[Tyler_JC]

Local governments are complaining about their credit ratings?

If they didn't keep borrowing and spending themselves into oblivion, the market would provide them with all the affordable credit they needed.

Irresponsible local governments created their own individual debt crises and now that the financial industry is taking charging them an arm and a leg to borrow money, somehow the banks are to blame.

If I run up $50,000 in credit card debt and then my credit card company cuts me off, who's fault is that?

[leaflight]

A system built upon credit and or bonds, without pondering their steps, nothing but reps of crash and burn, to learn, artificial milk and honey prosperity , should have looked and learned how you get milk and honey, from cows and bees, the system wouldnt of had this disease, of right now please, for true prosperity and patience are one. Like contentment of the heart is more than just a tent shelter for the mind of it.

For true prosperity and patience are one.

[seldom_seen]

$this->bbcode_second_pass_quote('Sixstrings', 'I')t's really amazing, it's like Wall Street is shaking us down on every level -- from the consumer, to the federal government, the state governments, the cities, pension funds, and even non-profit utilities and transit authorities.

[deMolay]

Oilfinder2, more bad news Bro. The International Press is now saying the D word and America. http://www.telegraph.co.uk/finance/comm ... evels.html

$this->bbcode_second_pass_quote('deMolay', 'O')ilfinder2, more bad news Bro. The International Press is now saying the D word and America. http://www.telegraph.co.uk/finance/comm ... evels.html

[Plantagenet]

The USA successfully unwound some of its bank debt------by shifting it to the government.

Now the PIGS of the EU are trying to unwind some of their debt-----by shifting it to the EU.

Unfortunately, there is still a great deal of debt still to unwind in the housing market, commerical real estate market, US social security and medicare obligations, state government pension funds, etc. etc.

Hopefully the recovery will go smoothly from here, but I wouldn't be surprised to see another debt crisis pop up.

[Daniel_Plainview]

$this->bbcode_second_pass_quote('Plantagenet', 'H')opefully the recovery will go smoothly from here, but I wouldn't be surprised to see another debt crisis pop up.

[Armageddon]

The entire financial system is about to crash.

$this->bbcode_second_pass_quote('Armageddon', 'T')he entire financial system is about to crash.

[EnergyUnlimited]

$this->bbcode_second_pass_quote('Plantagenet', 'T')he USA successfully unwound some of its bank debt------by shifting it to the government.

[deMolay]

Whistle Oilfinder2, whistle. EVERYBODY KNOWS THE WAR IS OVER-EVERYBODY KNOWS THE GOOD GUYS LOST-EVERYBODY KNOWS THE FIGHT WAS FIXED- THE POOR STAY POOR THE RICH GET RICH-THAT'S HOW IT GOES EVERYBODY KNOWS. $this->bbcode_second_pass_quote('', 'T')he labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.


Related Articles
Wall Street bankers admit to mistakes over crisis
American jobs market may be bottoming out
Japanese manufacturing confidence slumps to record low
US benefit claims hit 26-year peak
US unemployment hits 26-year peak
Dow slides on poor jobs reportThe home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.

Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.

This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process.

This policy is entirely justified given the scale of the social crisis. But it also masks the continued rot in the housing market, allows lenders to hide losses, and stores up an ever larger overhang of unsold properties. It takes heroic naivety to think the US housing market has turned the corner (apologies to Goldman Sachs, as always). The fuse has yet to detonate on the next mortgage bomb, $134bn (£83bn) of "option ARM" contracts due to reset violently upwards this year and next.

US house prices have eked out five months of gains on the Case-Shiller index, but momentum stalled in October in half the cities even before the latest surge of 40 basis points in mortgage rates. Karl Case (of the index) says prices may sink another 15pc. "If the 2008 and 2009 loans go bad, then we're back where we were before – in a nightmare."

David Rosenberg from Gluskin Sheff said it is remarkable how little traction has been achieved by zero rates and the greatest fiscal blitz of all time. The US economy grew at a 2.2pc rate in the third quarter (entirely due to Obama stimulus). This compares to an average of 7.3pc in the first quarter of every recovery since the Second World War.

Fed hawks are playing with fire by talking up about exit strategies, not for the first time. This is what they did in June 2008. We know what happened three months later. For the record, manufacturing capacity use at 67.2pc, and "auto-buying intentions" are the lowest ever.

