For the first time since 1991, insured and public municipal bonds have failed to sell at auction.
http://www.businessspectator.com.au/bs.nsf/Article/Municipal-bonds-on-the-nose-BHUDK?OpenDocument
What does this mean? Wall Street is so cash strapped they could not step in and purchase these municipal bonds when no other buyers were available. They've done it in the past a couple of times. However, they let them fail now.
This demonstrates both the unwillingness of investors to purchase debt based securities and the inability of the financial industry. While I think, if things do not change, that the banking industry will fall apart, it's not going to happen.
Have you ever been on a project that was too important to fail? That's our banking system, it's too important to the world trading systems that it won't fail. On those big projects that can't fail, they change the definition of success in order to declare victory. As you can see, the banking system is having it's definition of solvency changed in order not to fail. These changes only hurt us more.
Just today, I got a notice from my credit union that they are limiting withdrawals to 2500 dollars a day. It's only 1500 on my debit card. I don't use my credit union much, as I am in a more liquid position.
Scary stuff.
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5 comments:
John, what happens if the key energy stock (oil) of an economy starts to decline? Fiat-currencies are based on the perspective of exponential economic growth, which is only possible if the input of energy to the economy grows too. In a world which has passed the peak of oil production all fiat-currencies should get in trouble and lose value. I expect the peak in global oil production was in 2005. In 2010 the decline will become more prominent (up to 7 % per year).
I ask myself if some economists anticipate already the coming downslope of the global Hubbert-curve. If a fiat-currency is expected to fail due to less and lesser fossil energy inputs to the economic system, does it make sense to allow the national debt to grow as much as possible?
John,
A crisis is brewing for sure but I am not sure any of us know how it is going to play out nor how long it will take to unfold. You are right about the banks, they will not fail even if the governments of the world have to print trillions of dollars to prop it up. Also, in an electronic banking age I see two possible reasons for your credit union limiting cash withdrawals. One could be that cash is actually getting in short supply relatively speaking based on everyone stuffing a few hundred to a few thousand at home. Or this is a general move we will see in the future to inhibit the use of cash and promote the use of debit and credit (electronic) money. This is to prepare the next generation or two to go to a totally electronic system which is more easy for banks and governments to control.
John - have a look here (PDF WARNING):
http://www.greenrushcapital.com/greenrush_fed2.pdf
This is how parlous the US banks are. Too big to fail? DON'T BET ON IT.
Talking with someone the other day who owns a dozen or so subway restaurants. He is trying to scoop up commercial property from the bank at fire sale prices. He is offering 50 cent on the dollar (cash) for the current prices of the property. He has had no takers yet.
Get ready for the next batch of bank maneuvers to salvage the modern TITANIC (World Economy). Read the article posted by Global Research at:
http://www.globalresearch.ca/index.php?context=va&aid=8033
We are now on the longest drop of a rollercoaster ride. I wonder how long this drop will be. Bernanke is controlling the amusement psrk rides for now.
Panic is an understatement.
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