Even Wallstreet Knows That The Fed Is Fucking Us!

DriftingByTheStorm

So you guys should have seen this already.

But what i couldn't find until today was what came on after Ron chewed Bernake out.

CNBC went to its analysts and here is what the guy on the NYSE floor said.

Uh.

Does that make you guys comfortable or nervous?

Go back and watch what Ron was screaming about to the Fed ... and lots of people on the NYSE floor were cheering him?

That means they ARE freaked out about US fiscal policy and worrying about dollar collapse and market failure.

What is your take?

I was immediately happy when i heard they were cheering him on, followed by anger and sadness when i realized that meant that even the true players are aware that the system is gnawing off its limbs to survive.

:(

RolandTD20Kdrummer

Bernake reminds me exactly of how the Enron guys were talking before they all went to jail.

Lukin2Not4You

yes, im becoming very uneasy about this situation, its snowballing out of control. im not sure if this has been posted here....

http://www.youtube.com/watch?v=yKbcQ_7nFo0

theroachman

Snowballing?

I think that snowball is just about to turn into an avalanche.

The Government put inflation at just above 3% but for that to be true the Fed printing of more money this last week (may be last week?) would have lowered long-term interest rates. It did no such thing. The long-term rates stayed the same.

My guess is all the money printed for short term loans went to cover bad bank dept.

Being in the real estate business I see another threat to stability in this country. Typically a Bank that forecloses on a home they discount the selling price 10% to 15% I have seen some, in good neighborhoods, hitting up to 40% on the discount. This is on a first mortgage there is almost always a 2nd mortgage on homes that are being foreclosed right now.

This brings down the prices of every home in the neighborhood. If you need to sell your home and you can get a price you want or may be even desperate to get in order to pay bills, this does not bode well for you.

DriftingByTheStorm

This is another meeting with the Fed from a few months ago, right when the subprime bullshit kicked up.

Notice that Bernake's answer is IDENTICAL to the aswer he gave this time around (title post link) ...

I AM REALLY TIRED OF HEARING THIS B.S ARGUMENT, which phrased as you normaly hear it sounds like this:

The decreasing value of the dollar is actualy a GOOD thing, because it means we can sell more goods overseas, and at the same time all of our domestic goods still cost the same amount because they are sold in dollars.

UH.
THAT IS BULLSHIT.
Are they forgetting about our overwhelming trade deficit?

What the fuck good does it do to sell a few more things to china if EVERYTHING we buy from them now costs more, because our dollar is in the tube?

Not to mention, prices of domestic products dont even stay the same ... as someone else said, real wages don't move up anywhere near 3% a year ... and 3% is probably a lie ...

Americans are losing REAL wealth, and the trade deficit (among other things) will WORSEN because of it!

:(

RolandTD20Kdrummer

Lukin2Not4You wrote:

yes, im becoming very uneasy about this situation, its snowballing out of control. im not sure if this has been posted here....

http://www.youtube.com/watch?v=yKbcQ_7nFo0

Thanks, that's a great vid btw..

modern day slavery.

DriftingByTheStorm

RolandTD20Kdrummer wrote:

Thanks, that's a great vid btw..

modern day slavery.

That vid is OK.
Besides the small factual point of oversimplifying what The Fed really is -- a privately owned, federaly mandated corporation backed by money from large banks -- the real problem i have is this weird utopian (?) view of money being lent at zero interst.
???

Uh ... ANY money given out is a LOAN and should be acompanied by interest, because you are BORROWING money, by default.

The only problem with the current system is that the government tries to MANIPULATE the market rates by flooding it with cheap loans ... essentialy fixing the price by offering lower prices itself. That violates the free market AND worse, it floods the market with cash and thus devalues the existing currency.

I just think market rates should be set by the market, and not the "invisible hand".

:(
I

gue_barium

RolandTD20Kdrummer wrote:

Thanks, that's a great vid btw..

modern day slavery.

I'll bet I'm not the only one who's noticed that the rules of the money game are made by those who have no debt, and made for the rest of the shmucks (pretty much all of us) who are born into debt. It is modern day slavery. "Balancing the Budget" isn't a hot political button by accident.

