6,600 jobs to be eliminated

Reply to redhatty


Our massive debt will be the cause of this. The only thing holding this boat above the waterline is foreign investment in several markets including the massive purchase of government short term and long term bonds.

We don't produce any wealth here we borrow it with the promise of a return + interest later. We've seen t-bills go O to negative, we've seen the amount of government spending in the last 30 years, the worst of which has been the last decade(again this is borrowed money), Fed lowers interest rates to 0 -.25 percent, and they are talking about parking at 0 for an extended period to create "Liquidity" in the market. That is inflation, but we're talking about recaps in the trillions, not billions. We're digging a much bigger debt hole than anyone could understand. When our foreign creditors see that, they will get out, and they will let us hold green toilet paper if it means not being dragged down with us. You can't have a broke government bailout an over-leveraged America without printing money into the extreme. I love the people that say "This can't happen" when the system is in fact PERFECT for such a collapse.

Our money is backed by other people buying our debt, and they're not stupid enough to keep doing so . If we paid off all of our debt there wouldn't be a damned penny in circulation in the current flow of things. THAT can never happen, but the other can, and likely will. The Fed will make sure of it.


[edit on 17-1-2009 by projectvxn]

Again to redhatty

To illustrate my point further. Would you keep your investment in California if she defaulted? Became insolvent?

I know I wouldn't.

Expect a collapse of state, muni, and treasury bonds very soon:

www.abovetopsecret.com...

[edit on 17-1-2009 by projectvxn]

And again redhatty

FACTBOX: U.S. economic report shows poor hit hard

(Reuters) - The U.S. recession is shaping up to give Americans their hardest economic times since World War Two. A new assessment of the economy was presented on Wednesday by the Congressional Budget Office, the non-partisan budget analyst for Congress. Here are some of CBO's observations on the impact of the bad economy on the poor, elderly and others, one year into the recession: * More people need food stamps. Government spending on food stamps, designed to help the poor buy basic commodities, will grow by 27 percent this year. CBO said spending will hit $50 billion, from $39 billion last year, mostly because of growing caseloads and benefits as food prices have risen. A record 31.5 million people were signed up for food stamps last September, according to government records. * Unemployment rolls are growing. Washington's spending on jobless benefits will nearly double, to $79 billion this year from $43 billion last year. CBO thinks the jobless rate will rise to 9.2 percent next year, from around 6.7 percent now. The number of unemployed and action by Congress last year that extended benefits during the hard economic times are causing the additional spending. Some Democrats in Congress want to take further steps to expand unemployment benefits, possibly covering part-time workers who lose their jobs. * Medicaid is expanding. The federally backed health insurance program for the poor was growing in cost even before the recession because of rising health care costs generally. But rising unemployment means more people qualify for Medicaid, CBO said. * Retirees won't get a raise in 2010. A contracting global economy means less demand for consumer goods, including oil, which means lower prices. That can help consumers during hard economic times. But it also means lower annual cost-of-living adjustments for seniors collecting Social Security retirement checks. CBO anticipates no Social Security cost-of-living raise next year. This would come as retirees' private savings have been hit hard by the stock market bust and low interest rates paid by banks on savings accounts. * Home foreclosures rise. Mortgage foreclosures stemming from risky adjustable loans jumped to 7 percent by early 2008, from an eight year average of 2 percent. CBO said foreclosure rates are likely to remain high as house prices continue to fall. "Many homeowners have negative equity in their homes ... and will not be able to refinance their mortgage." (Reporting by Richard Cowan; Editing by Eric Walsh)

Where is the money for all of this welfare spending in the future? Where is it going to come from? They are going to burn down the building with the amount of heat those printers will produce. And then the country will catch fire.



[edit on 17-1-2009 by projectvxn]

Originally posted by projectvxn
Reply to redhatty


Our massive debt will be the cause of this. The only thing holding this boat above the waterline is foreign investment in several markets including the massive purchase of government short term and long term bonds.

You are preaching to the choir here. I completely agree with this point.

We don't produce any wealth here we borrow it with the promise of a return + interest later. We've seen t-bills go O to negative, we've seen the amount of government spending in the last 30 years, the worst of which has been the last decade(again this is borrowed money), Fed lowers interest rates to 0 -.25 percent, and they are talking about parking at 0 for an extended period to create "Liquidity" in the market. That is inflation, but we're talking about recaps in the trillions, not billions.

Please elaborate on how you see lower interest rates as equaling Inflation. The lower interest rates do not cause a rise in the prices of goods and services. In fact, it has the opposite effect.

The Dollar is still strong, comparatively. No where near as strong as it was in the 1960's, but the painful process of deflation can bring back the dollar strength of the 1960's. But that is a painful road. At this point though, we have one painful road or another to travel. either we suffer through deflation, like Japan did, or we suffer through the entire collapse of our Dollar and our country, like Argentina did.

