively small effect, it did accelerate the deal's consummation (China most likely got some concessions).

Since oil prices have dropped, however, the ruble (and thus the Russian economy) has begun a serious downward spiral. So much so that Putin recently called for the repatriation of (ill-gotten) rubles (~125B) from overseas with promises of complete amnesty.

Point is, the US strategic imperative, the neocon version at least, is to dominate Russia financially (and therefore politically) and control China via domination of its energy supplies while maintaining the petro-dollar's reserve currency status. The Russian-Chinese energy deal threatens that imperative and it would be best to "solve" this problem before Russia is able to implement further de-dollarization measures (esp. an alternative international payments system).

But US bankers and politicians are not suicidal -- direct military confrontation with Russia is not desirable. Thus the USA's minions, the EU and SA were called in to do our dirty work -- financial and economic warfare -- even if it goes against their best interests...

Wed, 12/10/2014 - 20:30 | 5538742 emersonreturn
emersonreturn's picture

spanky, cleanly thought through with a ring of quite possibly. 

Wed, 12/10/2014 - 17:52 | 5538080 tumblemore
tumblemore's picture

The Saudis are working with the neocons in the US stste dept. The neocons in the state dept. don't care about the US.

Wed, 12/10/2014 - 10:46 | 5536249 Dr. Richard Head
Dr. Richard Head's picture

In the world of Central Bankers equity markets are the economy - the economy of deception and perception of the common man.  "If stawks are high, shit must be goin' right in this here world." 

Wed, 12/10/2014 - 10:47 | 5536257 geekz_rule
geekz_rule's picture

expand expand expand -> BOOM! CONTRACT!

P < P + I

Wed, 12/10/2014 - 10:46 | 5536258 BandGap
BandGap's picture

It's like feeling sorry for an alcoholic. In the end you have to realize they did it to themselves and they are the only ones who can get themselves out.....or not.

Wed, 12/10/2014 - 11:09 | 5536382 bbq on whitehou...
bbq on whitehouse lawn's picture

Alcoholics are locked in a brewery.

Wed, 12/10/2014 - 12:14 | 5536645 Mike in GA
Mike in GA's picture

that's sure suicide

Wed, 12/10/2014 - 13:38 | 5536942 I woke up
I woke up's picture

And Farva can't drink himself out of the vat of beer

Wed, 12/10/2014 - 14:26 | 5537132 Almost Solvent
Almost Solvent's picture

Chicken fucker!

Wed, 12/10/2014 - 14:39 | 5537173 ersatz007
ersatz007's picture

"It's like feeling sorry for an alcoholic. In the end you have to realize they did it to themselves..."

true - but alcoholics take down a lot of the folks nearby in the process...it's not about NOT feeling sorry, it's about detaching from the stuff/people that can hurt you.

Wed, 12/10/2014 - 10:46 | 5536259 Doubleguns
Doubleguns's picture

Only Pentagon in alliance with Saudi Arabia can solve the problem, and they will.

 

Now that is a frightening prediction!!!

Wed, 12/10/2014 - 11:05 | 5536355 gladih8r
gladih8r's picture

Only Pentagon in alliance with Saudi Arabia can solve the problem, and they will.

The Pentagon crew may TRY to solve the problem but they'll only make it worse for everyone.

And it will all be done while prominently waving the US flag in everyone's face.....

Wed, 12/10/2014 - 10:47 | 5536260 Oh regional Indian
Oh regional Indian's picture

No Shit Sherlock...

Seriously...NSS....we've been here since 2000, Sherlock...

oooh, look, history rhymes, oh wait, it's being made to rhyme, poor banks, they tighten, they loosen, they tighten, they loosen, just like the anal sphincters they are...

Ease loan standards, tighten loan standards, more sphincter behaviour...

Another dust bowl coming, they should probably be putting nets on all those wall street high rises right about now...

Such a farce....

Wed, 12/10/2014 - 10:50 | 5536268 adr
adr's picture

The idea is that if it doesn't look like a depression, then there isn't a depression.

