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| User Info | Why Bernanke And Geithner's Gambit Fails in forum [Ticker] | ||||
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Genesis Posts: 66463 Incept: 2007-06-26 
Royal Flush! 
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http://market-ticker.org/archives/1574-W....
---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2009-11-03 09:58:42
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Snowman Posts: 785 Incept: 2009-03-09 
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I would take an even more caustic view on the banking and "credit" system of hot potato. The banks don't lend and hold, they originate and sell. So the model they operate under is to - get first in line at the origination table - make as much up front fees as possible - make the mortgage/credit card debt appear as cash flow enticing as possible but only for the next investor in line - quickly get out of the credit by selling it - get the next investor to make THEIR fees by trading promises of future cash flows - get the final investor, the guys taking care of your retirement and savings money, to hold the promise of cash flows Notice that the word "customer" disappeared from the banker's vocabulary. This "system" is of course unsustainable since the disconnect occurs between the banking process and the customer - where underwriting standards no more reflect the ability of the borrower to repay, and instead are calculated on the ability of the investor to pay for the debt. The only end game for this banking model is more debt (to please the originator and the investor) and it becomes higher leverage when real incomes aren't able to keep up with the debt. Even if real incomes do rise, never in history have they risen fast enough to compensate for the increased rate of debt needed to keep this game of banking musical chairs going. 2009-11-03 10:29:13
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Maxi Posts: 26 Incept: 2009-10-13 Lander, WY
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I was one of those who successfully "gamed the system", from 2003 - 2007. During this period of time I opened real 0% APR (No Transfer Fees) credit cards to the tune of seventeen cards, virtually all were offering twelve months at the 0%. I opened the first in 2003 with a credit limit of $12,000. I took $10,000 and had it directly deposited into my checking account and immediately purchased physical silver and gold with a 90/10 ratio. Credit was available and I continued to open and roll balances until 2007. Every month I deposited a goodly amount into savings, which was eventually used to pay the balance on the final card. By this time silver and gold had appreciated substantially. I gamed the banks big time, but made sure that every payment was made on-line and on the day that the Monthly Statement was posted, not when the payment was due. I ended with a substantial stash of silver and gold at rock bottom prices, while all of my friends and family were busy attempting to game the housing market. They all lost substantial amounts and several are now stuck with homes and facing foreclosure and bankruptcy. I sure do miss those days of real 0% APRs. :( Funny thing is that just yesterday CitiBank - where I had two accounts and they were closed for inactivity early this year - sent me an offer for 0% APR for until August 2010, but with fees and a disclaimer that the rates could be increased at any time. They are just looking for people to transfer a balance so that they can jack the rates. Out of the bank gaming business for now and for good. Last modified:
2009-11-03 10:32:18 by maxi
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Financeguy Posts: 4720 Incept: 2007-08-10
Charlotte
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Rock meet hard place.....
---------- "Granted, if you are not into Barbara Streisand and creme brulee, South Beach could be a tad lonely." Eleua 2009-11-03 10:37:34
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Cetera Posts: 15 Incept: 2009-05-21 Colorado
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Maxi, Good to see someone from home manage to put one in the eye of the banks. I grew up in Riverton. When I was younger, I did a little of the balance transfer game, more of necessity (and stupidity) in college than out of any intelligent scheme. My little brother, who's still in college at UW, is having some real issues. His job has really gotten cut back, he's not making enough money to pay for all his college and living expenses, and has now maxed out a CC that just jumped the rate to 30%. I've tried talking to him about finances, but getting a younger sibling to listen is almost as hard as getting the truth out of D.C. ---------- Give me liberty or give me death! 2009-11-03 10:44:27
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Tjeffersonsghost Posts: 1824 Incept: 2009-01-26 
Yes, I'd Hit It
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Dylan Ratigan did a good piece on why Geithner should be out of a job. http://www.huffingtonpost.com/dylan-rati.... Just a little addition to your piece. Nice ticker and to bad you didnt get invited... guess Im not surprised. 2009-11-03 10:47:10
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Richard112360 Posts: 127 Incept: 2008-02-06 Hooterville Online
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Quote:Ramping prices through currency deprecation in an environment where global wage arbitrage has capped the feedback mechanism into earnings capacity destroys credit capacity instead of adding to it. Brilliant synopsis Karl. The key word missing in the Hyperinflationistas arguments are "global wage arbitrage". As I understand it, we've already had our inflation, it was masked by massive global wage arbitrage. DEFLATION here we come. Last modified:
2009-11-03 11:00:59 by richard112360
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Bagbalm Posts: 780 Incept: 2009-03-19
Just North of Detroit Online
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When the economy does not respond the way they wish it to eventually the current administration will try wage and price controls. It just fits with their mentality to think they can command reality to do as they wish.
