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Chart Of The Week: European "Fear And Loathing" Hits Record $1.3 Trillion

Tyler Durden's picture


The topic of the European "Ice-nine"phenomenon is nothing new to regular Zero Hedge readers: every day we point out the increasing freeze in European interbank lending (in both the traditional and shadow formats), in various money markets, in commercial paper, in broad fixed income issuance, and in the overall collapse in market liquidity, so deftly masked for now by daily political and central bank rhetoric, which for all its market kneejerk reaction glory is merely unsubstantiated innuendo and lies - keep in mind that the last time the incoherent and disorganized Troika came to an actual decision was July 21, with the second Greek bailout, and even that has not yet been implemented! So while hopes still percolates faintly on the surface, the riptide just below it has grown to record proportions. Presenting the chart that everyone who has an opinion on Europe, one way or the other, has to see. Here, courtesy of Diapason's Sean Corrigan, is the epic "Fear and Loathing" in the European banking system, in all its $1.3 trillion glory, or nearly double where it was when Lehman filed for bankruptcy. Banks may say they trust each other, they may promise the system is viable, they may even submit bogus (if increasing) Libor indications to the collusive organization that is the BBA, but the truth is, in vivid color, presented below. Never before have European banks parked as much of their hard earned cash with the only two remaining pillars of "stability", the Fed and the ECB. And with Dexia about to be nationalized, and an unpredictable, and highly contagious, waterfall chain of events about to be unleashed on Europe all over again, will the worst case scenario transpire and the ECB's credibility be swept away? If so, prepare for all the money in the world to funnel into the binary number-based safety deposit box located in the servers of 33 Liberty street. Then the two ultimate questions become: how long before the Fed's own viability is questioned by the global vigilantes (who have finally started asking the right questions), and who will bail out the central bank tasked with bailing out the world?

Source: Diapason


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Sat, 10/08/2011 - 10:55 | 1752786 misterc
misterc's picture

Merkel & Sarkozy meeting scheduled tomorrow.
I wonder what the markets will do on monday if they don't come up with some magic trick on 5 pm (just in time for production of the evening news on TV).

Sat, 10/08/2011 - 11:43 | 1752862 DormRoom
DormRoom's picture

Germany is going to exit.


Here's the logic: 


If fiscal uninon -> crisis is averted -> optimizing group (EZ) benefit.


Merkel & German mandarins: "No fiscal union"


Therefore: Not trying to optimize group benefit.

C2: Trying to optimize individual benefit.

QED: German exit.


p.s.  The US can use war with China as a bailout.   If they win the war, they can force China to pay war reparations, thereby forfeiting the debt.  It's one reason why Nazi Germany lashed out @ Europe.


conspiracy theory  #1: US alledges drone & predator hacking attacks by Chinese.  First step in war escalation.


Sat, 10/08/2011 - 11:48 | 1752888 Pinto Currency
Pinto Currency's picture



At its core, the problem is a debt bubble that has been blown by central banks worldwide over the last 15 years in Europe, North America, China, and the U.K.  It is not strictly a European problem when we look at the fact that there is $50 trillion of total debt outstanding in the U.S. (Federal, state, municipal, corporate and consumer) 


See this excellent summary of the extent of the problem by Kyle Bass.


We need immediate debt write-down and currency reform in North America (read: gold and silve backed money) or we will see chaos. 


For total US debt level see:

Sat, 10/08/2011 - 11:49 | 1752902 max2205
max2205's picture

Isn't the spike related to the worthless QE that banks got that they parked at the Fed cause the fed is paying them. It's just money that just shouldn't have been created in the first place

Different this time?

Sat, 10/08/2011 - 15:26 | 1753258 Pinto Currency
Pinto Currency's picture

So much for the "millionaire's tax"


It will cover the deficit for a few months.

Sat, 10/08/2011 - 16:34 | 1753345 knukles
knukles's picture

But its so populistly politically correct.  And any Big Wage Earner subject thereto should be very happy with it.  OK, they've taken their pound of flesh from me (The thought being; I got away cheap, after all I do earn over $1,000,000, so I fucking pay another $50k, BFD) now go bitch. piss and moan to/about somebody else.  Look elsewhere, I've given more than my fair share to UncleShyster.

Sat, 10/08/2011 - 21:22 | 1753774 Ned Zeppelin
Ned Zeppelin's picture

The rich in America need to pay more - they're the only ones who can afford to, and by far the only ones who have benefited greatly from the Fed's and govt rescue programs funded directly or indirectly (via the low rates that have stolen untold billions from savers). But they deserve to have in place a US budget that does not "blow" their taxes on horseshit. 

Sun, 10/09/2011 - 07:10 | 1754289 mick_richfield
mick_richfield's picture

I'm not rich, and I vote that the rich should not pay more taxes.  Certainly not because they have benefited from the federal 'government's' 'rescue' packages.

I vote that the federal 'government' should be prevented from enacting 'rescue' programs, should return to a pre-1913 tax policy, should roll back its world-wide empire, dismantle the foreign money power called the Federal Reserve (one name, two lies), and above all must be prevented from creating 'money' at will and forcing Americans to use it.

Their help doesn't help, their care doesn't care, their schools do not educate, their rescues are murder, their social engineering is genocide.


Sat, 10/08/2011 - 16:18 | 1753312 Pinto Currency
Pinto Currency's picture





The increase in debt really accelerated starting in the mid 1990s.


At that time, the central bank gold leasing scheme acclerated as well as Comex futures market interventions and the re-writing of the CPI to hide consumer goods inflation (Boskin-Greenspan work) was effected.  Also at that  same time, Robert Rubin started yodelling about a strong-dollar policy.


Then came the Nasdaq bubble.


Here's a total debt vs gdp graph:


Sat, 10/08/2011 - 17:33 | 1753427 css1971
css1971's picture

I'm sure I saw a Martenson chart whcih showed that the debt was increasing at a constant percentage per unit time with very high fit to an exponential curve. It only looks like it started accelerating in the 90s because that's the way it's plotted on the chart.

i.e. It started in the mid 1960s, then blew the US monetary system in 1971 and kept on going.

Sat, 10/08/2011 - 19:13 | 1753556 Pinto Currency
Pinto Currency's picture



But there is the problem - you cannot increase the money stock to infinity.  Especially when the money supply (annual growth of the money stock) greatly exceeds the real growth of the economy.


Here we can see that real economic growth was declining (when factoring-in the monkeying with the CPI index that occurred) while they just kept ramping the money supply.  That works until it explodes.

Sat, 10/08/2011 - 11:50 | 1752903 trav7777
trav7777's picture

no, the problem is an entire system built on an unabated 400 year Era of Growth that cannot accomodate the fact that growth has stopped.

We have reached a new period in human events here and the systems built around extracting a vig on growth are unviable.

Sat, 10/08/2011 - 11:58 | 1752920 DormRoom
DormRoom's picture

We were getting growth from misallocation of capital.  But eventually the economy has to adjust,  and purge the excesses of over investment during the boom time, whether by deflation, or new innovation.


The era of growth hasn't ended.  It only seems to have ended because we're in an adjustment period from the Debt bubble/Greenspan's Great Moderation.

Sat, 10/08/2011 - 12:06 | 1752944 centerline
centerline's picture


Wrong.  You can google many different sites regarding population growth.  When done with that, google stuff on bacterial growth... as it is likely the best proxy for the outcome.  This is all about resources.  Economies are nothing more than dogma.  Growth therein is an illusion.  Smoke and mirrors.  The carrot on the stick to keep the hamsters on the wheel.

Sat, 10/08/2011 - 12:56 | 1753020 decon
decon's picture

Yep, this economic shit is just a sideshow.  The main event is the fact that our little yeast colony is starting to bump up against the sides of the petri dish.

Sat, 10/08/2011 - 13:32 | 1753065 lincolnsteffens
lincolnsteffens's picture

Capt. Wolf Larsen in "The Sea Wolf" by Jack London said "We are all just foaming yeast...." and essentially elaborated with a similar reasoning as you. "...yeast colony is starting to bump up against the sides of the petri dish." Each organism trying to get that last remaining bit off sustenance to survive and procreate.

