I see where Willem Buiter has been appointed the new chief economist for Citigroup.
Nov. 30 (Bloomberg) — Citigroup Inc. hired Willem Buiter, a former Bank of England official who has criticized the Federal Reserve for being too close to Wall Street, as its chief economist.
Buiter, 60, will join the bank in January and fill the position left vacant by Lewis Alexander’s move to the U.S. Treasury eight months ago, New York-based Citigroup said in a statement today.Alexander, who had worked at Citigroup since 1999, left in March to become a counselor on domestic finance issues to Treasury Secretary Timothy Geithner. He was paid $2.4 million by Citigroup in 2008 and the first months of 2009, according to his financial-disclosure form filed with the Treasury. In December 2007, he predicted the U.S. would probably avoid a recession.
Bloomberg doesn’t say where Alexander will wind up, maybe playing for the Redskins. Certainly, I would have accepted $2.3 million from Citi and would have accurately predicted the recession.
I usually ignore gold bugs and climate change deniers but Bob ‘Gold bug’ Chapman was featured on Automatic Earth, maybe he’s a friend of Ilargi’s family:
The following information may be the most important we have ever published. One of our Intel sources, highly placed in banking circles, tells us that on 1/1/10 all banks that have received TARP funds have been informed by the Federal Reserve that they must further restrict any commercial lending. Loans have to be 75% collateralized, 50% of which has to be in cash, which is a compensating balance.
The Fed has to do one of two things: They either have to pull $1.5 trillion out of the system by June, which would collapse the economy, or face hyperinflation. This is why the Fed has instructed banks to inform them when and how much of the TARP funds they can return. At best they can expect $300 to $400 billion plus the $200 billion the Fed already has in hand.
We believe the Fed will opt for letting the system run into hyperinflation. All signs tell us they cannot risk allowing the undertow of deflation to take over the economy. The system cannot stand such a withdrawal of funds. They also must depend on assistance from Congress in supplying a second stimulus plan. That would probably be $400 to $800 billion. A lack of such funding would send the economy and the stock market into a tailspin. Even with such funding the economy cannot expect any growth to speak of and at best a sideways movement for perhaps a year.We have been told that the FDIC not only is $8.2 billion in the hole, but they have secretly borrowed an additional $80 billion from the Treasury. We have also been told that the FDIC is lying about the banks in trouble. The number in eminent danger are not 552, but a massive 2,035. The cost of bailing these banks out would be $800 billion to $1 trillion. That means 2,500 could be closed in 2010. Now get this, the FDIC is going to be collapsed before the end of 2010, which means no more deposit insurance. This follows the 9/18/09 end of government guarantees on money market funds. Both will force deposits into US government bonds and agency bonds in an attempt to save the system.
This will strip small and medium-sized banks and force them into shutting down or being absorbed. This means you have to get your money out of banks, especially CDs. We repeat get your cash values out of life insurance policies and annuities. They are invested 80% in stocks and 20% in bonds. Keep only enough money in banks for three months of operating expenses, six months for businesses.
Major and semi-major banks are being told to obtain secure storage for new currency-dollars. They expect official devaluation by the end of the year.
We do not know what the exchange rate will be, but as we have stated previously we expect three old dollars to be traded for one new dollar. The alternative is gold and silver coins and shares. For those with substantial sums that do not want to be in gold and silver related assets completely you can use Canadian and Swiss Treasuries. If you need brokers for these investments we can supply them.
The Fed also expects a meltdown in the bond market, especially in municipals. Public services will be cut drastically leading to increased crime and social problems, not to mention the psychological trauma that our country will experience. Already 50% of homes in hard hit urban areas are under water, nationwide more than 25%. That means you have to be out of bonds as well, especially municipals.
Good grief! It’s hard to know where to begin with this self- contradictory and incoherent nonsense! Chapman doesn’t appear to know how money is created, doesn’t know TARP is administered by Treasury, not the Fed, doesn’t give a reason for the Fed’s June deadline, doesn’t realize that shrinking money multipliers represent the cut-off in lending he threatens the country with:
Chapman doesn’t realize dollars outside of base money or cash currency in circulation are lent into existence by banks and finance, not by the Fed and certainly is not issued by the government. Chapman doesn’t understand that cash currency represents only a minuscule amount of dollar funds. Chapman doesn’t understand how the government works; that it and the rest of the establishment have committed trillions in the past twelve months attempting to sustain the asset price status quo, nor does he seem to see the reasons for doing so. He offers no evidence as to why the establishment would risk the country’s future solvency supporting asset values now then arbitrarily compromise the same values six months from now.
