Ongoing rush of monetization world-wide took a predictable step yesterday as the Fed Chairman announced open-ended lending to mortgage industry. This is on top of ongoing lending to the government (LSAP/Operation Twist) and the promise of ‘unlimited’ lending to banks (by way of governments) in the European Union. On the way is more central bank lending in Japan, UK as well as more stimulus in China and elsewhere.
As was pointed out in the Economic Undertow short-version:
Modernity cannibalizes its capital, as such our crisis is irreversible. Conventional marketplace remedies such as debt jubilees/write-offs, re-distribution, bailouts, stimulus, austerity policies, monetary easing, etc. have no effect on outcome other than to worsen conditions. These are efforts to reclaim capital that no longer exists. Consequently, remedies accelerate unraveling process by increasing gross debt (claims against capital) while exposing remaining capital to consumption at higher rates.Economists insist that capital is symbolic (money) rather than material. Capital = resources (Daly), all industrial money is debt. Abstract money is infinitely reproducible, material inputs are not.
The central bankers endeavor to reproduce as much of the abstract ‘money’ as possible, hoping that consumption can grow to ‘normal’ levels. The central banks lend, this is all they can do. Despite talk about ‘tools’, they only have one: making- or not making loans. The banks’ only form of medicine is more of what put the world in the hospital in the first place!
The economies are like a car that cannot start. First one person then another puts the key into the ignition and cranks the engine. New people arrive and say, “I can start the car,” and take their turn with the key. They declare the problem is with the battery or the starter or the engine or the electrical system. Each believes the other simply does not know how to start a car. The gas tank is empty the car will not start regardless of who turns the key. Eventually, the battery fails.
Battery Failure = Great Depression
Most of the people in the world do not want a second Great Depression. There are also very few who do not acknowledge the possibility/likelihood of another depression taking place. The people will do whatever it takes to forestall it: if this requires believing the establishment’s lies … they will become true believers. They will repeat whatever lies they must to themselves, to their children, they will live the lies until they are submerged by them.
When the central bankers promise the children that they will save them, the children act accordingly … even though the fact of central banks making such promises speaks for itself. When the Fed and the rest are the last line of defense, there really is no last line of defense.
What people don’t understand is the nature of our crisis, it is an energy crisis in drag. High real input prices due to scarcity are stranding trillion$ of infrastructure used to waste resources, (sunk capital investment). There is no coming back from this. When capital resources are gone they are gone forever, wasting infrastructure is worthless junk. The process has arrived at the point when the various actors are beginning to come to understand what ‘forever’ actually represents and that they are confronting it.
The monstrousness of our predicament is almost beyond the ability of the human mind to grasp its scale. We burn up our resources today, there will be no more resources to burn for millions of years. We’re it. Apres moi le deluge!
Central bankers cannot issue value-on-demand. They cannot offer anything other than symbols for value, items that have worth only under circumstances that do not currently exist and cannot again! They cannot print crude oil, topsoil, surface water, they cannot increase waste-carrying capacity, they can add to the assault on these things by way of their lies and the willing credulity of others. They can only make matters worse, the central banks are at odds with themselves.
As far as it goes, the entire world is in the grip of resource deflation, from which there is no escape. Our voracious machines dig the graves of our grandchildren faster and deeper, capital is destroyed more utterly, what remains becomes unaffordably expensive, at some point the costs are bankrupting … see ‘Greece’.
Greece is all of our futures, our children’s futures, our grandchildren if they are very, very lucky and can dodge the consequences of our stupidity and blindness. They will live in small villages, they will till what fertile soil they can find, they will make things by hand they will wish all of us had died before we were born.
Loans without end … just not for you!
Tens of millions are unemployed worldwide! The solution is to offer loans at near-zero cost to bankers! That will solve the problem … right? Let the Fed Chairman’s friends take they money and run … to Peru!
Figure 1: This graph of Fed total assets and liabilities from Cleveland Federal Reserve Bank (click on for big). This amount is set to grow by another US$480 billion per year into the foreseeable future. Keep in mind, the central bank balance sheet expands because the private sector balance sheet contracts. Fed credit supplants private credit, it is not added to it. If there is no private sector deficiency there is no need for easing! The end of the day has no net increase in available funds for the public, only balance sheet problems pushed further into the future.
The breakdown of Federal Reserve balance sheet can be seen on the Fed statistical release page. Regardless of what the report says, all assets held outright by the Fed are loans made by them: the purchases of Treasury- or agency bonds are loans to these agencies.
The flow of credit is from the central bank into reserve accounts at the Fed (not circulating currency). Reserves do not appear in the greater world unless there is demand for them in the form of redemptions/depositor withdrawals that exceed the requirements of ordinary, day-to-day business. A good example of this excess depositor demand would be a bank run.
