The U.S. is probably the largest debtor nation the world has ever seen!
See article
Links 5/7/2022
3 years ago
Thursday, January 22, 2009
Exclusive Interview: Jim Rogers Predicts Bigger Financial Shocks Loom, Fueling a Malaise That May Last for Years
U.S. national debt – the roughly $5 trillion held by the public– essentially doubled in the course of a single weekend
See interview
See interview
credit losses could peak at a level of $3.6 trillion for U.S. institutions
Leading economist Nouriel Roubini said today that the U.S. banking system is "bankrupt" and "effectively insolvent":
“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion.” ***
“The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.”
“I’ve found that credit losses could peak at a level of $3.6 trillion for U.S. institutions, half of them by banks and broker dealers,” Roubini said at a conference in Dubai today. “If that’s true, it means the U.S. banking system is effectively insolvent because it starts with a capital of $1.4 trillion.” ***
“The problems of Citi, Bank of America and others suggest the system is bankrupt,” Roubini said. “In Europe, it’s the same thing.”
Warren Buffet’s wisdom will be borne out, “Only when the tide goes out do you discover who’s been swimming naked.”
Read this article. Hanging out at the mall will never be the same again.
"America's Economic Collapse-Ghost Malls Will Be Appearing
James Quinn January 19th 2009 Cutting Edge Economic Crisis Analyst
America’s economy supports more than 1.1 million retail stores. There are approximately 1,100 Malls in the United States, not counting the thousands of strip mall centers. That will soon change as once thriving malls become ghost malls. By 2011, America’s malls within two years will have an entirely different set of numbers."
"David Rosenberg, the brilliant economist from Merrill Lynch, describes what will happen next: "This is an epic event; we're talking about the end of a 20-year secular credit expansion that went absolutely parabolic from 2001-2007.Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8 percent, US housing stocks must fall to below eight months' supply, and the household interest coverage ratio must fall from 14 percent to 10.5 percent. It's important to note what sort of surgery this is going to require. We will probably have to eliminate $2 trillion of household debt to get there. This will happen either through debt being written off, as major financial institutions continue to do, or for consumers themselves to shrink their own balance sheets."
That is right $2 trillion in debt needs to be wiped out. How long will that take?
See article
"America's Economic Collapse-Ghost Malls Will Be Appearing
James Quinn January 19th 2009 Cutting Edge Economic Crisis Analyst
America’s economy supports more than 1.1 million retail stores. There are approximately 1,100 Malls in the United States, not counting the thousands of strip mall centers. That will soon change as once thriving malls become ghost malls. By 2011, America’s malls within two years will have an entirely different set of numbers."
"David Rosenberg, the brilliant economist from Merrill Lynch, describes what will happen next: "This is an epic event; we're talking about the end of a 20-year secular credit expansion that went absolutely parabolic from 2001-2007.Before the US economy can truly begin to expand again, the savings rate must rise to pre-bubble levels of 8 percent, US housing stocks must fall to below eight months' supply, and the household interest coverage ratio must fall from 14 percent to 10.5 percent. It's important to note what sort of surgery this is going to require. We will probably have to eliminate $2 trillion of household debt to get there. This will happen either through debt being written off, as major financial institutions continue to do, or for consumers themselves to shrink their own balance sheets."
That is right $2 trillion in debt needs to be wiped out. How long will that take?
See article
U.S. economy may sputter for years
LA Times "Unemployment could be worse than now by the time President-elect Barack Obama's first term ends."
No kidding. We exported millions of jobs and factories overseas. Just check the job listings for computer related engineering jobs. Lots of listings in Bangalore. And housing not cheap there either.
See Article
No kidding. We exported millions of jobs and factories overseas. Just check the job listings for computer related engineering jobs. Lots of listings in Bangalore. And housing not cheap there either.
See Article
$8.5 Trillion Spent and No Relief in Sight...
Anther blog has an interesting graphic comparing the amount spent on the bailout to the GDP. Check it out.
"The combined effort of the Federal Reserve Bank and the U.S. Treasury hasn't done much towards solving the problems in our banking system. Since my last article about the Fed's action to bailout the financial system there has been an additional $6.684 trillion put to work assisting financial institutions."
SEE BLOG.
"The combined effort of the Federal Reserve Bank and the U.S. Treasury hasn't done much towards solving the problems in our banking system. Since my last article about the Fed's action to bailout the financial system there has been an additional $6.684 trillion put to work assisting financial institutions."
SEE BLOG.
“Banks Foreclose on Builders With Perfect Records.”
The article talks about how banks are starting to do such things as call for extra collateral from builders—even if they have never missed a payment—essentially dooming them to failure. If you have purchased or are planning to purchase a home in a new subdivision that has not yet been completed, this could be horrible news for you.
>SEE ARTICLE.
>SEE ARTICLE.
Wednesday, January 21, 2009
Banks face 3.6 trillion in losses. The govt can't cover this.
The possibility of bank nationalizations, in which governments take direct control of financial institutions, is being debated in Britain and elsewhere, as some of the world's biggest banks report surprisingly dire results. The industry's plight, tightly intertwined with the ongoing recession, is among the great challenges confronting President Obama.
See Washington Post article.
See Washington Post article.
Friday, January 9, 2009
Game over
The borrowing game is officially over as China will now reduce its purchases of US debt instruments.
Interest rates in the US will be significantly higher as a result.
China Losing Taste for Debt From U.S.
Interest rates in the US will be significantly higher as a result.
