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What Do You MAke Of This?

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This was posted by Goldfinger over on HPC

 

What do people make of it?

 

Seems the game is up, but no one has realised yet (no queues yet).

 

http://www.tickerforum.org/cgi-ticker/akcs-www?post=24611

QUOTE

AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND THE MONETARY BASE

Not adjusted for changes in reserve requirements(1)

Not seasonally adjusted

Millions of dollars

 

[...]

 

Date______________total___nonborrowed___required

2008-Jan._16(p)___39989______-1387________38278_

 

Yes, that's a minus sign. Total reserves now appear to consist of loans from the Fed. (Two weeks ago was bad enough, at 75% loans.) No similar event appears to exist within the range of online records, which go back to 1959. (Weekly data available through 1975.)

 

This can't be good. Yes, I know why it's happening, but, um, gee.

 

http://www.federalreserve.gov/releases/h3/Current/

QUOTE

...

Obseedian: Yes, exactly. But that number going outright negative kind of implies that they're borrowing even from the borrowed reserves for operating funds, doesn't it? And that implies (and this should come as no huge shock, but it's still skeery to see it in the actual numbers) that there are possibly (probably?) multiple majors currently outright insolvent. To have that kind of situation so bad that the system-wide net is negative... yikes.

 

It also prompts me to speculate that additional "liquidity injections" are just going to be sucked into this morass (US$45B and counting!), and that the markets should forget about any sort of emergency rate cut until one or more major banks fall over.

...

 

 

EDIT: The actual number ($Millions) of non-borrowed reserves Jan 30 is -2424.

 

Question to the bankers on here: Are we finished? Is it well and truly over? Banking system kaput?

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Frizzers,

It has been mentioned on here. My reaction is "they are fooked" :lol:

Check out the Mish article on it.

Steve

 

Have you a link?

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Have you a link?

 

No he hasn't.

 

But I have : da link

 

Looks like it's deflation then - poor old Jimmy Pup.

It's only a two hourse race and he's backed the wrong one.

Should have backed the cockroach :lol:

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He has lots :D

 

I think this was the start:

 

Gold and Math on a Napkin

By : Jim Willie CB

http://www.24hgold.com/viewarticle.aspx?la...n_Jim_Willie_CB

 

DAMAGE SUMMARY ON A NAPKIN

 

Let’s summarize in plain bold letters so as to avoid any confusion. These comments require plan language. Clear numbers are needed in clear statements.

 

PRIME MORTGAGE BOND LOSSES AT LEAST $2 TRILLION

 

SUBPRIME MORTGAGE BOND LOSSES TOTAL OVER $1 TRILLION

 

THE TOTAL MORTGAGE BOND LOSSES ARE OVER $3 TRILLION

 

THE OFFICIAL ESTIMATES ARE WRONG BY A FACTOR OF 10 !!!

 

GOLD WILL SKYROCKET WHEN THESE NUMBERS ARE FINALLY REPORTED

 

 

We're Fooked - The Story

 

we have no problem

we may have a small problem

we do have a small problem

the small problem is over

hang on, the small problem is not over

we may have a bigger problem

we do have a bigger problem

the big problem is over

hang on, the big problem is not over

we may have a huge problem

we do have a huge problem

the huge problem is over

hang on, the huge problem is not over

we may have a catastrophic problem

we do have a catastrophic problem

 

then google '1929 depression'

 

 

From the Mish article (as link above):

 

non-borrowed-reserves.png

 

US - Bank Reserves Go Negative

http://globaleconomicanalysis.blogspot.com...o-negative.html

 

Source of data:

 

US Net Free or Borrowed Reserves of Depository Institutions

http://research.stlouisfed.org/fred2/data/NFORBRES.txt

 

I mentioned it here: http://www.greenenergyinvestors.com/index....ost&p=28681

 

And finally:

 

US Banking System Teetering on the Brink of Collapse

http://www.marketoracle.co.uk/Article3570.html

 

 

Maybe this thread should be changed to "The Collapse of the US Banking System" :lol:

 

Or just "They are Fooked" :D

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The nature of the graph is a flat stable one, rather than a trend downwards - we see a spike down.

