April 6, 2010

So, looking back on it, how close did we come?

So, if it wasn't for the $10 trillion money bomb, the 0% interest rates, the stimulus bill and the bank bailouts, would it have been a World-Weekly-News-worthy depression-of-all-depressions? People eating dogs in the streets, ATMs not working, 50% unemployment, martial law imposed?

How close were we to total economic Armageddon?


long beach,ca said...

it's not over yet. double dip? W?

Angry Leprechaun said...

We are still just as close! Kinda like the Twilight Zone.

Anonymous said...




Bukko Canukko said...

How close were we to total economic Armageddon?

Not as close as we're gonna be once the $$$ugar bomb wears off!

I mean, at the rate all major monetary systems are trying to degrade their currencies in order to inflate away their debts and beggar their neighbours to make their own exports seem cheap, I expect that all fiat currencies will become worthless. When the concept of money becomes a joke all over the world, all international commerce will come to a halt. (I expect each currency area will maintain internal trade with their own form of money, which will NOT be accepted anywhere else.)

But as far as obtaining stuff like oil or anything your own country can't make, got barter?

keith said...

$10 trillion buys us a lot of time. Maybe more than a decade.

What amazes me though is that we really did come close. If the fed and gov't (yes, under bush) hadn't reacted forcefully after lehman, seriously, the ATMs were about to stop working. The banks wouldn't have had any money, they'd be closed.

Now THAT would have been interesting.

But, that said, it's amazing that we got that close. No regulation, no oversight, no criminal justice, no SEC, no auditors - complete financial anarchy, and we got what we got.

Thank you GOP. Thank you Congress. Thank you Bush. Thank you Chris Cox. Thank you Barney Frank. Thank you Phil Graham. Thank you Alan Greenspan. Thank you media.

Walter said...

Tis Amazing that we made it three decades on with central bankers and governments believing in utterly fraudulent economics.
No less astounding is that we fixed the problem by simply printing paper money. Where would we be if we didn't have that option?
As Bismark famously said;
"There is a Providence that protects idiots, drunkards, children and the United States of America."

P:ay Lay Ale said...

We still need to declare bankruptcy as a country and repudiate $112 trillion of unfunded liabilities and debt. That doesn't even include private debt, which is still at historically high and unsustainable levels.

What happens when the dollar loses half its value, and then again, and again...

What happens when we can't import oil anymore using dollars?

edd browne said...

Mr K typed:
"No regulation, no oversight,
no criminal justice, no SEC, no auditors ..."
No evil guvermint to interfere with
robber barons and libertarians.
Cats were observed sleeping with rats.

Saving & Loan disaster c1990;
Enron-dotcoms-etc c2000; MBS bomb c2007.

And those exponential credit default swaps.
What evil still lurks in the hearts of BigBiz ?

If I recall, some global transactions did nearly
grind to a halt for several days after Lehman fell.
And cash still does not flow as needed.

But Greenspan was the smart libertarian !
And GWB let the markets work !

Anonymous said...

I can’t believe you of all people would support paying off the visa with the MasterCard. You say “$10 trillion buys us a lot of time. Maybe more than a decade.” So now you’re another live for today HELOC debt junky well…. just worry about the debt later???

keith said...

Anon - I didn't say I supported the money bomb.

I simply deal with reality.

And the reality is we dropped a massive money bomb, and put out the fire (for now). This as we predicted is causing a massive re-inflation of asset values, and a dramatic V-shaped recovery.

The $64,000 question is - what happens when the bill comes due? Not just on the money bomb, but on ALL of it? The full $52 trillion and counting that we're in the hole.

The ONLY way out for America is a dramatic increase in population, productivity and GDP. Dramatic. Otherwise we won't be able to pay the bill.

Jury's out on that one. I wouldn't be against us. But it's gonna be a big ol' rabbit out of a big ol' hat if we do it.

casey said...

what a joke of an economy we have.wall street screws america as usual and it as now business as usual.

Jacksprat said...

"The ONLY way out for America is a dramatic increase in population, productivity and GDP. Dramatic. Otherwise we won't be able to pay the bill."

And, and, and then, a miracle happened! Cue the trumpet fanfare.