Sun, 10/09/2011 - 12:27 | 1753257 Pinto Currency
Pinto Currency's picture




Your comments fit into the stuff happens, nobody could have done anything category.  That is not so.


Humans have through the ages been infinitely adaptable and, as prices rise, they have learned to adapt and  consume less.


Our ongoing and accelerating crash is not a crash from overconsumption but instead one spurred by rigging markets (gold and interest rates) and blowing bubbles until they collapse using central banks/fiat money as the core bubble generator.

Sat, 10/08/2011 - 13:40 | 1753079 tmosley
tmosley's picture

ITT people who know nothing about microbiology try and fail at making microbiology metaphors.

Here's a hint--when you grow bacteria, there are several phases to the growth.  The first is the exponential phase, where planktonic growth is, you guessed it, exponential.  During this time, the bacteria begin colonizing surfaces, exuding substances that allow them to live there with greatly reduced need for nutrients.  They then enter a stationary phase, where growth stops.  They don't die (not en mass, at least), but rather they all settle into the biofilm.  In this form, they are able to take in the small amount of nutrient available and remain alive for a very long time, until a new source of food comes around, at which point they take in the greater amount of nutrient and begin sloughing off to go out and colonize other areas.

To those who don't understand what happened, the bacteria accumulated capital and used it to survive.  The bacteria did not need forever exponentially increasing resources to stay alive.  They continued to grow, but more slowly, and based on accumulated capital, not nutrient pumped out of the ground.  This happens naturally, as a result of signalling between bacteria and as a direct effect of lesser amounts of nutrients.  No high priest of bacterial death required, no need for mass sterilization programs.  Just simple economic decisions made by individuals having an emergent positive effect on the entire population.

The neat thing is that unlike bacteria, we can seek out our own new energy sources.  But some of the scum don't want to hear about that.

Sat, 10/08/2011 - 13:53 | 1753101 centerline
centerline's picture

And your point is?

IMO, we are entering our own "stationary phase" with systems designed for exponential growth.  Hence, the systems must change.  Further pressure on fixing, reviving, amplifying, etc. the current system is only going to aggrevate the transition.

Althouth not an ideal metaphor - do you have a better one?

I really like the last sentence of your response though.  Science is clearly our best hope.  But, we revere thug athletes, blow-hard actors/actresses, and other uselessness over what really matters.  Is is still not a given that we will survive our adolescence as a species.

Sat, 10/08/2011 - 13:53 | 1753102 DoChenRollingBearing
DoChenRollingBearing's picture

Excellent comment tmosley. We can depend on you to give us clear thinking.

+ $55,000!

Sat, 10/08/2011 - 13:58 | 1753107 decon
decon's picture

It was just a generalized metaphor, don't read too much into it.  Actually, I do have a degree in biology.

Sat, 10/08/2011 - 14:06 | 1753122 centerline
centerline's picture

It was a fair (and funny) statement.  Any metaphor here is going to be loose at best anyhow.  The simple point is that we simply cant continue to realize exponential population growth.  At some point there will be a slowing.  Over the long haul... well, the metaphor still works reasonably well.

Plus, it seems at time that bacteria might be smarter than some people.  LOL.

Sat, 10/08/2011 - 14:37 | 1753182 decon
decon's picture

+1 centerline

Sat, 10/08/2011 - 14:46 | 1753193 Fish Gone Bad
Fish Gone Bad's picture

Thomas Malthus.

He might be the original doom and gloomer.

Sat, 10/08/2011 - 15:45 | 1753285 Talleyrand
Talleyrand's picture

Question: How would Malthus explain the fact that, today, well-fed people in rich countries reproduce at lower (now negative) rates than do hungry people is poor societies?

Humans - seems the better you feed them, the less they breed. Go figure.


Sat, 10/08/2011 - 19:14 | 1753561 Dugald
Dugald's picture

Long years ago whilst on a mid-week Army Reserve training exercise in southern England a bunch of  us had stopped for lunch in a satellite town south of London, think it was called Harlow New Town, as we drank coke and munched on sandwiches and junk that young soldiers like, we noticed that practically all the women were either pregnant, and/or had kid/s  by the hand or in prams,or, in many cases all three. As we all pondered on this high level of local fecundity, one guy called hey,  look around.......NO TV antennas.

So there is your answer TV is a great way of population control......

Sun, 10/09/2011 - 04:59 | 1754259 Skid Marks
Skid Marks's picture

I believe this subject has been studied and the answer is quite simply that wealthy people choose not to have as many children. Prosperity is a cure for population growth. Look at it like this, farmers get cheap labor out of their kids. Death rates used to be high in the "third world". Having a lot of kids meant a greater chance at having kids that lived and could help out.  Add to the mix the religeous dogma which gives its blessing to having lots of kids and condems birth control.

Sat, 10/08/2011 - 16:32 | 1753340 falak pema
falak pema's picture


Sat, 10/08/2011 - 14:29 | 1753167 Medea
Medea's picture

Microbiology people fail at understanding what a metaphor is.

Sat, 10/08/2011 - 15:23 | 1753254 pods
pods's picture

Except that bacterium do not have the problem of having to expand exponentially due to the P+I =Future P problem like us dumber animals.


Sat, 10/08/2011 - 20:02 | 1753627 NoClueSneaker
NoClueSneaker's picture

Hmmm, just my 2 cents ...

When you talk about biofilms - the microorganisms shows much more intelligence then the "upper" species.

They cooperate to stay alive - kicking out the members of compound which r prone to attack from outside. Biofilm is an taxonomy ...

  "Mainly vicious" tactic anihilates all the other tactics in the prisoner's dillema.

Goverment Sachs kills us all ....



Sat, 10/08/2011 - 13:08 | 1753035 AnAnonymous
AnAnonymous's picture

The era of growth hasn't ended.


What does it mean? The sustainability of the current system no only requires growth to occur but a certain amount of growth.

Misallocation of capital? What does it mean? It is so stupid.

We have now a horde of thinkers who have sold the benefits of physical expansion as the result of their ideological charade, known as economics.

The current system has been the result of a period of fast and successful expansion.

As usual, expansionists bid against the future: their current expenditures will be covered by the future gains brought by their successful expansion.

Save this time, they have hit the limits to their expansionist scheme and contrary to previous cases, the limits are set by the physical Earth. The world is globalized. No where to run, no where to hide.

Sat, 10/08/2011 - 22:54 | 1753922 byteshredder
byteshredder's picture

Misallocation of capital = spending on unproductive assets

a.k.a. WELFARE

This is simple behavioral science; reward/subsidize a behavior and you're going to get more of it.

I don't blame the people on welfare; I feel pity for them -- they are just doing what they are encouraged/programmed to do.

Sat, 10/08/2011 - 11:59 | 1752924 Eeyores Enigma
Eeyores Enigma's picture

The accounting has been done by multiple organizations. The banking industry in the US and probably globally, have the assets to cover peoples deposits, merchant deposits and transactions, basically all of the "REAL ECONOMY's" money. 


Unfortunately this only represents a small portion of the banking and finance industries activities. The other 90% of what they have been doing, essentially gambling and fraud, is what is being bailed out, that is what is at risk if (when) banking collapses, NOT the real economy.


This is a bit over simplified as banking collapse would certainly effect all trade and therefore the real economy but not in the way that they are saying and recovery of the real economy would be possible and maybe even reasonable whereas what is happening right now is that the real economy where 99% of us live, is being sucked dry, thrown under the bus, raped, or what have you, in order to cover the bad gambling debts of the 1%.


It's not just banking and finance it is all big corporations most of which have been augmenting low and declining revenues from making and selling stuff by participating in the financial dealings (gambling and fraud) also.


 The politicians currently in charge (and those aspiring to be) got there positions and owe complete allegiance to BIG money. They will do what is best for the 1% NOT what is best for the 99%. In all fairness they are convinced that serving the 1% is whats best for the other 99%. I know this for a fact.


Money = a claim on the future.