Unless we end up with monetary inflation, we will not go the way of Weimar or Zimbabwe. In order to have the hyper-inflation that those countries has (have) we also have to see an increase in wages as well as an increase in the money supply.

That is not happening.

We're digging a much bigger debt hole than anyone could understand. When our foreign creditors see that, they will get out, and they will let us hold green toilet paper if it means not being dragged down with us. You can't have a broke government bailout an over-leveraged America without printing money into the extreme. I love the people that say "This can't happen" when the system is in fact PERFECT for such a collapse.

We are NOT printing money. That is a fact. what we do see happening is an illusion - made of 1's and 0's on a computer. this is not more money in circulation, There are no more physical dollars available today than there were in September.

The ONLY way to effective increase the money supply is to increase the wages as well as the prices. Wages are not going up.

Price fluctuations caused by supply and demand is NOT inflation.

Our money is backed by other people buying our debt, and they're not stupid enough to keep doing so . If we paid off all of our debt there wouldn't be a damned penny in circulation in the current flow of things. THAT can never happen, but the other can, and likely will. The Fed will make sure of it.

There are not enough dollars in circulation to even make a dent in the debt. That's the whole point. No increase in money supply = NO monetary inflation.

Though I do agree with you in that we cannot fix a debt problem by creating more debt.

Originally posted by projectvxn
Again to redhatty

To illustrate my point further. Would you keep your investment in California if she defaulted? Became insolvent?

I know I wouldn't.

Expect a collapse of state, muni, and treasury bonds very soon:

www.abovetopsecret.com...

[edit on 17-1-2009 by projectvxn]

I wouldn't touch California with a 10 foot pole. But realize that California (alone) is the 7th largest economy in the WORLD. There are at least 10 more states right behind Cali that will be in the same situation within months.

Eventually there will be no place that is safe.

The US is insolvent. Just be thankful that China and the other countries that buy our debt haven't quite woken up to that fact yet. When they do, the entire country will collapse.

reply to post by projectvxn


Food stamps, like the bailouts do not cause the printing of money - it is imaginary 1's and 0's in computers.

That said, I expect that the entitlement programs will be cut back if not completely eliminated in the future.

As the middle class is crushed down to the poverty class, as more and more jobs disappear, the drain on the federal system will be too much and these programs will cease.

The poor will always suffer through tough financial times, the middle class will be dissolved of their wealth and become poor and the rich elite will still eat caviar and prime rib. That is how it has always gone and will again.

reply to post by redhatty


www.reuters.com...

We are printing money. Physically. Right now.

And one thing you need to understand is what our money really is. It is representation of debt. If we had no debt under the current system there would be no money, physically or electronically. But right now there is HUGE debt, and we will be lucky if we stay at zero output. So no wealth, all debt. Debt has to be financed and in good standing(Meaning the lender is made a return guarantee). They won't take IUOs. And since our FOREIGN investors BACK UP OUR DEBT, if they leave the value of the dollar leaves, and we're left with an over abundance of PRINTED, and electronically CREATED money with no backing. You get hyperinflation in a situation like that.

Cutting interest rates essentially creates cheap money. And floods the market. The whole point of these low interest bailouts is to "Recapitalize banks" in other words, fill them with cash. New cash mind you, it's all printed. www.msnbc.msn.com...

[edit on 18-1-2009 by projectvxn]

Originally posted by projectvxn
Cutting interest rates essentially creates cheap money. And floods the market. The whole point of these low interest bailouts is to "Recapitalize banks" in other words, fill them with cash. New cash mind you, it's all printed.

You're looking at things a little skewed.

Call it printing, call it selling more debt to China...yeah, money is being injected into the economy.

What you're not taking into consideration is the amount of money that has been destroyed. You said it - money is debt. We're a nation in debt up to our eyeballs. Consumers have relied on cheap, easy debt/credit to spend ourselves stupid. The entirety of the economic growth of the past, oh, 20 years or so has been because of credit and debt.

Now that's over. HELOCs are being slashed across the board. Credit card companies are reigning in what they're lending, and consumers are reigning in what they're spending on the credit they have left. New loans aren't being generated at anywhere near the rate as they were just 18 months ago.
Remember the "credit crunch"? That's the destruction of credit. How much credit has been lost?

Think about how much, in dollar value, has been lost just in the stock market. Aunt Betty's 401k is down 20-40% or so; if Aunt Betty had a 401k value of $1 million, she know has $600k...a loss of $400k. And that's just one person. Multiply that by all the Aunt Betties.
What about corporations' market caps? Citi, for example, now has a market cap of about $19B. It was at about $160B towards the beginning of 2008. That's $140B *poofed* from their equity. That's just one company. Multiply that out, too.