What the central bank has done is guarantee all bank deposits by offering what amounts to unlimited reserves.
It’s not clear guaranteeing deposits is what the Fed Chairman intends to do. Bank runs are underway in Europe, China, Argentina and elsewhere. The reason is there are no effective lenders of last resort, the consequence of central bank over-promising/making unsecured loans. When central banks leverage themselves they become no different from ordinary, commercial banks/shadow lenders who are insolvent because of their unsecured lending. The central bankers promise ‘unlimited’ supplies of liquidity, they cannot possibly deliver it. The central banks are collateral-constrained. There is less good collateral available: collateral is capital, there is a shortage of it: our crisis is the consumption of capital. Adding claims against what little remains is pointless particularly when the form of the claim is accelerated consumption.
The Chairman guarantees bank deposits with the left hand while making the guarantee necessary with the right.
More left hand-right hand: or perhaps left foot-right foot: the central banks place the petroleum industry’s boot on the throat of the world’s economies (click on for big):
Figure 2: Brent crude continuous front-month contract, chart by TFC Charts: the financing needs of the petroleum extractors is at odds with those of the extractors’ own customers (Guardian):
Further quantitative easing in doubt as petrol prices near record high.
Phillip Inman
The Bank of England could be prevented from boosting the economy with another round of QE if inflation rises
Petrol pump prices jumped to 139.7p a litre this weekend, within 3p of the 142.5p record set in the spring, according to figures from the AA.
The cost of diesel also rose as Europe’s major refiners blamed hurricanes in the US and a string of refinery shutdowns for a spike in the cost of crude oil.
A rising oil price will spook the Bank of England, which has relied in its inflation forecasts on a fall in oil prices linked to falling demand across the world. The central bank’s monetary policy committee, which sets interest rates, could be prevented from adding to its £375bn programme of quantitative easing to boost lending in the economy if inflation takes hold, analysts said.
Higher pump prices will also add to concerns that the UK will join continental Europe in a stagflation trap as inflation rises while growth remains flat.
Fears that the economy will remain in recession for the rest of the year were heightened by a report on Monday that found optimism among UK businesses has hit a 20-year low.
There is an upper bound to the price of petroleum, where the costs of consumption become unaffordable and demand is constrained. In the US, the price is a little over $4 per gallon of motor gasoline: at this level the entire fuel wasting enterprise becomes unaffordable, including the precious tract house- and office developments, sectors of the economy the central banks are desperate to revive.
Figure 3: Got gold? (TFC Chartz, click on for big) How about silver? It is hard to see a green light given to Wall Street asset speculators that won’t push up the price of all commodities. Unlike crude oil, which cannot rise in price without self-limiting demand destruction, gold is not strategically important. An ounce of gold can be bid up to a cool million dollars per ounce without effecting the so-called ‘productive’ economy. Gold is a fetish, like a Tiger tank or a Warhol Car Crash: a very high price might reflect uncertainty about the worth of other goods (including currency) but the implied shortage of gold would not materially effect output of necessary goods.
The central banks think only of creating asset price ‘bubbles’, in our ruin of a world there is nothing left.
I can’t help but wonder if the suits decided to make this one “open-ended” because they know what rising food prices as a result of the worldwide drought will do the global economy. And of course, they’ve chosen a solution that will only push those very prices up even higher. But I guess I’ve known for a while that the series of events that will take us into the Greater Depression we have so far managed to delay, will be an ongoing clown-show. I just hope the Pee Tardy loonies aren’t the ones in power when that day finally comes.
History says with considerable authority that Pee Tardy Loonies are heavy favorites to be in charge, if not before the crash then immediately after. All politicians promise more than they can (or intend to) deliver. In times of econo-chaos, the people want the impossible and no party is more mesmerized by impossibilities than the Pee Tardy. The USofA narrowly escaped Pee Tardiness in the last depression. Not at all likely to avoid it this time. Both right arms of the Corporate Party are currently busy inflicting severe damage on their own ligaments and tendons. Only diehard faithful are going to stick with those morons much longer. The events of 1914-45 seem to be a useful template for how it most likely plays out. It will only rhyme of course, not a deferred replay. Since the Pee Tardy is the only alternative that can get any play on Faux News, they’re a shoe-in.
QE3 Ship Sails
Its all over the Blogosphere and the MSM, Helicopter Ben has once again loaded up the Chinook Choppers and is going to drop anywhere from $40B to $125B worth of Funny Money on the TBTF Banksters EVERY MONTH from now to Kingdom Come.
Graham Summers of Phoenix Capital on Zero Hedge is busy eating CROW after months of predicting that the Bernank would NOT run another QE Gambit. After 2 Epic Fails with QE1 & QE2 & “Operation Twist”, yet ANOTHER one of these Helicopter Drops you would think a Normally Smart Academic like Helicopter Ben would not undertake. There are however extenuating circumstances here you have to consider in the situation as it stands.