I guess Chapman thinks it would be easy for the Fed to steal billions from the barons of world commerce, the real holders of money wealth. He should be put in charge of Obama’s healthcare ‘initiative’ where he can take on the insurance industry, overburdened as it is with dollars.
Chapman postulation suggests the country’s overseas lenders and oil suppliers will do nothing should their ‘old’ dollars instantly lose two- thirds of their value. Our trading partners groan about the current small loss of dollar exchange value. Chapman does not concern himself where the government’s future funding and fuel will come from, but the Fed and Treasury certainly do. Chapman’s devaluation concept stands in contrast to what the establishment has been doing since Lehman’s collapse, funneling cash toward finance’s insiders – the payoff to these insiders being real, US dollars, not other assets.
Chapman conveniently ignores central bank tactics driving gold prices higher alongside other asset prices. Perhaps ‘doomer pimp’ Chapman is part of the gold- price driving mechanism, which paints cash dollars as trash and a bargain at the same time. This is even against government ‘risk assets’ such as Treasury bills!
Chapman is the walking, talking embodiment of dumb money … or ‘playing dumb’ money.
Chapman doesn’t understand that money creation is done electronically; ‘secure’ closets to store paper cash are not required.
Chapman does not understand when fewer borrow, less money is created. This shrinkage of money contradicts the entire thrust of Chapman’s hyper- inflationary argument, which blames loss of currency ‘value’ on a Fed/Treasury conspiracy, rather than on circumstances much more powerful.
Historically, currency loses value relative to goods and services that gain more than money value. The name given to this change of value is called ‘Progress’.
Chapman doesn’t understand that banks fail when they stop lending, not on account of the ‘value’ of the money being lent. Banks are stores that sell money. If they don’t sell money, they go out of business. Banks aren’t lending because their customers aren’t borrowing; the customers don’t borrow because they are unable to gain any value on goods they buy with money. Progress is running in reverse. That’s why the multipliers shown in the Fed chart are shrinking. The value- aware ex- borrowers are driving the process, not the Fed nor the Treasury.
Chapman is another gold bug repeating a tired Internet conspiracy theory/rumor that has no basis in fact or observable reality.
Gold bugs and others obsess about the value of currency to the exclusion of common sense. The worth of anything, including gold, silver or any currency in every instance is both consensual and arbitrary. What matters most of all is not the worth of currency but the worth of commerce. The economy fails because the value of our commerce is diminished due to decades of waste and bad investments. Here’s more:
As you can see, the Illuminist program is going to come quicker than we anticipated. That in part is because they have had to expedite their program, due to exposure in the IF, other publications and especially via talk ratio and the Internet. There is no doubt we have the elitists on the run.
We are reaching the masses. On TalkStreamLive.com we were on the Rumor Mill this past week and out of 50 talk radio programs we were 5th behind, Rush (Limbaugh), (Sean) Hannity, Dr. Laura and we were tied with (Glenn) Beck. On the Sovereign Economist on Wednesday night we were 5th behind Beck and (Michael) Savage and ahead of Hannity. Both these programs are not well known and the Sovereign Economist is only about a month old. It shows you what you can do if you work hard enough at it.
Chapman maybe will take Buiter’s job at Citi, he’ll do it for $2.2 million a year.
Also on AE is Bill Bonner. Bonner – and unfolding deflation – skewers Chapman without even trying;
There are so many breathtaking things going on around us we practically suffocate. Last week, three-month US Treasury-bills yielded all of 0.015% interest. Some yields were below zero. In effect, investors gave the government money. The government thanked them and promised to give them back less money three months later. How do you explain this strange transaction? Was there a full moon?
Moonlight on the week of November 6 must have been especially intense. Bids totaled a record $361 billion for just $86 billion worth of T- bills. This was $100 billion more than the peak set during the credit crisis a year ago. What? A third of a trillion dollars, per week, gives itself up to the hard labor of government service and asks for nothing in return?
If smart people are paying Uncle to store money – presumably not in closets – why would Uncle want the people to store money somewhere else?
Bonner came up with the best line I’ve read so far in this crisis. He speaks about the increasing cost of servicing expanding sovereign debt:
There is also the problem of paying the interest on rising debt loads. Thanks to the forgetfulness or credulity of the world’s lenders, borrowers now benefit from exceptionally low rates – just like the ‘teaser’ rates once accorded to sub-prime lenders. But the tease will come to an end soon. Even the Obama Administration forecasts interest payments to rise from $200 billion at present to $700 billion by 2019. This assumes interest rates only regress to ‘normal.’ But “hot money” from the feds has acted like spent nuclear fuel; every fish in the financial pond now seems to have two heads and a bag over both of them.
Et tu, Bob Chapman?