Household wealth - we lost $2.81 TRILLION just in the 3rd quarter of 2008. TARP barely scratches the surface.

So, yeah, like I said, call it printing - the amount of "money" being injected into the economy doesn't even begin to touch the amount of "money" that has been destroyed.

Cutting interest rates essentially creates cheap money except when it fails as monetary policy by failing to stimulate the economy. That's called a liquidity trap and that's what we're quickly heading towards now. The "market" is not being flooded with money/credit; the new money/credit is being used to offset the losses that just aren't stopping. As jobs continue to disappear, the losses will just keep on coming as consumers are forced to default.

This is in no way inflationary, let alone is it hyperinflationary. This is deflation.

reply to post by anachryon



This is max tracking


this is 5 year tracking


I have considered all of this. What we're seeing right now is a correction of a bubble that the Fed created, burst, and is now trying to re-inflate by pumping "liquidity" into the market. They are cutting revenues and spending more, China will not be buying our debt anymore, and yet we are still creating new money. The pace of creation, despite the credit freeze, has increased beyond the pace of destruction. They are trying to create, with the printer, the needed reserves to create more credit. This will do nothing but damage the value of the dollar in the near term.

Unemployment and inflation are not mutually exclusive. The Feds practices in the manipulation of interest rates vs. money supply vs. debt can be independent of inflation. It's the way the system works. If we were still using gold as a peg for our currency we would have far more control over it.

Don't mistake current bursts of speculative bubbles as deflation. It's a neat trick, but it is not what it seems. Take a look at soft commodities right now and you will see increases. Same with harder commodities like Gold.

The reason our dollar takes a hit every time we post new job loss numbers is because defaults are born out of that. And the government is trying to make up for a lack of demand by "recapitalizing" which is just a neat word for inflating the money supply independently of other market indicators. Like wages(They've been doing this for 30 years). Wages and inflation are not mutually exclusive either. You can have a disparity in wages in the form of stagnation, like we do now, and by the rules the fed plays by they can decrease the buying power of the dollar in the process by manipulating market prices with interest rates. As they are doing now.

We're creating cheap money to pay back loans from foreign creditors. That will kill us in the end when we find ourselves in the midst of a dollar run sometime this year.

Edit to add the following from Euro Pacific Capital

This week, in a speech before the London School of Economics, Fed Chairman Ben Bernanke offered a perverse economic theory in his quest to gather support for never-ending Wall Street bailouts; “This disparate treatment, unappealing as it is, appears unavoidable. Our economic system is critically dependent on the free flow of credit, and the consequences for the broader economy of financial instability are thus powerful and quickly felt.” In other words, credit is the lifeblood of our economy, and the continued operation of credit providers is an issue of national security. In truth, not all economies run on credit. But over the last decade, the United States became a bubble economy that needed unlimited credit to keep from collapsing. In a legitimate economy, it is not credit that fuels spending and investment, but simply income and savings. It’s too bad our Fed chairman does not understand the difference. That American families now routinely rely on credit to make every-day purchases is a habit that needs to be broken and not encouraged. What we need in America is more restraint and less indulgence. For example, Americans in the current economy should not go into debt to buy new cars. Given the level of debt that weighs down the typical family, Americans should defer such purchases until they have paid down existing debt, or replenished their savings to the point where they can afford to pay cash. Until that time, Americans should continue driving their old cars. In the meantime, the untapped savings could be made available to local businesses that would use it to finance badly needed capital investments. But such a drastic reversal in financial culture represents the kind of change that no one in the outgoing or incoming Administrations appears willing to consider. By providing perpetual support to lenders who have bankrupted themselves through bad loans, the government merely guarantees that bad economic behavior will continue. Credit is indeed vital to an economy, but it does not constitute an economy within itself. The important thing to remember is that credit is scarce, and is limited by the stock of savings. Savings loaned to one individual is not available to be loaned to another until it is repaid. If it is never repaid, the savings are lost. Loans to consumers not only crowd out more productive loans that might have been made to business, but they have a far greater likelihood of ending in default. In addition, while business loans increase our capital stock and lead to greater productivity, loans made to consumers are merely spent, and do not create conditions that will make repayment easier. When businesses borrow to fund capital investments, the extra cash flows that result are used to repay the loans. When individuals borrow to spend, loans can only be repaid out of reduced future consumption.

