Here It Comes

[GliderGuider]

Karl Denninger is such a hard-ass realist... :evilgrin:

Here It Comes

Reality has started to intrude into the market and it's not a pretty picture. FCBs sold Treasury and so did Primary Dealers in the most recent week. This is new, it is ominous, and it signals that market participants in the bond market have detected smoke in the room. Should they all rush the door at once the bond market dislocation that I have been warning of for months will gather steam and cut off federal funding, along with kneecapping the stock market. The Fed cannot possibly absorb this supply as it will not be limited to Treasuries; they would have to print up literally $20 trillion dollars to halt the collapse and should they attempt it the dollar would collapse instead as that would be a literal ten times over expansion of the monetary base. This would produce a monetary and market implosion twice as bad as what occurred in Iceland overnight.

We stand on the edge of the failure of all of American's retirement assets. Literally all of them. Buried in some of the earnings reports of the last quarter are the fact that half of the market capitalization of some firms was wiped out in the last year due to pension fund shortfalls as a consequence of the stock and credit market swoon. CALPERS and other funds are rapidly going from being adequately capitalized to critically undercapitalized. If the Treasury and Stock market both sell off as I believe both can and is likely to happen if the current policies are continued essentially ALL American Retirement Assets will be destroyed - 401ks, IRAs and both private and public Pension systems. Total losses through these systems is likely to reach 80-90%, and the Boomers start retiring "en-masse" just a few years from now.

In short, if policies are not changed now there will be no retirement for Americans and the currently-retired who rely on these funds will find them gone and be forced back into the workplace. Unemployment in that scenario is likely to reach and may exceed 20%, and what's worse, Medicare funding will be severely curtailed at the same time due to the inability of the government to fund it.

There is a tonne more at the link. None of it is fun.

[patrice]

1. Invest in the Hospice Industrry. The religiously themed ones should do quite well.

Lots of creative ideas for how to get folks to go quietly into that great good-night.

[SheilaT]

2. Realistically, retirement (old age) will start looking a lot

like it did up to the mid 1950's, with people working longer and being in far more reduced financial circumstances. Do keep in mind that even though Social Security was enacted in Roosevelt's first term, and I think the first SS checks were sent out around 1937, the benefit was very small, and even at its maximum no where near enough to live on. Today the benefit can be lived on, especially if your house payment is very low or nonexistent, and you live modestly. We'll go back to more multi-generational families, with the elders living with grown children as was common at least into the 1960's. The biggest difference today is that people live much longer either in better health, or with chronic diseases managed by medication.

[Joanne98]

3. Well, there it is. We need to start planning a life after capitalism.

They intend to just let millions of people die so they don't have to change the structure. That's BULL SHIT!

[patrice]

5. Do you know of anyone other than Survivalists and religious cartels doing this?

[GliderGuider]

7. Sure -- the Transition Town movement is doing it

http://www.transitiontowns.org
http://en.wikipedia.org/wiki/Transition_Towns
http://transitionus.ning.com

[patrice]

8. I have been thinking that this has possibilities too . . .

http://www.ncbcapitalimpact.org/default.aspx?id=146

I haven't seen one of these yet that has the kind of relationship to Labor/staff that I'm looking for, but I think the model has possibilities.

Thanks for the links!

But, mark my words about Hospice; there's almost nothing that gets folks higher than Death.

[SoFlaJet]

4. For a minute there

I thought you were going to tell me Here it comes your 19th nervous breakdown...

[GliderGuider]

6. This one is just going to be my third nervous breakdown...

But it promises to be a doozy!

[patrice]

9. So . . . tell us about guiding gliders . . . . ?

& What's your avatar about?

:hi:

[GliderGuider]

10. I was a sailplane pilot for a number of years

I have a Silver "C" badge. I almost died twice, once due to carelessness (I forgot to latch the canopy closed before takeoff) and once I had a mechanical failure in the elevator on the tail during takeoff that resulted in an almost complete loss of pitch control. When I stopped flying I kept the "GliderGuider" handle I'd been using because that's how people know me.

My avatar is the flag of Anarcho-Primitivism, the philosophy that informs my fundamental critique of civilization and how we got ourselves into this mess. I part company with most A-P's in that I don't advocate trying to return humanity to some pre-civilized or feral condition because that's just stupid -- for better or worse, human development is a one-way function. But A-P provides the most coherent account I've yet discovered of how we developed into what we are today.

