HowThecommon…

Wouldn’t a bad bank have to be created then though? If they are going to sell the assets back into the system to take back some of the liqudity who will buy and at what price? I suppose though it doesn’t matter that the Fed would ever sell anything at a loss. How can you figure out what price they paid for them? Is that available anywhere?

Good questions. I am not aware of any places to get the info but I try not to look too deeply in the the actions and happenings of the Fed and the banking system. I get entirely too angry whenever I do and that is not what I want my life to be about. Instead, I just try to know enough to know whether or not they have blown the financial system to bits. If they haven’t done that then I don’t care because I can probably survive. A saying I adopted many years ago that has served me well on all big picture issues is:

Never worry about what you can’t control

I also try to know enough to educate others for the few (though that number is growing daily) that are actually interested in how their money works. I consider that a moral duty as a member of dragon slayers international

I would think if you could figure out what price they paid and then watch this play out there would be a way to profit of that.

You could I’m sure but that is how many of them are trying to profit and I doubt they would want any of us looking into their club and business dealings. Besides, is there a soap on the face of the earth that would clean the slime off your hands once you finished dealing with that stuff? :)

@dead hobo,

And where does the dollar fit into your thesis?

reply:

Nowhere. I read several of the Dollar Crash books and some actually taught me some pretty good monetary theory. However, the dollar appears be influenced by factors not usually mentioned in the Dollar Crash books. If they were correct, the dollar, today, would have less value than a puddle of day old piss.

In fact, I’m starting to put together a new economic theory of the US and world. I have not yet developed it to the point of full clarity but it basically goes …

“Nothing that You or the texts say matters, really does. The theories tells a good story and give people something to talk about, but most are crap when compared to real world events. I’m starting to think a trillion dollar deficit wouldn’t hurt a kitten, although it would scare the crap out of people who make a living out of talking and writing about economic theories (few of which actually amount to much.) Crooks run everything important and their skill at making the economy a money machine will keep it going”

Think about this too with annuities. In the past 2-3 years many annuity comps have promised certain payouts over the life of the annuity to the holder regardless of investment performance. I don’t know that this will show up right away but I would promise over the next decade someone is going to blow up on that stuff.

And when they found our shadows
Grouped around the TV sets
They ran down every lead
They repeated every test
They checked out all the data on their lists
And then the alien anthropologists
Admitted they were still perplexed
But on eliminating every other reason
For our sad demise
They logged the only explanation left
This species has amused itself to death
No tears to cry no feelings left
This species has amused itself to death

Roger Waters – Amused to Death. Check it out :)

I think, upon reflection, is that the reason we haven’t seen a lot of pension headlines is that pensions are dying out, with fewer and fewer companies putting much effort into them. And they are probably all nearly 100% into Treasuries, or long AAA corporates (to limited the extent that AAA has any meaning these days, when companies can for all practical purposes apparently purchase bond ratings).

But the annuities world has got to be under some stress, as most annuities are intended to generate some rate of internal growth, which has been effectively impossible for at least the past year, based on the average returns of fund managers of all types. Lacking much in the way of transparency, annuities can hide their internal difficulties for a while, but if this keeps up for another year or two, I think that a lot of unimaginable fallout will begin to hit the fan.

AIG went under, are they not a big enough insurance company for you?

I think you’ll get some more of what you were saying this year, maybe one other big insurance company. Pension funds got killed last year but I think you would tend to see they diversify better than the banks here which is why they haven’t gone under, I could be wrong though, wouldn’t be surprised if one blew up.

I agree though, is the recovery later this year, or later next year. That is the big question. If we use Japan as the model, sure, there could be a recovery this year or next year, but is it sustained?

Mannwhich,

You are correct in saying that Japan’s consumer’s were better savers but the Nikkei was at 65 times earnings at one time, much higher than we are here, even if earnings go down further, and land there, according to Grantham was at several multiples of ours. I’m holding out a last hope that we aren’t as bad as them and that after a shorter period we come out of these and return to growth.

That said, I do continue to stare at the debt/GDP and where it’s going in horror.

If credit begins to flow again though people will get that last little bit of credit they can, we’ll blow a new bubble and net time this happens it’s going to be even more ugly.

Thanks for that explanation, makes sense.

Wouldn’t a bad bank have to be created then though? If they are going to sell the assets back into the system to take back some of the liqudity who will buy and at what price? I suppose though it doesn’t matter that the Fed would ever sell anything at a loss. How can you figure out what price they paid for them? Is that available anywhere?

I would think if you could figure out what price they paid and then watch this play out there would be a way to profit of that.

I’m long oil like a lot of people here. I don’t think you are going to see it take 10 years for demand to come back but I don’t think you are going to see $100 in the next 12 months either. In the next 36 months, yes I’d be willing to make that prediction. Only time will tell if I’m right.

I-Man, deadhobo,

I get what you guys are saying about oil, the demand thing is silly, I should have been more careful with my response, Simply, I do not see lower oil prices as such a tailwind for the consumer that it will improve spending and thus GDP. Have you heard anyone say this recently “I’m spending because gas prices are lower!” There are too many other forces going against the consumer right now for that to improve things.

I wish I could be more optimistic like hobo but I’m not.

Back below 8k on the DOW.

Is this silence because that option is dead or because Obama’s smart enough not to discuss it before getting a stimulus bill passed?