1% controls all of the money.

99% have no future.


Bottom line This is a crisis of capitalism but this is where it gets tricky.


Debt driven Capitalism is and has been the optimal system to promote exponential growth. Resource depletion, over population, environmental degradation,  are just a few of the detrimental results. A version of capitalism is what every Country around the world uses to juice growth, even communist China. Silly people think they can control capital, LOL!


Capitalism functions like a pyramid scheme in that there are always opportunities for more and more people to acquire wealth but only as long as multiples of additional participants are constantly coming in at the bottom. Oh, yeah, capitalism also requires that there is enough cheap, almost free energy coming on line at a similar or greater multiple in order for those participants to generate excess profit$ to pass on up the pyramid.


Right now there are plenty of willing participants but due to the lack of cheap, almost free energy these participants are unable to generate "excess profit$" to pass up the pyramid. Low life bums. So instead of money flowing, being pushed up that is, the relentless, unquenchable demand that "capital" is simply sucks it up anyway it can even if it has to create virtual participants with virtual excess profits. There is no stoping capital…FEED ME SEYMOUR!


Capital has muscle too and is always looking for cheap, almost free energy. Is it any coincidence that last of the light sweet crude is in Iraq and Libya?


Even that is not enough so it just keeps on expanding debt/credit and skimming off the top.


Debt/credit expansion has continued on well beyond anything that this planet can ever support.


Problem is whenever you talk this way people scream "your a damn communist/ socialist".


Clearly humanity needs to operate from a base of support that includes healthcare for all. education for all, security in old age for all, in order to maintain dignity and humanity and this is socialism. Above and beyond that maybe we can have some form of capitalism that allows people to reach there aspirations BUT CAN NEVER INTRUDE ON THE BASIC SOCIALISTIC BASE SYSTEM. Truth is we kind of had this sort of setup here in the US for a while but then capital noticed this while heading out for some grub one day and…well the rest is history and here we are.


Maybe instead of Debt based Capitalism we should try Gift based Capitalism.







Sat, 10/08/2011 - 12:04 | 1752937 Stuck on Zero
Stuck on Zero's picture

Fess up.  Are you an Obama mole?

Sat, 10/08/2011 - 12:17 | 1752956 Dingleberry
Dingleberry's picture

Good post, but like quatum physics.....all theoretical and impractical for everyday living. Free health care? Try getting past HMOs, pharma, lawyers, etc.  Free education? Try getting past Sally, universities, etc. Even Dems oppose drugs from Canada, cuts to subsidies for student loans and discharging from BK, and on and on and on.....bottom line is the system we have will collapse on itself when it can't go on any longer, and not one nanosecond before. Bribery/lobbying has ensured that to be the case.  And once that happens, usually we get a BIG war to artificially grow out of the mess, and destroy the other half so they get to start over and population has declined.  Like an economic reset button, if you will.......

Sat, 10/08/2011 - 13:45 | 1753086 slewie the pi-rat
slewie the pi-rat's picture

yes, i agree; with stuckOnZero!

...the eeyore is a troll:
...1/2-dozen posts in 1/2-dozen weeks
...& is cutting & pasting

ice 9 + contagion = BiChflation

we are doomed
, BiCheZ!

Sat, 10/08/2011 - 12:37 | 1752990 stirners_ghost
stirners_ghost's picture

Clearly humanity needs to operate from a base of support that includes healthcare for all. education for all, security in old age for all, in order to maintain dignity and humanity and this is socialism.

Clearly, nothing.

Fucking vampire.

Sat, 10/08/2011 - 19:28 | 1753578 Motley Fool
Motley Fool's picture

Bravo! :)

Sat, 10/08/2011 - 12:47 | 1753008 sschu
sschu's picture

Free Healthcare.  Free Education.  Human Dignity for all.  Utopia on Earth!

Sounds great!  I want some!  

What do we have to do?  Oh, give unlimited power to the "government" to make it so? Uh, let me think about it.

All this sounds great, until it collides with the reality of human nature.


Sat, 10/08/2011 - 16:44 | 1753367 knukles
knukles's picture

Right... and who the Fuck Pays For It?
I am so fucking tired of the liberal mentality that it will all be A-Fucking-OK, the Gubamint will provide and "the rich" will pay.

The same shit got us here with Ethanol.  Cleaner than thoust, decrease the dependency of foreign oil.  Only fucking problem is that it's an energy sink. 
Same with the fucking electric car.  Oh, the liberal feels like he's not fucking polluting but forgets two very critical metrics.  The power is being generated somewhere, creating a carbon footprint (assuming it's not nuke, for the clean alternatives don't count for shit) and second... that it is Humonguosly inefficient to ship energy over wires.  Called resistance... so much is lost.  The good old fashioned....  Oh never fucking mind.

Those peole should not be allowed to vote.  Not whether they're dems, repubs, etc, but oughta be an intelligence test to qualify for pulling the lever. 

Sat, 10/08/2011 - 21:35 | 1753797 StychoKiller
StychoKiller's picture

Don't blame me, I voted for Comacho! :>D

Sun, 10/09/2011 - 12:07 | 1754758 bbq on whitehou...
bbq on whitehouse lawn's picture

No it would require time instead of money in the way of taxes. It wouldn't but Utopia it would be community work.

You wouldn't hire teachers, you would have to teach 1-5 days a year or sometihng like that.

For healthcare you would have to take classes and do all of your first aid, yourself, plus work at a hospital or other health program and donate time as well.

Could it work, maybe. Utopia not a chance.

Its small communities vs citys. Cities would die and small communities would thrive.

All governments would shrink as time and labor vs money system would develop.

Choose your poison i guess. Pay taxes or pay labor. But pay you will.

Sat, 10/08/2011 - 13:51 | 1753098 macholatte
macholatte's picture

Oh, yeah, capitalism also requires that there is enough cheap, almost free energy coming on line at a similar or greater multiple in order for those participants to generate excess profit$ to pass on up the pyramid.


You're right!

Socialism and peons use practically zero energy so the solution to the Capitalist Pig is simply for everyone, including you, to wear cloths and live in a tent he made himself from native plants. NO computers, TV, cars, cell phones, internet, super markets, department stores, pharmacies, or any of that junk. Burning wood for cooking and to keep warm would polute so nobody would be allowed to do that. All the free medical care would be from witch doctors since Universities use energy they wouldn't be allowed to exist anymore either.

Where can I get some of what you've been smoking?




Sat, 10/08/2011 - 14:17 | 1753138 disabledvet
disabledvet's picture

you get it from your brain. LITERALLY. "The human brain produces an electro-magnetic field that exists outside the skull." Should be careful how you "tap that source" however. Sometimes you get a "solar flare."

Sat, 10/08/2011 - 14:31 | 1753172 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 there macho.  I have to spell it out as the green arrow is not working...

Sun, 10/09/2011 - 01:13 | 1754118 dr.charlemagne
dr.charlemagne's picture


After you have read all of Sowell, Hayek, Von Mises, Rothbard, Jefferson, and Locke drop by again



Sat, 10/08/2011 - 12:02 | 1752934 centerline
centerline's picture

Exactly.  Only takes one look at the parabolic rate of human growth during the industrial age to reach a conclusion that we are on a most unsustainable course that WILL change direction at some point.  In the case of our industrialization, it will most likely be resource scaricty (cheap oil rises to the top of this list) that tips the balance.  All current idicators point towards that moment having already begun over the last few decades and now picking up speed (de-acceleration per se).

Most econonies and systems within those economies are based on perpetual growth.  Thus, they cannot be "restarted."

Frankly, I am sick of the constant talk about getting the economy "growing again."  It is the greatest stupidity staring us right in the face.

Of course, here we are also at maximum social complexity and debt saturated at the same time.  Gasline meets open flame in the middle of a fireworks factory.

Sat, 10/08/2011 - 13:21 | 1753052 Newsboy
Newsboy's picture

Simply true, Trav.

Eeyore expands upon the concept.

