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Strategies & Market Trends : Ride the Tiger with CD -- Ignore unavailable to you. Want to Upgrade?

To: pogohere who wrote (132176)	9/30/2008 3:37:00 AM
From: Canuck Dave	Read Replies (3) \| Respond to of 312304

Where's Joe Battaglia today? Wasn't he predicting Dow 30,000 a few years ago? CD

To: pogohere who wrote (132176)	9/30/2008 9:55:25 AM
From: gg cox	Read Replies (1) \| Respond to of 312304

youtube.com

To: pogohere who wrote (132176)	9/30/2008 9:55:59 AM
From: E. Charters	Read Replies (3) \| Respond to of 312304

"The truth is, that capital may be produced by industry, and accumulated by economy; but jugglers only will propose to create it by legerdemain tricks with paper." That quote by Jefferson is what is meant. The only regulation that should be enforced is how much of an ratio bankers can create based on a deposit. If they do it properly and scrutinize and rate the risk of the loan according to Fair Isaac then there is low risk of a bubble debt economy. If the Chancellor of the Exchequer and members of parliament fairly object to too much deficit and bills that cannot be afforded are killed on the floor in first reading, then we will get fair fiscal policy and governments won't overspend us into civil service economies a la Egypt and Rome. In the days when chartered banks were formed the lenders allowed themselves a 4 to one asset to public debt ratio. They would loan 4 dollars out to one on deposit. This they found was good for normal withdrawl rates. This was fine for a century or two, but in the modern age we have an expansion of credit. Now banks in Canada run on a 20 to one asset (deposit) to debt ratio. This makes for an inflationary spiral and leads to the eventual bubbles of inflation-deflation that we have seen in the modern age. What we have in the market is a high withdrawl rate due to financial institutions covering their losses due to overleveraging (really lending on collateral) of what since the 1970's had been relatively secure instruments, i.e. mortgage securities. This money in turn went into hot situations such as derivative hedges, resource stocks, speculation in metal markets and China deals. People I know where making millions lending to housing projects etc.. It started all about 2001, as if it were a concerted effort to produce an economy after the 1990's tech meltdown. The thing that produces a high money economy is the debt ratios. The Glass Steagall act of the 1930's tried to separate merchant banking business and investment from depository institutions to protect the depositor from the more risky extensions of the merchant banks, which were seen to have caused the 1930 crash by their involvement in the markets. But once more this distinction has been blurred. Who feeds the government with bonds and credit is Goldman Sachs. That is what Paulson is doing advising the government now. They know if G-Sachs goes down, their source of bond cash dries up. The funny money that feeds the US congress and its precious entitlement and military spending spin outs would dry up overnite if this system collapses. I don't think your average member of congress knows where all this money comes from to operate government. I imagine they think it comes from taxes. Taxes just pays the interest. And not really at that as we run a deficit on the loan. So why do people line up for these instruments? Because they can always be flipped and the commissions are what keeps Goldman Sachs in business. If the Wall Street icons topple one by one, then we are beset with a spectre of government IOU's to employees, as the banks will not be able to cash cheques. A government IOU is not worth the paper it is printed on. This sort of pure paper credit was in place in Austria and Germany after WWII as most of the banking infrastructure had been destroyed or closed/plundered by the US army. It worked for a while, but when banks got back into action they shunt this sort of thing aside. Nothing is more jealously guarded by the elite barons of government and the financial world than the power to issue credit on deposit. You only get a license for that if you are connected. I knew a person who owned a 100 year old charter for the original TD bank. In theory it was still good, as they are never cancelled by any law for any reason. He could not get recognition for it. If it were recognized the onus of trying to get a bank started in Canada could be sidestepped and that would be a true license to print money. This sort of thing is a real Cabal and should be investigated by your representative. If isn't that we have too many banks in this country. We have too few that are free of the usual suspects and their machinations to control capital flow. That post may have complained about banks being evil, but it is a necessary evil to tie them to business. The capital is the currency of business. NO group of well meaning representatives of the people should be able to step in and say how it should be meted out. All money is debt that is manufactured by a debt writer and a businessman. The businessman presents his case/collateral, plan to the banker and the banker extends credit on a revolving door basis, in that any cheque proffered to his bank on that capital will be honoured based on his asset to debt ratio. Providing everyone does not ask for their cash at once, it works. Even if they did, all the banker has to do is go to the insurance company and get coverage. That is why the AIG's cannot go down. We could not ever give this process to government as that imagines that they would monitor every financial transaction for its worth. This would mean the politicization of all money. A Nazi spectre if ever there was one. With the predominance of government contracts at present in the economy, it is bad enough. Any further and we would be in real trouble. In a democratic congress, a republican would not be able to get a loan to save his life. Much of the lack of growth in the CDN economy can be traced to the size of the banks in this country. They prefer to do only hot money and overseas business. Institutional clients. Business cannot get money to operate. Traditional money creation for growth and employment is ignored. Home loans, well that is a different story. Consumer credit is eagerly extended. This has given an advantage to foreign and big business who is now the major employer in Canada. We have witnessed the slow execution of of the small business in the last 40 years in Canada, who once provided 65% of all employment. If you want to know why there are homeless on the street in a boom economy, all you have to do is look to your local national bank. Once they get too big they are useless to the business of the country. They become government banks. We don't need more of that. EC<:-}