THE Federal Reserve Thread pt 2 (merged)

[Madpaddy]

All I'm sure of is that my country is fxxked. We should have stuck to creating world class musicians and alcoholic beverages.

I reckon the US will struggle along for longer in this game than most as they own the board and the rulebook.

[Ludi]

I honestly do wonder if maybe this can all work out?

Don't forget the enormous place the US holds in the global economy and use of resources. Such a tiny (relatively) population but such enormous wealth, power, and desire for resources! This effects every other economy on the planet (except maybe a few like the Sentinalese).

[Plantagenet]

Since the Obama administration failed to convince the Chinese to allow their currency to rise, they will now print dollars and cause our currency to go down in value.

The Obama administration thinks that a lower currency will help the US to export more, thereby increasing jobs.

The main thing that will screw up the Obama people's plan is peak oil......QE will cause the US dollar to go down but that will just jack up the price of oil for US consumers and businesses (oil is priced in dollars but sold into a global market).

IMHO, Obama's policy will result in a steep increase in the price of oil which cause will result in EVEN MORE job less and produce another recession in the USA.

Double-dip recession, here we come!!!!

[Revi]

I don't know how you can blame this on Obama. He is like student council president in a high school. Who really runs the economy? It's the Fed.

We are in a position where we have to print money now. They have promised it for months, so if we don't, the economy tanks.

This is the end for the middle class. All our savings and all our hopes are about to be inflated or deflated away.

If money is a claim on future resources, then they have to make it worthless, because we all know there ain't gonna be nothin' left by the time us baby boomers retire.

[Ludi]

This is the end for the middle class.

But that's how folks want it. This country is for the wealthy, apparently.

[Pops]

Everyone want their currency cheap because everyone is in recession and cheap exports boost their economies - it's why everyone is pissed at china for keeping their's artificially low.

Here's Stanifords chart of cpi x-food/energy from his post today and like he says its Not Deflation Yet




'Course it doesn't look anything like it did back in the 70s

[Blacksmith]

I don't know how you can blame this on Obama. He is like student council president in a high school. Who really runs the economy? It's the Fed.

We are in a position where we have to print money now. They have promised it for months, so if we don't, the economy tanks.

How things have changed since the days of President Truman, who had a sign on his desk "The buck stops here".

[pstarr]

This is the end for the middle class.

But that's how folks want it. This country is for the wealthy, apparently.

Yup. During a Republican administration people get tax cuts for the wealthy and corporations, and during a Democratic one they get job "free-trade" for same corporations. I don't get free trade. I'm stuck in Hollywood.

[Keith_McClary]

Don't worry, the PTB's are having a working breakfast and a closed-door dinner.

World finance leaders seek currency peace

"What we all want is a rebalancing of the global economy and this rebalancing cannot happen without ... a change in the related value of currencies," IMF Managing Director Dominque Strauss-Kahn said on Thursday.
...
For Geithner and most of his European counterparts, options for providing more stimulus are limited because either politics, creditors or both prevent them from amassing significantly larger piles of government debt.
Until rich nations find their footing, emerging markets will be the strongest source of global growth. So far, they appear to be up to the task. The IMF expects emerging markets to grow at three times the pace of advanced economies.

[Sixstrings]

All I'm sure of is that my country is fxxked. We should have stuck to creating world class musicians and alcoholic beverages.

Well according to the Finnish PM, things will get so much better you'll forget they were ever bad:

THE ECONOMY will recover and, over time, it will be hard to remember the difficulties faced by the Republic today, the Finnish prime minister said yesterday.
http://www.irishtimes.com/newspaper/finance/2010/1008/1224280635335.html

Meanwhile a French central banker is telling you that you need more austerity:

IRELAND must stick to the deadlines and commitments on fixing the public finances, the president of the European Central Bank Jean-Claude Trichet said yesterday.

ECB loans to the Irish banking system have been critical in saving the system from collapse, and it is now the largest lender to Anglo Irish Bank. Mr Trichet made clear that this support must be matched by action on the deficit.

