Bank Holiday in our future?

[4plexowner]

“It does not have Zimbabwe’s problem because U.S. is valuable for many reasons and has plenty of attractive assets for international buyers to back its currency.”

what?

we’re going to back our currency and bonds with US real estate? manufacturing facilities? energy plants / distribution systems? mines and mills?

[4plexowner]

“US does not have Argentina problem since the debt is not in foreign currency.”

yes, in Pollyanna-ville foreigners continue to buy US debt from here to eternity and we all live happily ever after

edit: in reality, however, foreigners have already stopped buying US debt which is why the Fed had to buy 47% of the recent debt auction!

[4plexowner]

“US does not have Argentina problem since the debt is not in foreign currency.”

yes, in Pollyanna-ville foreigners continue to buy US debt from here to eternity and we all live happily ever after

edit: in reality, however, foreigners have already stopped buying US debt which is why the Fed had to buy 47% of the recent debt auction!

[4plexowner]

“US does not have Argentina problem since the debt is not in foreign currency.”

yes, in Pollyanna-ville foreigners continue to buy US debt from here to eternity and we all live happily ever after

edit: in reality, however, foreigners have already stopped buying US debt which is why the Fed had to buy 47% of the recent debt auction!

[4plexowner]

“US does not have Argentina problem since the debt is not in foreign currency.”

yes, in Pollyanna-ville foreigners continue to buy US debt from here to eternity and we all live happily ever after

edit: in reality, however, foreigners have already stopped buying US debt which is why the Fed had to buy 47% of the recent debt auction!

[4plexowner]

“US does not have Argentina problem since the debt is not in foreign currency.”

yes, in Pollyanna-ville foreigners continue to buy US debt from here to eternity and we all live happily ever after

edit: in reality, however, foreigners have already stopped buying US debt which is why the Fed had to buy 47% of the recent debt auction!

[barnaby33]

jpinpb, my point was not to pick on you. It was to jar your thinking a bit. I don’t think a bank holiday is likely, but it or something like it could happen and its hardly too alarming to contemplate.

As many here know I am a short/medium term deflationisto. Long term I feel inflation is the way forward, but short term its all about credit/debt deflation.

A bank holiday in the 30’s served to stem the panic, not start it. However it wouldn’t work this time because the banks themselves aren’t really the problem. The toxic levels of debt system wide are the problem. The banks don’t even own most of it anymore. They’ve sold it off to large pension funds which is where the REAL damage has yet to be done.

Closing down insolvent banks would send a message that we are serious about clearing the bad debt out of the system, but it won’t happen. Once that chain reaction begins it would, in my mind, be impossible to stop a full scale deflationary implosion of the economy.

Lets say we closed down Citi and unwound all its toxic debts. Not just the on balance sheet stuff but the off balance sheet stuff. Who knows what the bond holders would get, but it would probably be under 50 cents on the dollar. Ok who are Citi’s bond holders? Well there is that one rich Arab prince, but I’m ok with him getting screwed over. Then there are all those pension funds who also own it. Blamo smoking hole in THEIR balance sheets. Companies which are already struggling with lower profits are going to have to contribute more to pension funds to make up the difference. Some will go under exacerbating the unemployment situation, most will have their stock price trounced.

If there is one thing senor Obama doesn’t want its another collapse in the stock market. Thats just bad PR.

Josh

[barnaby33]

jpinpb, my point was not to pick on you. It was to jar your thinking a bit. I don’t think a bank holiday is likely, but it or something like it could happen and its hardly too alarming to contemplate.

As many here know I am a short/medium term deflationisto. Long term I feel inflation is the way forward, but short term its all about credit/debt deflation.

A bank holiday in the 30’s served to stem the panic, not start it. However it wouldn’t work this time because the banks themselves aren’t really the problem. The toxic levels of debt system wide are the problem. The banks don’t even own most of it anymore. They’ve sold it off to large pension funds which is where the REAL damage has yet to be done.

Closing down insolvent banks would send a message that we are serious about clearing the bad debt out of the system, but it won’t happen. Once that chain reaction begins it would, in my mind, be impossible to stop a full scale deflationary implosion of the economy.

Lets say we closed down Citi and unwound all its toxic debts. Not just the on balance sheet stuff but the off balance sheet stuff. Who knows what the bond holders would get, but it would probably be under 50 cents on the dollar. Ok who are Citi’s bond holders? Well there is that one rich Arab prince, but I’m ok with him getting screwed over. Then there are all those pension funds who also own it. Blamo smoking hole in THEIR balance sheets. Companies which are already struggling with lower profits are going to have to contribute more to pension funds to make up the difference. Some will go under exacerbating the unemployment situation, most will have their stock price trounced.