Intothewild

Bernanke is fucking us. However there is only so much the Fed can do. We have this little war thing causing our dollar to drop and our gas prices to rise and a debt from the war that will eventually have to be paid back......through higher interest rates. Its not all on Bernanke

DriftingByTheStorm

Intothewild wrote:

Bernanke is fucking us. However there is only so much the Fed can do. We have this little war thing causing our dollar to drop and our gas prices to rise and a debt from the war that will eventually have to be paid back......through higher interest rates. Its not all on Bernanke

I don't think Ron Paul thinks it is all Bernake either.
I think he is just using the opportunity to bring the issue to the house floor.

Ron Paul has said in other interviews that he doesn't believe a lot of the other members of congress -- even the ones on the finance related committees -- really understand what fiat money is or how the system is destroying itself with interest debt and inflation.

DriftingByTheStorm

Here is the entire segment that came after the "ron paul fired every pistol in his arsenal" comment.

Rick Santelli says that the floor traders are extremely worried about huge problems with headline inflation !?!

LISTEN TO THE LAST 50 SECONDS!
"They obviously realize that the only thing the fed has ever done to solve these things is to 'ease' [cut rates] and they're making money. But if you ask these people 'do you really think your gonna see a rate cut in december?' and these people are long Fed fund futures [betting on rate cut] say by the time we get in to December headline inflation will probably make it so that the Fed cant ease!"


UH?

NOT GOOD! NOT GOOD! NOT GOOD!
I don't want the Fed to ease, but the fact that inflation is SO bad that they wouldn't be able to if they wanted. NOT GOOD, PEOPLE! NOT GOOD!

I don't really know how to read the 2yr vs 30yr t-bond spread, but it IS a bad indicator, "flight to safety" or not.

One of the other commentators also acknowledges that cutting the rate is NOT going to help things out.

I heard someone here (i think) say that tightening fiscal policy and raising rates is like putting salt on a wound. It hurts like hell, but you sterilize the wound and it heals.

Cutting rates is like giving someone with flesh wound some painkillers and slapping a bandaid on it ... they feel better but they end up dying from infection or bleeding out!

DriftingByTheStorm

How about what Soros' Little Bow Tied Buddy has to say.

SELL SELL SELL.

RolandTD20Kdrummer

Check this out:

http://www.youtube.com/watch?v=4n3g5lUgkWk


Ouch...

DriftingByTheStorm

RolandTD20Kdrummer wrote:

Check this out:

http://www.youtube.com/watch?v=4n3g5lUgkWk


Ouch...

Yeah.
OUCH!

"Somewhat like the 70's but different. Conditions are WORSE than the 70's"!

RolandTD20Kdrummer

another must watch

http://www.youtube.com/watch?v=3RhnHo3RDfg

RolandTD20Kdrummer

DriftingByTheStorm wrote:

Yeah.
OUCH!

"Somewhat like the 70's but different. Conditions are WORSE than the 70's"!

Ron Paul is THE only person to vote for in America in the upcoming election.

He's the only one that actually gets it.

spiral out

RolandTD20Kdrummer wrote:

Ron Paul is THE only person to vote for in America in the upcoming election.

He's the only one that actually gets it.

Yea i totally agree with you. He would do that country some good.

DriftingByTheStorm

PRIME EXAMPLE OF THE IDIOCY THAT SUPPORTS THIS POLICY:

MSNBC just had a guest on so they could discuss the possibility of The Fed giving more "guidance" on a quarterly basis. Straying from the theme a bit, the guest actualy went on to talk about Fed Policy related to rate cuts, and said, "Yeah, i mean, i think that inflation does give the Fed some leeway to cut rates further come December if the economy really is as soft as it seems."

WHAT THE FUCK?

Inflation gives the Fed leeway?
The Fed MAKES INFLATION.
The ONLY inflation our country faces is the dillution of the money supply!

How the hell can some guest argue that the very thing the Fed creates gives it perrogative to make MORE of that same thing?

Rate cuts = INFLATION

So

Inflation is an excuse for Inflation?

Huh.

No WONDER we are fucked!

josevolution

you guys all give good info but can someone please put it in lamens terms for us dummies out here who really don't understand ?? what are we really looking at thanks .......

