I think this is the beginnings of an economy based on perpetual growth and fossil fuel energy running headlong into geological energy constraints. Basically I see an undulatory downward path for the rest of my life. From here out, I think any rallies in our economic condition are going to be met with spiking commodity prices that knock us right back down.
Seven trillion dollars of wealth has been vaporized in US Stocks in the last seven days alone, with five of it since the passage of that ill-designed and foolhardy "bailout" bill.
The selloff this afternoon is the "real deal." It was not caused by the stock market getting "mad", it was caused by the short-term credit market along with the Treasury market suddenly dislocating at a few minutes before the bond pit closed at 2:00 PM.
Worse is also the fact that institutional lending has essentially disappeared - both between banks and now it is choking off commercial short-term credit across the board.
It doesn't get any more serious than this. To repeat: short-term commercial credit is threatening to completely disappear from the American scene.
Every action our government has taken thus far, including repealing mark-to-market requirements have made the situation worse by further destroying confidence.
In the overnight market the futures are imploding once again; the Osaka exchange was closed in Japan after hitting its "lock limit" within minutes prior to the Nikkei opening; the Nikkei is now down ANOTHER 10%, for a total loss of nearly 20% in just two days, with Japanese banks trading "offer only" - that is, NO BID. There are rumors of government bond market fails in parts of Europe, and Iceland has essentially been cut off from the rest of the world Interbank marketplace.
Japanese banks are now firewalling themselves from European and US claims; the interbank market is about to explode. Iceland has effectively defaulted on sovereign debt and today there was a rumor that Hungary had a failed bond auction, effectively defaulting as well.
Key: Sovereign debt (that is, Treasuries from various nations) has become infected with trash - unfortunately including ours now that Fannie and Freddie were nationalized and TARP has been passed - and may fail in a cascade-style fashion across the world. If this occurs our ability to fund our government will be cut off as well, leading to a need to reduce government spending by $800 billion a year immediately. This means huge and immediate cuts to Social Security, Medicare and Military budgets - by as much as half.
Over a year ago I warned in my writings that this could happen if we did not take action. If we did not force accountability through Congress and onto our financial system. If we did not force the thieves, liars and thugs on Wall Street to take their medicine.
Instead of taking action we have sat on our collective asses and allowed Congress to pass bailout after bailout - now our stock market is down close to 40% from the top with 20% of that loss coming in just over one week!
We are facing a global DEPRESSION and the cut-off of essential goods and services in this nation if we do not stop this lunacy immediately.
Please understand - the TRUCKER who has a full load of food headed for your grocer REQUIRES commercial credit in order to fill his truck with diesel.
The local GAS STATION owner REQUIRES commercial credit to fill his underground storage tank.
The local CAR DEALER REQUIRES commercial credit to have cars - and parts - in his dealership. No credit, no car - and no car repairs.
IF THESE MARKETS DO NOT IMMEDIATELY UNFREEZE THE CONSEQUENCE WILL BE THAT FOOD AND FUEL MAY NOT FLOW TO YOUR GROCERY STORE AND GAS STATION.
Think about that very carefully and then consider whether YOU can afford to sit on your ass for one more second, or whether you have an absolute NEED to get on the phone, fax, and whatever else RIGHT NOW to your elected and appointed representatives and, if you do not get in response that they will IMMEDIATELY resolve this matter whether you will vow to band together with every one of your associates and friends, form a group consisting of everyone in your local city or town, and call a GENERAL STRIKE, refusing to both work and permit commerce to be conducted UNTIL THE LIARS ARE FORCED INTO THE OPEN, DEALT WITH, AND THE SYSTEM IS ABLE TO CLEAR.
We are quite literally out of time. This freeze in the markets WILL continue around the globe unless something is done NOW.
Every "intervention" and "promise" made by our government thus far - all of them - have been LIES.
Our government has done NOTHING to alleviate the problem and in fact every one of their "solutions" have made the situation worse - going back for more than a year.
We have "pumped liquidity" and even bailed out firms with taxpayer money, and yet the markets have not unfrozen.
They remain frozen because the root cause of the problem is that banks and other financial firms have been lying for more than a year, each quarter claiming to have "kitchen sinked" their losses only to report more the next quarter, and in some cases have gone on national TV to proclaim they're "well-capitalized" only days or weeks before they collapse!