 

In the past the funds have spiked up and down, but have corrected soon after. It is true the extent of the movement is much worse than before however.

 

There something that I m not convinced this is 1929.

 

1. The US dollar was backed by gold - http://en.wikipedia.org/wiki/History_of_th...d_States_dollar all the way upto 1975. There is not the limitation today.

 

2. A 1929 event was revovled around lack of confidence and supply of money. Businesses shut down because there was no investment or a lack of money to invest. The difference is that, we are in a global economy, there is nothing to stop foreign business in picking up assets at cheap prices in a firesale, and rebuilding because they have savings and reserves. With global inflation relentless, foreign investors must invest or have capital eroded because all currencies are fiat.

 

3. 1929 was mainly a bubble around stocks which could go to zero. Today its primarily a housing bubble - which the assets can be resold [by creditors].

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I think this thread is a good place for all the more dire warning.

So.....

 

Biggs's Tips for Rich: Expect War, Study Blitz, Mind Markets

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

Jan. 30 (Bloomberg) -- Barton Biggs has some offbeat advice for the rich: Insure yourself against war and disaster by buying a remote farm or ranch and stocking it with ``seed, fertilizer, canned food, wine, medicine, clothes, etc.''

 

The ``etc.'' must mean guns.

 

``A few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage,'' he writes in his new book, ``Wealth, War and Wisdom.''

 

Biggs is no paranoid survivalist. He was chief global strategist at Morgan Stanley before leaving in 2003 to form hedge fund Traxis Partners. He doesn't lock and load until the last page of this smart look at how World War II warped share prices, gutted wealth and remains a warning to investors. His message: Listen to markets, learn from history and prepare for the worst.

.

.

.

The rich get complacent, assuming they will have time ``to extricate themselves and their wealth'' when trouble comes, Biggs says. The rich are mistaken, as the Holocaust proves.

 

``Events move much faster than anyone expects,'' he says, ``and the barbarians are on top of you before you can escape.''

 

 

And I think this one might have gone unnoticed:

 

Iran's Notice to Crude Oil Importers Results in Monetary Contraction of $500 billion of PetroDollar Reserves

http://www.marketoracle.co.uk/Article3542.html

 

Much was made of Iran's announcement back in December, 2007 – that they would no longer be accepting U.S. Dollars as payment for their chief export, crude oil:

.

.

What the table above clearly shows is this: Countries that import Iranian crude oil clearly “took notice” and made dramatic adjustments to their foreign reserve holdings [for the most part] – beginning immediately after July 13, 2007 – when Iran put Japan “on notice” that they would be required to pay for their crude in Yen.

.

.

The with-drawl of U.S. Dollar reserves in one month - on this scale – was almost certainly a contributing factor to the “liquidity event” that gripped the U.S. banking system in August, 2007.

 

This means that a 44.7 B with-drawl of U.S. Dollar reserves from the U.S. Dollar-centric banking system had the predictable cause / effect of close to a ½ Trillion monetary contraction event.

 

Not just fooked, but triple fooked !

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The nature of the graph is a flat stable one, rather than a trend downwards - we see a spike down.

 

In the past the funds have spiked up and down, but have corrected soon after. It is true the extent of the movement is much worse than before however.

 

There something that I m not convinced this is 1929.

 

1. The US dollar was backed by gold - http://en.wikipedia.org/wiki/History_of_th...d_States_dollar all the way upto 1975. There is not the limitation today.

 

2. A 1929 event was revovled around lack of confidence and supply of money. Businesses shut down because there was no investment or a lack of money to invest. The difference is that, we are in a global economy, there is nothing to stop foreign business in picking up assets at cheap prices in a firesale, and rebuilding because they have savings and reserves. With global inflation relentless, foreign investors must invest or have capital eroded because all currencies are fiat.

