Posted by Tommy G on Sun, 05 Aug 2007 13:54 | #

LMAO. Kramer is a maniacal little schmuck!

First off , hyperinflation WILL NOT happen in the US. We have many economic(fiscal and monetary) programs in place to counteract this type of situation. Setting aside hyper-inflation, keep in mind that as the threat of inflation increases, the Fed will raise interest rates on short term fixed income yields. This will keep inflation in check. From what I’ve always been told, the main objective of the Fed is to keep inflation in check.

I hope the Fed stays put and doesn’t lower short-term rates to save the portfolios of the likes of Kramer. I’m confident Government bailouts funded by money inflows from the major economies of the world (China, Japan, Germany, etc.), in the form of buying US Treasuries will keep our financials afloat. It’s in their best economic interest to bail out our short term economic shortfalls because if the US economy goes into a 1930’s style depression, their economies will follow suit. After all, they need a strong robust American economy to market their goods.

Let the stock market correct! I look at this situation as a great opportunity to cost dollar average into the S&P 500 index fund.

Posted by onetwothree on Sun, 05 Aug 2007 15:02 | #

WTF is this crap? It sounds like espn. Except, coked up.

Posted by Mark on Sun, 05 Aug 2007 15:25 | #

I would bet on deflation.  The credit crunch is now beginning.  Hopefully, it will lead to some “interesting times”.
You should have sold your house already; now sell your stocks and gold.

Posted by James Bowery on Sun, 05 Aug 2007 16:30 | #

I’ve always been told, the main objective of the Fed is to keep inflation in check.

Well then it must be true!  I mean, why would some private organization try to use its influence on the money supply to perform macroeconomic insider trading?  That would be unethical.  And besides, look at what happened in 1981... the Fed did raise interest rates to stop stagflation—finally.

Sorry, Tommy G.  I don’t have the faith you do in our institutions—especially when we’re facing a situation where the male to female ratio in our engineering schools has gone from 2 to 1 to 1 to 2, with the percentage of males in them that are white go from near 100% to near 50%.

And now the two forces, Industry and Finance, are in a struggle to see whether Finance is again to become the master, or creative Industry.

—Henry Ford “The Jewish Question”

Posted by DavidL on Sun, 05 Aug 2007 18:48 | #

James

I’m in your corner - believing the Fed will inflate not deflate.

Bernanke wrote a book of essays on the Great Depression and knows good and well it was a deflationary event.

Secondly, I’m in the HVAC parts industry and recently
received from 2 different suppliers notices that any equipment
containing stainless steel was going up in price from 11 to 17 % !

Doesn’t sound very deflationary to me.

Hold the gold - ditch the stocks ( maybe short the market ? )

DavidL

Posted by onetwothree on Sun, 05 Aug 2007 21:15 | #

Re: Stock Markets and inflation:

http://www.mises.org/story/2532

Posted by James Bowery on Sun, 05 Aug 2007 22:45 | #

onetwothree, very interesting link.  Thanks for that.

Posted by Tommy G on Mon, 06 Aug 2007 00:19 | #

James,

Obviously I’m not an expect on the Federal reserve bank. However what I do know is that when the economy starts to grow too rapidly the Fed increases the short term interest rates thereby effectively reducing the demand for short term loans. Conversely when the economy is slowing down, the Fed reduces rates making it less expensive to take out short term loans. Hence it provides—or should provide—a stimulus to the overall economy. This is how the Fed keeps inflation or stagflation in check. In that aspect, it’s worked pretty well for the last 25 years.

From what I can glean from the financial news, Kramer is having a fit because all his hedge-fund buddies (especially those at Bear Sterns) invested heavily in repackaged sub prime mortgage loans. Now that the interest rates are being readjusted upwards on all the variable rate mortgages, the number of foreclosures have risen sharply there by making the hedge-funds’ investments plumit in value. So Kramer wants the Fed to lower short term rates it hopes it will stop the hemorrhaging saving him and his buddies’ hedge funds from collapsing.