The primary consideration you have to grasp is what is going on over in Eurotrashland. The Krauts and the Bundesbank basically Caved to Super Mario Dragon and have agreed to fund the ESM and look the other way while the ECB does back door buying of Sovereign Debt of Spain and Italy. IOW, Super Mario is going to Print to Fund these economies, at least for a while. This will require a LOT of Ink and Paper to print those colorful Euros.
What happens if Super Mario is Printing non-stop to fund those economies and Helicopter Ben does NOT print in tandem? Answer: the Exchange Rate goes to hell in a handbasket in short order. The Euro would drop in value rapidly, the Dollar would rise in value and all the trade based on the current relative valuations being held stable would fall apart. In order to Validate the Value of the Euro, Helicopter Ben HAS to print just as fast as Super Mario does.
As Steve on Economic Undertow often points out though, CBs like Da Fed and the ECB don’t really Print Naked, they Print to match “Collateral” that is thrown at them and Buy this Collateral with the New Money. The issue here is that just about anything these days serves as Collateral on completely Fictitious Marking of Value.
Not quite Baseball Cards here as Collateral, but Close. For the ECB, they are “buying” Sovereign Debt that is Irredeemable Debt, it cannot and never will be repaid. In the case of Da Fed, they are Buying MBS that basically amounts to non-performing loans. Stop and THINK about that. Even if it is JUST $40B a month, are people REALLY taking $40B/month out in Mortgages anywhere now?
…
Read the rest on the Doomstead Diner
http://www.doomsteaddiner.org/blog/2012/09/14/qe3-ship-sails/
RE
The Bryce Harper and Stephen Strasburg trading cards are worth something, RE.
The real estate that is collateral for mortgages is diminishing US$40 billion or so a month. Also, the worth of real estate as an income generator for municipalities is diminishing, fast. If you look around there are plenty of assets/wealth that are diminishing fast. US$40 billion is probably not enough to make any difference.
People don’t notice this shrinkage, they are convinced that the economy is ‘normal’, running in the background.
The Fed or ECB creating any new/unsecured credit is a major no-no (non-non). None of the central banks have any capital, the perception of central bank insolvency is a rumor away. Once insolvency is apparent, nothing the central bank can do will matter.
The Fed or ECB creating any new/unsecured credit is a major no-no (non-non). None of the central banks have any capital, the perception of central bank insolvency is a rumor away. Once insolvency is apparent, nothing the central bank can do will matter.”-Steve
Nein-Nein?
Agreed, but what is the Emperors No-Clothes Moment? It seems to me Insolvency is already apparent, but the markets don’t seem to recognize that, and the Saudis still take Dollars for Oil.
What does it take to reveal a Naked Emperor?
RE
Changing metaphors: This is a casino with one table. You either play or leave.
Nobody wants to leave (because it’s cold, dark and dangerous outside) so they are going ‘all in.’ Draghi and Bernanke have just raised the bid. Everyone is bluffing of course, but Greece, Spain and a few others are now out of chips.
– A default (or political rejection of) the euro by an EU country (Greece).
– A classic asset market crash in China/hyperinflation.
– Higher interest rates/funding difficulties in Japan.
– Breakdown of the Swiss franc/euro peg (already the beginnings of intra-EU capital controls).
– AAPL crash.
– “Fiscal Cliff” and associated US default.
– Bond auction failure in Germany.
– A major industry bankruptcy in Europe (Peugeot? Fiat?).
– + $125/barrel Brent crude for any amount of time.
– Failure of any large hedge fund that invests in bonds such as Black Rock.
– Default/insolvency of a US state.
There are already big banking failures in Europe w/ quiet bailouts and bank runs. Runs out of currency are indicated by rising price of gold. This is driven by both fears of hyperinflation and deflation/currency collapse which is the consequence of current mismanagement.
There are other events that ~should~ trigger widespread panic, such as a default by CalPERS, but I’m not sure I agree. Greece has already defaulted by other means. Germany had a failed bond auction in Nov. 2011. The currencies are managed via the Great Currency Teeter Totter….
The question remains. If the Emperor has no clothes, then what system do we switch to? Nobody (important) is going to point and giggle, because there isn’t any alternative. The Emperor is still the Emperor.
It seems the authorities are prepared to do everything they have to to keep the lights on for as long as possible. A decade of low to zero growth while we slide into a permanent global depression is better than letting the whole thing collapse under it’s own weight.
“They could be made to accept the most flagrant violations of reality, because they never fully grasped the enormity of what was demanded of them, and were not sufficiently interested in public events to notice what was happening.” Orwell, 1984
The Fed Is Useless And Its Efforts Are Futile
http://chartistfriendfrompittsburgh.blogspot.com/2012/09/the-fed-is-useless-and-its-efforts-are.html
“it’s always fun to look at the Fed Funds Rate because it looks like a the stock of a corporation that has filed for bankruptcy.”