China Losing Taste for Debt From U.S.
Tuesday, January 6, 2009
The point of no return
Rome is burning. The US government in a last desperate act is going to run trillion dollar deficits
for the next several years. Remember those pictures of Germans pushing wheelbarrows full of
marks well we will be pushing wheelbarrows full of dollars. You can kiss your retirement savings
goodbye. The coming dollar crash and the ensuing hyper inflation will wipe out your savings.
SEE ARTICLE
for the next several years. Remember those pictures of Germans pushing wheelbarrows full of
marks well we will be pushing wheelbarrows full of dollars. You can kiss your retirement savings
goodbye. The coming dollar crash and the ensuing hyper inflation will wipe out your savings.
SEE ARTICLE
Friday, January 2, 2009
Manufacturing Downturn
Manufacturing Reports Show Depth of Global Downturn
By BETTINA WASSENER/NYT
Published: January 2, 2009
From Australia, to Asia and Europe and the United States on Wednesday, the message in the latest economic reports was clear: manufacturing continued to slump amid the worst slowdown since the Great Depression.
In the United States on Friday, a crucial measure of manufacturing activity fell to the lowest level in 28 years in December. The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index was 32.4 in December down from 36.2 in November.
See article.
By BETTINA WASSENER/NYT
Published: January 2, 2009
From Australia, to Asia and Europe and the United States on Wednesday, the message in the latest economic reports was clear: manufacturing continued to slump amid the worst slowdown since the Great Depression.
In the United States on Friday, a crucial measure of manufacturing activity fell to the lowest level in 28 years in December. The Institute for Supply Management, a trade group of purchasing executives, said its manufacturing index was 32.4 in December down from 36.2 in November.
See article.
a recovery program that has in every provision a ‘buy America’ clause.”
Steel Industry, in Slump, Looks to Federal Stimulus
Dilip Vishwanat for The New York Times
The Granite City Works U.S. Steel mill in Granite City, Ill., cost more than 2,000 people their jobs when it closed.
By LOUIS UCHITELLE
Published: January 1, 2009
The steel industry, having entered the recession in the best of health, is emerging as a leading indicator of what lies ahead. As steel production goes — and it is now in collapse — so will go the national economy.
See article.
Dilip Vishwanat for The New York Times
The Granite City Works U.S. Steel mill in Granite City, Ill., cost more than 2,000 people their jobs when it closed.
By LOUIS UCHITELLE
Published: January 1, 2009
The steel industry, having entered the recession in the best of health, is emerging as a leading indicator of what lies ahead. As steel production goes — and it is now in collapse — so will go the national economy.
See article.
Eurozone Blues
New year nightmare brings spectre of 1930s-style depression to eurozone
Politicians have little to celebrate as currency reaches its 10th birthday
David Gow in Brussels
The Guardian, Thursday 1 January 2009
See post.
Politicians have little to celebrate as currency reaches its 10th birthday
David Gow in Brussels
The Guardian, Thursday 1 January 2009
See post.
US Overborrowing
DEBT SWEAT
Printing Money – and Its Price
By PETER S. GOODMAN/NYT
Published: December 27, 2008
Borrowing and spending beyond ordinary limits largely explains how Americans got into such economic trouble. For decades, businesses and consumers feasted relentlessly, as if gravity, arithmetic and the tyranny of debt had been defanged by financial engineering.
...
“We got into this mess to a considerable extent by overborrowing,” said Martin N. Baily, a chairman of the Council of Economic Advisers under President Clinton and now a fellow at the Brookings Institution. “Now, we’re saying, ‘Well, O.K., let’s just borrow a bunch more, and that will help us get out of this mess.’ It’s like a drunk who says, ‘Give me a bottle of Scotch, and then I’ll be O.K. and I won’t have to drink anymore.’ Eventually, we have to get off this binge of borrowing.”
Some argue that the moment for sobriety is long overdue, and postponing it further only increases the ultimate costs. “Our government doesn’t have enough spare cash to bail out a lemonade stand,” declared Peter Schiff president of Euro Pacific Capital, a Connecticut-based trading house. “Our standard of living must decline to reflect years of reckless consumption and the disintegration of our industrial base. Only by swallowing this tough medicine now will our sick economy ever recover.”
Printing Money – and Its Price
By PETER S. GOODMAN/NYT
Published: December 27, 2008
Borrowing and spending beyond ordinary limits largely explains how Americans got into such economic trouble. For decades, businesses and consumers feasted relentlessly, as if gravity, arithmetic and the tyranny of debt had been defanged by financial engineering.
...
“We got into this mess to a considerable extent by overborrowing,” said Martin N. Baily, a chairman of the Council of Economic Advisers under President Clinton and now a fellow at the Brookings Institution. “Now, we’re saying, ‘Well, O.K., let’s just borrow a bunch more, and that will help us get out of this mess.’ It’s like a drunk who says, ‘Give me a bottle of Scotch, and then I’ll be O.K. and I won’t have to drink anymore.’ Eventually, we have to get off this binge of borrowing.”
Some argue that the moment for sobriety is long overdue, and postponing it further only increases the ultimate costs. “Our government doesn’t have enough spare cash to bail out a lemonade stand,” declared Peter Schiff president of Euro Pacific Capital, a Connecticut-based trading house. “Our standard of living must decline to reflect years of reckless consumption and the disintegration of our industrial base. Only by swallowing this tough medicine now will our sick economy ever recover.”
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