Just like if we don't talk about Ebola or report on it. Then nobody has Ebola.

I'm sure if you ignore the giant cancerous growth, then you don't have cancer.

 

Can we call it the green bag economy?

Boy the economic numbers are ugly. 

No problem, just green bag it and concentrate on the shower of freshly printed bills. Now you can go to town and enjoy yourself.

Wed, 12/10/2014 - 10:57 | 5536316 ejmoosa
ejmoosa's picture

You mean like we have hidden the soup lines behind the EBT cards and the homeless behiind Section 8 housing?

Hidden in plain sight.

Wed, 12/10/2014 - 11:36 | 5536492 conscious being
conscious being's picture

Somehow, the facts of Bldg.#7 have eluded the majority of the population, while hidden in plain sight.

Wed, 12/10/2014 - 10:49 | 5536270 ABG LINE
ABG LINE's picture

We astonished some folks.

Wed, 12/10/2014 - 10:50 | 5536272 q99x2
q99x2's picture

Pretty amazing that nobody has stopped the theft.

Wed, 12/10/2014 - 12:02 | 5536595 Kprime
Kprime's picture

you didn't steal that, it takes a village

Wed, 12/10/2014 - 21:32 | 5538903 WmMcK
WmMcK's picture

It takes a pillage.

Wed, 12/10/2014 - 13:11 | 5536854 Peterus
Peterus's picture

Why would you ever go and stop something? Or even go and try talking people into stopping something? In this day and age you're supposed to ask your government wirte a law to stop it. That's how problems are solved.

Wed, 12/10/2014 - 10:52 | 5536279 Incubus
Incubus's picture

WE GREATEST-DEPRESSIONED SOME FOLKS

Wed, 12/10/2014 - 10:51 | 5536284 Panic Mode
Panic Mode's picture

Looks pretty much the same as Madoff fund's chart.

Wed, 12/10/2014 - 10:53 | 5536287 geekz_rule
geekz_rule's picture

lmao .. theres a serial junker in the house...

Wed, 12/10/2014 - 10:52 | 5536290 THE DORK OF CORK
THE DORK OF CORK's picture

GDP growth matters for corporates.

It is obviously extractive of real purchasing power.

GDP in Ireland is shooting up while wages ( the mechanism to access purchasing power for most) continues to crash.

The instability is a result of the 101 policies of wealth concentration by so called generalised financial capital.

 

Wed, 12/10/2014 - 10:58 | 5536328 ejmoosa
ejmoosa's picture

GDP growth does NOT matter for corporates.

Profit growth matters.

Double the GDP growth and halve the profit growth and you are no better off today than you were a year ago.

 

Wed, 12/10/2014 - 11:16 | 5536387 THE DORK OF CORK
THE DORK OF CORK's picture

Activity / GDP growth is the act of chasing after scarce money in the modern market state economy.

How does pointless hamster wheel activity benefit the person.

Its simply capitalism going through its final absurd ( but deadly) stages of wealth concentration.

 

"Investment "post Tudor times is simply about concentrating wealth claims.

It has nothing to do with wealth really.

Within the national capitalistic monopoly you appeared to be doing better but that could only be achieved via a externalization of costs via war and colonisation.

The mask has been lifted during these strange market state times and it sure Ain't a pretty picture.

Wed, 12/10/2014 - 11:23 | 5536436 LawsofPhysics
LawsofPhysics's picture

Please, when an increasing amount of your "GDP" is simply paper pushing, you can manipulate the shit out of your GDP by simply creating more paper claims out of thin air and pushing them around.

GDP is fucking meaningless.

Wed, 12/10/2014 - 11:37 | 5536499 conscious being
conscious being's picture

Hookers and blow.

Wed, 12/10/2014 - 11:56 | 5536557 THE DORK OF CORK
THE DORK OF CORK's picture

GDP is not meaningless , it is however pointless ( for most)

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