If there is one thing senor Obama doesn’t want its another collapse in the stock market. Thats just bad PR.

Josh

[barnaby33]

jpinpb, my point was not to pick on you. It was to jar your thinking a bit. I don’t think a bank holiday is likely, but it or something like it could happen and its hardly too alarming to contemplate.

As many here know I am a short/medium term deflationisto. Long term I feel inflation is the way forward, but short term its all about credit/debt deflation.

A bank holiday in the 30’s served to stem the panic, not start it. However it wouldn’t work this time because the banks themselves aren’t really the problem. The toxic levels of debt system wide are the problem. The banks don’t even own most of it anymore. They’ve sold it off to large pension funds which is where the REAL damage has yet to be done.

Closing down insolvent banks would send a message that we are serious about clearing the bad debt out of the system, but it won’t happen. Once that chain reaction begins it would, in my mind, be impossible to stop a full scale deflationary implosion of the economy.

Lets say we closed down Citi and unwound all its toxic debts. Not just the on balance sheet stuff but the off balance sheet stuff. Who knows what the bond holders would get, but it would probably be under 50 cents on the dollar. Ok who are Citi’s bond holders? Well there is that one rich Arab prince, but I’m ok with him getting screwed over. Then there are all those pension funds who also own it. Blamo smoking hole in THEIR balance sheets. Companies which are already struggling with lower profits are going to have to contribute more to pension funds to make up the difference. Some will go under exacerbating the unemployment situation, most will have their stock price trounced.

If there is one thing senor Obama doesn’t want its another collapse in the stock market. Thats just bad PR.

Josh

[barnaby33]

jpinpb, my point was not to pick on you. It was to jar your thinking a bit. I don’t think a bank holiday is likely, but it or something like it could happen and its hardly too alarming to contemplate.

As many here know I am a short/medium term deflationisto. Long term I feel inflation is the way forward, but short term its all about credit/debt deflation.

A bank holiday in the 30’s served to stem the panic, not start it. However it wouldn’t work this time because the banks themselves aren’t really the problem. The toxic levels of debt system wide are the problem. The banks don’t even own most of it anymore. They’ve sold it off to large pension funds which is where the REAL damage has yet to be done.

Closing down insolvent banks would send a message that we are serious about clearing the bad debt out of the system, but it won’t happen. Once that chain reaction begins it would, in my mind, be impossible to stop a full scale deflationary implosion of the economy.

Lets say we closed down Citi and unwound all its toxic debts. Not just the on balance sheet stuff but the off balance sheet stuff. Who knows what the bond holders would get, but it would probably be under 50 cents on the dollar. Ok who are Citi’s bond holders? Well there is that one rich Arab prince, but I’m ok with him getting screwed over. Then there are all those pension funds who also own it. Blamo smoking hole in THEIR balance sheets. Companies which are already struggling with lower profits are going to have to contribute more to pension funds to make up the difference. Some will go under exacerbating the unemployment situation, most will have their stock price trounced.

If there is one thing senor Obama doesn’t want its another collapse in the stock market. Thats just bad PR.

Josh

[barnaby33]

jpinpb, my point was not to pick on you. It was to jar your thinking a bit. I don’t think a bank holiday is likely, but it or something like it could happen and its hardly too alarming to contemplate.

As many here know I am a short/medium term deflationisto. Long term I feel inflation is the way forward, but short term its all about credit/debt deflation.

A bank holiday in the 30’s served to stem the panic, not start it. However it wouldn’t work this time because the banks themselves aren’t really the problem. The toxic levels of debt system wide are the problem. The banks don’t even own most of it anymore. They’ve sold it off to large pension funds which is where the REAL damage has yet to be done.

Closing down insolvent banks would send a message that we are serious about clearing the bad debt out of the system, but it won’t happen. Once that chain reaction begins it would, in my mind, be impossible to stop a full scale deflationary implosion of the economy.

Lets say we closed down Citi and unwound all its toxic debts. Not just the on balance sheet stuff but the off balance sheet stuff. Who knows what the bond holders would get, but it would probably be under 50 cents on the dollar. Ok who are Citi’s bond holders? Well there is that one rich Arab prince, but I’m ok with him getting screwed over. Then there are all those pension funds who also own it. Blamo smoking hole in THEIR balance sheets. Companies which are already struggling with lower profits are going to have to contribute more to pension funds to make up the difference. Some will go under exacerbating the unemployment situation, most will have their stock price trounced.

If there is one thing senor Obama doesn’t want its another collapse in the stock market. Thats just bad PR.

