Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

[Chris Coles]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

DEAR EJ, time to do a paper on banks collateral, the true balance sheet risk!

REF:
http://www.zerohedge.com/news/gold-m...tal-collateral
http://www.zerohedge.com/contributed...dia-will-touch

Now there is a very good suggestion.

[icm63]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

Oh Yeah, why are central bankers worried about the collateral on banks balance sheet.

1) The NEXT 2008 like crisis wont be much fun. Clearing the junk off bankers balance sheets now is making it (hoping) to make the next crash demand of bailout easier.
2) Central bankers are owned by the banking cartel. Rothschilds, Rockafella, JPM, GS, NY Fed, Bundasbank
3) Unemployment for the masses is one thing, unemployment for bankers is very personal.
4) Of course forget the above, its about the $700 trillion derivative market that every human on this plant a 100 yrs from now will associate WW1, WW2 and 'derivative crash' in one sentence.

Seriously, JPM is the holder of $100 trillion of derivatives. YES I know that that JPM is not covering all of them, and I know that not all $700 trillion derivatives can go nuclear, but I do know that at least $70 trillion can blow up (and that is enough)! (See BLS numbers)

EJ, Time to review 'THE GREAT RESET' scenario, $700 trillion derivatives, lack of collateral. Because it is a confidence game, and the players are starting to get a little crazy
ECB - Begging Spain to take a bailout, $trillion to cover PIIGS
BOE - Printing like crazy
BOJ - About to go buzz light year printing to get inflation at 3%
FED - Set the tone of printing to infinity, followed by the rest

The common house hold has with more frequency the word GOLD passing their lips.
The common house hold has yet to have the words $700 trillion derivative enter the dinner time converation.

This a trend that will change.

UPDATE1 Nov 20th 2012: Graham Summers of GainsPainsCapital.com covers this subject well...Its all about WHATS ON THE BALANCE SHEET WHEN AAA+ Sovereign bonds are not LONGER AAA+

REF: http://www.zerohedge.com/contributed...they-want-gold

If you want further evidence that the financial elites are already preparing for a default from Spain and a collateral crunch, you should consider that the large clearing houses (ICE, CEM and LCH which oversee the trading of the $700+ trillion derivatives market) have ALL begun accepting Gold as collateral.

This is where the DR and CR of accounting is making the motivation of central bankers very clear. Improving the bankers balance sheets. Nothing to do with governments, the taxpayer, the people, the voters.

CASH at the bank is depreciating faster than an ice cube in a Gin and Tonic !

[lektrode]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

Same here. Now everything is minimal. Just fix what you have to, nothing more. Incredible difference from The boom times. So many things we used to do, we havent done in years. But my phone has simply stopped ringing in the last week. Hopefully thats just temporary. But people are freaked, perhaps needlessly so.

+1
altho not unusual for this time of year - for me, it makes things feel a lot like....

the 3rd week of october - 2007....

the last time my incoming call volume stopped cold.

[gwynedd1]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

Been a reader, not a poster..

More on US dollar ... it could be a bumper year for the USD in 2013. Even QE to infinity hasnt crushed USD !

http://www.readtheticker.com/Pages/B...h-when-2012-11

In the one corner is the world wide savings glut. In the other corner is a heretofore favored savings vehicle showing less favor. Will hot air soak more water? If the USD does tank so will global liquidity. Where will this savings creature go? Well to some extend PMs, but with the USD there is just no telling...

[gwynedd1]

Re: GdP from Military spending

I have often wondered about this myself. Steve Keen has questioned GDP in "debunking economics" but I have not read it. You are right that a better number might be "GDP less debt incurred". That would measure the sustainable economic activity.

Ordinarily the GDP of an activity is determined by what it sells for in a "free market". But what is the "free market" value of a battleship, or a nuclear missile?
One could establish a gdp value for weapons based on a marginal cost basis, but then why not pay everyone $100/hr to dig holes in their back yard? It seems to me that "value" really is determined by what people will pay for a good or service, not what it costs to produce it. It is when production costs exceed the market determined price that the good is no longer produced profitably.

A big complication is the value of "public goods". These are things genuinely useful, which cannot be created and sold on a purely "free market" basis. This includes things like public sanitation, police protection, education, etc. The GDP value has to be computed on a cost basis. But then how to separate the "productive public sector" from the military industrial complex, etc. ?

During WW II, the standard of living was very low, due to all the rationing. One could argue that it was one big austerity plan. The inflation wiped out the domestic debts, and the war destroyed production capacity outside the US. The result was high employment after the war.

I am not sure this proves that Keynesian stimulus works. It perhaps proves that bombing the other guy's factory increases demand for your stuff.

I think Yersinia Pestis was a proto Keynesian economist. Of course one of the things that people abuse most about Keynes is description vs prescription. Keynesian economics can tell you why war seems to improve employment but its hardly a prescription.

[Slimprofits]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

FWIW ~ This, despite being the latest article, is still not posted on the "Front Page" as the latest article...

[sishya]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

- RISK ONE: A risk is that Germany leave the Euro when and if the ECB balance sheet gets massive. This will only happen on the will of the german people.

- RISK TWO: The motivation is for the PIIGS to stay in the euro is for the FREE MONEY from ECB. For example if GREECE or SPAIN leaves they wont be able to print money ( I remind you of Zimbabwe), so if the stay with Euro printing can cover there budget needs. This is with or with out Germany

- RISK THREE: But if a leader of one the PIIGS wants to do an ICELAND and force a massive write down of SPAIN SOVERIGN bonds by those that hold their paper. (note: Of course the loss to the banks would be covered by more money printing.

