Riick
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You betcha, Mr. Smith, we wake you up just as soon as we reach 1984.
Now you just lay back and we Matrix will take good care of you.
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Global Economy Bursting?
- Thread starter Austin
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Now you just lay back and we Matrix will take good care of you.
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Randolph Kinney
Elite Member
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- Retired Appraiser
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- North Carolina
Banks Use $1.77 Trillion To Double Treasury Purchases
http://www.bloomberg.com/news/2012-08-20/banks-use-1-77-trillion-to-double-treasury-purchases.html
The gap between U.S. bank deposits and loans is growing at the fastest pace in two years, providing lenders with more funds to buy bonds and temper the biggest sell-off in Treasuries since 2010.
As deposits increased 3.3 percent to $8.88 trillion in the two months ended July 31, business lending rose 0.7 percent to $7.11 trillion, Federal Reserve data show. The record gap of $1.77 trillion has expanded 15 percent since May, the biggest similar-period gain since July, 2010. Banks have already bought $136.4 billion in Treasury and government agency debt this year, more than double the $62.6 billion in all of 2011, pushing their holdings to an all-time high of $1.84 trillion.
Wall Street’s five biggest banks are off to their worst start in four years. JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley had combined first-half revenue of $161 billion, down 4.5 percent from 2011 and the lowest since $135 billion in 2008. The firms blamed the decline on low interest rates and a drop in trading and deal-making.
After cutting its target rate for overnight loans between banks in 2008 to a range of zero to 0.25 percent, the Fed under Chairman Ben S. Bernanke bought $2.3 trillion of Treasury and mortgage-related debt to reduce market interest rates and stimulate the economy.
The global supply of the highest-quality securities, as measured by ratings companies, is poised to fall by as much as $4 trillion. Reforms such as the Dodd-Frank financial-overhaul law and global regulations set by the Bank for International Settlements require institutions to hold more top-graded debt.
Lenders have an added incentive to buy Treasuries after the Basel Committee on Banking Supervision proposed rules in 2011 that banks increase available capital to bolster the cushion against potential losses and better measure and control their risk. Treasuries’ safety and liquidity makes them suitable capital under regulations designed to prevent a repeat of the global financial crisis.
http://www.bloomberg.com/news/2012-08-20/banks-use-1-77-trillion-to-double-treasury-purchases.html
The gap between U.S. bank deposits and loans is growing at the fastest pace in two years, providing lenders with more funds to buy bonds and temper the biggest sell-off in Treasuries since 2010.
As deposits increased 3.3 percent to $8.88 trillion in the two months ended July 31, business lending rose 0.7 percent to $7.11 trillion, Federal Reserve data show. The record gap of $1.77 trillion has expanded 15 percent since May, the biggest similar-period gain since July, 2010. Banks have already bought $136.4 billion in Treasury and government agency debt this year, more than double the $62.6 billion in all of 2011, pushing their holdings to an all-time high of $1.84 trillion.
Wall Street’s five biggest banks are off to their worst start in four years. JPMorgan Chase & Co. (JPM), Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley had combined first-half revenue of $161 billion, down 4.5 percent from 2011 and the lowest since $135 billion in 2008. The firms blamed the decline on low interest rates and a drop in trading and deal-making.
After cutting its target rate for overnight loans between banks in 2008 to a range of zero to 0.25 percent, the Fed under Chairman Ben S. Bernanke bought $2.3 trillion of Treasury and mortgage-related debt to reduce market interest rates and stimulate the economy.
The global supply of the highest-quality securities, as measured by ratings companies, is poised to fall by as much as $4 trillion. Reforms such as the Dodd-Frank financial-overhaul law and global regulations set by the Bank for International Settlements require institutions to hold more top-graded debt.
Lenders have an added incentive to buy Treasuries after the Basel Committee on Banking Supervision proposed rules in 2011 that banks increase available capital to bolster the cushion against potential losses and better measure and control their risk. Treasuries’ safety and liquidity makes them suitable capital under regulations designed to prevent a repeat of the global financial crisis.
Randolph Kinney
Elite Member
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- Professional Status
- Retired Appraiser
- State
- North Carolina
It’s Even Worse Than The Great Depression
http://www.zerohedge.com/news/guest-post-shhhh…-it’s-even-worse-great-depression
Velocity of Money
Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face.