Sat, 10/08/2011 - 13:59 | 1753108 disabledvet
disabledvet's picture

growth in what? "If i can look into your face and understand your emotional state before you make a trade"... or any decision of significance for that matter...what does that tell me? I say A LOT. What say you?

Sat, 10/08/2011 - 14:53 | 1753202 dvp
dvp's picture

BINGO trav7777!  Money lending was condemned in the Christian Western world until about 400 years ago.  My suspicion is because it is so comparatively new in the West--just read or watch a production of The Merchant of Venice--Westerners haven't had time to learn its implications and, thus, its limitations.  Like kids in a candy shop, Westerners have "gone wild" with their new toy, unaware of what to expect when playing with it.  Thus we have "financial innovation" in the form of derivatives and such, effectively selling and reselling abstractions.  Hell, the very idea private and central banks "create money," and thus "are fundamental to an economy," nay society, is a child gone wild in a candy shop.  If you can create money without cost, why not do so uncontrollably?  This is the logic which drove the 1990s, leading to Francis F**kYouMamma's End of History.  Growth is infinite, money being created infinitely to sustain it.  Thus, it made sense to hold down wages to produce "efficiently," while making up for stagnant wages by low interest borrowing.  Now demand is decoupled from work, another "brilliant" example of the mythical character of economics.  (Thank you, oh thank you for this wonderous "financial innovation" Allan "the maestro" Greenspan!)  What is bought by the "cheap" borrowed money will always go up in value, allowing the ever increasing debt to be paid off.  Similarly, speculators can borrow infinitely, because what they buy with the borrowed money will increase in value infinitely.  Yowza, the End of History!  Hell, economics ain't no social science, its an imaginative literary creation.  It belongs in the "humanities" because it is imaginative, as imaginative as a fairytale!  Problem with moving departments of economics and finance into the humanities is they are inhuman.  Why so is because debt creeps up on ya', and finally bites ya' in the hiney.  Cinderella and the Prince don't live happily ever after.  They get a divorce, and the prenup' sends Cinderella back to her mean ol' step mother and sisters.  As debt consumes more and more of your income, you buy less and less, shrinking demand.  This happening, the whole damn fairy-palace-in-the-sky comes crashing down, and can't get up.  Can't get up?!  Hey dvp, don't you read economists and economics journalists?  Sooner or later, things will always get up, always.  Fairy palaces can always be rebuilt.  After all, they're just fairy palaces.  So, all you have to do is wish to return to Kansas hard enough, and click your ruby heels.  Yeah, and wish how hard?

Sat, 10/08/2011 - 15:02 | 1753216 oldman
oldman's picture

Four 7's.

You are right on the money--a new era of humanity that we are as yet unprepared for and an era of declining population which will produce a high quality living standard. This is the best reason for debt forgiveness; there will be a new 'negative economics' that will require niether the money or the assets, and certainly not, the debt. Who is going to pay for Social Security? Well, it's damned obvious that retirees should be paid before phony virtual debts that were created with phoney virtual money that never existed in the first place.

Get this: I loan you a million against a property that is 'bubble-valued' and the price collapses to $500,000: who loses? Show me the money---there is none and never was because the 'value' was never realized by a sale----the asset was never 'money'. I made a mistake and made a bad loan---now, they want to reduce SS payments because I'm out my money?

The 'money' never existed; it was only debt all the time and the creators of this great idea and illusion are probably amazed that they have gotten as far as they have already without a revolution. Well, brothers and sisters-----the revolution is on!

Four 7's I agree with your statement entirely    thanks for stirring an oldman's mind enough to get something out of it      om

Sat, 10/08/2011 - 15:39 | 1753274 Burnbright
Burnbright's picture

no, the problem is an entire system built on an unabated 400 year Era of Growth that cannot accomodate the fact that growth has stopped.

Here we go again. We have always been at our limits trav, their isn't a time in history when people were not screaming about running out of one resource or another. Or that the world would end. 

The only reason we are contracting is because governments around the world have been so successful and stealing capital from their populations and continue to choke off any kind of capital formation.

This isn't a resource problem, never has been, never will be. It's a problem of not enough liberty globally. 

Sat, 10/08/2011 - 17:38 | 1753436 dvp
dvp's picture

Now Burnbright, let me get this right.  Governments ain't "liberty," but corporations are "liberty?"  After all,

"The only reason we are contracting is because governments around the world have been so successful and stealing capital from their popultions and continue to choke off any kind of capital formation."

So, the current global whatever ya' wanna' call it--Great Recession, Depression, minor blip, whatever--has nothing to do with the financial institutions gone wild?  After all, they couldn't go wild because, "It's a problem of not enough liberty globally."  Damn!  I sure got that one wrong!  What we oughta' do, then, is give the finance people (remember, corporations are people) more FREEDOM.  Got it, that'll solve everything.  EVER MORE CREATIVE FINANCIAL INSTRUMENTS!  LET FREEDOM RING!

Sat, 10/08/2011 - 21:41 | 1753812 StychoKiller
StychoKiller's picture

Two werdz for yer conclusion:  Non Sequitor!

Sat, 10/08/2011 - 23:31 | 1753972 dvp
dvp's picture

StychoKiller, you seem to have difficulty distinguishing a counter argument from a non sequitUr.  Or, perhaps, it is a difficulty in distinguishing sarcasm.  Or, perhaps, it is because you are a conflicted libertarian who hates government, but loves corporations, even though corporations dictate your behavior, and at least in a democracy you have some voice in what occurs.

Sat, 10/08/2011 - 12:05 | 1752939 Marco
Marco's picture

Until recently most of that debt was being bought up by the private sector and of the central banks mentioned China's central bank ... it was being created by governments, but the willingness of the private sector and mercantilist trading partners to buy it was what allowed governments to create so much debt. How exactly can the blame for this be heaped on the central banks of trade deficit countries?

None of their policy tools could prevent mercantilist trading partners from doing what they did ... apart from fueling inflation, making it as painful as possible to hold their debt.

Sat, 10/08/2011 - 15:51 | 1753296 Bobbyrib
Bobbyrib's picture

If they back our currency with silver and gold, they're going to want to hold it all. I say no to the PM currency peg. I would rather hold the real stuff than the paper backed by it. Central Bankers are scum any way you look at it. 

Sat, 10/08/2011 - 12:01 | 1752929 misterc
misterc's picture


Dexia Commercial

Narrator: "Earning money isn't always easy" (Then woman starts to vomit).

Sat, 10/08/2011 - 12:38 | 1752991 disabledvet
disabledvet's picture

exit what? Germany? this is classic Grenspan. "The Conundrum." As he queried during the tech bubble "how is one to know whether an IRRATIONAL EXUBERANCE has taken hold." He didn't start raising rates "until it was too late" then Obviously the European Union itself is a text-book case of an "irrational exuberance" since once the trade flows opened up a massive expansion in the economy took place which led to perhaps the greatest credit expansion in history (leverageed times a billion of course.) This is not rocket science people. The United States itself was founded on the basis of speculations in credit markets--the precise reason for having a gold standard. Anywho "the credit expansion over there is now one big mutha of a credit contraction." This will go down in history as the greatest credit contraction IN history. PERIOD. But that is just a "monetary...." ...."phenomenom." Underneath this annihilation of credit itself still exists actual trade. If that goes bye-bye (and it sure is going bye bye in Greece right now) now you're left with "former powers that be" all over the place. I SAY AGAIN RED LEADER: "all eyes on Washington DC." (Now please deposit 5 cents in the kitty of your local homeless shelter for vets..thank you very much.)

Sat, 10/08/2011 - 16:29 | 1753335 knukles
knukles's picture

Why in the world would one think that any assumption of Chinese involvement in the drone hacking would be a conspiracy theory?  It is a known fact that it has happened, and it is public record that Chinese manufactured soft and hardware components are chock-a-block full of back door entry points.  Just like the electronics we put into our military hardware/software that is sold to foreign entities.
That such is done as a matter of course is public record. 

That it is being announced publicly in the manner it has taken is the clue, the "act of war" itself, if you will.
For the US has already declared that any tinkering with its systems constitutes such.
Ergo, an act of war has already been committed.  Not stated, hinted or even spoken of.  It simply has occured within the province of the US's lexicon. 
And there are but a few entities capable of such.