Sure it's possible Keith, if we annex Mexico and Canada, steal their resources and tax the hell out of our new "citizens".

Anonymous said...

now wouldn't that be funny, if the border crossed bukko?

edd browne said...

Hear my confession ...
I do support the money bomb,
in general terms, as a lesser evil, and with
the assumption that the idiots, libertatians,
and buffoons are largely out of power (for now).
It was even the choice of those Bushiters.

Excessive debt, for time to change, with struggle.
Or negligent loss of the ship, without many
lifeboats, the choice of Teabag group-think.

The changey-struggley-thing is not optional.
We get healthy, productive, sober, and smart,
as we failed to do for 50 years.
(usual unit productivity ratings don't account for
defective-work costs, indigenous advantage,etc)

We refer to good sources before we vote.
We avoid group-think for peer approval.
For ourselves, and those who inherit our sins.

[that Butler shot was soooooooooo close]

keith said...

Had duke 15 x 1 - put the bet down a couple months back

watching here at 5 in the morning, I thought the damn thing was in. Took a few minutes to realize it wasn't. Should have laid some off as butler was 3 x 1 but got greedy. worked out, but stupid on my end.

Meanwhile, remember the poster(s) who mocked me for loading up on AAPL at $130? Think we'll see AAPL $300 before we see AAPL $200 again?

Let's hear it - anyone making money during this year-long bull market? What are your favorites? Think it's gonna end anytime soon?

My take - the only way for the Feds to get tax receipts up in a hurry is to have massive cap gains - like 1998 all over again. And then watch the gains flow through to products and services, and into the state accounts via their insanely high sales taxes

I'd give stock picks but then we get people posting daily results which gets old. You got me on AAPL, other than that you're on your own

Butler 2011 btw looks good. Damn those kids can play.

Stuck in So Pa said...

Bukko Canukko said...
How close were we to total economic Armageddon?.......

..............(I expect each currency area will maintain internal trade with their own form of money, which will NOT be accepted anywhere else.)
Actually, that can work, sort of!

I remember years ago when I was in the service, the Russian ruble traded for 2.4/1, dollars to rubles(exchange rate artificially set by the Russian government)so a dollar American bought you 41 cents Russian, so to speak. On the black market (real world) a dollar American bought you 800 rubles. You could go into the old communist bloc and live like a king on a few dollars American, as long as you didn't get caught, but a Russian couldn't afford to go anywhere outside of Russia. Their currency was worthless to the rest of the world. And there wasn't much to buy inside Russia as well, as their entire economy was going to Cold War weapons production.

Russian people are pretty resilient, used to doing with less ,or nothing, and their country does have its own gas and oil fields to supply its people who as I mentioned are used to doing with less, or nothing.

They will be O.K. And some other countries as well, under a fiat currency collapse scenario.

USA......outlook not so good.

Anonymous said...

The question is when? Not how close we came.

You know you have a group of followers that know their shit when it comes to the economy.

With the huge debt load, everyone against the ropes, unemployment at an all time high, it's a matter of time. You are still trying to get a sense of how many stupid bears are left, aren't you?



buy PCLN and tell me how you do.


Andrew from Russia said...

What the money-pumping did was to win time, and this time is being wasted right now as no sensible adjustment is taking place. And what I find really depressing is that it feels "bubbly" again in Moscow just when the federal gov't has used up most of its SWF reserves (and ponders borrowing abroad, 1990s style). Those boutiques are reopening/expanding exactly where I'd rather want to see discount retailers.
I'd go as far as to say: any country that did not partake in the 2009's reflationary "return to normalcy" (the Baltic states didn't, to name a few) might find itself in a better form to weather the looming "lean" years, in contrast to any of the GDP-brought-to-new-highs easy-money miracles.

Prisoner No. 6 said...

We came damn close. I spent a couple weeks in the fall of 2007 with high-level bankers in Russia and Europe, working on some unrelated projects. They were shitting their pants when they saw Northern Rock go under ... because even at the height of the Great Depression, UK banks didn't fold like that. The problem was that nobody knew what was in these damn CDOs and freakisly complex instruments.