2009-11-03 11:09:23
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Tat668 Posts: 1583 Incept: 2007-09-09
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Thank you Karl for yet another clear and concise dissemination. The bad debts in Japan are within the boundaries of large corporations and quite different in magnitude than what we have today, globally. ---------- "Patience grasshoppers.... but your time to eat the bugs is coming......."- KD 9-1-2009 "This marks the beginning of the end."- Barack Obama 2-26-09 2009-11-03 11:16:01
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Widgeon Posts: 5672 Incept: 2007-08-30
OK
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My View, Basically they've attempted to coax "the consumer" into ramping their cc's and further credit expenditure ... by inciting them w/ a full-press media campaign and massive stock market invention (buying) on the part of the gov't. Unfortunately, their view of who the majority of americans are and the dry powder they have available is just a figment of their imagination and they have erred in that they believe their own propaganda. americans are exhausted and spent out. Except for a few geogrfaphic locations that receive inordinate shares of gov't spending, etc. this "recovery" has been a complete joke. You can't have a phucking recovery while 500k more people are unemployed every week and debt payments are being defaulted upon in ever-growing record amounts. INCREDIBLE HORRIBLE ACTION W/ PM'S, CURRENCY, and MARKETS TODAY. 2009-11-03 11:18:55
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Curbyourrisk Posts: 1617 Incept: 2008-08-19 Long Island, New York
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Not to go off topic....anyone watching GOLD rally despite a stronger dollar? I knowIndia bought a boat load last night from the IMF....but is there something else going on? Why the dislocation int he 2? I saw the drop in .DXY when the Gold run started...but WOW!
---------- Hopium: hope filled delirium preached by the White House and Swallowed whole by the American Sheeple. "We saved the world from disaster" - Ben Bernanke - Jackson Hole 08/21/2009  2009-11-03 11:21:05
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Curbyourrisk Posts: 1617 Incept: 2008-08-19 Long Island, New York
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Karl: Any way we can get a list of attendees from the Blogoshpere? Would be real interesting to see who changes their tune in their reporting. Was this an attempt to get "Bloggers" on the side of the .gov?
---------- Hopium: hope filled delirium preached by the White House and Swallowed whole by the American Sheeple. "We saved the world from disaster" - Ben Bernanke - Jackson Hole 08/21/2009 2009-11-03 11:26:45
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Ldog Posts: 120 Incept: 2009-06-11
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KD: Maybe that's the plan. Get the world even more short the dollar. Close the doors and the ability of Chindia to get dollars via trade surpluses. Then create a wage price spiral to inflate the debt away. The only people we have to keep happy are those that supply raw materials that we don't have (read OPEC and some African countries). LD 2009-11-03 11:27:07
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Kuhio Posts: 203 Incept: 2008-12-31
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The Japanese surprised us @ Pearl, but it only took 6 months to figure out their game and reverse the tide of war @ Midway. Likewise, Bernanke & Co surprised us with their outrageous disregard for the law, but like many who willfully violate basic ideals of law and fair play, that only buys a little time before the opposition becomes wise to their game. Ben is trapped; his thesis only spoke of addressing temporary disruptions in market functions by focusing on liquidity to smooth over psychological driven panics. The markets now have an extremely simple & foolproof method for dealing with whatever policy prescriptions are advanced: * Print (interest rates remain below market) - short $USD, long assets (equities, FI & commodities), or * Don't print (interest rates revert to market) - long $USD, short assets (equities, FI & commodities) Game, set & match. The smart money no longer is interested in such noble ideals as "saving the system". America as we know it is hosed, so it's a complete waste of time to do anything other than jump in and try & get your piece of the carcass before it's picked clean. Admittedly, the lions who took down the kill (eg GS, Chase, et al) got the prime cuts, but there's still a lot of meat left. OT: When I refer to the the US as 'we', I am of course referring to the 50.1% who control the electorate. Actually, it's up to 52% now, and will only go higher. The only evidence anyone needs is California - the tipping point was reached a generation ago. So even if you still believe in the relics of your youth, it doesn't mean anything in the real world. Rant, rave & scream all you want about what the PTB are doing is "wrong". Of course it's "wrong"; that's not the point. The point is these activities are about as effective as raging at the iceberg that took down the Titanic. There's nothing you can do about it except be smart and try and cover your bases. Like I've said before, if you have the means & opportunity, you should seriously consider converting your assets to a stable foreign currency & emigrating to that country. I'm not kidding. 2009-11-03 11:30:38
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Armedmichigander Posts: 351 Incept: 2009-03-27
MI
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Quote:Any way we can get a list of attendees from the Blogoshpere? acrossthecurve was one: http://acrossthecurve.com/?p=9870 He listed some others that were there. The only ones I recognized are nakedcapitalism and financialarmageddon. ---------- Prompt Corrective Action: not just a good idea, it's the law! Last modified:
2009-11-03 11:37:06 by armedmichigander
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Jal Posts: 38 Incept: 2009-03-25
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Quote:But neither Bernanke or Geithner can fix an over-levered consumer. Doing that would require either massive debt defaults (bankrupting both lenders and borrowers) or the erection of trade barriers worse than anything ever seen in the history of America, forcing manufacturing (and thus high-wage jobs) home. That in turn would fuel price inflation as wages and prices both rose. There is no way out of the box that Geithner and Bernanke face. K. D. way does not work either. Does that mean that someone will need to tell grandma that she is destitute. jal 2009-11-03 11:42:46
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Genesis Posts: 66463 Incept: 2007-06-26
Royal Flush!