T'is not a conspiracy theory. 
It's reality.
In fact, letting the information run amok as it has, via Wired, etc,, engendering a "conspiracy theory" cachet serves as one of the most efficient means of transmitting to the public; the perceptions managed consideration of "somebody doing us wrong", the mutherfuckers.

Sat, 10/08/2011 - 17:30 | 1753420 RafterManFMJ
RafterManFMJ's picture



You only think I guessed wrong! That's what's so funny! I switched glasses when your back was turned! Ha ha! You fool! You fell victim to one of the classic blunders - The most famous of which is "never get involved in a land war in Asia" - but only slightly less well-known is this: "Never go against a Sicilian when death is on the line"! Ha ha ha ha ha ha ha! Ha ha ha ha ha ha ha! Ha ha ha... 

Sat, 10/08/2011 - 12:19 | 1752966 Yamaha
Yamaha's picture

Speaking of news - ZH - When are we going to start the TV channel next to CNBC to suck out their revenues?

Sat, 10/08/2011 - 13:50 | 1753094 disabledvet
disabledvet's picture

can't wait for the AldusHuxley "late night hour."

Sat, 10/08/2011 - 15:40 | 1753277 SilverDOG
SilverDOG's picture

What revenues?

Nobody is watching.

Sat, 10/08/2011 - 13:02 | 1753028 irishlink
irishlink's picture

Was talking with my friend in Europe about the mess we are in and we are amazed by the names in this collapse; Madoff made off with the money for years and the translation of M. Trichet  name from French to English is "CHEATER" A person writing fiction could not come up with these names! Steve JOB(S) Has created more jobs than JOB with an Apple. ZH readers I challenge you to come up with some more!

Sat, 10/08/2011 - 14:36 | 1753178 r101958
r101958's picture

Here is one from a while back; the name of the Chinese pilot that clipped the US transport plane which was then forced to land on a Chinese island: Capt. Wong Wei

Or how about the guy that now works for Pimco but was Paulson's right hand during the bailouts and TARP (etc.); Kashcari.

Sat, 10/08/2011 - 17:20 | 1753408 Dapper Dan
Dapper Dan's picture

How about this

Joseph J. "Joe" Cassino at AIG and Drexel Burnum Lambert



Sat, 10/08/2011 - 14:14 | 1753041 macholatte
macholatte's picture

I wonder what the markets will do on monday if they don't come up with some magic trick on 5 pm

Not to worry. When the "markets" get an erection at 3:15 you'll be able to know the reason when you read the FT website at about 4:05 to discover the latest rumor fabricated by the the Soros Machine.

Sat, 10/08/2011 - 13:51 | 1753096 ParaZite
ParaZite's picture

Remember, in the USA... Monday is a Bank Holiday. 

Maybe they are having their little meeting before monday, so the masses won't run to withdraw their money all at the same time, like has been happening to BOA? Just an idea.

Sat, 10/08/2011 - 10:56 | 1752787 Timmay
Timmay's picture

One can only hope this comes to pass.

Sat, 10/08/2011 - 12:04 | 1752849 Pinto Currency
Pinto Currency's picture



So much for the "millionaire's tax"


It will cover the deficit for a few months.

Sat, 10/08/2011 - 10:59 | 1752793 Frank N. Beans
Frank N. Beans's picture

the black hole that is the Fed grows and grows.

Sat, 10/08/2011 - 12:18 | 1752965 DoChenRollingBearing
DoChenRollingBearing's picture

@ Frank

Yes: Who will bailout the bailouters?

Various of the above posters have stated that part of the problem is that we have reached the limits of growth, real economic growth because of population growth, resource depletion, malinvestments, extreme corruption, etc.  That may all be true.  If so, it is very hard for me to imagine that Collective Soilutions are going to work.  That is, all these Smart Guy Elites imposing something that will not work, and they probably already know that.

I continue to to think that there are really only two ways that we 99% can fight back:

1)  Protect our own wealth that is left with hard assets (gold and guns, oversimplifying)

2)  Vote for Ron Paul and anyone who categorically supports the US Constitution

The third possibility is already being tried in various ways, and I will be watching:

3)  Chumbawamba and others are pulling OUT of the system and in some cases actively fighting back, at legal peril to themselves.  Whether I can put (some of) OWS into this category I cannot say, I do not know enough about the make-up of the group(s), but when I hear that Leftist Democrat pillars (part of the problem, NOT the solution) are jumping aboard the OWS train, well...

The Banksters and Deficit Spenders are going to fight against real change.  Real change must start with us.  Buy gold.  Look after your families.  Cust both your spending and demand cuts in .gov spending, including ending the wars.

Sat, 10/08/2011 - 12:40 | 1752996 disabledvet
disabledvet's picture

buy natural gas stocks.

Sat, 10/08/2011 - 12:53 | 1753017 Green Leader
Green Leader's picture

The Biblical answer is to come out of the system (Mystery Babylon):

Sat, 10/08/2011 - 14:21 | 1753145 disabledvet
disabledvet's picture


Sat, 10/08/2011 - 12:20 | 1752970 BlackholeDivestment
BlackholeDivestment's picture

...ever notice how the person(s) that ''set'' the delay fuse for the well timed event use the term to define their target goal? Say, ...what time is it anyway? Oh yeah, just in time for 2012. How about that. It does not feel ironic does it? Lol. 

Sat, 10/08/2011 - 10:59 | 1752794 Fips_OnTheSpot
Fips_OnTheSpot's picture

Soon it'll make WHOOOSH, and afterwards we will pay in "1 Fiasco = 100 Debacle" in EuZo ... just as a reminder for the current days.

Sat, 10/08/2011 - 11:00 | 1752796 prains
prains's picture

whoop there it is! benny you are the father

Sat, 10/08/2011 - 11:01 | 1752798 papaswamp
papaswamp's picture

Holy Shitstain BatMan!...that is one big fucking monster. 

Sat, 10/08/2011 - 11:01 | 1752799 Belarus
Belarus's picture

Sean Corrigan always has the best charts bar none. I would like to work with someone like him someday.

Sat, 10/08/2011 - 11:02 | 1752804 Snidley Whipsnae
Snidley Whipsnae's picture

Fed may need to upscale their server farm...

Sat, 10/08/2011 - 11:26 | 1752859 demers1957
demers1957's picture

Hopefully all the Fed will have to worry about is serving burgers in their new career

Sat, 10/08/2011 - 11:05 | 1752810 Moocao
Moocao's picture

What the....







Sat, 10/08/2011 - 11:52 | 1752907 falak pema
falak pema's picture

hahaha...what a zombie knee jerk...Correction, you're no zombie, you're alive. Now if you learn to reason you might just become a responsible citizen. Never say die!

And it isn't AMERICAN money as ALL american money is owed to its debt holders. 5T of which is non American. The rest is all smoke screen money, like monopoly money. You print you own, until someone says 'no I won't use it in international exchange....'

Sat, 10/08/2011 - 11:53 | 1752911 max2205
max2205's picture

Good point. Who cuts Bens check every two weeks?

If it's the banks, no wonder the Fed will prop them up at any cost.

This is fucked up Dude

Sat, 10/08/2011 - 11:06 | 1752813 gilliganis
gilliganis's picture

+1 for the obscure Vonnegut reference.


Sat, 10/08/2011 - 11:23 | 1752851 Belarus
Belarus's picture

+2 for the Vonnegut reference by ZH and the HST reference by Corrigan. And to think, all in one post we get two great authors, and two fine financial commentators. You know, I always wonder why ZH shouldn't take the best of the best and have it sort of printed by a independent print company with short but to the point books, such as:

Fear and Loathing in Europe

Last Tango in Debt Town

The New Dumb in America

The Doomed Valium Effort (The Inkjets and Zero Bounders)

Well, you get the point. Perhaps I think about this stuff too much. 

