Months ago we spoke about de-leveraging of banks and how dangerous this could be.
Well here it is we are in the Grip of deflation now. Our banks are leverage 9 to 1 as dictated by the Federal Reserve's Fractional Reserve Banking Policy. Meaning a bank can lend 9 times what they actually have on deposit in the bank. The money they lend is actually just digital credits it doesn't exist. This is why now that the FED has started the proverbial elephant down a hill side in its wave of defaults created since the 17 rate hikes its has run over every bank in its path.
Prices are dropping in every market; gas prices, commodities, equities, and currencies all falling in unison. The US dollar recently being the strongest currency out there in the G8 is perceived to be that we are the safest of the G8 to be but this is not true.
This USD strength is a false strength; it is actually a result of deflation or the scarcity of US Dollars in the system that is causing it as the leveraged US debt vanishes from the system. THE FACT IS EVERY DOLLAR WE HAVE IS A DOLLAR CREATED AT INTEREST OR DEBT MONEY.
What happens when the deflation runs its course? There won't be any money left. Gas might be cheaper but you will also have relatively less dollars to work with thereby keeping the benefits of price drops from truly being realized.
Once deflation runs its course then the remaining inflationary pressures of the central banks' money creation will take over. Since we must continue to finance defense, fight on going global conflict/wars with dubious origin and rational, and protect the people that pay the central bank's interest, the citizens of the nations, well enough for them to get their money back from us through government taxation. They will continue to flood the system with this fiat tsunami. This will put us at risk of mirroring the Pre-World War 2 era in Germany when the Mark was pretty much worthless. This is the future we face if the powers that be are left to their own devices.
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Showing posts with label Fed. Show all posts
Showing posts with label Fed. Show all posts
Sunday, October 19, 2008
Problem Reaction Solution
How can this model work so effectively on people? I can only say I wish it did not but it just does. Like cattle with a cattle prod poke them in the right place and they will rush toward their certain doom.
Nobody noticed the 17 rate hikes in the housing boom (see chart from January 2008 post) and the fact George Bush out of no where close the Bankruptcy loop hole while the FED was increasing global default risk. Now in 2008 The treasury under the leadership of Henry Paulson former Goldman Sachs CEO has come to rescue with his trusted ally Ben Bernanke to save us.
Lets see now the Glass-Stegall Act has been repealed Henry Paulson or Hank has turned his old company into a bank holding company and plans to buy all bad US debt off of bank balance sheets with our own money they just created and give good bank assets back to his old company.
Doesn't this set off any alarm bells in anyone's head anywhere? If this is the only thing I heard I would be at high alert. Goldman Sachs was the one company that seemingly knew to stay away from the entire Mortgage Backed Security business even when it was booming, now their ex leader is handing over all the assets of all the institutions that were caught due to the rate hikes and changes to LIBOR by his ally Ben Bernanke in the FED, and buying the bad debt from those institutions using our own money...... No body else out there sees this as a little too close to home.... Seriously no one out there caught on to this. Humor me.
We have been backed in to a corner and given only one solution. GIVE THE FED EVEN MORE POWER THAN THEY ALREADY HAD OVER EVERYTHING YOU NEED TO LIVE, The creation of money, INSURANCE (AIG), HOUSING (FANNIE & FREDDIE CONSERVATOR SHIP) and basically your souls. Remember this is a private bank not part of the US government.
Constitutionally the FED should not exist exactly as Senator Ron Paul states that bank is illegal and is conducting extremely illegal activities in broad daylight.
The media is completely complicit in the scam as any amount of research will turn up the fact that the FED should not exist by the US Constitution and only one Law Maker Ron Paul will acknowledge it. The power own you do you all just not mind? Even the money in your pocket isn't truly yours, it is an interest dollar owed to someone else and to pay it back our Central Bank will create more money out of thin air and depreciate your own money without your permission essentially robbing us of buying power.
Nobody noticed the 17 rate hikes in the housing boom (see chart from January 2008 post) and the fact George Bush out of no where close the Bankruptcy loop hole while the FED was increasing global default risk. Now in 2008 The treasury under the leadership of Henry Paulson former Goldman Sachs CEO has come to rescue with his trusted ally Ben Bernanke to save us.