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I didn't say it did. I have repeatedly said that "first loss is best loss", and it is. Now or ever in the future, that which can't be fixed is best dealt with head on. ---------- I used to play flute; I wonder if I can play a fife? I incite prosecutors to create "Bubba Sausage Parking Lot" projects Darrell Issa has a middle finger and knows how to use it - Me 2009-11-03 11:43:28
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Widgeon Posts: 5672 Incept: 2007-08-30
OK
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Amen KD. "We" aren't asking to "be saved" ... we're asking for a Free and Honest Future for Our Kids. 2009-11-03 11:47:07
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Tesla Posts: 7276 Incept: 2008-04-03
Delaware
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Quote:that which can't be fixed is best dealt with head on but as always, timing counts. ---------- "Neither the wisest Constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams I'd rather die on my feet than live on my knees. - Emiliano Zapata 2009-11-03 11:48:52
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Dbcooper Posts: 321 Incept: 2009-05-12 PNW
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Whats funny Karl you could of included the Europa,lol. Carry it be damned,lol.. 2009-11-03 11:49:09
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Tm22721 Posts: 422 Incept: 2008-01-09
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Because lessons go to the grave the cycle can only repeat as it has for thousands of years. Reminds me of a StarTrek episode where the crew is stuck in a time warp and keeps mindlessly repeating the same events until Data's positronic brain notices the anomaly. ---------- Joe Terranova: "I'm long Amazon...once it goes above 90 it gets to 100...it's that old 9-10 thing. Once you get above the 9 it always goes to 10." Tim Seymour: "Once it gets to the 8 it goes to the 7 and then the 6..." 2009-11-03 11:57:46
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Widgeon Posts: 5672 Incept: 2007-08-30
OK
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... another thing that has helped to hold the duct tape for a few months is the phenomenon where people are living in homes rent and mortgage free and are thus able to spend that money in the retail economy. At this point it really must be assumed that allowing this to continue has been part of "their plan" as a means of freeing up otherwise committed funds. They Are So Incredibly Evil. 2009-11-03 11:59:03
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Doctorbob Posts: 774 Incept: 2009-06-03 Gusher of black gold
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Your use of the term "oligarchs" made my day. The first time I heard the term in modern reference was in the famous Forbes magazine article describing the 7 or 8 pigmen who stole Russia after the USSR fell. Boris Berezovsky was one of them. What has just occurred in the U.S. is on the same scale. 2009-11-03 11:59:29
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Mortgageguymn Posts: 140 Incept: 2009-03-09 North Coast
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But couldn't Japan have sparked more internal demand (higher spending) by creating higher prices by printing more money? When people see everything getting cheaper, they hoard money. If they'd seen prices rising, wouldn't they have been incented to increase spending? In a period of deflation, it does seem to me that the government could mitigate that deflation, by QE - no matter how unseemly I may find it. The risk is in QE having no end, since countries usually find printing money addictive. If you could get away with QE without it causing inflation (or necessitating higher interest rates in order to lure foreign creditors), wouldn't it be like having your own printing press in the basement, in other words, handy as he1l? ---------- "Neither a borrower nor a lender be." - Harold Hecuba 2009-11-03 12:01:17
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Kuhio Posts: 203 Incept: 2008-12-31
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@Widgeon Quote:"We" aren't asking to "be saved" ... we're asking for a Free and Honest Future for Our Kids. Are you for real? Your comment really has the feel of a good snark, but one can never be sure ... If you are sincere, let me guess - you live in one of the "red" states, right? I mean, no one who currently lives in a state like NY, NJ, Mass, Ill, Calif, etc could possibly be that naive as to how the real world works. Did the Nazi guards give a **** if starving parents begged them for a "Free and Honest Future for their Kids"? I guess you don't understand, but your opposition HATES YOU. They've always wanted to take down 'Merica; they spent decades getting all the pieces in position. It took a long time to wear down tradition, but they knew all along all they needed was to cross the threshold of the magical 50.1%. Now they have 52% and there's no going back. In fact, their majorities will only increase. Again, one only need refer to the blue states cited above - do they finally get religion as KD is preaching, or do they institute progressively crazier insane & inane policy solutions? I'm serious folks - we're living through a rare moment in history were a fantastically wealthy & powerful empire is collapsing before our very eyes. The people running the show are completely & utterly unqualified & corrupt, yet they have their 52% & the force of law that gives them authority. They're talking another couple T for stimulus 2.0. Are you gonna be out there wasting your time protesting, or getting the hell out of $USD? Last modified:
2009-11-03 12:07:13 by kuhio
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