It does indeed!
Ha haha haha!
Quite true, but when futilities are all you’ve got and failure to play is not an option, there can be no reason not to go all in. Homo artifex has a perfect record with regard to creating unstable self terminating econ-systems. Our generation is on the cusp of keeping that record intact. Steve is right on that we have practiced true capital destruction on a scale our ancestors could not have imagined. Future generations, should the artifactual consequences (one for instance) of our industriousness not obviate their existence, will never have any potential to exceed our achievement. WE’RE #1!!!
I have to agree that our grandchildren will have every reason to wish that we had never been born.
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Its getting difficult to read doomsterish posts not because they are alarmists, but because they are correct. As I think Steve implies, modern industrial civilization has its roots in digging up fossil fuels or burning them. With population doing its normal Mathusian increase as much as resources allows, this can only result in either the burning of fossil fuels poisoning the planet to the point where no human life is possible, or the process will stop due to the more readily accessible fossil fuels running out, and its peasants and farms again (with a much lower population). The only question is the timing. And the second alternative is actually much better, but the elites have gone all in on forcing the first!
I found myself down in Ballinspittle village this week for the first time in over a decade , its some 25-30~ miles from Cork city.
This was famous for the so called moving statue thingy just before the second greater credit hyperinflation that struck Ireland post 1987 (the first modern credit inflation was during the 70s and EU entry)
This very funny Monthy Python like British television video of the time captures the place perfectly , now its very different although not completly changed.
http://www.youtube.com/watch?v=kZjM83wZmWw
What struck me today was the presence of two empty housing estates in the centre & just outside the village.
This most rural of areas would be the last place you would expect to see such a thing but nowhere has remained untouched from this devasting house blight. (I am sure if this madness continued the 7th century ring fort located just outside the town would have been destroyed like in many other areas of Ireland)
Now this is a envoirment where thousands of new empty blockhouses exist much closer to Cork City so what hope is there for this village located withen rolling hill country with some decent quality south facing fields ideal for hay making but not much else !
This area was famous as a Stronghold for the Courceys of Kinsale before they backed some wrong horses and were made poorer by the total power of the Venetian banking system in the 1600s
http://www.panoramio.com/photo/17934764
Their descendants lived in a very miserable castle in the once untouched beautiful old Head of Kinsale.
If I am not mistaken they sold the Old Head to the same international elite that has gained total dominance of the western world post 1987….the Gordon Gecko like Helicopter elite.
Despite what it says in this obituary I think he sold it to pay for his care in old age back in 1997 although he donated the castle (its just a collection of stones with some shape) to the Town of Kinsale in 1986.
http://www.kingsmeadschool.co.uk/decourcyobituary.htm
Once used by many thousands of locals for their Sunday walk and adventurous rock fishing excursions (I travelled there most Sundays with my Dad when the sea was calm enough to fish).
It is now out of bounds , a now privatised once informal public space where all of its ground nesting birds on its once deep Heather have been wiped out by these obnoxious waste of a good walk developments
en.wikipedia.org/wiki/Old_Head_of_Kinsale
Meanwhile back in Kinsale harbour 2 new expensive custom boats remain tied up for lack of diesel while the countries cites are plagued with the scourge of Heroin.
Ireland is a completly unrealizable place – it now lacks a centre.
The question must be asked why did the central banking system wish to “develop” developments with no productive capacity ?
They are very far from Fools I imagine.
Is it to steal what little true holdings the non banking sect own ?
It looks like total financial war from where I am sitting.
A repeat of the 1600s experiment in Ireland but on a global scale.
Prescient view of the current euro situation from Wynne Godley in 1992 (HT Steve Keen):
http://www.lrb.co.uk/v14/n19/wynne-godley/maastricht-and-all-that
confirmation of your ‘dead money’ post (June 2011)
Greeks searching for cheaper heating solutions
http://www.ekathimerini.com/4dcgi/_w_articles_wsite2_1_10/09/2012_460618
@Tom
Greek heating oil demand seems to have flat lined to a much lower level in 2012 although I don’t know if the Winters were appreciably different in character these past few Years.
omrpublic.iea.org/demand/gr_ho_da.pdf
Only a further reduction in fiscal handouts or a return to a drachma could change this Graph dramatically I should guess. (outside of annual climatic variations)
omrpublic.iea.org/demand/ct_ho_ov.pdf
Whats really striking in the second graph is the rise of Icelandic heating oil demand …….at a guess I think during the heart of their crisis people remained in the capital where communal thermal volcanic heating was available cheaply and then when more disposable income was available they moved out to their more isolated second houses – but its just a Dorks speculation.
