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Total Fed Credit, where the glorious miracle of "money from thin air" originates at the Federal Reserve - thanks to the use of a fiat money and multiplied by insane levels of fractional reserve banking - actually declined by $3 billion last week. Oops!

Foreign holdings of U.S. and agency debt deposited at the Fed went up another $6.8 billion last week, taking their stash to a hefty $1.988 trillion, getting a little closer to the dark symbolism of the looming "$2 trillion" mark.

With relatively so little happening on the monetary or inflationary front, I had time to actually do my job of reading the entries in this week's "I Can't Believe My Freaking Eyes" contest, presented as part of the popular Mogambo News On Parade (MNOP) series. It resulted in a tie between two equally good items.

The first contestant is, of course, the weird stuff happening as a result of the latest bankrupting boondoggle born of the buttheaded banks, namely the CDO/subprime mortgage debt debacle. The actual entry was the Bloomberg.com report that "The U.S. is urging China's central bank to buy more mortgage-backed securities after a surge in defaults by risky borrowers in the world's largest economy eroded demand for such instruments." Hahaha!

Nobody wants these securities, as they are so default-prone that they are known in the industry itself as "toxic waste", and now we are reduced to begging the Chinese to buy them, to bail out the market, to bail out investors, to bail out the American banks who created the mess, and to bail out the U.S. government, which is watching in horror as trillions and trillions of dollars in losses seem destined to be deducted from taxable incomes! Hahaha!

The official story is that U.S. Department of Housing and Urban Development Secretary Alphonso Jackson is "in Beijing to persuade the Chinese central bank to buy more mortgage securities from Ginnie Mae, a mortgage association under the Housing Department."

For various reasons, I suppose, the article then adds, "Its securities are guaranteed by the U.S. Government National Mortgage Association."

But the cold reality is that an arrogant, bullying United States is not there to "persuade" the Chinese to do anything, but we are there instead to cram these crappy bonds down their throats, as Mr. Jackson himself said, "It's not a matter whether they're going to do more business in mortgage-backed securities, it's who they're going to do business with."

The other serious contender in the "I Can't Believe My Freaking Eyes" contest ............

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I suggest that you take the time to buy some gold bullion, silver bullion and some oil stocks, and when I get back you can tell me all about how much money you made, and all the silly, selfish crap you want to buy with the gains, which always seems to put people in a really, really good mood!

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Originally posted by Ronald Rutherford:

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I suggest that you take the time to buy some gold bullion, silver bullion and some oil stocks, and when I get back you can tell me all about how much money you made, and all the silly, selfish crap you want to buy with the gains, which always seems to put people in a really, really good mood!

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Ron I prefer beef or chicken boullion, but that's just me. Ha ha. Bad joke.

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Originally posted by Ronald Rutherford:
Stark, Boy I had the most brilliant post ever in my life and it got erased, so instead I offer this

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A while ago I saw that there was a report that showed that worldwide satisfaction increased as incomes increase to $13,500 per capita, after that income did not significantly increase utility of the questionnaires.

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But let us look at the chart. First why should we be looking at Pre-taxed dollars? People view their well being by take home and not pre-tax. Just ask my wife. Also if Government is to "redistribute" income and hopefully opportunities then we need to look at after the government took their "ill gotten gains" (lol).

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We also need to note where the top 1% got their ill-gotten gains. I saw some reports that the top 10 and top 5% (excluding the top 1%) lost out to the top 1%. So are we to cry for the really rich for the ultra-rich?

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Originally posted by stark0311:
Inequality, by the numbers

Some interesting info on trends in income & wealth gaps. The rich get richer, the poor get poorer, the middle get poorer. The data shows this is not due to lack of, or reduction of, productivity (which has gone up, see here, scroll down, about 13th line) but due to the "rules of the game" fostering the concentration of wealth by a discrete few rather than a cyclical flow of wealth.

first chart:


Several more at the link, with references and links at the bottom of the page.

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Originally posted by polycarp:

Does the chart show the coming demise of the current "gilded age"? Or is it just one indicator? It shows an approach to the '29 collapse level. Housing foreclosures are still on the rise. Another economic indicator?

Retired Monk
"Ideology is a disease"

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Originally posted by polycarp:
Interesting to note from one of the charts you posted that the huge disparities began under Reagan.

Retired Monk
"Ideology is a disease"

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Originally posted by polycarp:
We do have one substantial difference. Home ownership. An economic collapse effecting all levels can occur here with a collapse in the housing market. That would effect financial institutions and the whole thing would come tumbling down like a house of cards.

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I think it can be useful to look at gross (pre-tax) incomes in order to do the comparisons without regard to tax structures. But for other analyses taxes should be included, so here's a chart depicting that:

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So how to box it? The highest priced item would be a watch that moves backwards. Otherwise, it seems, they'll have to use time wisely and be in constant search of a tipping point.

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Originally posted by stark0311:

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Originally posted by polycarp:
We do have one substantial difference. Home ownership. An economic collapse effecting all levels can occur here with a collapse in the housing market. That would effect financial institutions and the whole thing would come tumbling down like a house of cards.

I don't have a workable theory or any data on it yet, but this alludes to a smouldering belief I have that the long, long time cultural push in America towards home ownership as a goal and virtue is skewed. Ties up "wealth" in equity, and encourages lending. I think I prefer a system emphasizing liquidity and wealth in terms of cash and savings. A fœtal idea as of yet.

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We almost considered doing a flip once, but I'm glad we didn't. Would have contributed to the bubble. I think flipping is part of the affluenza problem.

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Originally posted by polycarp:
We do have one substantial difference. Home ownership. An economic collapse effecting all levels can occur here with a collapse in the housing market. That would effect financial institutions and the whole thing would come tumbling down like a house of cards.

Reducing the middle class's ability to pay their mortgages is going to have very serious consequences.

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The real story behind all this wealth, however, isn’t in the numbers. It’s in the people, and how they’re changing the culture and character of wealth in America. Richistan is largely about a country in flux — one in which Old Money is being shoved aside by self-made entrepreneurs, philanthropy is changing from passive check-writing to “high-engagement philanthropy,” and the progressive new rich are changing the politics of wealth. Most of all, Richistan is about the entertaining way that today’s rich are making, spending, donating and living with their wealth. (Like the guy in my book who has a house staff of 105 people.)