Friday, January 16, 2009


I posted this the day before TARP crashed the stock market from 11,000 to 7,500. It applies equally to TARP II, III, IV...

The banks: Bad news, we're broke.

The People: Huuuuh? What? Do you mean we're going to lose everything?!

The banks: Well, yes. Yes, you are. A total meltdown. Well, unless....

The People: Unless what? Tell us, tell us, we'll do anything!

The banks: Unless we get $850B to recapitalize and start lending again. As a down payment.

The People: Ouuuuuh.... hmmmm.... that is A LOT of....

The banks: Washington Mutual failed. The FDIC has no money.

The People: OMG! Here, take it, take it all, just don't hurt my 401K, PLEASE!

The banks: Ok, ok, enough. We're open for business again.

The People: Oh good, because we really need a loan. At 1.5% please. Thank you.

The banks: Well, well, well, ok, let's see... ...uh, no. No way.

The People: What! Why?

The banks: Bad news, you're broke.


  1. I just want to scream.

    To think that we are so powerless about what our government does simply because our neighbours keep voting these clowns into office.

    B of A gets $400 billion of taxpayer dollars for issuing credit cards and mortgages to all the mexicans that went home anyway.

  2. Please don't blame Mexicans or other foreigners for your financial problems. You must blame American ignorance.....Americans MUST stop voting in these arse clowns in congress.

  3. FDR I just don't understand how can things continue to get worse if the printing press keeps on printing trillions of dollars. No one in the world is even challenging our TARP programs. We still hold a AAA on our bonds. I think that the money is just going to the wrong hands and that is why our economic situation is getting worse everyday. What is your take?

  4. FDR

    what kind of a rally are the markets capable of after a first quarter tank to 6500 dow.

    time frame please.

  5. "FDR I just don't understand how can things continue to get worse if the printing press keeps on printing trillions of dollars. No one in the world is even challenging our TARP programs. We still hold a AAA on our bonds."

    Maybe because everyone else is printing too? Plus Europe is more overleveraged than we are. Just a guess.

  6. Dow/gold ratio crossed below 10 today for the 1st time - on it's way to 4-5 by end of 2009 IMHO. Jayhawk1

  7. "what kind of a rally are the markets capable of after a first quarter tank to 6500 dow."

    That's an excellent Q, I'll try to post something on it the profile(s) we might expect and why.

  8. Hey FDR, I remember something you posted on MW about the Fed rate, the 3M T rate, and the currency supply. Would you elaborate on this?

  9. Good info. One question, what happens to price when there is a currency devaluation? What is your view of the chance and impact of this happening?

  10. FDRalloveragain, I read with great interest your entry "Gold-money or currency?" and also was interested to see your prediction of gold at $225 by 2020. Supposing this actually happens as a result of deflation, wouldn't gold still be a good way to preserve value (but not price) since all other prices would have also deflated? So might a nice suit in 2020 cost $225?

  11. What Would A Wise-Investor Do?

  12. California controller to suspend tax refunds, welfare checks, student grants
    John Chiang announces that his office will suspend $3.7 billion in payments owed to Californians starting Feb. 1, because with no budget in place the state lacks sufficient cash to pay its bills.,0,4472460.story

  13. It isn't the lack of a budget that has thrown California into a deep depression, it is the lack of currency in circulation, thus deflating home prices against wildly inflated debt notes, thus congressional shenanigans to pump subprime prices by buying risky loans from bankers so as to transfer banker risk to the public, thus the real estate collapse when that transfer finally happened, thus the foreclosure crises, thus no state tax revenue, thus no national revenue, thus the USA in depression, thus the world economy in depression, which we were once the driver.

  14. Hi FDR. I was wondering why I haven't seen you lately on MW, LOL. Nice blog BTW.

    Do you really think that deflation will be entrenched another 11 years? Are you saying that even if more currency is in circulation that it doesn't matter if it's not spent?

    Jan Paul said this: "I don't like the use of the term deflation because that refers to money supply not prices or asset value. I would prefer they use the term devaluation caused by a reduced money velocity where money has literally stopped flowing."

    I thought that the plan of the elite is to destroy the dollar and bring in a one world currency and then a cashless society that they can control. I believe it will eventually take hyper-inflation to bring that about.

  15. The plans of the elite ARE to destroy the dollar and other currencies, and they do that by issuing insurmountable debts to the American taxpayer and other taxpayers around the world through central banks.

    The thing is that it is not working because we are delfating to a degree that nobody could have predicted. As Jon Paul says, money ain't flowing.

    Nobody with any authority outside of a vague warning by Warren Buffett (who soon became a derivatives dealer himself) ever took notice of the avalanche of toxic derivatives and toxic securities. Banks are all bankrupt, and all business is soon to follow. Not exactly inflationary. No matter what we give them in bailouts, the banks simply lose that money to self inflicted debt. So all our bailouts simply dissappear into a black hole, with no inflation or money velocity at all.

    Everybody has run out of money everywhere.

    The elite can't pump hard enough to cause inflation right now unless they start bailing out the taxpayer. Only the taxpayer can 'spend' money, and this is the only way to spur inflation.


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