 

3. 1929 was mainly a bubble around stocks which could go to zero. Today its primarily a housing bubble - which the assets can be resold [by creditors].

 

I get the impression that comparisons are more valid when just considering the potential scale of the fallout, rather than the exact nature of what happened.

The US Treasury Secretary Larry Summers interview I just posted about I think makes it pretty clear that the Fed are going to react differently, and so the results will be different.

That doesn't mean they won't be as bad in the end.

This time, it seems to me, there are more bubbles worldwide, making the potential fallout more widespread and severe.

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I get the impression that comparisons are more valid when just considering the potential scale of the fallout, rather than the exact nature of what happened.

The US Treasury Secretary Larry Summers interview I just posted about I think makes it pretty clear that the Fed are going to react differently, and so the results will be different.

That doesn't mean they won't be as bad in the end.

This time, it seems to me, there are more bubbles worldwide, making the potential fallout more widespread and severe.

 

 

I m not seeing complete melt down. Take for example KKR who ve been taking over companies left right and centre...

http://scotlandonsunday.scotsman.com/busin...debt.3738723.jp

 

Equity firms seek own debt on cheap

 

I m guessing theres been so much liquidity in the past, a credit crunch has a made only a small dent to profits made in the past. How can KKR afford to keep spending?

 

KKR are in planning in taking over media channel ITV today.

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That's a very interesting article.

 

I'm no expert on this. I tend to just report what 'experts' have written, and gain a general view from what they are all saying.

There certainly is a lot of money sloshing around out there. I think the question is which parts of it are based on shaky foundations.

 

I expect those with non-borrowed cash are looking forward to buying cheap assets, and those with huge assets based on debt are feeling very nervous.

 

Shall we start taking bets on how many US banks will go under?

50 is the minimum bid, and 9000 is the maximum.

 

The next few months should be very interesting.

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These private equity companies - dont think pessimistically do they?!

 

A lot of people would think that liquidating and holding onto cash seems best .... But private equity companies are still bidding and showing interest in take overs.

 

Do they know something that we dont, assets are going to be as cheap as they are going to get? Will the rich powers collude to inflate the troubles away? So difficult to see the way foward.

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I think this thread is a good place for all the more dire warning.

So.....

 

Biggs's Tips for Rich: Expect War, Study Blitz, Mind Markets

http://www.bloomberg.com/apps/news?pid=206...&refer=home

 

``A few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage,'' he writes in his new book, ``Wealth, War and Wisdom.''

Accept when the brigands are more in number and better armed. I think the Mad Max movies showed that while you might rely on a hero there is always safety in numbers. :lol:

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Ask a old friend whos well enough connected about this and this was his repley. Any body what what the new TAF facility is?

 

"I was over in the Fed last week. They are very concerned, particularly with the continued spillover from the housing market. Undoubtedly, they believe a recession is hard to avoid at this stage. However, with the stimuli, there still should be a pretty quick turnaround. Re: the reserves data, it is due to distortions casued by the new TAF facility. Not the end of the world!!"

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Time for a few more then :lol:

 

Legendary Funds Manager Julian Robertson Predicts Utter Global Collapse Stemming From Bursting of Property Bubble

http://64.233.187.99/search?q=cache:poH5MG...t=clnk&cd=1

 

In a recent interview on CNBC with Ron Insana, one of the “old-timer”funds manager, Julian Robertson, predicted “utter global collapse” as a consequence of the bursting of the world-wide property bubble.

 

Often called “Never Been Wrong Robertson”, the former head of Tiger Management (once the largest hedge fund in the world), is extremely worried about the speculative bubble in real estate.

 

Specifically, he is very worried about a world that is sustained by American consumer spending which is in turn 1/4 sustained by a property bubble. He predicts that 20 million people could lose their homes once the property bubble bursts.