PS whats even more striking is the difference between countries of similar populations but very different climates.
Greece , Portugal , Hungary and the Czech Republic have all populations of 9+ to 11+ million yet the much colder Hungary & Czech republic burn 1 or 2~ KBD a day and the Med countries burn 9~ & 70 ~ KBD a day.
Now the med especially eastern Med winters can be cold but they sure ain’t as long as the interior of Western Europe !
It justs goes to show the scale of the oil /credit that has been pumped into the Euro periphery.
Find it, extract it, distribute it, metabolize it, grow and increase complexity,
find it, extract it, distribute it, metabolize it, grow and increase complexity,
find it, extract it, distribute it, metabolize it, grow and increase complexity,
until the returns on complexity are insufficient to justify their cost. When? When education, medical care, food, transportation, pensions, become too expensive? Are we there now?
At what point is it no longer worthwhile participating in a starving system? When medical care, housing, education, pensions, transportation and food are no longer within reach of the small apportionment of money/energy earned by our labor? Is there a way to opt out? Will opting out enhance your own survivability and enjoyment of life? Should you squander your remaining wealth trying to remain within the existing, destined for extinction, system? Will the system require your participation (property tax, schooling, medical insurance, taxes, military draft) to insure its continued but ultimately futile efforts at survival? Do you want to be bled dry until you’re too poor to escape? Can you have a future outside of the system?
Why persist in the insanity? Because we are drawn to and over saturate our bodies and minds with the stimuli it provides? Is it simply a matter of which living arrangement, which job, provides the most dopamine per unit time? Is that why the human moths migrate to the periphery of the big cities to live in slums? Or, as a society, do we really have a choice, or are we enslaved by our own neurochemicals to spin around the technological lightpost until we drop dead from energy exhaustion?
The Wizards of Oz. All you have to do is tap your ruby slippers together three times and you can go home – anytime. The nightmare will end and the choice has always been yours.
The bi -monthly French energy situation publication is showing big drops in Nuclear electrical production this Summer. (YoY)
http://www.developpement-durable.gouv.fr/IMG/pdf/CS333.pdf (May)
Down 12.1 % in May
13.9 % in July
A 6% drop between Jan – July
A 4% drop over these past 12 months
Somewhat larger increases in Hydro production (North Atlantic jetstream oscillation , more rain this year ?) but nowhere near enough to compensate for the huge base load of Nuclear.
Measured cumulatively over the last twelve months, the primary energy production fell by 3.8% to a total of 119 Mtoe in late July 2012.
The energy bill continues to grow , it crossed the 6 Billion euro mark for the first time in April.
Google translate from the 2011 energy balance publication (July 2012)
“In a tense geopolitical context, including the Middle East, the international prices of raw materials increase significantly in 2011, especially oil. This weighs on French energy bill. At 61.4 billion euros (€ bn), it increases by almost a third and 88% of the accumulated trade deficit of France. It thus represents 3.1% of GDP, against only 1% in the 1990s”
http://www.statistiques.developpement-durable.gouv.fr
Run and hide your “wealth” away!
Party today and demand your neighbor pay, while you don’t!
Complain the residents don’t support Downtown! Don’t pay your property taxes!
Evade! Cheat! Strategic Default! Over-assess!
Everybody’s Doing!
Probably Obama knows very well about the problem, and so does Mr. Bernanke. But politicians don’t say “There are too many people on the planet”.
It’s not allowed. Politicians can’t say that. It’s not what they are supposed to say.
So the synchronized money-printing by the FED and ECB is the way to convince everyone that you (Obama, Merkel, etc) want to keep the system going and that you (Obama, Merkel, etc.) care.
You (Obama, Merkel, etc.) will need everyone’s support later when the system fails.
I think that Obama, especially, is the “Capitalist’s GORBACHEV”. Gorbachev was sent to Russia to oversee the end of communism. I think Obama has a similar underlying (secret) purpose. It is vague and undefined, morphing out of events. I think he wants to help, actually.
Things are progressing rapidly and I think the system will be sabotaged on purpose by currency hyper-inflation. Probably leaders agree on the necessity to crash the system on a world basis while it still functions, then have millions and billions of people en masse drop their middle-class aspirations with one fell swoop, while they are mobilized to grow food.
It’s more democratic, let’s face it.
Dropping out of the middle class on a one-by-one basis is excruciating and unacceptable. The chance to compete is too attractive.
So I think governments will engineer (are engineering) a massive crash that will leave some social structures intact and functioning for a while. But the massive crash will effectively make middle-class existence out of reach all at once. No whining and complaining.
An engineered crash that will “leave some social structures intact and functioning” is a massive gambit.
Will the nuclear engineers be able to get to work? Will the line crews have the spare parts to replace blown transformers and repair downed power lines? Local water treatment facilities and chlorine? Hospitals and IV bags? Complexity is our friend/enemy.
