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[bob ford <bobford79 AT yahoo.com>]

Leslie, post 'your' commentary on what all of that means, 'your' conclusion, 
if you please.....................

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--- On Sun, 12/7/08, Leslie <cayadopi AT yahoo.com> wrote:

> From: Leslie <cayadopi AT yahoo.com>
> Subject: [Homestead] Depression first?
> To: homestead AT lists.ibiblio.org
> Date: Sunday, December 7, 2008, 4:51 PM
> Whoa nellie........... and here I thought it would be
> hyper-inflation first...
>  
> The below are excerpts from the first 1/3 of the 3rd hour
> radio show dated 
> 12/6/2008 at financialsense.com 
>   
> Puplava/Loeffler discuss:  Big differences between
> recession & depression. 
>   
>   
> NORMAL RECESSION CYCLE 
> ·         Recession is a contraction in GDP, 
> ·         Recession – the contraction in GDP is
> brought about due to raising interest rates and a slowdown
> in the economy, then the Fed comes in a cuts interest, it
> reduces debt burdons, re-fi becomes easier, and as credit
> becomes more available, the economy is stimulated, and
> stimulates buying. 
> ·         This buying brings the recession to a
> halt and the economy bounces up again 
>   
> DEPRESSION 
> ·         Key point to understand is that a
> depression is all about excess debt and a de-leveraging
> process that results.  (How many times have we heard
> “deleveraging in the past year?  This is exactly what is
> going on.) 
> ·         As people de-leverage, they sell assets
> that were purchased with debt.  As they sell those assets,
> the asset values decline. 
> ·         The more asset values decline – credit
> become tighter. 
> ·         As credit becomes tighter, you get an
> economic contraction. 
> ·         However, in a depression the traditional
> monetary responses used in a recession cease to work and
> more and more asset comes in to play, more de-leveraging,
> more margins calls and it becomes a self feeding cycle.  
>   
>   
> The current events of the past year are more reminiscent of
> a depression than a recession because the typical remedies
> that have been used by central bankers over the past 50-60
> years clearly are not working. 
>   
> Recession v Depression isn’t just about the level of
> economic growth, but a shift in the actual environment where
> the rules are all changing. 
>   
>   
> LOOKING AT A DEPRESSION 
> 
> It is a de-leveraging process 
> Wealth destruction
> Economy declines
> All prices falling together
> Assets fall and debt becomes worth more (a greater % of
> asset). Servicing debt becomes more expensive, and
> stimulates more selling.
> 
>  
>   
> The first part to get hit was the financial sector, Feb
> 2007, then again Aug 2007. 
>   
> 3 parts to the economy: 
>   
> Manufacturing 
> Service 
> Financial 
>   
> Up until recently, approx this summer, most of the
> contraction was hitting the financial section:  real
> estate, mortgage, banking system, Wall Street, insurance
> companies. 
>   
> Underlying difference between recession and depression is
> debt levels and the magnitude of de-leveraging. 
>   
>   
>   
> Typical response to recession stops working. 
>   
> We’ve had a series of unconventional moves that shows
> that the Fed’s traditional methods of combating a
> recession have failed, and that they have move to depression
> battle mode: 
>   
> 
> Term Auction Facility
> Asset Swaps
> Loans to Securities Dealers
> Shotgun mergers of brokerage firms
> Swap lines to European Banks
> Fed back-stop commercial paper market
> Fed back-stop money market funds
> Fed nationalization of FNM and FRE
> Projected to see the Fed nationalize part of the banking
> system, similar to Swedish model.
>   
>   
> Now all kinds of consumers and companies lining up for a
> hand-out also. 
> 
> Hints of the Fed buying up consumer debt
> Auto makers lining up
> etc
>   
> This is giant amounts of money .  Where is all this money
> going to come from? 
> Out of thin air.  
>   
> How much money?  So far? 
>   
> Rescue Fnds:  8.5 Trillion committed so far, they’ve
> actually issued and spent 3.2 Trillion so far. 
>   
> The size and magnitude of this monetization is illustrated
> here, which will eventually show up as inflation (a day of
> reckoning).  Article on Friday that thoughts of deflation
> might be coming to an end given the size and magnitude of
> monetization going on. 
>   
> This is what the Fed has committed (the taxpayers) to as of
> 11/30/08: 
>   
> 
>  1.8 Trillion - Commercial Paper 
> 900 Billion - Term Auction Facility
> 606 Billion – Other Assets
> 600 Billion - Finance Company Debt Purchases
> 540 Billion - Money Market Facilities
> 291 Billion - Citigroup Bailout
> 250 Billion - Term Security Lending
> 200 Billion - Term Asset Backed Loan Facilities.
> 123 Billion - Loans to AIG
>   92 Billion - Discount Window Borrowings
>  62 Billion - Commercial Program #2
>  50 Billion - Discount Window Program #2
>  29 Billion - Bear Stearns Bailout
>  10 Billion -Overnight Loans
> 118 Billion -Secondary Credit 
>   
> Total so far 5.5 Trillion so far of which 2.1 Trillion has
> been used. 
>   
> 
> 1.4 Trillion - FDIC commitment / loan guarantees
> 139 Billion - Guarantees on GE Capital
>  10 Billion – another infusion to Citigroup
> 700 Billion - TARP  - Troubled Asset Relief Program
> 168 Billion - Stimulus Package earlier this year
>  50 Billion - Exchange Stabilization Fund
>  29 Billion - Tax Breaks for Banks
> 300 Billion - Hope for Homeowners July 08
>   
> 8.5 Trillion…. And this doesn’t include next year’s
> stimulus program…. 500-700 Billion. 
>   
>   
> Citizens are getting more and more torqued about Wall
> Street getting a free ride. 
>   
> Congress now talking about buying down mortgages. 
> Driving down interest rates for home purchases down to
> 4.5%. 
>   
> These things were all predicted, “When Money Dies”. 
>   
> The size and scope of the programs tell you this is NOT an
> ordinary recession.  It is more like a depression. 
>   
> ’29 Depression versus now. 
>   
> Then the government tried to get the depression to end via
> intervention. 
> 
> FDR came in, declared a bank holiday, came back with the
> FDIC.
> FDR severed the dollar from gold, which allowed step 3
> FDR started the monetization process
>   
> Today, we have similar events that further hint that we are
> in a depression: 
> 
> The Fed came in and raised the FDIC limits from 100K to
> 250K insurance.
> The Fed is artificially suppressing the price of gold.
> The Fed is printing money like crazy and down the road…
> “The Nuclear Option” coming at some point, will be
> devaluation of the dollar.
> 
> 
>       
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