The first question anyone asks when someone wishes to borrow money is whether or not they will get paid back. If the lender does not believe they will be able to be paid back then that loan will not be made, no matter how much money someone has available to them.
It really is that simple folks and yet this fundamental principle has been willfully and intentionally ignored for more than a year.
YOU MUST CHOOSE RIGHT NOW, TONIGHT, AS AN AMERICAN WHETHER YOU ARE GOING TO GO TO WORK TOMORROW AND PRETEND THAT NOTHING IS WRONG, OR WHETHER YOU ARE GOING TO ENGAGE IN PEACEFUL BUT FORCEFUL PROTEST IN DEMANDING THAT THIS CRISIS BE ADDRESSED NOT WITH "MORE OF THE SAME" BUT BY ARRESTING EACH AND EVERY ONE OF THE CROOKS, BY FORCING BALANCE SHEET TRANSPARENCY FOR EACH AND EVERY FIRM IN THE UNITED STATES, AND BY THEN FORCIBLY RECAPITALIZING VIA DEBT-TO-EQUITY "CRAMDOWNS" EACH AND EVERY INSOLVENT BANK AND OTHER FINANCIAL INSTITUTION, WITH TREASURY STEPPING IN WITH TAXPAYER MONEY ONLY AFTER THE TRUTH (OR FALSEHOOD) OF SOLVENCY IS ESTABLISHED IN PUBLIC WHERE WE CAN ALL SEE IT.
YOU LITERALLY MUST CHOOSE NOW, AS THE TIME TO DAWDLE AND THINK ABOUT IT HAS EXPIRED.
Looks like we're there. TS has HTF.
Good luck to all of you. _________________ "Thank you for attending the oil age. We're going to scrape what we can out of these tar pits in Alberta and then shut down the machines and turn out the lights. Goodnight." - seldom_seen
Joined: Apr 06, 2006 Posts: 3615 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Fri Oct 10, 2008 1:46 am Post subject: Re: Karl Denninger's dire warning
Yeah, right. Protest against what? Ignore that iceberg? Steer hard to starboard? Man lifeboats now? We're not even passengers in steerage on this ship, not even mice. More like cockroaches! J6P isn't going to have a light bulb moment reading Ticker Forum, fer Christsakes. J6P can barely read the instructions on a TV dinner, that's why he's J6P.
Ilargi wrote:
Which brings me to the IMF, and its warnings of a global recession this morning. Where the fcuk were you 6 months or even 2 years ago, when an entire chorus of people on the web, from Panzner to Schiff to Supkis to Shedlock, Noland to Bonner to Denninger to Stoneleigh, to, yes, me, were warning, each in our own style and fashion, about what we see before our eyes today? Dr. Doom, me? I don’t think so.
We've done our part warning about peak oil, here and elsewhere. What else is there to do? Calling for a general strike ain't gonna push people over the edge, whether for financial collapse or imminent fuel shortages. People don't form organized protests - that's insane. The government will take care of things once markets settle down. [/sarcasm, exasperation, cynicism]
Best you can do is get out of town, or try and make sure people in the one you're in know what's in store. Once again: people en masse (OK, Americans) will be proactive about the financial unwind once it's on their doorstep, no sooner, same as with peak oil. _________________ Cogito, ergo non satis bibivi
The Dude Is Not In: Leave A Message After The Beep.
Joined: Apr 06, 2006 Posts: 3615 Location: 3 miles NW of Champoeg, Republic of Cascadia
Posted: Fri Oct 10, 2008 5:36 am Post subject: Re: Karl Denninger's dire warning
John's busy complaining about how Hirsch left conservation out of his calculations. I've needled JD about the likely treatment gaijin will receive in coming years, to no response. Good luck with all that Mr Seamless Transition. He also had a post about how we've replaced energy doom with economic
doom, which I frankly found stunning.
Maybe we'll see some of his ideas put into practice, like the oil shale getting nuked. Desperate times desperate measures. _________________ Cogito, ergo non satis bibivi
The Dude Is Not In: Leave A Message After The Beep.
Joined: Aug 03, 2006 Posts: 4330 Location: Graceland
Posted: Fri Oct 10, 2008 6:16 am Post subject: Re: Karl Denninger's dire warning
I'm looking forward to telling stories around the fire barrel at the refugee camp.