Lets see now the Glass-Stegall Act has been repealed Henry Paulson or Hank has turned his old company into a bank holding company and plans to buy all bad US debt off of bank balance sheets with our own money they just created and give good bank assets back to his old company.
Doesn't this set off any alarm bells in anyone's head anywhere? If this is the only thing I heard I would be at high alert. Goldman Sachs was the one company that seemingly knew to stay away from the entire Mortgage Backed Security business even when it was booming, now their ex leader is handing over all the assets of all the institutions that were caught due to the rate hikes and changes to LIBOR by his ally Ben Bernanke in the FED, and buying the bad debt from those institutions using our own money...... No body else out there sees this as a little too close to home.... Seriously no one out there caught on to this. Humor me.
We have been backed in to a corner and given only one solution. GIVE THE FED EVEN MORE POWER THAN THEY ALREADY HAD OVER EVERYTHING YOU NEED TO LIVE, The creation of money, INSURANCE (AIG), HOUSING (FANNIE & FREDDIE CONSERVATOR SHIP) and basically your souls. Remember this is a private bank not part of the US government.
Constitutionally the FED should not exist exactly as Senator Ron Paul states that bank is illegal and is conducting extremely illegal activities in broad daylight.
The media is completely complicit in the scam as any amount of research will turn up the fact that the FED should not exist by the US Constitution and only one Law Maker Ron Paul will acknowledge it. The power own you do you all just not mind? Even the money in your pocket isn't truly yours, it is an interest dollar owed to someone else and to pay it back our Central Bank will create more money out of thin air and depreciate your own money without your permission essentially robbing us of buying power.
The Truth Will Set You Free (Part 2)
Who does the financial crisis benefit?
If you asked this question about the IRAQI war you would have realized what was going on long long ago. Dick Cheney gave $100 Billion dollar contract non compete to his former company Halliburton and even now the Oil Minister of Iraq has been in talks to reintroduce Exxon, Shell, BP, Total and Chevron after some 36 after being forced out by Saddam's nationalization of the industry. IN A NUTSHELL THE WAR USED OUR SONS AND DAUGHTERS FOR A VERY LUCRATIVE OIL DEAL WORTH TRILLIONS OF DOLLARS OVER THE LONG HAUL to invade and steal another countries natural resources. Very simple it wasn't because they hate your freedoms we felt the need to murder 1 million civilians to help them out, that ridiculous and just plain stupid if you even considered that a possible rationale.
Corporate America controls Congress and the president so then its easy to assume a business motivation behind anything this large scale that requires the spending of $10 billion dollars a month. That's a large market to not have a financial motivation to be a part of. War makes money just not always for us.
If you asked this question about the IRAQI war you would have realized what was going on long long ago. Dick Cheney gave $100 Billion dollar contract non compete to his former company Halliburton and even now the Oil Minister of Iraq has been in talks to reintroduce Exxon, Shell, BP, Total and Chevron after some 36 after being forced out by Saddam's nationalization of the industry. IN A NUTSHELL THE WAR USED OUR SONS AND DAUGHTERS FOR A VERY LUCRATIVE OIL DEAL WORTH TRILLIONS OF DOLLARS OVER THE LONG HAUL to invade and steal another countries natural resources. Very simple it wasn't because they hate your freedoms we felt the need to murder 1 million civilians to help them out, that ridiculous and just plain stupid if you even considered that a possible rationale.
Corporate America controls Congress and the president so then its easy to assume a business motivation behind anything this large scale that requires the spending of $10 billion dollars a month. That's a large market to not have a financial motivation to be a part of. War makes money just not always for us.
Libor and the FED
Ok lets talk education and the lack thereof in the USA today. Its all over the news now that LIBOR is sky high. LIBOR is a measure of credit risk, in normal times LIBOR is usually within 15 to 30 basis points or bps of the FED target rate.
However now that the FED rate is back down to 1.5% the LIBOR is lingering 300 bps plus above LIBOR signaling the complete destruction of the entire credit system. Why is this important? Or a better question what exactly is important about this whole thing?