Sat, 10/08/2011 - 11:34 | 1752870 disabledvet
disabledvet's picture

another Upstater...spent a lot of time hanging out on the couch so i hear. Experienced the annihilation of the City of Dresden first hand. Anywho "freezing the entire world's Oceans" would be a challenge since that's salt water...which actually is a good question. Why are the world's oceans salty?
maybe all our Oceans need is a little sunshine and they'll stop being so salty and just be fresh.

Sat, 10/08/2011 - 11:07 | 1752816 Jack Burton
Jack Burton's picture

Europe is a ticking time bomb. No agreements are being reached, because they don't have a clue how to rescue this failing Euro system.

The UK just had 12 banks and building societies downgraded. RBS being one of the bigger ones. The Belgium bank that failed is only one of god knows how many. They can pass a stress test and then fail within weeks!

It is all an extend and pretend puppet show. The Fat Lady must sing and when she does banks will fall like bowling pins.

Sat, 10/08/2011 - 11:10 | 1752823 Hansel
Hansel's picture

OR the governments of the world band together in even more insanely authoritarian/fascist/totalitarian ways and they just don't give a fuck how much debt there is, you'll still have to fucking pay it.

Sat, 10/08/2011 - 11:16 | 1752834 Caviar Emptor
Caviar Emptor's picture

That's the trend. It may not be your friend

Sat, 10/08/2011 - 11:24 | 1752853 CompassionateFascist
CompassionateFascist's picture

Arm yourself. Pay in lead.

Sat, 10/08/2011 - 12:17 | 1752961 falak pema
falak pema's picture

If there is financial meltdown there only will be government rule, that is for sure. The question is who controls government : people or Oligarchs. That's the issue and it looks like the oligarchs are winning.

Sat, 10/08/2011 - 12:14 | 1752896 falak pema
falak pema's picture

Ironic isn't it, the Euro construct; Europe's hymn to private sector capitalism is leading to total government sector control of the economy of all major euro nations as minor ones...Marx must be laughing in his grave in London town.

Why the lipstick knee jerk? Fact n logic always beats emotion and false rhetoric, and warped value systems. Its US history speaking when I say this. 

Step 1 : freedom 1776

Step 2 : Consolidation in balance. aka Civil war, one federal nation.

Step 3 : Government clean out of private exuberance and corruption, aka 1929 and FDR, W/o statist decadence.

Step 4 : private sector decadence in hubristic regulatory capture of all levers  from 1981 onwards. The harder they fall!

Step 5 :  ???

As for Blaming it all on statist shills...its pissing in the wind. 

Sat, 10/08/2011 - 13:12 | 1753042 AnAnonymous
AnAnonymous's picture

Step 1 : freedom 1776


No. The US started as a slaver nation. Slavery is not freedom. One basic point.

Sat, 10/08/2011 - 13:39 | 1753077 Steel_Preacher
Steel_Preacher's picture

Yuck, I stepped in troll poop.

Sat, 10/08/2011 - 16:57 | 1753382 GOSPLAN HERO
GOSPLAN HERO's picture

Comrade AnAnonymous is wrong.  Slaves were considered property in 1776.  Slaves were freed by the 13th Amendment and "made human and equal" under the 14th Amendment. 

Sat, 10/08/2011 - 14:01 | 1753115 macholatte
macholatte's picture

Fact n logic always beats emotion and false rhetoric


Yes, but you need the truth first. How many times have you made good decisions based upon bad information?

The propaganda machine is alive and well.

Sat, 10/08/2011 - 15:20 | 1753249 falak pema
falak pema's picture

Well, eventually you can tell fact from fiction, eventually. I don't pretend to know truth. But once the fact becomes irrefutable, like the basic mecanisms and value systems of this financial meltdown sequence, then what-ever your past beliefs, its time to rethink your perception of truth, however hard it could be from emotional perspective, if it destroys past value system as  fake shadow of truth.

I think all adult people lose some of their past illusions as the price for acquiring a more fulsome apprehension of human truth; not tribal truth, not national truth, not ideologically slanted truth, but universal truth; that fits best their renewed 'true' value system paradigm based on revised fact assimilation. Until life moves on and sheds old skin of wisdom for newer skin, based on new perceptions of revised facts. That is the historical cycle as its a moving value system reflecting man's own capibilities, as we are mortals and not immortals with godlike certitudes. We evolve over time.

Sat, 10/08/2011 - 16:40 | 1753360 macholatte
macholatte's picture

I think we could be a little more simple than that. How about one word:  Enron.

The truth was not discovered until after it was too late and that, unfortunately, is what makes hindsight 20-20.

When people mean to deceive you, to swindle you, to steal from you and do it with deception and subterfuge then there is little you can do about it unless you get a lobotomy. Shields up!


Sat, 10/08/2011 - 17:29 | 1753416 Dapper Dan
Dapper Dan's picture

Regarding the Civil war,

Salmon Portland Chase

As Secretary of the Treasury in President  Lincolns cabinet in 1861-1864, during the first three years of the Civil War, he rendered services of the greatest value. That period of crisis witnessed two great changes in American financial policy, the establishment of a national banking system and the issue of a legal tender paper currency. The former was Chase's own particular measure. He suggested the idea, worked out all of the important principles and many of the details, and induced Congress to accept them. The success of that system alone warrants his being placed in the first rank of American financiers. It not only secured an immediate market for government bonds, but it also provided a permanent uniform national currency, which, though inelastic, is absolutely stable. The issue of legal tenders, the greatest financial blunder of the war, was made contrary to his wishes, although he did not, as he perhaps ought to have done, push his opposition to the point of resigning

Sat, 10/08/2011 - 11:07 | 1752817 Mike2756
Mike2756's picture

Too bearish the Fed, there is dissension in the ranks, agree on the ECB, I think the euro goes first.

Sat, 10/08/2011 - 11:08 | 1752819 lemosbrasil
lemosbrasil's picture love crash in October !!.......take a look here ;

Sat, 10/08/2011 - 11:09 | 1752821 tim73
tim73's picture

Europeans will get a beating for sure but Americans will be whacked behind the barn. USA is finished as one nation. Future liabilities now about 450 000 dollars per household.

No way USA is able to rise again in current form. Maybe as separate states but USA is one way.

Sat, 10/08/2011 - 12:38 | 1752993 JLee2027
JLee2027's picture

I never understood this idea that the USA must be "finished".  Why?  It's an economic issue, solved by the simple restoration of Sound Money.  The debts won't be paid that's all.  

Sat, 10/08/2011 - 13:01 | 1753026 Mike2756
Mike2756's picture

Most of the private and some of the public debt is finished, the situation is very salvageable if we get rid of the current kleptocrats. Death to the socialist kleptocrats!

Sat, 10/08/2011 - 14:51 | 1753203 r101958
r101958's picture

If we start living within our means.

Sat, 10/08/2011 - 13:59 | 1753109 centerline
centerline's picture

All the talk about the end of the world is simply banker fear mongering by the financial elite attempting to hold onto their wealth for a day or two longer.  The real issues that threaten our future aren't even being talked about out in the open.  And the more time we waste being distracted by this bullshit takes away from the precious time we need to be doing the right things in order to make sure the next chapter in our history is not one of max suffering.

Sat, 10/08/2011 - 14:04 | 1753121 macholatte
macholatte's picture

The real issues that threaten our future aren't even being talked about out in the open.

and those would be.....?

Sat, 10/08/2011 - 14:26 | 1753155 centerline
centerline's picture

Hmmm... Peak oil.  Exponential population growth.  Social complexity.  Nature of money.  Etc.  There are more than a few 900lb gorillas in the room.

Sat, 10/08/2011 - 17:46 | 1753447 SilverIsKing
SilverIsKing's picture

What do you suggest we do about these problems other than just talk about them?

Sun, 10/09/2011 - 11:48 | 1754719 centerline
centerline's picture

I don't claim to have any good answers.  Any of us could throw out some utopian ideas that would fall flat the moment they come face to face with actual human behavior.  Beneath it all, we are still just animals - and every system has drawbacks.  Individuality is one of our greatest strengths and also one of our greatest weaknesses as a species.