Reduced future consumption is usually "Shored up" by the Fed trying to re-inflate bubbles that burst. Creating what is called an "Artificial Demand Bubble". That is the cause, this is the final outcome:

In trying to perpetuate the illusion, the government wants to revive the spending spree that has led us to this disaster. But how can such actions possibly help? How will more debt improve the economy? Wouldn’t our circumstances be vastly improved if we paid off some of our debts and replenished our savings? Wouldn’t we be in better shape if instead of buying more stuff we concentrated on producing it? The unpleasant reality is that years of bad monetary and fiscal policy have over encumbered our economy with debt and undermined our industrial capacity. The sooner we can begin to repair the damages, the sooner we can right the ship. If instead we merely administer more of the same, the ship will sink in a sea of inflation.

[edit on 18-1-2009 by projectvxn]

[edit on 18-1-2009 by projectvxn]

[edit on 18-1-2009 by projectvxn]

[edit on 18-1-2009 by projectvxn]

[edit on 18-1-2009 by projectvxn]

reply to post by anachryon


I will add this:
www.abovetopsecret.com...

1. Tariff the hell out of imported goods and the good produced by American companies overseas. This will give the government the money they need to pay for reinvestment programs without taxing US taxpayers into oblivion. Do this to the point that it becomes cheaper to produce in the US.
2. Return to a sound monetary policy backed by hard valued assets instead of speculated value.

3. ENFORCE MONOPOLY laws. Our anti-trust laws are there for a reason. We cannot allow large conglomerates to corner markets to the point that they drive competition into the ground.

4. Allow failed enterprises to fail instead of giving them a handout that they will just steal from us and never pay back anyway.

5. Foster good employee protections and make sure that production keeps up with wages and vice versa. If we don't do this we will always have to deal with costs out-pacing wages and creating default crises like the one we are seeing now.

6. Eliminate free-trade agreements. Cheap foreign products does not translate into American prosperity, it only eliminates business here in the US that would otherwise be hiring workers to make their products.

7. After all of this get as much foreign investment as possible to finance further growth. The foreign investors will get consistent and REAL returns based on our consistent and REAL production, and every body wins.

8.Shrink government spending and get rid of agencies and departments that do nothing more than drain the people wealth and pass it on to the top of an already imbalanced pyramid.

This would be a skeleton area we can start. I would also include pulling back the 700 military bases, and cutting nuclear weapons out of the budget to save more money. But that is essentially what cutting government spending would include anyway.

[edit on 18-1-2009 by projectvxn]

[edit on 18-1-2009 by projectvxn]

PRECIOUS-Gold up 3 pct as investment buying boosts prices

LONDON, Jan 20 (Reuters) - Gold rose more than 3 percent to an 11-day high of $860.40 an ounce on Tuesday amid market talk of a large order, with firm investment demand for gold as a haven from risk fueling buying of the precious metal. Spot gold was quoted at $854.60/856.60 an ounce at 1525 GMT, up from $834.55 late on Monday. Earlier it touched a low of $822.90, down more than 1 percent. U.S. gold futures for February delivery GCG9 on the COMEX division of the New York Mercantile Exchange rose $17.20 to $857.10 an ounce. Standard Chartered analyst Daniel Smith said strong investor flows into products such as exchange-traded funds, as investors sought more secure assets, were offsetting weaker jewelery demand. "People are slowly building long positions in gold and commodities more generally," he said. Gold shrugged off early weakness linked to a strengthening U.S. dollar and weaker oil prices. The dollar rose to a six-week high against the euro as traders worried about the outlook for the euro zone economy, after the European Commission issued a grim forecast for 2009 and Standard and Poor's cut Spain's debt ratings. [ID:nN20402332]

Gold tends to move in line with crude, as it is often used as a hedge against oil-led inflation. Moves in the oil price are also an indicator of interest in commodities as an asset class.

Page Two:

Overall, fears over the outlook for the global economy and the financial system are boosting interest in products like exchange-traded funds -- which issue securities backed by actual stocks of gold. These are seen as less risky than paper assets.

Imagine that people are hiding from the dollar already. And this is set to gain more steam. It has been estimated that the 1st quarter of 2009 Gold will make it to about $1080 and then continue to move on up as people run from the dollar amid debt woes and the very probable threat of a California Collapse. Should this happen, we could very well see a massive run on the dollar. And this, as you know, is what I'm worried about the most.

[edit on 20-1-2009 by projectvxn]

Clear Channel cuts 1,850 jobs, 9 pct of work force:
m.apnews.com...


Progressive to sell assets after missing debt deadline:
m.apnews.com...

Eaton says to cut 5,200 jobs to cut costs:
www.reuters.com...

The second one is really big news. That's TWO of the largest insurance corporations swimming in unmanageable debt. Good luck to you if Progressive is your insurance company. If you get into an accident, it may not matter if you're "Covered" as there may be no money to cover you.

[edit on 20-1-2009 by projectvxn]