DriftingByTheStorm

josevolution wrote:

you guys all give good info but can someone please put it in lamens terms for us dummies out here who really don't understand ?? what are we really looking at thanks .......

What are we looking at?
Well ... for all those who say i'm an "alarmist" or a "fearmonger" let me be the first to say, possibly NOTHING.

That being said, there -- as indicated by the near doubling of gold -- is a significant amount of real fear out there that the US financial system is standing on cracked crutches right now.

In lamens terms?

The big banks in this country -- Citigroup, JPMorgan Chase, Bank of America -- are invested HEAVILY -- i mean to the tune of nearly a trillion dollars combined -- in these "Structured Investement Vehicles" (simply put, corporations that hold on to home mortages to make a profit).

The SIVs that the banks invest in need money to buy the mortgages ... that is why the banks are invested in the SIVs ... they are the ones giving the SIVs the money.

That money is in 3 year promisory notes ... in other words, the bank hands over cash, and they get a piece of paper saying "in 3 years I.O.U"

The problem is the investments the SIV funds made were in home loans that are increasingly in default ... the home owners can not pay.

The homeowners cant pay the SIVs ... the SIVs owe the banks money on these 3 year notes ... and those notes are coming due.

The homeowners cant pay the SIVs, and thus the SIVs can't pay the banks.

No problem?
Well ...

The banks are on the hook to depositors.
Normaly that isn't a problem. Depositors notoriously let their money sit in accounts inactive for LONG periods of time, drawing only marginaly on those funds.

HOWEVER, with the market the way it is, a lot of those depositors have and may continue to come running to the bank looking for their deposited savings.

PROBLEM: The banks are counting on these SIV notes coming due to meet these liabilities ... the depositors funds, in a very real sense, are tied up in failing home mortgages.

There are a bunch of more convoluted problems that stem from this, in that the "solutions" to this problem involve some very negative feedback responses ... where the bank has to sell the SIV assets, which floods the market with these assets, driving their value down even further, causing the banks losses to increase even higher ... all the while the depositors could get increasingly nervous and demand more of their funds!

See the problem?

What is the ground truth?
Right now nothing is really buzzing.
The issue is in a bit of a "lull".
Why?

The banks are NOT talking.
Even Bernake (the Fed. Reserve chairman) said THEY (the Fed) are getting bad information (LIES) from the banks.

If the banks are not disclosing accurate information to the market, the market can not react appropriately.

For me to gauge the depth of the problem is hard without real numbers, but what we are "hearing" is that the banks are in the hole for around 500billion to 1000billion (1 trillion) dollars.

THAT IS INSURMOUNTABLE.
It truly is.
They will not dig their way out of that hole in the next 10 or 20 years.

If and when this shit hits the fan -- and it could be "avoided" if the government allows these banks to be involved in extremely shady acounting practices, which HAS happened in the past -- we could see MAJOR problems with the financial markets.

HERE IS A BIGGER PROBLEM:
The federal reserve insures ALL depositors with less than 100k in the bank through their FDIC program. That program is funded by ... gasp ... THE SAME BANKS IN TROUBLE HERE ... really it is funded by ALL banks ... but those banks being the biggest (by far) are resposible for the most money in the FDIC system (by far).

If the banks fail, and the Fed has to bail out the depositors, but the banks that owe the Fed that money don't have it because they just failed ... ?

That is over simplistic but it is just about the truth.

The REAL truth, even beyond that, is that these same banks ... Bank of America, Citigroup, and JP Morgan Chase are 3 of the largest OWNERS of the Federal Reserve (at least the NY Fed -- there are 12 Fed banks nationaly) ...

If the system get in deep shit, and the Fed can't bail out the banks, but the banks own the Fed ... what do you think will happen?

Gaurantee #1 -- The banks will drive the government in to some extremely shady decision that will involve defrauding Joe Tax Payer by involving the govenrment in some deal to "Guarantee" loans back to the banks ... thus the banks will be able to lend money they dont have back to the SIVs (or whomever) with the knowledge that if and WHEN that SIV goes under and can not pay back, the GOVERNMENT will step in and pay the bank back.

