There’s a report that someday-to-be-former (just an educated guess) Treasury Secretary Tim Geithner has done the ultimate political no-no: Questioned his boss. The story leaking out is that “Geithner aired concern on bank limits – sources“.
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The real dots to connect here involve something of a split in the nation’s most powerful financial circles. On the one hand, I see Goldman Sachs graduate Geithner working the paper money side of the financial sandbox. But, on the other, I notice that “JP Morgan nears purchase of RBS Sempra” which is a huge investment in a commodities out. $4-billion is large, to me anyways…
Remember the CFTC rules changes being buried I was telling you about earlier this week? All part of what’s starting to feel like the paper money crowd versus the commodity control crowd.
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For now, both factions may not even recognize that they’re starting to dance. But with rumors from well-informed forums like Bill Murphy’s GATA group & Le Metropole Cafe that some of the key players have been active in the suppression of gold & silver prices, just to name two commodities, a very curious picture emerges:
What IF – and this is only an IF…later this year the paper money/paperhanger faction thinks it ‘owns’ the world at about the same time that the commodity faction thinks “No, we own it!”
What might arise from this collision of giants could be catastrophic for the economy as the paperhangers would bump up interest rates in an attempt to raise the holding costs for speculators in commodities – which in a corporate sense are competitors. But in response, the commodity-based faction would turn around and raise commodity prices best they could, in order to whip the paperhangers back into submission.
In more ‘normal’ times, no one faction has really been this consolidated. But Goldman rules on the street and JPM is working commodities hard with the RBS Sempra deal.
Could a squeeze leading to hyperinflation result? It’s an interesting hypothetical question especially since there’s a growing risk of deflation in commercial real estate and the Fed G.19 report argues that consumer spending via credit cards is collapsing by nearly 20% annually.
My consigliore has pointed out that in his model (built in 1976) we f8irst get deflation (which we’re in now as evidenced by housing prices) but this then swings into hyperinflation as the major players position themselves for the hyperinflation dance.
My expectation: Goldman will lead the paper, while JPM will lead commodities in the coming hyperinflationary dance.
Oh! About you and me? We’re the floor.
Reminds me to reread Bucky Fuller’s Grunch of Giants
So, The Market’s Down Because?
Can’t tell you the name of the fellow who sent me the following analysis but it’s an interesting premise to ponder: The way this person has it figured, the market is down because of the Scott Brown victory in Massachusetts this week:
“A lesson in compounding
Whether you’ve swallowed the US Chamber of Commerce flavor-aide without thinking (government takeover, when the truth is about a million miles away), or you’ve studied the House and Senate versions of health insurance reform in depth, it seems that the stock market “gets it” what defeat of the reform effort will really do.
What it does is let the medical insurance billing machine stay on its current path. For those of us with private coverage, that means we will continue to experience the after-inflation double-digit annual cost increases (literal for those who keep the same benefits year over year, or adjusted for increase co-pays, etc) and for government programs, the increase in cost will sit, after inflation, in the mid single-digit range.
Let’s put that in perspective:
60% of our medical costs flow through the private insurance system, and 40% through government programs. At 17% of GDP, that means the after inflation tax increase imposed on our economy will stay on the current trajectory. That works out to
17%*60%*10% + 17%*40%*5% as an annual real growth rate, expressed as a percentage of inflation-adjusted GDP. That’s an after-inflation contribution to our national overhead of 1.054% in 2010. Assuming all income taxes will equal 8% of GDP in 2010 (a stretch if we don’t have serious growth), it’s as if the obstructionists just put on a 13% across-the-board increase in income taxes for this year. Next year, assuming 2011 stated personal income tax collection is flat to 2010 after inflation, the tax increase is 1.56% of GDP, or nearly 20% of the size of the income tax collection, working out to an aggregate increase of one third in just the first two years.
Left to compound merrily along, this equation doubles our national tax load in less than five years.
Nice work, dirtbags. Too bad you thought getting back in power was more important than your country and its economy.
So far this friend of mine has been a pretty even-handed Libertarian type although he/she/it often likens the republicorps with an organized crime family running an extortion racket while the democorps are less hierarchical…kind of like a loose collection of thieves, pick-pockets and shoplifters.
But it’s all going to get even worse since the….
High Court Auctions America
You thought I’ve been kidding about living in the Checkbook Republic? You saw where the Supremes on Thursday essentially removed all restraint on corporate buying of Washington and the Hill?
I rest my case. Put the whole DC operation on eBay so we can at least watch the bidding, I say!
Well, not exactly, since I can’t find anything in the Constitution which empowers anything other than Natural Persons to contribute anything and it’s all be a hilarious scam, but if ‘hilarious scams’ is our cryteria (sic), we don’t have enough time in this life to fix even a small fraction of them, do we?
Hard on Harley
(Who’s writing all the double entendre’s today?) Saw where Hibbly-Diblitzen was showing a bigger than expected 4th Q loss? Well, least they don’t leak oil anymore…
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As goes GE? Q4 down by ‘signs of improving‘.
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Robin Landry’s line in the sand: 10,200 on the Dow if the market slides today. Won’t mention which one, but one of my long-term put options was up 42.7% in yesterday’s downer which was an upper in a downer…oh, you know….forget it. ‘Cept this has 10X potential or more. yee haw! You fall, Dow…rally up the dollar….ride ‘em short boy!
That Empty Feeling
“Empty office spaces soar in downtown” (Seattle, but could be about anywhere). Over 21% up there.
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I always wonder when I look at companies which seem to consciously distance themselves from the people who produce the real value for them. Take Boeing – once headquartered in Seattle which is now back in Chicago, maybe 1,730 miles from Paine Field.
I ask myself: “Would the Dreamliner have been as late & overweight if the company had kept it’s corporate office in the Seattle area? Wonder what their logic was?”
I’d love to know whether Boeing sent more people from Seattle to Chicago when it was in Seattle than it’s sending from Chicago to Seattle nowadays. Seems like a logical question to me…I guess that’s why I only consult small agile companies, eh?
Mud Flap
L.A. after rain and fires. The mud no doubt aggravated by environmental rules which keep people from cutting down the brush in the canyons which in turn leaves tinder-dry more to burn next season…oh my head hurts. Repeat after me: Cause. Effect.
Linguistics Watch
Remember how in the predictive linguistics out of HalfPastHuman.com we were supposed to see “Diaspora” pop all over the place along in here?
Gee, gosh, look surprised (if you can): Here’s that word in a UK Financial Times story. The ‘day after Haiti’ there were 83 Google News hits on the word ‘diaspora’. Today there are 4,900+ and growing.
Troubles In France, Redux
Not too much about it in the MainStreamMedia in the US – at least during my early clicks today, but a report by Iran says “French police clash with youth over dead teen.“