There will be plenty of “whining and complaining” each step of the way down.
Found this interesting quote on wikis Amtrak
en.wikipedia.org/wiki/Amtrak
Amtrak’s leader at the time, David L. Gunn, was polite but direct in response to congressional criticism. In a departure from his predecessors’ promises to make Amtrak self-sufficient in the short term, Gunn argued that no form of passenger transportation in the United States is self-sufficient as the economy is currently structured.[46] Highways, airports, and air traffic control all require large government expenditures to build and operate, coming from the Highway Trust Fund and Aviation Trust Fund paid for by user fees, highway fuel and road taxes, and, in the case of the General Fund, by people who own cars and do not.[47]
Before a congressional hearing, Gunn answered a demand by leading Amtrak critic Arizona Senator John McCain to eliminate all operating subsidies by asking the Senator if he would also demand the same of the commuter airlines, upon which the citizens of Arizona are dependent. McCain, usually not at a loss for words when debating Amtrak funding, did not reply”
The aversion to subsidising Amtrak fares with major fiscal funds given that its in a unique position of not controlling any of the rail commons outside of some major east coast NY routes is perplexing.
The least Congress can do is give Amtrak some fiscal edge in slow but very cheap travel.
The rail passenger numbers outside of New Yorks immediate hinterland is truely appalling.
en.wikipedia.org/wiki/Greensburg_(Amtrak_station)
en.wikipedia.org/wiki/Union_Station_(Pittsburgh) passengers in Y2011 : only 133,885!!!
The little Scottish West highland Old Garrison town of Fort William gets more passengers then the City of Pittsburgh !
en.wikipedia.org/wiki/Fort_William_railway_station
Greensberg station is now down to 1 passenger train a day for the first time.
Follow the very low passenger numbers during Y2011 on the preceding stations to New York.
Greensberg : 13,097 (-6.5%)
Meanwhile a rail route that could feed into Greensberg station is a tourist route that is now closing down because of increased rail freight traffic.
http://www.youtube.com/watch?v=mzGKEc4R4OI
Passing the lost towns of Unionstown ,Dunbar ,Connellsville & the ironically named Fairchance………….
en.wikipedia.org/wiki/Uniontown,_Pennsylvania
America has become a deeply ironic place it seems.
David Gunn was part of the Dukakis administration in Massachusetts during the 1970’s – 1980’s. Members of that administration stopped an interstate highway, built public transportation, bought much of the Penn Central ROW that was up for grabs, revitalized commuter rail and more. America chose to elect Bush #1 and laughed at Mike Dukakis.
@Ellen
1987 -1988 was the strangest of times , it was the final phase of the credit hyperinflation.
Suburbia still had some wealth back then , but it choose to destroy itself to sustain its consumption patterns.
http://www.youtube.com/watch?v=h8SrDiySfEc
Thank you, polite readers-then thinkers and contemplatives-then ascii producing nonlinear compacting linear outputting joiners of Steve-from-Virginia’s blog, for your pungent and insightful responses to our said host’s most enjoyable opus blogarii (Latin corrective required). As I drove over 3 hours, walked 20 minutes and was ferried for 25 minutes plus worked for 8.5 hrs (paid for 7.5) doing coal testing, which didn’t pay for the AUD cost of compulsory (bureaucratic society-wide bribery rather than local cop bribery) car registration+fine this morning but surely also didn’t pay for the destruction caused by most of the links in my daily chain (thanks James) and most assuredly the utter dependence on cheap fossil fuels (discounting the future needs an economic analysis thanks Steve … ) is not recommended on any radio station to be thought about because “you’re a fool if the rest are grabbing a chunk of carcass to turn your nose up at how it was acquired”, type thinking, I guess. It doesn’t have to be this way.The Reality Way Party invites you to join, website address Coming To A Theater Near You Real Soon Now.
The Drop in Greek car regs just gets bigger & bigger. (ACEA)
Jan – Aug 07 : 208,921
Jan -Aug 11 : 72,513
Jan – Aug 12 est : 42,072
One fifth of credit boom sales now.
Astounding either with or without a devaluation but those guys must have no tokens for domestic commerce.
The very big market of Italy could obviously become the next Greece with huge consequences for zee Germans.(what are the Current Volks ,Merc ,BMW sales in Italy , or is it all Polish Fiat 500s ?)
Jan -Aug 07 : 1,741,322
Jan -Aug 11 : 1,224,096
Jan – Aug 12est : 981,030….. a bit over half of credit bubble peak
Spain is a bit further along this path
Jan -Aug 07 : 1,119,050
Jan – Aug 11 : 568,349
Jan – Aug 12est : 520,216……just under half of credit bubble peak. (flat lining ?)