So that just delays the problem.
There are about 1000 ways in which this "crisis" can and will come back to bite you and me back in the ass.

We will see it in the forms of a violent market that goes up and down wildly, and an economy that runs flat and then down as money in the system dries up ... as banks take very real losses ... the owners of those banks lose very real money ... and you and i lose very real wealth in the sense that our dollar will be worth less and less as the government is forced to print more and more new money to shell out to the banks to cover or "guarnatee" their loans\cough cough losses.


BEYOND ALL THAT:
okay so that is the crux of the crisis as it relates strictly to the US market -- the insulated US market entity.
HOWEVER, we live in a GLOBAL market. The US has millions of high dollar FOREIGN investors ... CHINA comes to mind.
What does THAT mean? Well ... if the US market goes south ... and i mean, if it REALLY starts going south ... if numbers come back at the end of this year or in spring indicating that inflation is past 5% or that job numbers are way down or consumer spending is way down ... the markets (the US markets) will take a bit of a bath ... when that happens ... if the US stock market stops performing (okay, in many ways it HAS stopped performing) but if it goes down ... and if inflation starts creeping up from government printing\spending, foreign investors will BAIL OUT OF THE DOLLAR ... we will see billions more dollars come back home from overseas as foreign investors cash out of the treasury bills and us stocks and what have you ... they will cash out of the dollar and send them back to their US owners ... as those billions of dollars come home to roost, the money supply in America will increase at a rate never seen before. That in itself is enough to cause A LOT of inflation!
Remember, "inflation" among other things is just code for "dollar value decline" ... more dollars in america chasing the same number of goods = your dollar is worth less.

:( :( :(

Is that laymens enough?

I mean, it shouldn't have been overwhelmingly technical.
It was longwinded, but i think it is a fairly "dumbed down" explanation of what is going on.

Again,
in terms of "what are we looking at", YOU will have to be the judge of that in some sense, but like i said ... the fact that on relatively little news (just assumptions really) the markets have reacted in a HUGE way by pumping billions of dollars out of the stock market and in to gold means that SOMETHING is brewing.

Something very much not exactly good.

josevolution

DriftingByTheStorm wrote:

What are we looking at?
Well ... for all those who say i'm an "alarmist" or a "fearmonger" let me be the first to say, possibly NOTHING.

That being said, there -- as indicated by the near doubling of gold -- is a significant amount of real fear out there that the US financial system is standing on cracked crutches right now.

In lamens terms?

The big banks in this country -- Citigroup, JPMorgan Chase, Bank of America -- are invested HEAVILY -- i mean to the tune of nearly a trillion dollars combined -- in these "Structured Investement Vehicles" (simply put, corporations that hold on to home mortages to make a profit).

The SIVs that the banks invest in need money to buy the mortgages ... that is why the banks are invested in the SIVs ... they are the ones giving the SIVs the money.

That money is in 3 year promisory notes ... in other words, the bank hands over cash, and they get a piece of paper saying "in 3 years I.O.U"

The problem is the investments the SIV funds made were in home loans that are increasingly in default ... the home owners can not pay.

The homeowners cant pay the SIVs ... the SIVs owe the banks money on these 3 year notes ... and those notes are coming due.

The homeowners cant pay the SIVs, and thus the SIVs can't pay the banks.

No problem?
Well ...

The banks are on the hook to depositors.
Normaly that isn't a problem. Depositors notoriously let their money sit in accounts inactive for LONG periods of time, drawing only marginaly on those funds.

HOWEVER, with the market the way it is, a lot of those depositors have and may continue to come running to the bank looking for their deposited savings.

PROBLEM: The banks are counting on these SIV notes coming due to meet these liabilities ... the depositors funds, in a very real sense, are tied up in failing home mortgages.

There are a bunch of more convoluted problems that stem from this, in that the "solutions" to this problem involve some very negative feedback responses ... where the bank has to sell the SIV assets, which floods the market with these assets, driving their value down even further, causing the banks losses to increase even higher ... all the while the depositors could get increasingly nervous and demand more of their funds!

See the problem?