Remember in January we discuss the fact the FED raised rates 17 times and with those hikes LIBOR correlated with the FED hike better than 90% from 1.5% to the upper 5% range. Now the FED knows this is a measure of credit default. Further more the FED also knows very well that 80% of the purchase money mortgages used in the peak of the housing market from 2003-2006 were adjustable rate mortgages (ARMs) that were set to LIBOR upon adjustment. This would indeed make the FED guilty of deliberately triggering a default way by changing the future credit worthiness of all mortgage backed securities, CMOs, and CDOs that package these adjustable mortgage products by knowing full well that all those purchase money mortgages will then adjust higher. This is very simple. They new what they were doing all along these are Harvard educated business men with intimate knowledge of this system. Where exactly are they cutting rates from to increase liquidity to save us. From the 5.25% they cranked it in the largest debt boom in history. 17 hikes and no accountability how is this possible unless the media is helping to hide the problem.
98% of Americans have no idea about this and this is the single most important aspect of the financial crisis gripping the planet today. The FED has extensive knowledge of the system they regulate and are aware most Americans and Congress don't get it. Now the FED has absolute authority over the entire banking and credit system with the unchecked power. This doesn't bother any out there?
However now that the FED rate is back down to 1.5% the LIBOR is lingering 300 bps plus above LIBOR signaling the complete destruction of the entire credit system. Why is this important? Or a better question what exactly is important about this whole thing?
Remember in January we discuss the fact the FED raised rates 17 times and with those hikes LIBOR correlated with the FED hike better than 90% from 1.5% to the upper 5% range. Now the FED knows this is a measure of credit default. Further more the FED also knows very well that 80% of the purchase money mortgages used in the peak of the housing market from 2003-2006 were adjustable rate mortgages (ARMs) that were set to LIBOR upon adjustment. This would indeed make the FED guilty of deliberately triggering a default way by changing the future credit worthiness of all mortgage backed securities, CMOs, and CDOs that package these adjustable mortgage products by knowing full well that all those purchase money mortgages will then adjust higher. This is very simple. They new what they were doing all along these are Harvard educated business men with intimate knowledge of this system. Where exactly are they cutting rates from to increase liquidity to save us. From the 5.25% they cranked it in the largest debt boom in history. 17 hikes and no accountability how is this possible unless the media is helping to hide the problem.
98% of Americans have no idea about this and this is the single most important aspect of the financial crisis gripping the planet today. The FED has extensive knowledge of the system they regulate and are aware most Americans and Congress don't get it. Now the FED has absolute authority over the entire banking and credit system with the unchecked power. This doesn't bother any out there?
Tuesday, March 11, 2008
FED Injects More Liquity (Round 2 or is it 3?...)
So here we go again, another attempt to prop up the collapsing credit system. Will it work? It is indeed a good thing that the FED is stepping in to take on Mortgage Backed Securities and provide liquidity to the market. However, something must be done to stop the sweeping tide of defaults that is causing the severe dislocation in the credit markets. Deleveraging in the credit system is more destructive than folks realize. The fact of the matter remains that in our "fractional reserve" banking system, where banks only hold 1/9th of what they are willing to securitize and lend out, means massive credit defaults will be magnified. Leverage is a double edge sword. During an expansion it will allow you to realize far larger gains with less capital, but in a contraction it will have the very same implications to the downside. In a nutshell it won't take much to erase a banks book value and make them insolvent.
It appears to me we are on the verge of seeing a very large bank (dare I say a Citigroup or Washington mutual) implode right out of existence. I believe it to be a certainty that before this pandemic of the credit markets runs its course there will be one more shoe to drop, and it will be the a very well known financial institutions total collapse. Stay tuned!!
It appears to me we are on the verge of seeing a very large bank (dare I say a Citigroup or Washington mutual) implode right out of existence. I believe it to be a certainty that before this pandemic of the credit markets runs its course there will be one more shoe to drop, and it will be the a very well known financial institutions total collapse. Stay tuned!!
Thursday, January 10, 2008
Interest Rates
| 3 Month LIBOR | 3 Month CMT | Federal Funds |
Note the correlation to the Fed Funds Rate.
Did our own Central bank knowingly sabotage our raging housing market. 17 consecutive rate hikes in a massive debt boom what would you expect to happen. The escalation of the LIBOR Index which now is forcing very high adjustments to teaser rates on adjustable rate mortgages did not happen by itself. Now the FED is here to save the day with rate cuts if the market needs it. What!?! Does anyone want to ask them why they cranked it up in the first place and are now trying to play hero to a problem it appears they were in direct control of creating? Your thoughts....
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