Socio-Economics History Blog

Socio-Economics & History Commentary

Vitamin D The ‘Wonder Drug’, Sunlight and Skin Cancer

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July 31, 2009 Posted by | Medicine & Health | | 8 Comments

Marc Faber: Recent Rally is the Result of Excess Liquidity. The Worst is Still to Come!

  • Dr Doom gives his usual good advice and cut away all the Feds’ propaganda BS. The Next Bubble Can Be In Equities Marc Faber :
     
    “There is a bubble that the FED and the government are creating right now and this is a bubble in government debt, in the size of it. They are being very successful at that.
     
    Eventually the US Government will go bankrupt the way California is almost bankrupt, but that will take some time. The next bubble in my opinion can be a bubble again in equities.” Marc Faber told Bloomberg TV early this week.
     
    Marc Faber was also a speaker at The Agora Financial Investment Symposium in Vancouver and had an hour long interview with CNBC Asia here are some of the quotes from Marc Faber :
     
    “The world has not seen the end of the financial crisis and the recent surge in markets was a result of excess liquidity coming from central banks”, Marc Faber told CNBC in an interview.
     
    “If you pump money into the system and you create large fiscal deficits, you create volatility,” Faber, author of the Gloom, Boom and Doom Report, told CNBC in remarks reported on its website.
     
    “We’ve seen an intermediate low in March, we’ll rally for a year or so or maybe 18 months — the ultimate crisis will happen much later, and the ultimate crisis would clean the system,” he added.
     

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July 31, 2009 Posted by | Economics | , , , , , , , | Comments Off on Marc Faber: Recent Rally is the Result of Excess Liquidity. The Worst is Still to Come!

Federal Reserve Walks the Tightrope

  • I do not believe that the FedRes can remove all the excess liquidity once the ball starts rolling. The amount of MBS bought by them is in the region of US$900B. How do you price these MBS? By some accounts these are essentially worthless and possibly fraudulent. The banks are quite happy to be rid of them and dumped them onto taxpayers shoulders. Who wouldn’t be? Will any banks buy these back like in treasury operations, where the central bank mops up excess liquidity by selling treasuries for cash? I don’t think so.
     
  • Has all the liquidity been used by the banks for lending to counteract the credit contraction? Apparently not! See Kucinich: Federal Reserve is Paying Banks NOT To Make Loans To Struggling Americans! Don’t be taken for a ride. This is about consolidation of power, businesses… buying assets at dirt cheap prices.. into the hands of the ruling banksters!
     
  • Rolfe Winkler writes :
     
    The sound money set remains concerned that the Federal Reserve’s emergency actions to corral collapse could ignite hyperinflation.  In particular, they point to the explosion of excess reserves inside the banking system, which they call dry tinder just waiting for the spark of recovery.  Bill Dudley, president of the Federal Reserve Bank of New York, says this isn’t an issue because the Fed now pays interest on excess reserves.  It’s a good argument, but only in the short run.
      
    To liquefy the banking system, the Fed drastically expanded its balance sheet, which, as you can see in the chart to the right, has led to an explosion of excess reserves at banks.
      
    For decades they never rose above $10 billion. Now they’re above $700 billion. To understand why this level of excess reserves has some worried about hyperinflation, it helps to understand what they are.
     
    The Fed requires banks to keep a certain level of assets
    in reserve against deposits, either cash in the vault or reserves held at the Fed.  Reserves held over this required amount are referred to as “excess” reserves which banks are free to lend out.
     
    When banks lend money into the economy, the money borrowed typically ends up as a deposit in another bank.  Say I borrow to buy a house; the mortgage I get from the bank is money I give to the seller, who then deposits the cash in his own bank.
     
    Lent money turns into a new deposit, which turns into more lent money, which turns into another deposit, and so on.  As the supply of money multiplies, you get inflation.  If it multiplies too quickly, you get hyperinflation. The multiplication of money that might come from banks lending out over $700 billion of excess reserves is the stuff of inflationary nightmares. But banks aren’t lending it out.  Why not?  As Dudley points out in his
    speech, it’s because the Fed is now paying them an interest rate.
     
    Before last October, banks lent out all their excess reserves.  After all, excess cash in the vault earns the bank no profit.  But then Congress gave Ben Bernanke the power to pay interest on excess reserves, which means banks now can earn a return by keeping them on deposit at the Fed. Money that could be lent isn’t, inflation remains a potential threat, not a kinetic one.
     
    But there’s a catch. When the economy recovers banks won’t any longer want to keep their excess reserves on deposit at the Fed, not unless the Fed is willing to pay a much higher interest rate. Walker Todd of the American Institute of Economic Research argues that “the economy won’t be able to handle the high interest rates the Fed will be forced to charge in order to keep excess reserves immobilized in its vault.”
     
