Commercial Bank Credit Growth Still Contracting
by CIGA Eric 8/26/09
Fractional reserve banking is like a shark, credit must continue to expand (swim) or it faces death. As a result, the unprecedented panic, as reflected by the speed and magnitude of the coordinated quantitative easing, to unclog the credit markets and restart lending process. An economy is either rising at a rising rate or business activity is falling at an increasing rate. As long as Commercial bank credit continues to decay and cash assets soar, don’t buy the green shoots hype.
Click charts to enlarge
Dear Jim,
Zimbabwe, here we come!
CIGA Dr. Bob
Daily Policy Digest
"In 1981, the trillion dollar figure was such a novelty that President Ronald Reagan declared it incomprehensible. "If you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire," the president said then. "A trillion dollars would be a stack of thousand-dollar bills 67 miles high."
Federal Spending & Budget Issues
August 26, 2009
ZIMBABWE, HERE WE COME!
It used to be the government’s budget picture was measured in billions of dollars. No longer. Trillions, that’s the yardstick of the 21st century, says the Associated Press (AP).
In 1981, the trillion dollar figure was such a novelty that President Ronald Reagan declared it incomprehensible. "If you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire," the president said then. "A trillion dollars would be a stack of thousand-dollar bills 67 miles high."
Now consider the mileage in this:
The government faces nearly a $1.6 trillion deficit in the fiscal year that ends Sept. 30, according to government budget officials.
It faces a cumulative 10-year deficit of about $9 trillion; that’s $30,000 for each man, woman and child in the United States.
It’s publicly held debt is projected by the White House budget office to total a whopping $17.5 trillion by 2019 — a figure so big it is three-quarters of the nation’s entire economy — and big enough that it would send Reagan’s stack of thousand-dollar bills into satellite orbit.
The Congressional Budget Office (CBO) and the White House Office of Management and Budget (OMB) have some other numbers to ponder:
The unemployment rate will peak in coming months at 10 percent, but will begin to drop in 2010, according to the White House; CBO says it will be slightly worse, averaging 10 percent for all of 2010.
The recession will cause the economy to contract 2.8 percent this year, the White House said, more than doubling its prediction from earlier this year; both government agencies expect the economy to grow next year by 1.7-2 percent and continue expanding in 2011 at a 3.5 percent clip.
Jim,
Pensioners, widows, kids in the ghetto… God, they will stop at nothing. All of this is so they can have air-conditioned tennis courts, a collection of expensive cars and four homes, most of which are empty 51 weeks of the year. These people are a disease.
CIGA Pedro
Californians Lose $1 Billion From Unconstitutional Bond Sales
By David Dietz and Karen Gullo
The Compton school board didn’t seek voter approval for the deal. From 2002 to 2007, California school districts collected a total of $1 billion for construction during a bond refinancing spree set off by falling interest rates.
None of these deals should have been done, Brown says. The constitution bans school districts from taking on additional debt in a refinancing of taxpayer-approved bonds without a public vote.
In every case, the prohibited transactions added to school district debt and increased property taxes for at least the next decade, bond records show. Banks pitched the deals to schools on the premise that refinancing would save taxpayers money and provide extra cash.
The deals were dominated by UBS AG and Piper Jaffray Cos., which collected fees up to four times the U.S. average for bond sales, public records show.
“This was a hell of a cute scheme,” says Lee Buffington, treasurer of San Mateo County, just south of San Francisco. “These guys had a gold mine going and thought nobody was watching.”