- RISK FOUR: Status Quo, Euro stays together, and printing covers all funding needs.

I remember when Felix Zulauf said, he fears that the ECB and FED balance sheet will equal each of there GDP each.

FED Balance sheet to goto $14 trillion within 10 years from $3.5 trillion (current)..

The USD has no break up risk.

Gold $7000 ( and I am not a gold bug)

I am going to predict a massive rise in EURO against the US Dollar. Apparently you have taken the other side, Let us see how this goes.
All this propaganda about EURO breaking is nothing but ZH Bull shit.

Europe is economically self sufficient. Euro region Trade deficit in aggregate is near zero. Actually in recent months Greece, Spain, etc have become nearlt trade neutral.
Spain is fluctuating a trade deficit between $1B to $3B per month. I think this will go down further and may become export surplus.

you won't be hearing all these positive news from MSM.

The following is year to date figure, but if you look month to month change, I think they are already trending towards positive.
EU will force cut on PIGS and they will emerge trim and fit, when US will be still be bloating from $116B budget deficit per month.

http://www.tradingeconomics.com/data-all-countries.aspx


My 401K is in International equity since 4 months and it is already up by 17%, I expect this to go up much higher taking into account the equities and Euro.

Spain narrows official trade deficit as imports slump
(AFP) – 5 days ago
MADRID — A slump in imports to recession-hit Spain helped to narrow the trade deficit by more than a third in the year to September, government data showed Wednesday.
Imports fell by 7.4 percent to 20.95 billion euros ($27 billion) in the year to September while exports edged up 0.5 percent to 17.87 billion euros, an Economy Ministry report showed.
As a result, Spain trimmed the overall trade deficit by 36.4 percent to 3.085 billion euros.
With domestic consumption in the dumps, Spain is counting on exports, including its tourism and agricultural industries, as key engine during a recession that is expected to last through 2013.
Spain's government has forecast an economic contraction this year of 1.5 percent.
For 2013, Madrid tips an economic slump of 0.5 percent, far more optimistic than most private forecasts centred on a 1.5-percent drop in gross domestic product.

[icm63]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

.."All this propaganda about EURO breaking is nothing but ZH Bull shit."

Sure that is a caution. However the members of the euro will not be as it is now in the years ahead, members will leave and be added.

ECB can print money. Greece and Spain on there own cant. Printing money is a required tool for those running deficit budgets.

Question: How long can the German people tolerate 1930's all over again ?

[Polish_Silver]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

.."All this propaganda about EURO breaking is nothing but ZH Bull shit."

Sure that is a caution. However the members of the euro will not be as it is now in the years ahead, members will leave and be added.

ECB can print money. Greece and Spain on there own cant. Printing money is a required tool for those running deficit budgets.

Question: How long can the German people tolerate 1930's all over again ?

During the 1930's, germany had high unemployment, and they had large foreign debts.

Now they have low unemployment, and money is owed to them. What is the similiarity?

[icm63]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

.."Now they have low unemployment, and money is owed to them. What is the similiarity?"..

Germany OWES the ECB, the cover a large percentage of the bail out funds (the rest is covered by other Euro nations). Of course they will be relunctant to pay, if at all. And of course if ECB print trillions, does Germany wish to be called upon to cover that debt.

Germany is up for 25% of its GDP to cover bailouts. See links posted.

[sishya]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

.."All this propaganda about EURO breaking is nothing but ZH Bull shit."

Sure that is a caution. However the members of the euro will not be as it is now in the years ahead, members will leave and be added.

ECB can print money. Greece and Spain on there own cant. Printing money is a required tool for those running deficit budgets.

Question: How long can the German people tolerate 1930's all over again ?

(1) Germans need not tolerate anything.
(2) ECB/EFSF may dilute EURO's a little bit, But they are getting collateral and PIGS are also raising taxes like hell(and crashing their economy), SO EURO will stay strong and good.
(3) No Govt/People want to get out of Euro. Ask Germans or Geeeks. No one wants to get out.
(4) Countries are going to join EURO soon - Latvia, Poland etc are in the queue.

Anyone Short Euro and Gold , medium/long term, will get face punched.

[jpatter666]

Re: Reality Check, Election Edition – Part I: 1936 Election Recycled - Eric Janszen

(1) Germans need not tolerate anything.
(2) ECB/EFSF may dilute EURO's a little bit, But they are getting collateral and PIGS are also raising taxes like hell(and crashing their economy), SO EURO will stay strong and good.
(3) No Govt/People want to get out of Euro. Ask Germans or Geeeks. No one wants to get out.
(4) Countries are going to join EURO soon - Latvia, Poland etc are in the queue.

Anyone Short Euro and Gold , medium/long term, will get face punched.

1 ) What makes you say this? Your average German seems to be having to tolerate quite a lot.
2 ) ROTFL. What collateral? You mean the government bonds of bankrupt governments? And so far as taxes are concerned, raising taxes and collecting taxes are two very different things.
3 ) Germany doesn't want out because the Euro allows for its export engine to continue with any way for other European countries to counterbalance. Greece wants to stay in because Euros are far better than drachmas. The problem is that this is unsustainable unless (a) Germany funds the improvement of industrially backwards countries like Greece (which is in ways counter-productive to the Germans because it is building a future competitor) or (b) Greece resigns itself to German domination for the forseeable future. See either of those paths taking shape?
4 ) And they've seriously pushed back on the timeline for that.

[jpatter666]

Commentary on an Americas Zone

Right on the heels on EJ's commentary that the Americas might try to integrate into their own zone, here is an article calling for just such an event.

http://www.washingtonpost.com/opinio...ab3_story.html