"It is extremely important that the Irish Government takes all the appropriate decisions that would permit that highly credible path towards sustainability of the public finances,'" he said.
http://www.irishtimes.com/newspaper/finance/2010/1008/1224280635335.html

I'm not sure which is worse, the Federal Reserve or being at the mercy of the French. Overall, just sort of seems like Ireland, Iceland and Greece are getting hung out to dry by the EU's larger economies.

Is there ever any talk in Ireland about defaulting and telling the EU to piss off? I think Argentina did pretty much that earlier in the decade, then after a few years the world bankers came calling again offering credit (I think they ended up agreeing to pay a portion of the bad debt).

I wonder how bad default would be, compared to never-ending "austerity." Just wipe the books clean, start fresh, and in a few years you'd probably have investors clamoring to get in on the ground floor of a new debtless economy.

[Madpaddy]

Is there ever any talk in Ireland about defaulting and telling the EU to piss off? I think Argentina did pretty much that earlier in the decade, then after a few years the world bankers came calling again offering credit (I think they ended up agreeing to pay a portion of the bad debt).

Well there has been endless talk of taking just this course of action - however, Argentina is different because it has huge natural resources that the world needs. Also, the faith in the political system here is so low that many actually believe that we should invite the IMF in to run the country. The news here is awash with tales of massive institutionalised corruption and waste of taxpayers money. We are also the frontline between the US and EU. The former demand we keep our corporate tax rate low or foreign direct investment will be under threat (US multinationals employ a large portion of the workforce and salaries are high). The latter are demanding we increase our rate so we are in line with the rest of Europe.

We all know what happens to territory that is in the front line of any battle...

[Revi]

I don't think the Fed is insane. I think they know exactly what they are doing. They are going to bring the middle class to it's knees. I think they want to get rid of all those pensions and all us little savers.

The problem is that we are the people who were playing by the rules. We were the ones who worked in their factories, built their cars, taught their kids and take care of them in their old age.

We are the ones who will become destitute when our pensions turn to worthless paper. We're the ones who will be clamoring outside the gates.

Do they really want that? I guess so.

[EnergyUnlimited]

I think they want to get rid of all those pensions and all us little savers.

They rather wish to make sacrificial lambs of you.
You will be burned on the altar of economic growth.

The problem is that we are the people who were playing by the rules.

And now you have only yourself to blame for doing that.

We were the ones who worked in their factories, built their cars, taught their kids and take care of them in their old age.

But now this job is done and you are no longer needed.

We are the ones who will become destitute when our pensions turn to worthless paper.

And they won't even notice that.
They do not care much about some little peoples.

Do they really want that? I guess so.

Maybe they don't actually want that.
However they are happy to accept it as collateral.

[mos6507]

What short memories people have. So very good at finding villains and playing victim. So very bad at seeing that it took two to tango.

[efarmer]

Very true Mos. The American system came to a consensus method to provide instant gratification via financial leverage on an epic scale of fail. Every single place where financial leverage could be consumed was sated and as the debt instruments rippled up toward the top of the system each toll bridge they rolled over collected their fee until they piled up in massive heaps in the system. The people at the top simply obtained some instant gratification for themselves and turned these heaps into new products, with jiggered ratings and protections to sell to central banks and investors. And this allowed the hallucinated wealth to be freed up to go down to lower rungs of instant gratification and then ripple back up once more.

And the political system is based on instant gratification as well, the party in power doles it, the party out blocks it until the lack of instant gratification drives the response to put them in power, so they can do whatever it takes to restore instant gratification.

Americans want instant gratification or they want someone to suffer and atone for it immediately.

We are down to where Americans are not able to externalize the suffering and atonement any longer.
We are out of instant gratification and we are pissed.

[EnergyUnlimited]

What short memories people have. So very good at finding villains and playing victim. So very bad at seeing that it took two to tango.

Only one of those two is getting bailouts though.

[Sixstrings]

Well there has been endless talk of taking just this course of action - however, Argentina is different because it has huge natural resources that the world needs.