What is the ground truth?
Right now nothing is really buzzing.
The issue is in a bit of a "lull".
Why?

The banks are NOT talking.
Even Bernake (the Fed. Reserve chairman) said THEY (the Fed) are getting bad information (LIES) from the banks.

If the banks are not disclosing accurate information to the market, the market can not react appropriately.

For me to gauge the depth of the problem is hard without real numbers, but what we are "hearing" is that the banks are in the hole for around 500billion to 1000billion (1 trillion) dollars.

THAT IS INSURMOUNTABLE.
It truly is.
They will not dig their way out of that hole in the next 10 or 20 years.

If and when this shit hits the fan -- and it could be "avoided" if the government allows these banks to be involved in extremely shady acounting practices, which HAS happened in the past -- we could see MAJOR problems with the financial markets.

HERE IS A BIGGER PROBLEM:
The federal reserve insures ALL depositors with less than 100k in the bank through their FDIC program. That program is funded by ... gasp ... THE SAME BANKS IN TROUBLE HERE ... really it is funded by ALL banks ... but those banks being the biggest (by far) are resposible for the most money in the FDIC system (by far).

If the banks fail, and the Fed has to bail out the depositors, but the banks that owe the Fed that money don't have it because they just failed ... ?

That is over simplistic but it is just about the truth.

The REAL truth, even beyond that, is that these same banks ... Bank of America, Citigroup, and JP Morgan Chase are 3 of the largest OWNERS of the Federal Reserve (at least the NY Fed -- there are 12 Fed banks nationaly) ...

If the system get in deep shit, and the Fed can't bail out the banks, but the banks own the Fed ... what do you think will happen?

Gaurantee #1 -- The banks will drive the government in to some extremely shady decision that will involve defrauding Joe Tax Payer by involving the govenrment in some deal to "Guarantee" loans back to the banks ... thus the banks will be able to lend money they dont have back to the SIVs (or whomever) with the knowledge that if and WHEN that SIV goes under and can not pay back, the GOVERNMENT will step in and pay the bank back.

So that just delays the problem.
There are about 1000 ways in which this "crisis" can and will come back to bite you and me back in the ass.

We will see it in the forms of a violent market that goes up and down wildly, and an economy that runs flat and then down as money in the system dries up ... as banks take very real losses ... the owners of those banks lose very real money ... and you and i lose very real wealth in the sense that our dollar will be worth less and less as the government is forced to print more and more new money to shell out to the banks to cover or "guarnatee" their loans\cough cough losses.


BEYOND ALL THAT:
okay so that is the crux of the crisis as it relates strictly to the US market -- the insulated US market entity.
HOWEVER, we live in a GLOBAL market. The US has millions of high dollar FOREIGN investors ... CHINA comes to mind.
What does THAT mean? Well ... if the US market goes south ... and i mean, if it REALLY starts going south ... if numbers come back at the end of this year or in spring indicating that inflation is past 5% or that job numbers are way down or consumer spending is way down ... the markets (the US markets) will take a bit of a bath ... when that happens ... if the US stock market stops performing (okay, in many ways it HAS stopped performing) but if it goes down ... and if inflation starts creeping up from government printing\spending, foreign investors will BAIL OUT OF THE DOLLAR ... we will see billions more dollars come back home from overseas as foreign investors cash out of the treasury bills and us stocks and what have you ... they will cash out of the dollar and send them back to their US owners ... as those billions of dollars come home to roost, the money supply in America will increase at a rate never seen before. That in itself is enough to cause A LOT of inflation!
Remember, "inflation" among other things is just code for "dollar value decline" ... more dollars in america chasing the same number of goods = your dollar is worth less.

:( :( :(

Is that laymens enough?

I mean, it shouldn't have been overwhelmingly technical.
It was longwinded, but i think it is a fairly "dumbed down" explanation of what is going on.

Again,
in terms of "what are we looking at", YOU will have to be the judge of that in some sense, but like i said ... the fact that on relatively little news (just assumptions really) the markets have reacted in a HUGE way by pumping billions of dollars out of the stock market and in to gold means that SOMETHING is brewing.

Something very much not exactly good.

hey thanks really that explains alot of the ? i had so again thanks ...