Nobody knew what they had on the books. Nobody knew what anyone else had on the books. The Emperors around the world finally looked down at themselves, saw no clothes and FREAKED.

Everything was lies. Nobody believed anything, or would lend anyone else a nickel.

It's taken 2 1/2 years for people to start gradually, cautiously, doing business with each other. Nobody trusts each other - yet - but little trickles here and there...

This is the way cleanup happens after a disaster. All the toxic assets are being dismantled.

We just have to have honest regulation to make sure the same shysters don't go on to build whole new toxic assets. This can only happen if the goddam sellout GOP and DINO congresspeople don't take Big Bank bribes to filibuster any real reform.

The GOP will vote in a bloc against financial regulation. They will do so not because it's a bad idea. It is, in fact, the only workable solution.

They will vote against it just because Obama is for it. Which is pretty much the level of intellectual discourse we see here by the wingnuts, dingbats and religious fruitcakes here in the comment section, yammering about birth certificates, explosives planted in the Twin Towers, and fluoridation of our water.

Bukko Canukko said...

Keith said...

"The ONLY way out for America is a dramatic increase in population, productivity and GDP. Dramatic. Otherwise we won't be able to pay the bill."

Great idea in a world of unlimited resources, Keefer. But you know the whole "7 Earths" thing (for everyone on the planet to live like an American, we'd need to have seven planets with resources equal to our present Earth.) I think for every American to keep living like an American, we'd need two Earths just for that. Maybe a third one to export the pollution to.

Not gonna happen. And "moral hazard" applies to people as well as fraudulent banks. If they're not forced to reform, they're going to stay fat on the couch with their Cheez Doodles and "Idol".

Stuck in So. Pa., the evil Chinese communists used to do something with their money similar to the Soviets. They had a yuan which was good inside the country, and a renminbi that was used for international exchange. Not sure how they're working it now, because the only time I was ever in territory controlled by the Chinese government, it was when I was passing through Hong Kong while carrying 40 ounces of gold coins. Made me sweat nuggets when airport security eyeballed 'em, and I was in the semi-honest part of China then.

I'm not one who thinks China is going to dominate the world, because their economic bubbles are worse than the U.S.'s, plus they're ruled by killer dictators. When the fall comes, the bodies will be piled far higher in China than they will in the U.S. The only way I'd touch a yuan or renminbi is if someone gave me a stack of them for free.

And to the sneeering anonymous, if the U.S. somehow moves the border north to encompass me, I have the legal right to return to Australia and live out my days there. It's nice to have a choice of countries. What are YOU going to do, smart boy?

patrat said...

The amazing part is, nobody knew nuthin, nobody did nuthin, and nobody is responsible for nuthin. Friggin amazin! And as far as I can tell nuthin has changed except a big part of the middle class slippin away with a lot of nuthin to look forward to.

edd browne said...

The "professionals" in
gubmint, finance, real estate,
economics, underwriting, journalism,
risk modeling, investment, insurance,
banking, and politics created this
monumental train wreck.

Now the yaahhooos want to cut lifelines
to the innocent bystanders, cuz that
gets 'em a slap on the back, a free drink,
and that sweet Teabag glow of approval.

Mr K indulges in the devil's wagers ?
Next he might even order a second Guinness.

patrat said...

I don't think it's over yet either. There are thousands of ex-construction workers out of work, thousands of new graduates (high school and college) not able to find work and thousands of unemployed spouses who had to leave their jobs because the other half lost theirs and one income is not enough to stay. These people are not filing for unemployment because they are not eligible for it.

I know so many people who have taken in friends and relatives, so many graduates who are still at home or sleeping on a friend's floor.

Slow recovery at best.

edd browne said...

Good info at 2:59.
Could you post a link, or email ?

Seems that to relocate for a job, a pile
of mortgage balance is due at closing,
assuming they can come up with it.
The options are ugly.

To some degree, things will change
when enough people decide to accept
more personal risk.

Anonymous said...

39 million on food stamps

Anonymous said...

Only Postponed

Anonymous said...

Herr Goebbels would be proud of you.

Anonymous said...

Herr Goebbels would be proud of you.