Josh

[blahblahblah]

i) enrich insiders beyond their wildest dreams, insuring their dominance for a generation to come.

Hmmmm, which insurance company is going to “insure their dominance?” The proper word in this context is ensure.

Sorry but that’s a pet peeve of mine.

Back to the point of the post, we are really in uncharted territory. We might have an Argentina-style scenario here, but of course Argentina isn’t exactly a world power. The USA is a different animal. We have the world’s most powerful military and are basically untouchable due to our geography (oceans on either side, friendly/controlled neighbors to the north and south) and our nuclear deterrent. This is one porcupine that no one will mess with.

Maybe a Japan-style lost decade of deflation? Well, Japan is a nation of hard-working savers with a very conservative central bank and government. The USA is a nation of spendthrifts with a very liberal central bank and government, at least as far as spending goes. Also, Japan has an aging stable population while the USA has a growing young population thanks to our liberal immigration policy.

My bet is for a Katy-bar-the-door stagflation. Owe the world a bunch of money? No problem, just make the money worth a lot less. Of course we will have a stagnant economy at the same time since our economy is dependent upon credit and consumer spending.

Of course I could be wrong…

[blahblahblah]

i) enrich insiders beyond their wildest dreams, insuring their dominance for a generation to come.

Hmmmm, which insurance company is going to “insure their dominance?” The proper word in this context is ensure.

Sorry but that’s a pet peeve of mine.

Back to the point of the post, we are really in uncharted territory. We might have an Argentina-style scenario here, but of course Argentina isn’t exactly a world power. The USA is a different animal. We have the world’s most powerful military and are basically untouchable due to our geography (oceans on either side, friendly/controlled neighbors to the north and south) and our nuclear deterrent. This is one porcupine that no one will mess with.

Maybe a Japan-style lost decade of deflation? Well, Japan is a nation of hard-working savers with a very conservative central bank and government. The USA is a nation of spendthrifts with a very liberal central bank and government, at least as far as spending goes. Also, Japan has an aging stable population while the USA has a growing young population thanks to our liberal immigration policy.

My bet is for a Katy-bar-the-door stagflation. Owe the world a bunch of money? No problem, just make the money worth a lot less. Of course we will have a stagnant economy at the same time since our economy is dependent upon credit and consumer spending.

Of course I could be wrong…

[blahblahblah]

i) enrich insiders beyond their wildest dreams, insuring their dominance for a generation to come.

Hmmmm, which insurance company is going to “insure their dominance?” The proper word in this context is ensure.

Sorry but that’s a pet peeve of mine.

Back to the point of the post, we are really in uncharted territory. We might have an Argentina-style scenario here, but of course Argentina isn’t exactly a world power. The USA is a different animal. We have the world’s most powerful military and are basically untouchable due to our geography (oceans on either side, friendly/controlled neighbors to the north and south) and our nuclear deterrent. This is one porcupine that no one will mess with.

Maybe a Japan-style lost decade of deflation? Well, Japan is a nation of hard-working savers with a very conservative central bank and government. The USA is a nation of spendthrifts with a very liberal central bank and government, at least as far as spending goes. Also, Japan has an aging stable population while the USA has a growing young population thanks to our liberal immigration policy.

My bet is for a Katy-bar-the-door stagflation. Owe the world a bunch of money? No problem, just make the money worth a lot less. Of course we will have a stagnant economy at the same time since our economy is dependent upon credit and consumer spending.

Of course I could be wrong…

[blahblahblah]

i) enrich insiders beyond their wildest dreams, insuring their dominance for a generation to come.

Hmmmm, which insurance company is going to “insure their dominance?” The proper word in this context is ensure.

Sorry but that’s a pet peeve of mine.

Back to the point of the post, we are really in uncharted territory. We might have an Argentina-style scenario here, but of course Argentina isn’t exactly a world power. The USA is a different animal. We have the world’s most powerful military and are basically untouchable due to our geography (oceans on either side, friendly/controlled neighbors to the north and south) and our nuclear deterrent. This is one porcupine that no one will mess with.

Maybe a Japan-style lost decade of deflation? Well, Japan is a nation of hard-working savers with a very conservative central bank and government. The USA is a nation of spendthrifts with a very liberal central bank and government, at least as far as spending goes. Also, Japan has an aging stable population while the USA has a growing young population thanks to our liberal immigration policy.

My bet is for a Katy-bar-the-door stagflation. Owe the world a bunch of money? No problem, just make the money worth a lot less. Of course we will have a stagnant economy at the same time since our economy is dependent upon credit and consumer spending.

Of course I could be wrong…

[Author]

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