From the numbers I’ve read, these sub-prime mortgages constitute only 10% total of all the recent mortgages granted in the past 5 or so years….and only a fraction of those are acually in default. It’s hardly a threat to the overall economy.
I seriously doubt the Fed will come to the rescue of Kramer and Co. That indeed would be unethical. But we shall see how the Fed reacts this coming week. 

“Sorry, Tommy G.  I don’t have the faith you do in our institutions—especially when we’re facing a situation where the male to female ratio in our engineering schools has gone from 2 to 1 to 1 to 2, with the percentage of males in them that are white go from near 100% to near 50%.”

James, I think this is a separate issue from what Kramer is talking about. I agree with you, it’s an outrage that the White-male is being discriminated against in his own country. As far as the engineers go, I believe the CEO’s of the companies(ie Bill Gates et al) are to blame for that. They want cheap labor so as to produce larger profits. That’s a product of our traitorous politicians working in concert with the greedy businessmen to craft immigration laws that in effect price out the homegrown White-male engineers.

lastly, like I alluded to in my previous post: I think this correction in the market is providing investors an opportunity to buy stocks.
The fundamentals in the economy are still very strong. There is good job growth, low inflation, low interest rates, high corporate profits, etc,
I believe this drop in the stock market is only a temporary technical correction. It probably will go lower before it hits a “floor” and starts to trend back up and break through a new “ceiling.”

If there are any MBA’s out there, please tell me if I’m right or wrong.

Posted by danielj on Mon, 06 Aug 2007 00:30 | #

I would refer everyone to Bill Bonner’s great books and blog.

Financial Reckoning Day

Empire of Debt

Posted by James Bowery on Mon, 06 Aug 2007 01:52 | #

You’re sounding like Jim Cramer two weeks ago.

The real problem is the loss of home equity which has been carrying the debt of middle income families that have had their household income vs expenses hammered.  I know you look at the “inflation” figures provided by the liars as true, but they aren’t true.  They’re lies told by lying liars.  Families have gone into debt to pay for necessities during the housing bubble, and it has been made worse by the importation of literally millions of Asians into middle class jobs to lower wages while increasing prices.

And if you can look at the shift of technical education away from white males and then say “the fundamentals are sound” I really think you ought to be hanging out over at GNXP rather than here.

Posted by Tommy G on Mon, 06 Aug 2007 06:47 | #

“I seriously doubt the Fed will come to the rescue of Kramer and Co. That indeed would be unethical.”

I meant to say: I seriously doubt the Fed will come to the rescue of Kramer and Co.  But if they do, that would indeed be unethical.

Posted by Tommy G on Mon, 06 Aug 2007 18:11 | #

“You’re sounding like Jim Cramer two weeks ago. “

TG: It sounds like Cramer had it right two weeks ago.

“And if you can look at the shift of technical education away from white males and then say “the fundamentals are sound” I really think you ought to be hanging out over at GNXP rather than here. “

TG: When I spoke of fundamentals, I was specifically referring to the economic fundamentals, or the leading economic indicators.

The issue of white-males being shifted away from technical education is as different issue. Now we’re talking about the deliberate race-replacement of Whites by the elites. James, I think we can agree that race-replacement is of our most urgent concern. But I have yet to hear a viable course of action we as race-realists can take to reverse the predicament we’re in! If we could only convince enough White liberals (especially white liberal women) that it’s in the best interest of ALL humanity to preserve the White-race, we could turn this thing around. But liberalism being what it is, makes it next to impossible to convince them to become a race-realists. As I’ve learned, “Liberals are implacably hostile to anything pro-White.”

Posted by James Bowery on Mon, 06 Aug 2007 20:47 | #

TG: When I spoke of fundamentals, I was specifically referring to the economic fundamentals, or the leading economic indicators.

The debate really is over “how leading” our different “indicators” are.

If you take out the types of humans creating technological civilization then you are doing something nasty to technological civilization—like destroying it.