Anyhow, I can at least offer that the first step is actually recognize the problems and get them front and center.  We stand at an incredible moment in time wherein we have the power to touch the world almost overnight - and put a nail in the coffin of the scams that have been perpetrated for thousands of years now.  I really think we may be at critical juncture as a species... screw this up now and we might not get another good chance to outgrow our adolesence.

Sat, 10/08/2011 - 11:09 | 1752822 Jack Burton
Jack Burton's picture

Maybe Marc Faber said it best. "They will print and print and print. Then they will go to war". Anyone doubt Marc's scenario at this stage?

Greece must fail, banks must fail, the ECB must print, the Fed must print, the great NATO military machines must find an oil rich country to protect civilians in. So begins the war.

Sat, 10/08/2011 - 11:29 | 1752861 CompassionateFascist
CompassionateFascist's picture

Yeah, I do. MegaWars result when Empires crumble or when someone is trying to build one. 1914-45. We're looking at the collapse of an entire civilization here. More like a long, sustained, violent wheeeze....civil wars certainly, esp. US.

Sat, 10/08/2011 - 15:52 | 1753297 oldman
oldman's picture

Yeah, Jack,

I'm a doubter of everything---genetic defect. I don't know this Marc of whom you refer, but I have listened to 'print, print until we go to war' from the bankers for more than forty years and I know how bright the bankerts are; it's obvious, right?

You see, there's a new guy on our block now and he doesn't 'want to go to war'. No, this motherfucker wants to make war on the one per cent that have always sent  the rest of us to war. This motherfucker is US, Jack----the 99%, and this is not just a bunch of hippies, socialists, commies, reds, have-nots. We are the 99% who have waited all of our lives for anyone to ask us what we think----

And I believe that 'we' think that war---class war has been forced upon us by the msm and tptb who believe the machine is up and fully-functioning, but who are wrong. Well,, if war is what we are forced to do-------we might as well begin war against those who truly oppress us; the 1% who like to see violence and death and destruction to humans, the environment, and the infrastructure that each society has paid for with the taxes levied against its labor.

I have been an advocate of doing-nothing for many years because I do not want death and destruction anywhere on this planet. Doing-nothing is non-violence and assertion of one's human dignity, but I never thought that I would see resistence in the USof A on the scale we are seeing now, so I'm going join this new kid on our block----this opportunity will not come again. I'm going to be a part of this MF.

Anyway, thanks for the opportunity to speak to the issue of war and to the issue at hand and to those who I hope will join the 99%ers in the streets----it's time, brother


Sat, 10/08/2011 - 11:15 | 1752825 THE DORK OF CORK
THE DORK OF CORK's picture

"Hard earned cash" ??????? - theres the problem with the west  encapsulated in one phrase - banks don't earn cash , they are but a conduit or at least should be.

You cannot save debt by sticking it in a frezzer and hoping things work out for the best - it won't.

The Banks investments are dependent on the oil spice - anything else is marked down as waste - but it is only waste when using a oil based monetory system.......

Europe must break from the dollar / oil monetory system if it is to survive.

Sat, 10/08/2011 - 11:45 | 1752893 disabledvet
disabledvet's picture

The Deacon.
Obviously i like being able to look at "a bank" and describe it simply too. Under your definition perhaps we could describe it as a worm hole? In other words "we have your energy source(s) here--bring your goods, fuel up...and be we'll trade with you!" of course "worm holes can close for a while" in which case "please deposit said goods...either here or in the Ocean." The "spice" as you call it is of course information. Thank you for participating!

Sat, 10/08/2011 - 16:19 | 1753323 Bobbyrib
Bobbyrib's picture

Ireland needs to break away from the Franco-German alliance if it is to survive.

Sat, 10/08/2011 - 11:13 | 1752829 Caviar Emptor
Caviar Emptor's picture

and who will bail out the central bank tasked with bailing out the world?

Anyone good at drawing comic book-style cartoons? I think a caped crusader with a beard wearing spandex and a big bright letter "B" could save the day from the dark forces of the planet Debit

Sat, 10/08/2011 - 11:28 | 1752854 Hansel
Hansel's picture

I've been attempting to make a cartoon.  I haven't hit the winning formula yet, but I'm trying.

Sat, 10/08/2011 - 14:10 | 1753129 Caviar Emptor
Caviar Emptor's picture

Just catching up to you: I liked your cartoon. I think we are entering a time where we need to think like we're in a cartoon 

Sat, 10/08/2011 - 11:13 | 1752830 ISEEIT
ISEEIT's picture

History (recent) suggest that they are merely promoting yet another 'short harvesting' scam. First comes the 'dire' news, next comes the short positions, then comes the bull (shit) feeding frenzy to snatch your stop and use those funds to create the next play.

Pretty simple really and OBVIOUSLY works well.

Sat, 10/08/2011 - 11:46 | 1752894 DeadFred
DeadFred's picture

One of these times the dash to the bottom won't stop at support as predicted. The last time down took out two support levels. Don't buy into the rally until you're sure the rally is happening. The short squeezes have been causing quick rises in the markets but the shorts haven't gone away, they just short again at resistance. That was Friday. For all the hand wringing about the trips upward on the squeeze express the downward plunges are winning the tug-o-war. Nothing has been fixed.

Sat, 10/08/2011 - 12:59 | 1753025 RSloane
RSloane's picture

Truer words never spoken. All I have to offer your wisdom is a +1.

Sat, 10/08/2011 - 14:03 | 1753120 DoChenRollingBearing
DoChenRollingBearing's picture

@ DeadFred: + 1 again

NONE of our financial problems have been fixed.

NO ONE of significance has goen to jail.

Never a bad idea to prepare for the worst.

Sat, 10/08/2011 - 11:15 | 1752832 tim73
tim73's picture

"the epic "Fear and Loathing" in the European banking system, in all its $1.3 trillion glory, or nearly double where it was when Lehman filed for bankruptcy."

That is a big sum but how much the recent yearly budget deficit for US government is over $1.5 TRILLION! For one single government, not for a bunch of banks. 

Sat, 10/08/2011 - 11:16 | 1752833 DavidC
DavidC's picture



Sat, 10/08/2011 - 11:17 | 1752837 Atomizer
Sat, 10/08/2011 - 14:34 | 1753177 disabledvet
disabledvet's picture

amazing. and people think i'm crazy for saying "it's all about who controls the media." 200 million tax deferred. has he paid up? anywho..."i say again red leader. all eyes on Washington DC."

Sat, 10/08/2011 - 11:26 | 1752858 AbelCatalyst
AbelCatalyst's picture

How about a meaningless announcement that pushes equities even higher... In 2008 the S&P kissed the 75 DMA and began it's infamous drop. If the same is true this time around the lame announcement on Monday may lead to a rally up to around 1,200 (close to the 75 DMA), then begin the Final Collapse. That's how I'm trading it (then again I'm a pretty pathetic trader so who knows!)...

Sat, 10/08/2011 - 11:32 | 1752866 PulauHantu29
PulauHantu29's picture

As the old virtues of thrift, honesty and hard work lose their appeal, everyone is drifting toward greed, fear and specualtion.

Seems that way.

Sat, 10/08/2011 - 11:32 | 1752867 HD
HD's picture

No problem. We now have super congress - so soon we'll have super Fed. If I've learned anything over the past three years, it's that they do have an amazing talent for holding together the fiat ponzi - hopium is even easier to print that USD. Lies and BS are free and easy.

Sat, 10/08/2011 - 13:01 | 1753027 RSloane
RSloane's picture

We already have a Super Fed....super as in super-huge gaping wound.

Sat, 10/08/2011 - 11:38 | 1752877 Miss Expectations
Miss Expectations's picture

Jesus! Bad waves of paranoia, madness, fear and loathing, intolerable vibrations in this place. Get out! The weasels were closing in. I could smell the ugly brutes.~

Raoul Duke
Sat, 10/08/2011 - 11:39 | 1752880 chindit13
chindit13's picture

Finally, "sooner than most people think" is upon us.