Spain would probally benefit most from a return to a domestic currency given its previous massive internal rail investments with for example 3 million+ people still using the Barcelona to Madrid plane shuttle in 2010 despite the presence of a high speed rail connection since 2008.
There is still a few Gems remaining in Spain (although not many)
A Christmas spent in Seville looks nice.
http://www.youtube.com/watch?v=QOCgVbDIpt8
Its Germany that is in trouble – In Germany YOU NEED Gas / oil central heating(currently 400KBD) ,Seville not so much although the culture of Siesta needs to be brought back for the summer months as air conditioning will be prohibitively expensive under the Spanish Peseta with only the rich affording airconditioning courtesy of
en.wikipedia.org/wiki/PS20_solar_power_plant
Cannot really understand why the Spainish do not default…..they are dead ducks withen the Euro.
Same political culture as Ireland I suspect , the guys on top have too much to lose.
Story Steve ,
Its a public transport fetish
But this public transport story needs to be told.
en.wikipedia.org/wiki/Westside_Express_Service
What other mode of transport system refurbishes 1950s vehicles to supplement modern unreliable buy America vehicles ?
They perhaps may need to reconsider restarting the Budd railcar production line with possibly a lighter upper body replaceable section.
The Bicycle storage area is the largest I have seen on a commuter train , its pure decadence when seen from a European perspective.
http://www.youtube.com/watch?v=zCScJdmMUgc
And only 1,750 users a day !!
In Europe pre crash it would be standing room only for a route that passes through towns of 50,000 – 80,000 population.
The Fed is “lending” to the mortgage industry? Seems like it’s paying a premium for toxic MBS and saying it will unwind the transaction at some point (yeah, sure). But since it’s lending, what are the terms?
What are the terms, indeed?
What is meant to be a ‘temporary’ finance speed-bump is something else entirely.
Some say too much debt (true), some say crooked bankers (true), most say excessive finance (true), others say the duration mismatches themselves are the problem (true). Still others point to self-defeating politics (true), mis-distribution of proceeds, mis-allocation or resources, and improper theory (all of which are true).
At bottom, these things are symptoms of the foundational problem which is the industrial enterprise itself: it cannot repay or service its own costs but must be subsidized continually with loans. Instead of a speed bump there is a permanent state of over-indebtedness that must be out-maneuvered or removed. Without a plan and a willingness to put it into effect the problem of industrial enterprise will solve itself … by destroying the enterprise.
When there is no specific term it means ‘until the crisis is over’, which is not its design. All central bank discount window operations are intended to be very short term. By its actions the central bank is indicating there is a ‘Great Problem’ that it can only with great difficulty address. No specific term means, ‘the central bank is irrelevant’.
If you throw up a chart of the S&P 500 vs chart of Unleaded Gas since March 2009 and the advent of QE, you will find that they look almost identical. Correlations are near 1 due to monetary intervention. However, this week, since WTI hit $100 last Friday morning in reaction to QE3, Oil is down about $7/bbl, while the S&P has maintained its gains. It could be merely technical massive long-liquidation, or it could be a concerted effort ahead of the US elections to maintain the status quo and keep Romney out of the White house. The market seems scared of an Obama SPR in late October, and so is front-running the anticipated supply.
In the larger crisis, it is a blip on the radar, but this kind of correlation breakdown is unusual in the QE environment. Someone in the CB pantheon knows that asset prices remaining high means food and energy costs remain high, and this in turn is destabilizing to the global economy. The only solution is to replace high-paying jobs with low-paying jobs to offset diminishing margins. This is the cost/credit ceiling that Steve brings up every month in his oil charts. Around $125 Brent, the economy chokes on easy money. The market has a vested interest in the credibility of the CB’s, however, at the inflection point when it realizes that the Fed, ECB, BOJ, BoE, SNB are past the point of insolvency, a crash will occur on short order. The signal to look for is when you see the word ‘insolvent’ attached to the central banks in status quo papers like the NYT, WSJ, FT, and Der Spiegel. That’s ‘when’
Why not KISS? Sellers of oil have gotten more aggressive than buyers. The actions of the FRB have tipped oil producers that there is an imminent slowdown and deflationary hiccup inbound and they need to aggressively price their future production while prices last.
If gas and stocks are decoupling for the first time since 2009, it is probably signaling a recognition that the global economy is in trouble, not that the CBs have lost the plot.
Steve, you mention that CB’s are collateral restricted, and there globe is running out of “good collateral”. What is “good collateral” and who “says so”? To a CB that wants to rescue the shadow banking market, or keep asset prices elevated to stave off a derivative bomb, what do they care what is “good” and what is “trash”? Further, can’t a CB call anything collateral AND place any value on it? What’s holding it back? I agree completely that we are in the midst of resource deflation, that is easy to see for anyone looking, and there is nothing we can do about it at this point to make it “better”, and it would take a monumental effort just to make it “less worse”.
