Thursday, November 13, 2008

The Banking System, Economy & Market

Markets trade at the margin.  It is the marginal stock, barrel of oil, ounce of gold, pound of steel that sets the price for ALL of the commodity.

The world banking system is not working effectively and, compounded with the decline in demand caused by "inadvertent savings" from the exportation of currency from high consuming countries to high savings countries via high oil price trade payments, the world economy has the pneumonia.

Don't blame Paulson.  Thank him for having the courage to admit he was wrong.  A typical American politician would have gone down with the ship rather than admit to a mistake.  There are NO instruction manuals for how to deal with the collapse of the fractional reserve banking system and end to the credit system of money creation.  Because that is what is happening here.  The end of that system will take several decades, but IT WILL END.  20 years from now it will likely be a relic from a distant past, with vestigial items dangling from that system from the new system, whatever that may be.

The real question for America, and the World, is can America's political environment support a platform for real and worthy adjustment to the new paradigm.  Considering the polarization in the country, somehow I don't get a warm and fuzzy feeling over this.  Still, I am hopeful.


I received email from some angry Republican types regarding the election of Obama.  WE AMERICANS have got to stop sabotaging our Presidents.  What the Left did to undermine GWB was nothing short of despicable.  I will not be part of any such effort to hamstring Obama.  Not that the Right is innocent... remember their concerted attacks on President Clinton, complete with House Impeachment?  That little temper tantrum likely resulted in the tidal wave we are witnessing at the moment.  Every action has its unintended consequences.  America desperately needs a successful presidency out of Obama, and the next couple of presidents.  And spare me the email about Obama being a socialist.  That was just campaign talk to energize his base, just like the silly creationist talk we get from the Republicans.  With few exceptions, nobody running for office believes half the s--t they say.  Thank heavens for that.


I have no ability to time this, but withdrawing the recent stimulus at some point is going to be as important as its injecting it.  The ability of the US$ to withstand these gyrations and manipulations cannot be over questioned.

Good Luck!

Mentatt (at) yahoo (d0t) com


Anonymous said...

Why are you being a denier, enabler and apologist for Paulson? Are you a Republican? Did you work for Goldman? Have a personal relationship with Paulson? Hoping to curry favor?

Retirement for tens of millions of Americans is becoming a spot in the rear view mirror. Paulson raked in the fees when he was at Goldman. He had no problem devising Frankenstein financial instruments and peddling them on the street.

The man hasn't a clue. He said the banking system was fine. He said there wouldn't be a bailout of Fannie or Freddie and then there was. He even said the subprime crisis was contained, and it wasn't.

Make no mistake about Paulson is overseeing the destruction of markets and capital.

You wrote, at least Paulson can admit he's wrong. Why can't you admit that Paulson, Bernanke and Bush haven't a clue?

Greg T. Jeffers said...

Dear Anon:

WoW! Pissed you off, did I?

I am and have been a life long Libertarian Republican, I worked for Bear Stearns, not Goldman, and I do not hope to curry favor. I do not need anyone's favor.

Government officials cannot step up to the microphone and say the banking system is nearing collapse. They MUST speak in tongues, and then go about their business behind the scenes to address teh issues. Yelling "fire!" will not help anything.

So, your opinion is that the former head of Economics at Princeton knows nothing of economics, the former CEO of the premier bank in the world knows nothing of finance, and a guy who won the presidency as well as the governorship of the second largest state knows nothing of politics...

How fucking old are you? 7? Each of the jobs are unique functions... are they all retarded, but you could solve this in a week.

I fault GWB for going to War in Iraq. Primarily on principal, as I have no security clearances. I will be interested to see what Obama does.

Finally, how well do you know Paulson? Have you met him? Ever had a beer with him? Traded against/for him?

People are people, and have all of the frailties of humans no matter what their press clippings say.

Your inability to independently analyze this because of your hate and anger is palpable.

Why so angry?

bureaucrat said...

Let's get back to the issue at hand, boys .... what if this all adds up as some people are suggesting, including the "Austrian" economists: if we are in a deflation which will turn into a depression, just like the one 75 years ago, which no one anticipated, and which no one is anticipating now (except for little ol' me :) ), and no one living has had any real-time experience with such an event, we cannot really blame people like Bernacke and Paulson. Studying it in school is one thing, but living it is another. And if we are in such a situation, we know from the 1930s and Japan's last 20 years that all the conventional Keynesian bromides (pump priming, public works, lower interest rates, make-work employment) do NOT work -- even WW2 didn't end it -- this thing could go on for years. Obama and the democrats will be blamed, whether Jeffers likes it or not, and we could be stuck with this noose for 5-20 years! The Great Depression didn't really end until the 1950s. This could get really bad, if history is any judge. And when we do get out of it, there is peak oil sitting, smiling, waiting for the kill ...

Anonymous said...

Few differences between 1930's and now.
$ was tied to gold, it is not now.
US economy was extremely local, we have huge global influences.
We could have a depression but it will be a hyperinflationary one.

Don said...

Good for you Greg.

Man hasn't even taken the office yet and he's already taking the blame for everything.

Or gonna save everything in the other camp.

I too come from Republican roots. Actually liberatarian roots but I didn't know that until a few years back when I took a political aptitude test.

Like you said, we're cruising into uncharted waters and no one knows what to do.

But you can bet if we spend all our time fighting amongst ourselves this country will die.

Don Henry Ford Jr.