With the IMF recently lowering its 2012 US GDP growth forecast to 2%, while the monetary base is expanding at about a 5% clip, know that velocity of money is grinding lower every time you breathe.
The Fed’s refusal to recognize the importance of velocity of money quickly goes from idiotic to insidious. Here’s a question: If I give you 50¢ and as a result of that transaction, you owe me $1.00, what interest rate have I charged you?
In 2011, every dollar of GDP growth created $2.08 in debt. In real life, that’s 108% interest plus the nominal rate.
There’s another reason nobody wants you thinking about velocity of money and triple-digit principle-based interest rates. When you get comfortable with the idea that the same dollar gets spent over and over in the economy, you’ll begin to reconcile that notion with the fact that total government spending (Federal, State and Local) accounted for over 40% of GDP in 2011. Then it becomes clear that you are already living in on of those countries where the government controls everything (call it whatever -ism you want).
By any and all reasonable measures, it’s worse than the Great Depression, and still deteriorating.
http://www.zerohedge.com/news/guest-post-shhhh…-it’s-even-worse-great-depression
Velocity of Money
Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face.
With the IMF recently lowering its 2012 US GDP growth forecast to 2%, while the monetary base is expanding at about a 5% clip, know that velocity of money is grinding lower every time you breathe.
The Fed’s refusal to recognize the importance of velocity of money quickly goes from idiotic to insidious. Here’s a question: If I give you 50¢ and as a result of that transaction, you owe me $1.00, what interest rate have I charged you?
In 2011, every dollar of GDP growth created $2.08 in debt. In real life, that’s 108% interest plus the nominal rate.
There’s another reason nobody wants you thinking about velocity of money and triple-digit principle-based interest rates. When you get comfortable with the idea that the same dollar gets spent over and over in the economy, you’ll begin to reconcile that notion with the fact that total government spending (Federal, State and Local) accounted for over 40% of GDP in 2011. Then it becomes clear that you are already living in on of those countries where the government controls everything (call it whatever -ism you want).
By any and all reasonable measures, it’s worse than the Great Depression, and still deteriorating.
Big ole Boy
Elite Member
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- Dec 6, 2003
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- General Public
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- Tennessee
Velocity of money upstream verses downstream
Randolph,
... the only reason things are still turning is how the ruling classes have wedged the velocity of money into a longer and longer stream.
Way up stream near the waterfall (the FED) things plunge into the pool called Wall Street ... and then just away from the pool and the spray of the water fall is Washington .....
... and then way down stream ....... we get whats left which is a trickle of water velocity ...
..but when you average out the total water volume of the stream ..... velocity appears slow,but still near normal ranges...
.... but the masses ... do not benefit from the velocity near the water fall ...
.... what we experience .... are higher food and energy prices ...
.... no government can fix this problem ...
.... except radical demonitisation of the dollar itself .....
... via the military at some point
Randolph,
... the only reason things are still turning is how the ruling classes have wedged the velocity of money into a longer and longer stream.
Way up stream near the waterfall (the FED) things plunge into the pool called Wall Street ... and then just away from the pool and the spray of the water fall is Washington .....
... and then way down stream ....... we get whats left which is a trickle of water velocity ...
..but when you average out the total water volume of the stream ..... velocity appears slow,but still near normal ranges...
.... but the masses ... do not benefit from the velocity near the water fall ...
.... what we experience .... are higher food and energy prices ...
.... no government can fix this problem ...
.... except radical demonitisation of the dollar itself .....
... via the military at some point
Randolph Kinney
Elite Member
- Joined
- Apr 7, 2005
- Professional Status
- Retired Appraiser
- State
- North Carolina
US taxpayers bail out California homeowners, as banks fail to pay their share
http://www.foxnews.com/politics/201...-homeowners-as-banks-fail-to-pay-their-share/
Contrary to what voters were led to believe, California took the unprecedented step this month to give banks and struggling homeowners up to $100,000 in taxpayer funds to reduce underwater mortgages.
Originally, banks and lenders were supposed to pay 50 percent of the cost of reducing the principal for those whose homes are worth less than their mortgage. But when the banks refused, California took the controversial step of paying the entire amount, up to $100,000.
The program, known as the Hardest Hit Housing Market fund, is part of a $7.6 billion federal effort to help underwater homeowners in 18 states. California received $2 billion. But when banks and lenders who service loans refused to write down even a small portion of the negative equity loans, California decided to use the taxpayer money to pay 100 percent of the mortgage reduction.