Thanks for asking. :hi:

[DemReadingDU]

11. Thanks! I too had always wondered about your 'handle'. n/t

[Bigmack]

12. Hey thanks for this one

Not that I don't pay attention to the (alas, often depressing....but also often prescient) content of your posts, but I have wondered about the GliderGuider bit...as you're always referred to in our house...which is fairly often! And thanks again for the continuing search and research - Ms Bigmack

[Warpy]

13. If they're selling Treasury, what are they buying?

There's been a huge bubble in treasury bills as funds exited commodities and the stock market en masse. I said at the time the people who flooded into treasury bills were outsmarting themselves since the government's ability to pay the face value on those down the road was dubious, at best.

If big money is now exiting them, we can expect to see that money flood some other market again, probably commodities, creating another bubble.

That's the problem with huge masses of money, they create bubble after bubble, hiding in "safe" investments like treasuries when small investors have flooded into the bubble market a little too late and then creating another one when the little people have been wiped out. This is what they did with the unregulated stock market in the 20s and they will continue to do it until they are stopped by re regulation and high taxes on bubble profits.

[.... callchet ....]

14. My premise for describing the world situation

is that money and power is accumulated without regard to social issues. A situation is bad if you don't have money or a job. It is good if you have money and a job. Is the imbalance of money caused by greed and disregarding social issues a fair assessment of the situation and the problem?

[GliderGuider]

15. Well, I think the "world situation" involves a little more than just money and power

But I guess that's a good first approximation.

I define "the problem" as dualism -- man's sense of being separate and apart from nature gave us the notion that we have full dominion and control over all that we survey, which led to an attitude of dominion and control over each other, which led in turn to hierarchies and the concentration of power, which produced guardian institutions that protect that situation and teach the rest of us that this is the only way humans could possibly live. Which is now all going for a shit because we've used up so much of the stuff we need to live and concentrated the rest of it in the hands of the ones with the power at the top of the hierarchy.

[patrice]

17. Sounds kind of like what I remember of John Stuart Mill. nt

[GliderGuider]

25. Mill was a precursor to today's ecological economists

“If the earth must lose that great portion of its pleasantness which it owes to things that the unlimited increase of wealth and population would extirpate from it, for the mere purpose of enabling it to support a larger, but not a happier or a better population, I sincerely hope, for the sake of posterity, that they will be content to be stationary, long before necessity compels them to it.”

from John Stuart Mill's Principles of Political Economy. Book IV, Chapter VI, Section II, as it first appeared in 1848.

[.... callchet ....]

18. I have no facility for describing the problem and the solution

both of which are self evident to any logical scrutiny. I have an affinity for bringing the walls down on me when I write. It is obvious that there is much to do and nothing is getting done. The reason nothing is getting done is because the conditions are ideal for the powerful. And the powerful have unquestioning support from the wannabe powerfuls. I know I am in the minority and maybe singularity for these views, but sooner I hope than later action will be mandated.

[dgibby]

16. Are you including military retirement and SS payments in this?

[CoffeeCat]

19. I'm trying to wade through this article...

I clicked on the link, and I've read the article a few times. I only have a minor in economics,
so it's taking me a while to digest it all.

Obviously, this guy knows his stuff. It's interesting to read, but it is a meaty read.

I'm not as versed in the lingo or the acronyms. For example, what is "FCBs" that is mentioned in the first sentence
that you posted from the article?

I'll keep reading...and trying to decipher it all.

Thanks for posting it.

[marketcrazy1]

20. FCB`s = foriegn central banks

FYI!!!

[CoffeeCat]

22. Thank you...

I did the Google and didn't find it.

I was going to settle on: Feral Cat Beds. Thank God you chimed in!

;)

[dixiegrrrrl]

21. One can always trust Denniger, even if his wig and smirk are a bit off putting.

Denninger and Max Keiser have been on the money, so to speak, for the last couple of years.

[CoffeeCat]

23. That makes his lastest stuff even more scary...

...doesn't it?

[dixiegrrrrl]

24. Yes...they both have been scaring me for the past 2 years.

and fear, as we know, is a great motivator, so I went into financial survival mode back then.

I wish President O would listen to these guys instead of Paulson's protogee' Geithner.