What the central banks are doing is a bit of theater, they hope to convince market participants that what is underway is a temporary phenomenon, that today’s questionable assets will represent tomorrow’s ‘value’.
The central bank says that collateral — uniformly loans/debt — is worth the amount on the promissory note (not more). This is useful to stem a money panic caused by the failure of one- a small handful of mis-managed banks. Panics caused by bank failures have occurred frequently since the beginning of deposit banking. Failure of one bank would cause market participants to question all similarly situated banks leading to a self-fulfilling race to remove liquid deposits: there was never enough ‘money’ in the vaults to make all claims good. The depositors wanted the circulating money which is the form they originally deposited in the bank. The bank had other, illiquid forms of money: promissory notes from bank’s clients.
By the central bank offering depositor credit and supporting asset prices — by way of its own loans — the panic is ended as quickly as it starts.
Bagehot suggests central bankers freely lend against any ‘good’ collateral leaving out false- or fraudulently offered assets/marketable goods. Collateral could be anything money was paid for or credit was extended to gain: shipping invoices, goods recipts, warehouse bills of lading, mortgages, contracts payable in gold/specie, letters of credit, etc.
The central bank seeks to overrule the market as to the worth of these goods. During a panic the central bank’s opinion carries more weight than the markets. Asset holders/banks like the central bank’s opinion because it serves their temporary interests. It also serves the depositors’ interests as these deposits are unsecured loans to the banks.
The issue today is whether collateral is worth anything, or what the collateral represents. The market outside of asset holders (bank depositors) realizes loans that have been made are unproductive. Depositors have started eying the exits. When enough of the depositors have fled the market is no more. People fleeing is where the world is now, at the edge of market-death. The markets are undermined … central banks are impotent.
The central banks’ biggest problem is time: what is underway is simply not a temporary phenomenon or money panic. The fault is within the banking/finance systems of the entire world. The crisis began in mortgage banking in the US in 2007. Five years later, nothing has been changed or fixed. Any attempts to fix the structure will bring it down, instead.
(Dead link removed: edit)
A good read in this whole story :
http://www-personal.umich.edu/~twod/oil-ns/articles/for_aff_aikins_oil_crisis_apr1973.pdf
Akins is the guy that audited oil producing capacity after US peak for Nixon, was then Ambassador to Saudi Arabia (had been previously in Iraq), and then fired by Kissinger….”
politics trumps intelligence
http://en.wikipedia.org/wiki/James_E._Akins
18 July 2012
“According to data from AENA in the first six months of this year Spain’s airports have seen passenger numbers fall by 4.6% to 90.15 million. Apart from the general economic difficulties across Europe, Spain also suffered the collapse of one of its leading airlines (Spanair) at the beginning of the year. Among Spain’s busiest mainland airports there are significant differences with Bilbao (+3.8%) and Barcelona (+3.5%) both reporting growth in the first half of this year, while Girona (-20.3%), Alicante (-12.1%) and Seville (-10.4%) all suffered double-digit falls in passenger numbers. The country’s busiest airport, Madrid, has seen traffic drop by 7.2%.
“Ryanair clear #1 airline in 2011
Using AENA data to identify the airline on which passengers passing through Spanish airports were travelling, reveals that over 34 million airport passengers were travelling on Ryanair flights in 2011, up over 28% on the previous year”
Dork – Ryanair does well in this entropy envoirment , it can can direct more capital towards fuel waste as it pays its Staff less then its competitors and runs its pilots harder.
Indeed there has also been accusations that it has been pushing the envelope of fuel safety also …with one incident of 3 emergency diversions from Madrid to Valencia airport during a period of Thunderstorms during one day in July.
No other Airline called such emergency landings on that day
Ryanair does not appear to break the rules but some pilots like to carry a few 100 IB + extra then the guidelines – there has been reports that Ryanair puts pressure on such pilots.
http://www.rte.ie/news/2012/0816/ryanair-spain.html
In this Dorks opinion Ryanair is the lowest of the low – it creates malinvestment by appearing to make certain transports competitive via Wage competion rather then the intrinsic cost of such operations.
They are the true representatives of a certain class of Anglo Irish low lives which form the Oligarchical backbone to this sick Irish society.
These GPA guys flourished during the post 1986 Big bang / Euro EMU malinvestment period which has completly externalised Irish domestic demand which remained hidden during the credit hyperinflation years.
The Irish Aviation authority appears to have been recruited to defend this outfit by the Irish State amid accusations by the Spanish equivalent of serious safety breaches no doubt also encouraged by the Spainish authorties wishing to defend Spainish airlines.
The IAA appears to have only lightly slapped Ryanair with some “recommendations”
Its all seems very sick
google
Ryanair planes had ‘sufficient fuel’
Irish Times