The Fed's own Monetary Multiplier crashed to an all-time low of 0.809 in mid-December. Commercial paper has shrunk by $280bn ($175bn) in since October. Bank credit has been racing down a hair-raising black run since June. It has dropped from $10.844 trillion to $9.013 trillion since November 25. The MZM money supply is contracting at a 3pc annual rate. Broad M3 money is contracting at over 5pc.

Professor Tim Congdon from International Monetary Research said the Fed is baking deflation into the pie later this year, and perhaps a double-dip recession. Europe is even worse.

This has not stopped an army of commentators is trying to bounce the Fed into early rate rises. They accuse Ben Bernanke of repeating the error of 2004 when the Fed waited too long. Sometimes you just want to scream. In 2004 there was no housing collapse, unemployment was 5.5pc, banks were in rude good health, and the Fed Multiplier was 1.73.

How anybody can see imminent inflation in the dying embers of core PCE, just 0.1pc in November, is beyond me.

Mr Rosenberg is asked by clients why Wall Street does not seem to agree with his grim analysis.

His answer is that this is the same Mr Market that bought stocks in October 1987 when they were 25pc overvalued on Shiller "10-year normalized earnings basis" – exactly as they are today – and bought them at even more overvalued prices in 2007, long after the property crash had begun, Bear Stearns funds had imploded, and credit had its August heart attack. The stock market has become a lagging indicator. Tear up the textbooks.

[NoWorries]

I think if such a thing were going to happen, it would have happened by now.

[mcgowanjm]

$this->bbcode_second_pass_quote('NoWorries', 'I') think if such a thing were going to happen, it would have happened by now.

[mcgowanjm]

The 'Household Sector'-the sector that the Fed said bought
all those Treasuries last year- is $14 Trillion in debt.

In fact, Americans are carrying nearly as much household debt as our annual GDP. This is the so-called assets on the banks balance sheet.

There has been almost zero deleveraging here. We're heroin
addicts and the juice is about to be pulled.

http://www.mybudget360.com/

$this->bbcode_second_pass_quote('', 'B')anks have become pushers of debt to the middle class and in reality, it was all a front to consolidate power in their corporatacracy. The fact that only four banks control 55 percent of all banking assets is simply amazing. It is an oligarchy in the banking sector.

[Timo]

The Greek sovereign debt to GDP ratio was 12.7%. In the US, that same ratio is 84.6%. Just wait until it hits 90% which is contained within Obama's current budget proposal.

[Revi]

$this->bbcode_second_pass_quote('mcgowanjm', 'T')he 'Household Sector'-the sector that the Fed said bought
all those Treasuries last year- is $14 Trillion in debt.

[Gerben]

$this->bbcode_second_pass_quote('Timo', 'T')he Greek sovereign debt to GDP ratio was 12.7%.

[mcgowanjm]

$this->bbcode_second_pass_quote('Revi', '')$this->bbcode_second_pass_quote('mcgowanjm', 'T')he 'Household Sector'-the sector that the Fed said bought
all those Treasuries last year- is $14 Trillion in debt.

[EndOfGrowth]

[/quote]
It is now mid-winter, Armageddon. We just found out the economy grew 5.7% last quarter after growing 2.2% the previous quarter, and the unemployment rate went down last month. Still awaiting that depression!

[/quote]

This was mostly as result of a stimulus packages and the car scrappage scheme which will be coming to an end soon. This temporary recovery will be short lived. The DEBT still remains and is now unrepayable. Everyone is insolvent.

[NoWorries]

Here's my take:

1. I don't see how on earth the US can continue under the continue scheme, which is to continue borrowing massive sums each year just to make ends meet. According to the majority of respected pundits (the same ones who were predicting collapse last year, Roubini, et al) this is a "difficult, but by no means disastrous" situation. I'm totally confused by that, as I do not see what has changed in the fundamentals. Debt is still there, isn't it? Or was debt not the main contributing factor in the credit crisis?

2. Indeed there appear to have been no adverse consequences or knock-on effects (on the dollar, for instance) to monetizing the debt. Actually, the dollar has gained strength, and the Dow is up! How much of this is stimulus effect? Surely not all. But it looks very much as though King Dollar is back, and the US has solved its problem simply by printing more dollars. How can this be?

3. The current problems with the Euro / EU crisis will no doubt strengthen America's position further.

Shortly put, I understand what the doomers are saying, but I don't see it happening. In fact, the opposite is happening.