 

Even more worrisome, he thinks central banks around the globe out of desperation will try to re-inflate the world economy with more liquidity that will create an inflationary spiral unseen in the economic history of mankind. “Where does it end?”, Insana asked Robertson. “Utter global collapse,” he answered. But not just economic collapse … collapse of epic proportions. Collapse and disintegration of all infrastructure, including government. Inflation will run into the double and triple digits. “Food production will fall. People will be carrying around U.S .

 

dollars in wheelbarrows like Germany,” he said.

 

There will be “total collapse of public infrastructure. Total collapse of medical care systems. All public pension plans, Social Security will collapse. All corporate pension plans will collapse.”

 

 

Glenn Beck - The Real Story, Touching the Third Rail

 

Glenn Beck's Real Story from January 9, 2008 - Touching the third rail and interview Dave Walker.

 

Or should this be on the demise of the US thread ?

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The latest data was published yesterday.

Latest data from 14th Feb 2008.

 

So hot off the press.

 

It is now:

 

-18009

 

It was -8749 on 30 Jan. So it has more than doubled.

 

Does that mean they are double fooked ?

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Ask a old friend whos well enough connected about this and this was his repley. Any body what what the new TAF facility is?

 

"I was over in the Fed last week. They are very concerned, particularly with the continued spillover from the housing market. Undoubtedly, they believe a recession is hard to avoid at this stage. However, with the stimuli, there still should be a pretty quick turnaround. Re: the reserves data, it is due to distortions casued by the new TAF facility. Not the end of the world!!"

 

Sorry, I missed your question.

 

In the United States a run on the banks has begun, foreign depositors and scared individuals are withdrawing their money in epic fashion. However, it is being held out of the headlines as the Federal Reserve applies its latest techniques to underpin the systemic risks to the banks and financial systems -- known as the Temporary Auction Facility, aka TAF. This is where the Federal Reserve acts as lender of last resort and has opened the borrowing facility window in an anonymous fashion, in order to prevent bank runs such as was witnessed with Northern Rock.

 

This is the mechanism the central bank has created that will allow banks to take their most impaired assets and monetize them to meet the calls for withdrawal from depositors and maintain daily/weekly/monthly/yearly operations.

From my last link.

 

Steve

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Did someone mention monetization ?

 

Central Banks Other Option, Crossing the Rubicon

http://www.marketoracle.co.uk/Article3706.html

 

Gold here

 

With Central banks lowering interest rates, and more to come, gold is rising in all major currencies. This will continue in 08, sans some major world stock crash. But, if central banks actually do the other option, monetization of troubled assets and markets, and cross the Rubicon, then gold will go right out of sight. Even a hint of any serious monetization would drive gold rapidly to $2000.

 

If we merely have interest rate cuts, gold will get easily over $1000 in 08, probably in a month or two. If there is any significant monetization by Central Banks (perhaps just buying outright all the troubled assets on banks books, right now about $2trilllion worth and counting) gold goes to over $2000 in a few months time.

 

Monetization is the central bank's Rubicon. They are thinking of crossing it. We are at a decisive point in gold's price action in 08.

 

By Christopher Laird

PrudentSquirrel.com

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More on this from:

 

 

US Treasuries Auction Failure Suggests Stocks Dead Cat Bounce is Over

http://www.marketoracle.co.uk/Article3722.html

 

Once upon a time banks had cash reserves upon which they might lend money to their customers. Today, this is a difficult statement to defend. The most recent Federal Reserve Statistical Release shows aggregate non-borrowed reserves at -$18,009,000,000. This is defined as “non-borrowed reserves equal seasonally adjusted, break-adjusted total reserves less unadjusted total borrowings of depository institutions from the Federal Reserve.” Simply put, the banks are now in hock up to their eyeballs to the Federal Reserve.

 

THE page top watch: http://federalreserve.gov/releases/h3/Current/

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I added a second headline, Fr.

 

I hope you dont mind

 

BTW, did you hear Puplava's rebuttal of the bank reserve issue?

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