An opinion:

If I sift through everything and try to filter out the noise, what I am left with as the agent of change is this:  Greece.  I’ll explain.

Greece is the only economic superpower in the world right now, if that terms means the land that has its finger on the financial nuclear trigger.  Like democracy and the olympics, everything springs from Greece.

Greece will default.  That is obvious.  How they default is where it gets interesting.  If Greece remains in the euro system, there is a possibility---very slight---that the default can be managed.  It will hurt, and hurt badly, but it won't mean annihilation.  If Greece leaves the euro, all hell breaks loose.

Think about how a departure from the euro might occur, and what repercussions it would have.  If Greece hinted at departure, what Greek would not immediately head to the bank and remove his cash euros?  Who wants 'new drachma', at an exchange rate determined first by the Greek government, before the Black Market gets a chance to have its say?  Banks will have no choice but to close as their deposit base shrinks to zero.  The Greek government also will have to impose capital restrictions, as those euros will want to find a resting place outside of the Greek government's reach.

Then what about the debt held by non-Greek banks?  In what currency is it denominated?  Will a private Greek borrower be told by his Eurobank that he still owes euro, and if so, will the Greek government even allow the borrower to pay back in euro?  I'll bet "NO".  There is precedent for this.

Now suppose the Italians or Spanish are paying attention.  They, too, will immediately head to the bank and withdraw cash euros, just in case, or move them to Luxembourg or the Caymans or somewhere safe.  Spanish and Italian banks will have to close, too.  No other bank---not even a medium sized Bavarian bank (aka The Eternal Chumps) is going to do business with a Greek, Italian, Spanish, Portuguese or Irish Bank.  Outstanding debts to Italian and Spanish firms will be recalled, in euros.

When nobody gets paid back, or gets paid back in new drachmas or new lire, no Eurobank gets out alive.  French and Germans will remove what money they have in the bank.  Gold will do well, but for a time so will physical euro cash.  Inertia and a desire for simplicity will do that.

Then there's the US banks........what's the exposure?  On and on it goes.

And it all started with tiny little Greece.  Had Greece been the only profligate son of the EU, its loss could have been survivable, no matter the manner of default.  It isn't alone, however, it is just first, and worst.

Is it any wonder the Troika is getting panicky?  They are slowly awakening to the realization that they must take the lesser of two evils and try to orchestrate a controlled default of Greece.  Even Mervyn King, BOE Chief, says this is the worst crisis since the 1930s...worse than 2008.  It might well all collapse anyway.  They might not be able to sell "bailout" to their populations, because populations have Armageddon Fatigue.  They have heard it all before.  That card has been played.  The masses were fooled once;  they won't be fooled again, as the Who say.

The absolute only way that this in the euro bailout can be pulled off---and even then success is hardly guaranteed---is to offer the concessions that should never have had to be offered, because what needs to be broken down should never have existed in the first place.

What are those concessions?  Break up all TBTFs worldwide.  Install an international Glass Steagall.  Limit bonuses and do clawbacks on unearned bonuses from the last ten years.  Make banks similar to public utilities.  And the most important thing for public morale:  PROSECUTE.

"Sooner than most people think" has arrived.  Stopgaps such as announcing a massive stabilization fund or "plans" to recapitalize banks now can buy only a brief respite.  Euroleaders can do it the "easy" way, or they can let this hit them full bore.  Either way there is pain, but they can minimize the pain by sharing it, which means those who have escaped it thus far are overdue to get their butts smacked.

Sat, 10/08/2011 - 11:58 | 1752922 disabledvet
disabledvet's picture

Good first draft. Obviously gold would plunge under this scenario since the cut to living standards is apocalyptic. Let's throw this one in the mix just to blow your mind: "there has now been a seemless transition from the failure of Dexia to the failure of Belgium." Explain. For extra-credit "do something about it." (Hint: you are not allowed the use of any physical "weapons of war" this time.)

Sat, 10/08/2011 - 12:03 | 1752936 Hulk
Hulk's picture

Nice job, but you left out the biggest wildcard of them all, CDS. Oh what interesting times we live in...

Sat, 10/08/2011 - 13:04 | 1753030 Mike2756
Mike2756's picture

They can be banned and deemed unenforceable, just sayin'.

Sat, 10/08/2011 - 14:37 | 1753180 disabledvet
disabledvet's picture

absolutely. "line on the left, one cross each." they still might be able to claim "billionaire status" however. and i'm still waiting for the return of Karen Moscow on Bloomberg. What happened?

Sat, 10/08/2011 - 12:36 | 1752983 falak pema
falak pema's picture

Chindit finally walks away from the US hubristic view point : them or us, so prevalent here. Its not them or us, its always been them AND us. The only question has been did we stop the rot since 2009 or let it get worse. The answer is the second. Having said that, it has to be a global solution or no solution. SO the rest is irrelevant. Ron PAul and all those isolationists on both sides of the pond. They will not solve the problem only make it worse.

Its all in and its all in to save the people NOT the Oligarchs who are the arsonists. If the people can force the government to do it in EU there is a small chance; stall the domino fall and then clean out the banks and the hanky-panky financial architecture. FROM TOP TO BOTTOM. In the USA the Oligarchs OWN everything including the mainstream people's mind set, in total DENIABILITY. So NO HOPE THERE. Only more pain.

So lets hope there are some courageous people left in EU who know how to count...

Sat, 10/08/2011 - 12:47 | 1753009 JLee2027
JLee2027's picture

Not true about Ron Paul. There is no global solution except a debt reset and a new currency backed by Gold/Silver. That's never going to happen voluntarily world-wide at once, so it must be done country by country...aka Ron Paul here.

Sat, 10/08/2011 - 12:55 | 1753018 falak pema
falak pema's picture

If Ron PAul says get out and its country by country then Greece blows in ugly scenario...just we move into the Chindit's 'black swan' scenario which is worse than anything the world has seen...uncharted waters...

I was only making that comment on RP within the premise that the black swan scenario of 'little greece' had to be avoided at all costs. 

If you move away from that premise then I have no problem with RP's solutions. I don't have a crystal ball about what the future will be like. So don't get me wrong. I'M SURE OF NOTHING AND WILLING TO FOLLOW ALL REASONABLE ROUTES TO FUTURE...NOT the  Armageddon thesis.

Sat, 10/08/2011 - 17:34 | 1753428 Marco
Marco's picture

Is Ron Paul really in favour of a debt reset? I don't recall any statements he made in that respect as far as private debt is concerned.


I think starting over debt free instantly would certainly make a Ron Paul inspired deregulation wave far more likely to succeed than a slow unwinding of all the debt through a deflationary spiral (even made impossible in part by restrictions on personal bankruptcies and full recourse mortgages). It still doesn't seem something he would propose though.

Sun, 10/09/2011 - 12:53 | 1754911 CrazyCooter
CrazyCooter's picture

Actually, a gold standard implies something very important; the price fix. At 50k/oz, the US and the Euro sector would be quite solvent given the US has 8k tons and the Euro contries hold about 10 tons cumulatively.

Picking a price too high means inflation. Picking a price too low is deflationary. I won't even begin to suggest I know what the "right" price is. But a return to gold, at the right price could reset the system.

At least that is my line of thinking right now.



Sat, 10/08/2011 - 14:17 | 1753137 DoChenRollingBearing
DoChenRollingBearing's picture

@ Chindit13,

That was really very good.  Lil ol Greece could be the trigger for a high-risk world collapse.  Yours is the best comment I have seen to date on why GREECE alone could bring it all down.

You should consider becoming a contributor to Zero Hedge, your clear logic and writing would likely impress the Tylers.


I especially like the Rx you suggest people will do: physical euro cash (or US$ here) and gold.  People will do just that when things get scary.  Front-run them by getting cash and gold now, while you still can.

+ $55,000

Sun, 10/09/2011 - 11:05 | 1754625 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Good analysis, but anyone who knows of Ferfal or lived thru the Bosnian's worst times, should know that when SHTF, your best bet is alcohol, cigarrettes and barterable items. It will take at least several months to get back to gold. Learn that now or starve later.

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