*** FUTURE POSTS WILL ALSO APPEAR AT 'NOW AND NEXT' : https://rolfnorfolk.substack.com
Tuesday, September 30, 2008
Boing!
Super post by Denninger today, too. He points out, among other things, that the Dow started falling yesterday when everyone (himself included) expected the Bill to pass. And as he says, Bernanke upped the money in the system by vast amounts anyway, and it still hasn't fixed the problem. Just how much petrol do you need to throw onto a fire to put it out?
The BBC perspective
To me, it's the very opposite: it's a prewar Lagonda that has spent years with its axles on bricks, and it's just had a new set of tyres put on; after long disuse, the engine has finally turned over. Maybe it will seize up again, but for now there is a hint of democratic accountability.
For example, is it not interesting that more Democrats voted against the Bill, than Republicans for (both as a percentage and in absolute numbers)?
I watched Peston on TV last night and said to my wife, "I should be in front of that microphone." I heard him on the radio this morning and still want his job.
The MSM: one despairs.
Monday, September 29, 2008
Now what?
But maybe the worst players in the banking market should be allowed to burn out anyway, as Marc Faber has said for a long time.
How many of the crucial 10 swing votes in the House were down to the polemical fax-fomenting of Mish, Denninger at al?
And will the Establishment force them to vote again and again until they get it right? Nancy Pelosi and her "bipartisan" mantra (3 or 4 times in one statement) seemed to hint at this.
Under New Management
Sunday, September 28, 2008
My plan: a $15 trillion dollar bailout.
This graph shows that the 50-year mean ratio of such debt to GDP is 120.1%. So to get back to a long-term average, DEBT MUST HALVE. As I said in a reply to a comment today, it's like a game of musical chairs, but taking away half the chairs in one go.
In fact, an almost perfect fit would be to cancel all the mortgage debt in the USA - just to get back to the level of debt averaged over the last 50 years.
And Marc Faber is saying the bailout will need 5 trillion, not $700 billion.
Hmmm....
Why don't we get really bold: $32.4 tn debt x 46% in the form of mortgages = $14.9 trillion. Give everybody their houses free of debt, make future loans on domestic property illegal. Yes, there'll be inflation, but the liberated houseowners will be able to afford it.
Will the banks be ruined? They're ruined now. Will the government have to nationalise them? They're doing it now.
These are revolutionary times. We may not be able to scourge the moneylenders from the temple, but at least we can chase them out of our houses.
Yes, the result's a house price crash, if you can't pump up the price with phoney-baloney money. But no debt, so so what?
The banker has inflated everything so you have to borrow to have anything. He's made himself indispensable, like a pusher of addictive drugs standing outside the school gates, giving away samples to get you hooked. He's your "friend", your "main man", who'll make you "well".
Bankers and their pet traders have become insanely rich by making you poor. Your assets are big on the outside and hollowed-out by debt on the inside; it's why they call it a bubble.
Do you know your enemy?
Saturday, September 27, 2008
Bank lending - can somebody please help?
But over the same period, Bank of England stats show an annualised average increase in M4 bank lending of c. 13.5%, which suggests that lending grows at 4.5% p.a. above GDP. If that's right, UK bank lending as a proportion of GDP doubles every 16 years.
Can that be right? And what about the ratio of credit to the total of all national assets? Is that increasing, too? Because it looks as though eventually, the banks must own everything.
I reproduce below a graph from a mid-August post on Marc Fleury's blog. This shows the long-term ratio of total credit to GDP in the United States, and the current level of indebtedness seems to be way, way above the Great Crash situation in 1929.
Somebody please put me right and/or direct me to authorities and information sources.
My mind keeps saying, "This cannot be right, surely everything is sort of normal, really, we'll muddle through." I find myself discounting even McCain's Churchill quotation ("This isn't the beginning of the end of this crisis. This is the end of the beginning") and the politicians' use of the word "meltdown" to bounce Congress into accepting the bailout package proposals. I have spent years warning about a possible crash, but I've never, I think, allowed myself to get apocalyptic. I prefer my disaster movies to stay safely in the cinema.
So, how bad is it really, and does the banking system really have a tendency to acquire everything?