__________________
Thank you, suckers, for helping all those poor underwater California homeowners.
http://www.foxnews.com/politics/201...-homeowners-as-banks-fail-to-pay-their-share/
Contrary to what voters were led to believe, California took the unprecedented step this month to give banks and struggling homeowners up to $100,000 in taxpayer funds to reduce underwater mortgages.
Originally, banks and lenders were supposed to pay 50 percent of the cost of reducing the principal for those whose homes are worth less than their mortgage. But when the banks refused, California took the controversial step of paying the entire amount, up to $100,000.
The program, known as the Hardest Hit Housing Market fund, is part of a $7.6 billion federal effort to help underwater homeowners in 18 states. California received $2 billion. But when banks and lenders who service loans refused to write down even a small portion of the negative equity loans, California decided to use the taxpayer money to pay 100 percent of the mortgage reduction.
__________________
Thank you, suckers, for helping all those poor underwater California homeowners.
EDWARD BERRY
Senior Member
- Joined
- Jan 15, 2002
- Professional Status
- Certified General Appraiser
- State
- Arkansas
Did The Mainstream Media Report Anything On This?
This Is Class Thievery At Its Worse.
Why Did Not The Gooberment Loan The Homeowner Money At 1/2 % And Let Them Refinance The Loan? 100 Times Cheaper.(i'll Bet)
This Is Tampering(wrecking) Supply And Demand At Its Worse/
What Is So Sad, We Cannot Do A Thing About It.
This Is Class Thievery At Its Worse.
Why Did Not The Gooberment Loan The Homeowner Money At 1/2 % And Let Them Refinance The Loan? 100 Times Cheaper.(i'll Bet)
This Is Tampering(wrecking) Supply And Demand At Its Worse/
What Is So Sad, We Cannot Do A Thing About It.
DMZwerg
Senior Member
- Joined
- Mar 25, 2009
- Professional Status
- Certified Residential Appraiser
- State
- Wisconsin
It’s Even Worse Than The Great Depression
[url]http://www.zerohedge.com/news/guest-post-shhhh%E2%80%A6-it%E2%80%99s-even-worse-great-depression[/URL]
Velocity of Money
Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or
Actually I would like to see this compared to interest rates.
Reason: traditionally banks were the main multipliers of money, based on taking in money, lending it, then cycling the payments. Now banks primarily sell loans. The result is that those buying the securities are not multiplying the money as much, etc.
I suspect that as Prime goes up so does Velocity and as Prime drops so does Velocity ... it is not 1:1 ratio and Prime appears to be an acceleration factor.
[url]http://www.moneycafe.com/library/primeratehistory.htm[/URL]
Dee Dee
Elite Member
- Joined
- Jan 16, 2002
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- Certified Residential Appraiser
- State
- Colorado
AMEN!
What kills me is that the vast majority of those who ended up underwater would have thumbed their noses at anyone who tried to warn them that the housing market was about to tank. Weren't these the same people who were saying, "They aren't making anymore land!", "I'm going to flip this house in a couple of years and double my money....shoot, maybe I'll buy three!", "Any real estate agent will tell you, if you don't buy now you'll miss the boat!", "Real estate only goes up!", "With all the immigration into the USA, the shortage will drive the prices up further!", "There's no such thing as a bubble!". Blah, blah, freakin' blah, blah, blah.
How about just giving the money to those who didn't screw up instead? This American Dream crap that everyone should own their home turned out to be a big mistake. Some people aren't responsible enough to own their own home and, quite frankly, the majority probably didn't put much of their own skin into a down payment anyway. I really don't feel sorry for most of them and I resent having to pay for their mistakes. Let them be renters!
Randolph Kinney
Elite Member
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- Apr 7, 2005
- Professional Status
- Retired Appraiser
- State
- North Carolina
DMZwerg
Senior Member
- Joined
- Mar 25, 2009
- Professional Status
- Certified Residential Appraiser
- State
- Wisconsin
[url]http://www.stlouisfed.org/index.cfm[/URL]
Now is your chance to do the work. Go for it. :icon_mrgreen:
You missed the link I posted???
Like I said, not exactly one for one match up but does seem to tie in a bit. When interest rates dropped the Velocity seemed to do so as well. Part of a larger economic system but seems to either be dependent or tied to each other (virtually at the hip) AFAICT just looking at the two graphs.
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