The question is, what is the time constant?

There are two things that keep it from collapsing immediately:

1) The robustness of technological civilization allowing its fruits to be consumed by takeover artists for some time.

2) The remnant of the creators not so demoralized by becoming parasite food that they cease functioning altogether.

I think you overestimate both 1 and 2.

Posted by James Bowery on Mon, 06 Aug 2007 21:09 | #

The thing to keep in mind in the current situation is that as foreclosures increase adjustable rate mortgages will increase their rates driving more and more families into default.  In the late 1980s there was a surge of foreclosures however that surge was mining the fertility of the baby boom generation.  In the current foreclosure environment there is no such resource to mine.  Economists continue to ignore the economics of vital statistics and in so doing create government policies such as those whose fruits we are now reaping. 

From today’s Bloomberg:

The filing adds to signs that late payments have spread to homeowners with good credit.

Posted by Guessedworker on Mon, 06 Aug 2007 21:56 | #

Martin Hutchinson on the anatomy of credit crunches here:-

http://www.prudentbear.com/articles/show/2083

Posted by Tommy G on Mon, 06 Aug 2007 23:25 | #

“If you take out the types of humans creating technological civilization then you are doing something nasty to technological civilization—like destroying it.”

Eureka! I couldn’t agree more! That’s what I’ve always believed. I don’t understand why the elites are so foolish to believe displacing whites with nonwhites will in the long term benefit them. The economy and the overall quality of life will surly deteriorate—perhaps rapidly. I’m quite sure everyone at this site is well aware there is a correlation between the average IQ of it’s citizens and the wealth of their nation. Flooding the US with low IQ Mestizos and Blacks is insane!

“I think you overestimate both 1 and 2.”

Not at all. I believe the percentage of Whites in a nation, is directly-proportional to the quality of life enjoyed in that nation—both culturally and technologically. The faster the USA becomes a non-White nation, the faster it will become another crime ridden, slumified, third-world basket case.

Posted by James Bowery on Thu, 09 Aug 2007 17:21 | #

OK, so now China is now overtly threatening to dump its $1T holdings in US cash.  The European Central Bank is pumping liquidity into the market that the Fed is apparently unwilling to provide.

This reminds me of an exchange with John Jay Ray some time ago:

http://majorityrights.com/index.php/weblog/comments/nonsensical_fear_of_china/

Posted by Tommy G on Thu, 09 Aug 2007 18:01 | #

“OK, so now China is now overtly threatening to dump its $1T holdings in US cash.”

It’s only a threat. It ain’t gonna happen. Why you ask? Simply because China owns 1.3 trillion of our debt. As they start unloading, the value of the dollar will decease. Since they are so invested in dollars, they would be hurting themselves as much as the USA.

Posted by James Bowery on Thu, 09 Aug 2007 18:56 | #

Now you sound like John Jay Ray, and here is what I said to him when he said that:

Well here’s a clue:

A $1T 30 year mortgate at 6 percent interest requires monthly payments of about $8B or yearly payments of about $100B.  Taiwan’s GDP is more than $500B/year.

This seems like a pretty tempting deal—especially if you can start to use the US’s natural resources at rock bottom prices.
Posted by James Bowery on Tuesday, June 28, 2005 at 07:00 AM | #

Posted by Tommy G on Thu, 09 Aug 2007 19:53 | #

“A $1T 30 year mortgate at 6 percent interest requires monthly payments of about $8B or yearly payments of about $100B.  Taiwan’s GDP is more than $500B/year.

This seems like a pretty tempting deal—especially if you can start to use the US’s natural resources at rock bottom prices.”

That’s an even more unlikely scenario. I can’t begin to contemplate the damage China would do to it’s own economy if they foolishly made a military move on Taiwan. The Chinese are not foolish people.

Posted by James Bowery on Thu, 09 Aug 2007 20:01 | #

Who said “military”?  Do you mean to include a coup in Taiwan which China can plausibly deny?

