Defaulting banks - where will it stop?

[Magda Hassan]

Ever since hearing about the California IOU's I have been on pins and needles as when the welfare checks do not arrive there will be blood in the streets. Literally.

Well, I read today or yesterday that a significant segment of the US population are about to have their unemployment payments run out in the next few days.

WTF??? This is one of the things that started this mess we are in. I am convinced that our government is not just stupid but insane.

The leadership has certainly been certifiably bat shit crazy for most administrations in my lifetime and yours.

[Jan Klimkowski]

Brief YouTube clip of Market Ticker's Karl Denninger getting cut off by CNBC for daring to suggest that there was more market manipulation in the network reporting environment (ie MSM) than in the anonymous blogosphere.

Of course, They couldn't tolerate that...

http://market-ticker.org/archives/1200-F...-CNBC.html

MSM is just so predictable. :dancing:

[Peter Lemkin]

The watchdog overseeing the federal government financial bailout says the government’s maximum exposure to banks and other financial institutions could total nearly $24 trillion, or about $80,000 for every American.

....my, what I could do with $80,000 just about now [survive!]

NB - Webster Tarpley and others believe the real figure is perhaps 200x this figure [i.e. more money than exists in the world] when the real bubble bursts. hot:

[David Guyatt]

Oh boy, $24 trillion. Some heist!

[Peter Lemkin]

Oh boy, $24 trillion. Some heist!

I guess that underestimate makes this the largest bank heist in the world, by far - in fact many times more than all others combined!!!!...and more coming! [or is that going.....]:dong:

Oh, by the way.....it also leaks away and away from the rest of us...

The Wall Street Journal is reporting the nation’s corporate executives and other highly compensated employees now account for more than one-third of all salaries earned in the United States. According to Social Security Administration figures, top earners pulled in $2.1 trillion of the total $6.4 trillion paid in 2007. The numbers don’t include several types of stock options and other benefits that would add hundreds of millions to the top bracket’s earnings. From 2002 to 2007, the average worker saw a 24 percent pay increase, half the 48 percent increase for the highly paid. The rising pay for top earners appears to be adversely affecting Social Security. With more wages beyond the maximum that can be taxed to contribute to the Social Security trust, less money is available to fund retirement benefits for American workers.

[Jan Klimkowski]

Oh boy, $24 trillion. Some heist!

David, c'mon.

It was financial innovation.

Which our dear leaders unequivocally consider a force for good.

What's a mere $24 trillion embezzled from taxpayers?

The UK & US have to preserve neglible regulation for bankers, hedge funds and other financial innovators because otherwise they might go elsewhere....

To our leaders. :thefinger:

[Peter Lemkin]

Oh boy, $24 trillion. Some heist!

David, c'mon.

It was financial innovation.

Which our dear leaders unequivocally consider a force for good.

What's a mere $24 trillion embezzled from taxpayers?

The UK & US have to preserve neglible regulation for bankers, hedge funds and other financial innovators because otherwise they might go elsewhere....

To our leaders. :thefinger:

.....and don't forget about that torrent of 'trickle down'!!!!!! - that so many are drowning in currently....loosing their jobs, homes, health insurance, etc.....[along with our rights] :thefinger:

[Jan Klimkowski]

:dancing2: all the way to oblivion.....

Market Ticker's Karl Denninger laying out what MSM won't...

HOLY !@#!! Treasury Auction Schedule
Oh My......

Let's see if I can count this up....

70 day CMBs, $30 billion (tomorrow)
13 week Bills, $32 billion (July 27th)
26 week Bills, $31 billion (July 27th)
52 week Bills, $27 billion (July 28th)
2 year Notes, $42 billion (July 28th)
5 year Notes, $39 billion (July 29th)
7 year Notes, $28 billion (July 30th)
19 year, 6 month TIPS (reopened), $6 billion (July 27th)

That's two hundred thirty-five billion dollars over the next week!

Almost one quarter of a trillion....... geejus.

I guess you should get while the getting is good, but this is going totally parabolic. That money has to come out of somewhere, by the way, in order for the sale to succeed, which is going to get rather interesting at some point - but exactly where it matters is impossible to know.

I expected that when we crossed the $100 billion threshold in a week the market would throw up all over it, but it didn't. Now we've got the government trying to sell a quarter of a trillion dollars in debt over the next week, the announcement is out there, and while the bond market is selling off to a material degree equities could care less!

This is flat-out insane. At this run rate we would be trying to sell twelve trillion dollars over one year's time, an obviously ridiculous and impossible-to-peddle amount of debt at any price.

When does the rest of the world wake up (not to mention the primary dealers) and say "NO!"? Never? Is there a truly insatiable demand for our government's debt, despite the fact that President Obama got up on the national stage last night and promised to spend another trillion dollars we don't have?

How do equities power higher into this sort of debt issuance? Is it simply that the market has deduced that the government will hand all of this zero-interest money out - indefinitely?

Guess what - that which is impossible won't happen, and the stock market is now telling you that the impossible will become reality. There has been and will not be any amount of fiscal sanity on the part of our government until the market imposes it, and when it does it is going to happen in exactly the same way it happened to Bear Stearns, Lehman, Fannie and Freddie. May I remind readers that it was said that Fannie and Freddie "couldn't" get in trouble due to their implicit government guarantee? Well guess what - they both effectively failed, but when the US Government finds itself in the same situation it has nobody who can take it into conservatorship and as such we're just going to have to deal with the consequences of failed debt auctions - that is, dramatically increased funding costs across the board in the economy, including the government, which will choke off any hope of economic anything.

Folks, this is how you get detonation of a nation's monetary and political system. Timing the "event" it is not easy, but the certainty of outcome given this sort of outrageously irresponsible activity is not in doubt.

I'm increasing my stock of things that "will never go to zero" and keeping my ear to the ground. The "short the phone book but make sure you get out fast before you get trampled" moment approaches - mark my words.

http://market-ticker.org/archives/1256-H...edule.html

:driver: :flybye:

[Mark Stapleton]

You might be right, Jan. Looks like they're hitting the self destruct button. Who would dare buy such risky debt? I thought China and Japan already had their fill.

It's almost comical (in a tragic sense) that all this being played out under the backdrop of renewed spending in the multi billion dollar war on shadows in Aghanistan.

[Magda Hassan]

It's the only business left in the US - the arms industry. No recession there.