    The Fed argues it has other tools to shrink its balance sheet when the time is right. For one, its emergency lending facilities are priced high enough such that banks will stop drawing on them when the economy recovers. But even after its lending facilities are wound down the Fed acknowledges the level of excess reserves will still be huge. To keep them immobilized will require substantially higher rates.
     
    But raising rates will cause asset prices to plummet. Weak balance sheets will collapse and the financial crisis could return in full force. This is the conundrum the Fed faces.

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July 31, 2009 Posted by | Economics | , , , , , , , | Comments Off on Federal Reserve Walks the Tightrope

Temple Institute Construction of Sacrificial Altar Started on Tisha B’av

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  • This is a sign of the end times. The 2nd coming of Jesus Christ is near. The rapture of the church is even nearer.
     
    Daniel 9:27
    27 Then he shall confirm a covenant with many for one week;
          But in the middle of the week
          He shall bring an end to sacrifice and offering.
          And on the wing of abominations shall be one who makes desolate,
          Even until the consummation, which is determined,
          Is poured out on the desolate.”
       
  • For the above to be fulfilled, the sacrificial offering must be re-started. Many are of the opinion that the 3rd Temple will be built so that sacrificial offering can be re-instituted. But strictly speaking, Daniel 9:27 can also be fulfilled when sacrificial offering is done just on the altar without the 3rd temple.
     
  • Building of the 3rd temple is problematic. Any attempts to do so will trigger war with the Muslims. The Muslim Dome of the Rock is on the temple mount. Some say that the exact site of the temple is not at the Dome of the Rock but just 330 feet to the north of it (The Northern Conjecture, Three Theories on the location of the temple). So building the 3rd temple will in no way violate the space of the Dome of the Rock. I am highly skeptical that the Muslims will allow the construction of the 3rd temple so close to their beloved Dome of the Rock. The coming larger middle east war will likely see this temple mount issue resolved.

    Aerial photo of the Temple Mount in Jerusalem showing the Proposed Northern, Central and Southern Sites for the First and Second Temples. source: http://www.templemount.org/

    Aerial photo of the Temple Mount in Jerusalem showing the Proposed Northern, Central and Southern Sites for the First and Second Temples. source: http://www.templemount.org/

  • IsraelNN.com reports on the construction of the altar which was started (yesterday):
     
    The Temple Institute began work on the sacrificial altar Thursday, Tisha B’av, the day the Second Temple was destroyed almost 2,000 years ago.
      
    The Temple Institute has already built several of the Temple vessels such as the Ark and the menorah, and has now embarked on an ambitious project to build the altar, which will ultimately measure 3 meters wide by 3 meters long and 2 meters tall.
     
    During Thursday’s ceremony, which took place in Mitzpe Yericho just east of Jerusalem, the Temple Institute laid the cornerstone for the altar and demonstrated how tar will be used to cement the stones together. The Institute plans on bringing the altar to its proper place on the Temple Mount when the Temple is rebuilt.
     
    “Today, Tisha B’av, is not just a time to mourn the destruction of the Temple,” said Rabbi Yisrael Ariel, the head of the Temple Institute. “It is also a time to build.”
     
    Rabbi Ariel thanked the more than 100 people who came to the event despite their fasting for Tisha B’Av, and despite the hot weather. The main force behind the construction of the altar, Yonaton Tzadok, was also on hand to explain why its
    stones were taken straight from the Dead Sea.
     
    “The altar is supposed to represent going back to our roots, to the time of creation when everything was pure,” he said. “We took rocks from the Dead Sea, where it is likely that they were never touched by human hands.”
      
    During the ceremony, many people who came to watch were surprised when they were invited to take part and pour tar onto the cornerstones. Rabbi Ariel first asked if there were any Kohanim (priests) in the crowd, and asked them start. When a woman requested to join in, Rabbi Ariel said “of course” and emphasized that women are commanded to build the Temple as well.
     
    With the sun setting, Tzadok asked for volunteers to come back another day to help build the altar. “Carrying rocks and pouring tar is a lot of work,” he said. “We could use a few hundred people to help.” More information on the Temple Institute is available at
    http://www.templeinstitute.org/main.htm. 

    Altar Frame, Ready to be Filled (Photo: Yehudah Lev Kay)

    Altar Frame, Ready to be Filled (Photo: Yehudah Lev Kay)

    Pouring Tar onto Cornerstones (Photo: Yehudah Lev Kay)

    Pouring Tar onto Cornerstones (Photo: Yehudah Lev Kay)

    Tar on Cornerstones (Photo: Yehudah Lev Kay)

    Tar on Cornerstones (Photo: Yehudah Lev Kay)

  • See also :
     
    Historic Euphrates River is Drying Up!

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July 31, 2009 Posted by | EndTimes, History | | 9 Comments