But if your economy is imploding under the deflationary weight of ECB-imposed austerity, and perhaps future IMF-imposed austerity, isn't there a point at which default and exit from the Euro would be less painful?

It's definitely a tough spot you guys are in. All the complaining I do about the Federal Reserve, at least in essence my government is just going to print money to infinity. Whereas evidently the ECB isn't going to do that for you, you guys have to keep cutting in one round of austerity after another. Which is all deflationary, the more you cut the worse it will get -- the real problem here is the global debt, nothing can get better unless somehow the slate can be wiped clean.

Also, the faith in the political system here is so low that many actually believe that we should invite the IMF in to run the country.

Yikes, some Irish want the IMF to take over? I'd be careful there, the IMF doesn't have such a good track record with what they've done to third world nations.

We are also the frontline between the US and EU. The former demand we keep our corporate tax rate low or foreign direct investment will be under threat (US multinationals employ a large portion of the workforce and salaries are high). The latter are demanding we increase our rate so we are in line with the rest of Europe.

That's funny, conservatives in the US used to point to Ireland as success story, with your low corporate tax rates. I've heard that line many times, that we can't compete in the world without low corporate taxes like in Ireland.

You guys are definitely in a tough spot. The EU is imposing deflationary austerity on you, while at the same time wanting you to raise corporate taxes. But the low taxes are why the multinationals are there, if you raise them they WILL leave and then you're left with even more job losses and deflationary economic destruction.

In closing, I'll just say that if one ends up destitute at least it's probably better to be in Ireland than the US. We don't have the kind of social safety net you do; when the unemployment checks run out after 99 weeks then folks are on their own. "Independent contractors" get no checks at all, and even more commonly employers find an excuse to fire a worker with cause and so no checks there either.

Many end up in the streets. We probably have at least a million Americans living on the street. I live in Florida, and in most of this state we don't even have homeless shelters (and on top of that it's illegal to sleep in public, tell me how that makes sense). Well, in my county we have ONE homeless shelter but they can only stay two nights per week.

We still don't have universal healthcare. There are Americans with diabetes who go without treatment because they can't afford it, and end up having amputations. My point is that it's not all gravy over here, if you fall down nobody gives a damn. So as long as you guys have universal healthcare, and some kind of government help to at least put a roof over your head, then Irish poor will never have it as hard as American poor.

[Sixstrings]

What short memories people have. So very good at finding villains and playing victim. So very bad at seeing that it took two to tango.

And the rich will end up buying those homes up for pennies on the dollar. You blame the middle class for overextending, when in fact this is nothing but an engineered wealth transference UPWARDS.

Bottom line on this blame average folks stuff.. ALL OF THIS WAS PLANNED Mos. Greenspan INTENTIONALLY inflated the housing bubble. It was on purpose. If you want to blame the middle class Mos, then blame them for not electing representatives who would vote to revoke the Federal Reserve's charter.

Nice to see you posting by the way, you're missed.

EDIT: Although you're sort of off topic, though I guess I drifted too. How do you feel about the stock market being juiced up with printing press money? Do you think Wall Street will be happy with QE2, or will free money taste so good they'll want more, more and more?

[GASMON]

ALL OF THIS WAS PLANNED Mos. Greenspan INTENTIONALLY inflated the housing bubble. It was on purpose.

100% True

Welcome to the Global Corporation. Western Bankers, Indian Info centres & Cheap Chinese slave labour. Oh! - Us westerners, Yanks & Europeans - Debt slaves.

The master plan is in the end game, and hardly anyone can see / understand it.

Gasmon

[mos6507]

And the rich will end up buying those homes up for pennies on the dollar.

If they are truly pennies for the dollar, then anybody who was smart enough NOT to have participated in the housing casino (such as myself) and who isn't otherwise unemployed and saddled in personal debt could easily buy in as well. Housing prices need to come down to historical mean and they still aren't even close in halfway decent markets (like mine).