"I was alive back in 2008. It was as bad as they say. The fear was so thick you could cut it with a knife. Stock markets were falling 10% or more every day. Lending had dried up almost overnight. Everyone knew it was going to culminate in something ugly, but no one knew exactly what..."
When I'm done the children with squeal with fear and then yell in unison:
"BigTex, tell us about the SUVs again. PLEEEEEAAAASE!!!!!" _________________
Posted: Fri Oct 10, 2008 6:59 am Post subject: Re: Karl Denninger's dire warning
Hogan wrote:
BigTex wrote:
I'm looking forward to telling stories around the fire barrel at the refugee camp.
"I was alive back in 2008. It was as bad as they say. The fear was so thick you could cut it with a knife. Stock markets were falling 10% or more every day. Lending had dried up almost overnight. Everyone knew it was going to culminate in something ugly, but no one knew exactly what..."
When I'm done the children with squeal with fear and then yell in unison:
"BigTex, tell us about the SUVs again. PLEEEEEAAAASE!!!!!"
Ah, the good old days. I miss them already.
wb hogan... missed in the middle of the North American night _________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
J.R.R. Tolkien
Last edited by wisconsin_cur on Fri Oct 10, 2008 7:02 am; edited 1 time in total
Joined: Jun 18, 2004 Posts: 799 Location: Western North Carolina
Posted: Fri Oct 10, 2008 7:04 am Post subject: Re: Karl Denninger's dire warning
Quote:
I'm looking forward to telling stories around the fire barrel at the refugee camp.
"I was alive back in 2008. It was as bad as they say. The fear was so thick you could cut it with a knife. Stock markets were falling 10% or more every day. Lending had dried up almost overnight. Everyone knew it was going to culminate in something ugly, but no one knew exactly what..."
When I'm done the children with squeal with fear and then yell in unison:
"BigTex, tell us about the SUVs again. PLEEEEEAAAASE!!!!!"
That's some funny chit man!!!!
Don't forget to talk about drag racing, PWCs, ATVs, and private aviation while you're at it!!!
Posted: Fri Oct 10, 2008 7:06 am Post subject: Re: Karl Denninger's dire warning
TheDude wrote:
Yeah, right. Protest against what? Ignore that iceberg? Steer hard to starboard? Man lifeboats now? We're not even passengers in steerage on this ship, not even mice. More like cockroaches! J6P isn't going to have a light bulb moment reading Ticker Forum, fer Christsakes. J6P can barely read the instructions on a TV dinner, that's why he's J6P.
Posted: Fri Oct 10, 2008 7:14 am Post subject: Re: Karl Denninger's dire warning
I think I'm looking forward to hearing my children tell their children,
"If you aren't quiet George Bush will come and get you! Now go to sleep." _________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
Joined: May 20, 2008 Posts: 946 Location: I have a whole ward
Posted: Fri Oct 10, 2008 7:51 am Post subject: Re: Karl Denninger's dire warning
wisconsin_cur wrote:
I think I'm looking forward to hearing my children tell their children,
"If you aren't quiet George Bush will come and get you! Now go to sleep."
I'm teaching the kids to hide and keep their thoughts to themselves, and to train for the revolution to overthrow Lord Obama and his communist dictatorship over the proletariat.
Long live the fighter!! _________________ Viddy well, little brother. Viddy well.
Posted: Fri Oct 10, 2008 7:54 am Post subject: Re: Karl Denninger's dire warning
AlexdeLarge wrote:
wisconsin_cur wrote:
I think I'm looking forward to hearing my children tell their children,
"If you aren't quiet George Bush will come and get you! Now go to sleep."
I'm teaching the kids to hide and keep their thoughts to themselves, and to train for the revolution to overthrow Lord Obama and his communist dictatorship over the proletariat.
Long live the fighter!!
For the record I have not voted for a major party candidate since Dole and Clinton before that.
If we had a President Kerry today I would be substituting his name for Bush _________________ “It does not do to leave a live dragon out of your calculations, if you live near him.”
Posted: Fri Oct 10, 2008 7:55 am Post subject: Re: Karl Denninger's dire warning
As uncomfortable as it is for everyone, we are moving off
of the insanity of being on autopilot in denial. Myself, I
am concentrating on being pleasant to everyone around
even if I don't feel that way, and loving to my inner circle.
I have a stupid smile glued on my face and I am waving
at everyone all the time, who knows, I may run for President.
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