Posted by Maguire on Thu, 09 Aug 2007 20:02 | #

“It’s only a threat. It ain’t gonna happen. Why you ask? Simply because China owns 1.3 trillion of our debt. As they start unloading”

1.  US Gross National Product is presently $13.2 trillion.  I agree much of this gross product is useless and worse, but for this very reason these numbers are a perfect yardstick to compare Chinese products and numbers.  The ballyhooed Chinese dollar hoard works out to five weeks’ GDP.

2. China’s dollar assets are divided between US Treasury Bonds/Notes and Federal Reserve dollars.  If the Chinese choose to dump their $800 billion of US bonds & notes, and no other dollar buyers appear, Tim Bernanke can buy them by creating dollars.  And he can do it all with a few keystrokes in between more important meetings, such as the ones deciding on the specific methods the Fed will use to erradicate the Chinese regime and State. 

This is how our paper money system works;  US Bonds and Notes are used as collateral for issuing Federal Reserve Dollars.  Meanwhile the USG has made Federal Reserve dollars ‘legal tender’ for payment of taxes.  The perfect circle of paper is unbroken.

The Fed *claims* it returns profits on its operations to the US Treasury.  This presumably includes profits from interest paid on bonds/notes held by the Fed.  I can’t think of a better way for the Chinese to fund Bush’s Iraq war than by helping retire $800 billion in debt in this generous manner.

The net result for the Chinese will have been to exchange interest bearing paper for non-interest bearing paper.  Plus they’ll have aroused the ire of a group that happens to own the navy controlling the sea routes that China has unwisely become dependent on to import oil.

This Fed bond purchase might lead to a mote of inflation and a period of discomfort for unimportant peasants (i.e. us here).  But this will not even be a factor in the Federal Reserve’s decision-making tree.  It seems to escape most folks’ observation that the ‘Fed’ greatly augmented its power during the Great Depression, and also the subsequent war against another person who was a disruptive force in the international Jewish financial system.  A man named A.H. Hitler.

3.  The fact we here might have to do without second (or first) cars and many other items for a long period is regarded by the Fed as a minor incidental to doing normal business.

4.  Whether the present Beijing regime or even a unitary Chinese state is still around six months after an oil blockade begins is another question.

Considered against real power measurements, as opposed to faux images, the Chinese still occupy a weak position vis a vis the Fed’s North American base.  And also compared to relative access to strategic high grounds like space, size and capacity of navy, air force, access to coal, raw materials, etc.

The ‘Fed’s’ response on this issue might be delivered in the form of a very large ‘pre-emptive strike’ against Iran.  ‘Oh so sorry the flow of oil is temporarily disrupted.  But our brave naval escorts can fight some vital tankers through.  At least for our friends…  Oh so very very sorry Chin Lee the China Man, guess it’s back to making corn dodgers for Rooster Cogburn for you…”

Posted by James Bowery on Thu, 09 Aug 2007 20:26 | #

US Gross National Product is presently $13.2 trillion.  I agree much of this gross product is useless and worse, but for this very reason these numbers are a perfect yardstick to compare Chinese products and numbers.  The ballyhooed Chinese dollar hoard works out to five weeks’ GDP.
...
The fact we here might have to do without second (or first) cars and many other items for a long period is regarded by the Fed as a minor incidental to doing normal business.

The 2 problems with these comments are that Gross is not Net, and cars aren’t home equity (ie: non-evictable shelter).  Oh, and by the way, having children—especially among K-strategy populations—does require that the female feel there is a secure roof over her head.  Now, can you think of any current problems with a K-strategy population regarding homes?

Posted by DavidL on Thu, 09 Aug 2007 22:05 | #

Maguire

If you ever write a book, on anything, but especially
economics, I will gladly buy several autographed copies !

Best economic comments outside of Perfide Albion.
( since the capos down at the"The City” are mum )

Cheerio ! opps I mean right on.

DavidL