It was back during the housing bubble that housing was (objectively speaking) priced out of the range of the middle-class and only truly affordable by the rich. It was only the "evil banksters" who were still enabling the middle-class to buy-in via the teaser rates and turning a blind-eye to credit ratings.

In other words, there was a mass insanity in this country as far as the general public's willingness to take on debt. This should be in the forefront of any peaker's agenda, as there is little difference between living beyond your financial means, for instance, and society living beyond its ecological budget. So why should peakers lunge to the defense of people who collectively broke from traditional frugal household finance and decided to load up with debt?

Is it because debt was easy to come by? You could say the same argument about energy. Why blame someone who drives a Hummer if gas is under $3 a gallon? Why refrain from having 20 kids if you can afford it? So is this the platform we want to stand on? One in which personal restraint is never called for and we never think if it's too good to be true it might just be that way?

Nevertheless, the narrative I'm supposed to be swallowing is that everyone (note the generalization) was crucified by the banksters in some sort of grand conspiracy to kill the middle-class.

What really happened was a combined sin of greed compounded upon itself in a perfect storm. I like to look at the sociological/psychological dynamic more than the search for boogeymen because otherwise the lessons will never be learned.

Well, to that I have two words: CAVEAT EMPTOR.


I can afford to be smug about this because I did not drink the kool-aid. People like me, as few and far between as we are, are the REAL victims. We acted responsibly. We stayed on the sidelines. I was living with my daughter in a 1BR apartment with a salary close to six figures a year and stock options in the bank because I knew house prices were overvalued and peak oil doom was coming. Where was my white picket fence? Where was my swing-set for my daughter? Wasn't I entitled to the American Dream at that salary? Why did I have to live on a futon in the living room while people making less than half my salary were eating bon bons in their McMansions? Just think of all the people who DID manage to flip houses on the upswing, and get out while the getting was good, while I was just looking for feathering the nest for my daughter as a single parent.

I was the crazy one. I didn't think spending all your take-home pay on your mortgage each month was wise money-management. I was reading Housing Panic waiting for the bubble to burst. I had my schadenfreude ready and waiting, and here it is. Unfortunately, people like me are so rare that right and wrong is being forged by the masses. The majority who lost their sanity are looking for absolution for their mistakes.

Like Faustus, they made a deal with the devil, and they are only crying foul that they indeed have to give up their soul as indicated in the fine-print.



It's not like this is the first time I've been motivated to make this sort of rant. The same general thread came up at least a year ago and I said pretty much the same thing and with the same impact. A couple people agreed with me, but most just went back to what's easier: playing the victim card.

Threads like this are why peakoil.com has kind of lost its way because there are countless places one can go to find a bunch of people whining about the Federal Reserve.

What peakoil.com should do is dig a little deeper and be a little contrarian, not just sharpen your knives over TPTB. Any Tea Party moron can jump in here and bash the Fed or Obama. You gotta get people to think about things they don't want to think about.

How do you feel about the stock market being juiced up with printing press money? Do you think Wall Street will be happy with QE2, or will free money taste so good they'll want more, more and more?

From everything I've gathered about the great crash in the fall of 2008, the bailouts prevented a seize-up of the financial system that I simply was NOT willing to deal with at the time. My money was in WaMu and I moved it into BoA. Out of the frying pan and into the fire, I guess. So in some respects the bailouts bailed out everybody by virtue of averting zombie-horde grade chaos. But since the chaos never happened, people deny that it was even a possibility. The road not traveled is filled with people's fantasies.



Based on the multi-trillion-dollar bad paper that is now being juggled in mid-air that is, what, greater than the combined GDP of the entire planet, I'm thankful for the sleight of hand that kicked this can down the road. The entire planet is already bankrupt in multiple ways. The figures were already so huge as to be incomprehensible in 2008. What they inflate to with interest until it blows up really doesn't make any difference to me because nobody's ever gonna pay it off and we're gonna transition into peak oil doom probably within 5-10 years anyway. There's no "normal" to get back to anymore. So what exactly are we trying to preserve that isn't toast anyway?

This whole process of back-seat driving the Fed is a vague form of denial.