Of course a crash is imminent.
As many of you probably know, the Fed recently announced back in November that it would stop reporting statistics on the M3 monetary aggregate, the
measure of money supply that is so broad it includes just about everything that could possibly be considered "money". Now why would they want to do
that? In their words:
Federal Reserve:
The decision to discontinue publication of the M3 monetary aggregate was based, in part, on a determination that the M3 does not appear to convey any
additional information about economic activity that is not already embodied in the M2 aggregate. In addition, the role of M3 in the policy process has
diminished greatly over time. Consequently, the costs of collecting the data and publishing M3 now seem to outweigh the benefits.
But seriously, do they think we're stupid? M3 grew almost $690 billion, or 7.8%, last year. Through last september it grew $176 billion in 8 weeks.
That stinks, so it's no wonder why they wish to discontinue reporting this statistic, as it's proof we're buying up our own debt. No matter how
powerful the Fed is, they can't revoke the law of supply and demand, and as the supply of dollars goes up, demand will inevitable go down.
Hedgeco:
According to published reports, about 80 percent of the global hedge funds are registered with the Cayman Islands Monetary Authority. During the first
half of 2005, the number of Cayman Island’s registered hedge fund operators rose from 5,932 to 6,527.
Now what do we know the Cayman Islands are good for? Money Laundering! I'll admit there's no proof of this, but there never will be as long as Hedge
Funds are as loosely regulated as they are, so one is forced to read between the lines. It's no coincidence, I think, that China, Japan, and many
foreign investors were deciding that they would no longer buy up our debt that there was a surge in traders. This way they can tell you
"Foreign
investors are just lining up to buy our debt!" Who would be so stupid? Five-year government yields fell five basis points to 4.43%, and
bellwether 10-year yields declined seven basis points for the week to 4.49%. Long-bond yields dropped six basis points to 4.68%. Those crappy yields
is at the inflation rate.
From 2001 through 2005, consumer spending and residential construction had together accounted for 90 percent of the total growth in GDP, while over
two-fifths of all private sector jobs created since 2001 were in housing-related sectors, such as construction, real estate and mortgage brokering.
The decay in standards started with the Federal Reserve, and moved down to every lowly loan officer until lending stardards ceased to exist. These
unqualified buyers were able to create a false sense of growth every time another one bought a house, and CNN Money was able to report this fabulous
news to
you.
But alas, it was only a temporary solution since all the suburbs and their strip malls were built on the assumption that cheap oil and methane was
going to stick around. Of course this is crazy, since cheap oil and energy were the things we should have been
least expecting in the years
to come. So what's ugly monster is just now beginning to rear its ugly head?
NATIONAL FORECLOSURES INCREASE MORE THAN 13 PERCENT IN DECEMBER ACCORDING
TO REALTYTRAC™ U.S. FORECLOSURE MARKET REPORT
People are beginning to realize that heating a home, and travelling longer distances to work in their big, stupid SUVs is beginning to cost a lot
more. This isn't going to get any better, and in fact, there is one factor that really could speed up foreclosures.
Jobs
HP To Cut 14,000 Jobs In Restructuring
MeadWestco To Cut 850 Jobs
Computer Associates To Cut 800 Jobs
Carlson Companies To Cut 525 Jobs
Lear To Shed 7,700 Jobs
Symbol Tech Cutting 700 Jobs
Sara Lee Apparel To Cut 775 Jobs
Kodak Shedding 10,000 Jobs
Homeywell to Cut 2,000 Jobs
And I don't need to mention the airline industry, GM or Ford.
You can expect Fannie Mae and Freddie Mac to collapse under a tsunami of mortgage defaults if the massive de-industrialization of America continues.
Free trade agreements were never a great way to build an economy, but they were an excellent way to tear one down. Should either of these companies
collapse, they will take many of our largest banks with them. Derivatives failures could be a reason why so many banks are merging. They're
spooked, and they want to be "too big to fail" so they can get a government bailout. Unfortunately, the US is over 8 trillion dollars in debt and
has to make money out of thin air to pay for it current account deficit.
There are more indicators to the state of our economy than just the stock market, which is inflated anyways. The USDA says that hunger in America has
risen by 43% since Bush took office.
Hunger in American households has risen by 43 percent over the last five years, according to an analysis of US Department of Agriculture (USDA)
data released today. The analysis, completed by the Center on Hunger and Poverty at Brandeis University, shows that more than 7 million people have
joined the ranks of the hungry since 1999.
38.2 million Americans live in households that go hungry, with 14 million of these being children. 11.4% of American households run the risk of
hunger. How is the GOP responding to this growing national crisis? It's going to cut the food stamp program by $840 Million.
Man these guys suck
2006 will be a very interesting year, indeed. We were barely two weeks into it when we saw:
Death Of Emir Dubai
Death Of Emir Of Kuwait
Removal of Sharon due to a stroke
Whatever bodes ill for the Middle East bodes ill for the energy-hungry nations of the world. The delicate balance has been established, there are no
more "swing producers", and even a butterfly's flapping wings over
there could create landslides over
here. We will see many more
deaths, riots and protests in these nations.
Anyone interested in the state of the economy should check out the
Mogambo Guru's recent update. His lax and funny
style of writing will put a smile on your face, even though your finding out how crappy our economy is.
