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alstry (36.24)

We are All In The Soup.....

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November 11, 2009 – Comments (10)

The dollar fell to a 15-month low versus major counterparts today

The head of the Federal Deposit Insurance Corp. said Tuesday she's "very worried" that the nation's biggest banks aren't lending enough and warned the economy could take another turn for the worse without increased access to credit.

FDIC Chairman Sheila Bair said the FDIC's upcoming quarterly report would show that "not many large institutions are doing a very good job of lending." Instead, she said, some are taking advantage of near-zero interest rates by borrowing dollars cheaply to buy higher-yielding assets like stocks or commodities -- a move known as the "carry trade."

"I don't see much money going out (from banks). I see a lot of carry trade," Bair told a banking conference in New York. "It used to be you take deposits and you lend out money. We'd like to see more of that."

Many banks have tightened lending standards following a wave of residential and commercial property defaults. Others say they want to lend but see little demand as consumers and businesses seek to pay off debt, not take on more.

The lack of lending by large banks is dangerous at a time when many small and midsize banks are teetering on the brink amid the economic downturn, Bair said.

"I'm very worried (that) the larger institutions don't seem like they're stepping up to the plate providing credit," Bair said. "Because if they don't do that, we're all in the soup."

If Banks are not lending, there is no private economy.  If there is no private economy, there is little revenues going to government.  No private economy, no revenues to government....is much going on anywhere?

Job openings remain close to record-lows

We have a very high fixed costs in America....health care, housing, taxes, and interest.  Interesting times indeed.

10 Comments – Post Your Own

#1) On November 11, 2009 at 5:59 AM, alstry (36.24) wrote:

Many States Running Out of Money....Banks getting unlimited Free Money......Credit Tightening For Families and Small Business

Dollar Plunges To New Multi-week Lows Against Euro And Franc

What is a dollar worth if there is not much of an economy backing it????

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#2) On November 11, 2009 at 8:18 AM, Counterparty (< 20) wrote:

Currencies are primarily backed by interest rates, less so by GDP.

The dollar may go as low as 1.55 to 1.6 against the Euro in the next 6 months, but that's hardly based on the strength of the European economies.

We're pretty much in the same predicament as the US in the long term with lower overal growth, as we may have less private sector and individual debt, but higher taxation because of better social services and the resulting higher government debt levels compared to GDP.

The US will have to start raising interest rates by Q3-Q4 of 2010 at the latest, so at that point the dollar will start regaining some strength, which should have an impact on all those carry trades.

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#3) On November 11, 2009 at 9:10 AM, russiangambit (29.37) wrote:

Yes, who would've thought that private banks after getting public money will still stick with their own private interests and instead of  taking risk lending to overstreatched borrowers will prefer make easy money in the various market casinos?

If they want banks to lend, then they need to devise a method to make the markets  and any other activiyy less profitable for them, and lending more profitable.

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#4) On November 11, 2009 at 9:35 AM, alstry (36.24) wrote:

What many don't realize is that it is in the bankers' interests to shut down this economy.  Bankers can't make any money lending because they have overleveraged the current system and not much qualifies for loans.

We have over $50 trillion dollars of debt against a backdrop of evaporating revenues.  We are in the process of changing the entire nature of our economy.

Pretty much everything is being shut down right now....Businesses, Schools, Hospitals, Police and Fire Departments, Cities, Counties, and States.

Remember, they are doing God's work and it they seem to believe God wants them to be the chosen ones.

Notice how Bernanke says he is keeping rates low to keep things going.....yet the only rates that are low are those being offered to the banks.....rates to families and small business are high and tight.

This is Zombulation....free money to the bankers and no money to anyone else....eventually most lose their jobs and the nation shuts down.

When the worldwide distress gets severe enough...expect a war or wars to break out......this is often the easiest path to take when history glides into periods like this.....

What is facinating is how few really appreciate what is going on around them.....

World Bank warns unemployment threatens US economy

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#5) On November 11, 2009 at 9:46 AM, AdirondackFund (< 20) wrote:

That's exactly the point gambit, and was told to Policy Makers in Washington a year ago during the Stimulus Crisis when these very same Banks were out looting the US Treasury.  It is a simple fact that we do not have a Country as long as Goldman Government is paying off everyone in Government at everyone else's expense.  We have suffered a Banking Coup d'etat. 

Depressions are built on a foundation of Fraud and Corruption, always have been, always will be, this case proving to be exactly the same as all previous cases that have come before.

The way that you prevent Banks from looting the US Treasury is by imposing Glass-Steagall protections which prevent Banks from becoming Investment Houses.  Really, what we have is Banks posing as Banks to obtain free money and then redeploying that money as Investors.  There is simply no incentive to lend, cutomers become unable to borrow, and the entire Usury Chain breaks down into one big self fulfilling prophecy.  Washington has been told, a year ago, that this is what would happen and here we are reaping the bitter harvest of a Government bought and paid for by Investment Houses that cannot contribute anything to the economy.

Normally, there is no 'free lunch' in a properly regulated economy, this being the current day exception to that rule.  But everyone already knows that a 'free lunch' can always be had at taxpayer expense.  This is the point in Depressions where money becomes Political. 

Look out below.   

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#6) On November 11, 2009 at 10:04 AM, alasker (< 20) wrote:

I was wondering recently- we have enough problems here in the USA but so do other countries. Here in NY we constantly raid our rainy day funds rather than cut costs. I hope other countries do not get the idea to redeem their US bonds to pay for their own aging populations needs.

Also- anyone read that Zimbabwe is shifting towards the US dollar for transactions since their own currency is... there is not enough room on the zimbabwe paper bills to print all the zeros. 

What soup is Blair talking about? Minestrone? Tomato? Chicken noodle? I like barley soup.

 

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#7) On November 11, 2009 at 11:45 AM, alstry (36.24) wrote:

Regardless of the flavor....the soup is about to get a LOT HOTTER!!

Money is evaporating quickly as credit is cut off and debt consumes more and more......and the cuts are going to become more frequent and more severe......expect lots of tax increases as the politicians scramble for cash.  With massive government cuts...you should routinely see private corporations cut 10-20% of its workforce.

Uniontown Pa - 7 Firefighters 

Applied Materials Inc - up to 15% of Workforce

City of Plainfield - 25 and 10% Tax Increase

Lams Inc - 180+

Experts Expect Massachusetts will Lose Ten of Thousands of Jobs before the Recovery

EL Paso - 300

Burlington Northern Santa Fe Railway - 15 to 17

The Arizona Daily Star - 6

City of Joliet - 6

Zac Posen and Gucci - Layoffs Coming?

ABX Air - 46

Wicks Building Systems - 500

State of Ohio - Expect 100 Bus Drivers / Monitor Layoffs

Absent policy changes....we have only just started to witness the defaults and foreclosures.

Orange County: Foreclosure Notices Hit Record High

Very strange times indeed.

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#8) On November 11, 2009 at 1:45 PM, Rasbold (90.70) wrote:

JP Morgan announced they are hiring.....wait....HIRING???

1200 people through 2010 to ramp up for the coming RE redux!

 

Easy to make bets on tax money.....Chase....yeah, you got to chase them for anything!

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#9) On November 11, 2009 at 3:44 PM, jddubya (< 20) wrote:

Other than the last 3 paragraphs of the blog, and the comments added by Alstry, this was an outstanding bit of information to present here.

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#10) On November 17, 2009 at 5:43 PM, jason2713 (< 20) wrote:

Good video:

http://cosmos.bcst.yahoo.com/up/player/popup/?rn=289004&cl=16675795&src=finance&ch=4043681

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