ZERO INTEREST DOES NOT MEAN LOTS OF CHEAP LOANS

When something isn’t understood, if people assume they know where they are going despite obviously going into a terrible swamp, things only get worse and worse.  So it is today: all the US prescriptions for fixing the huge economic mess we are in are perversely the exact opposite of those we need to save ourselves.  Instead of heeding the obvious warnings from Libra, to balance our books, we are heedlessly increasing the money supply, increasing our debts and increasing our spending.  All the things that got us in trouble, in the first place.  This makes me want to tear my hair out except I know that Libra always prevails in the bitter end.  

The concept of the Cave of Wealth and Death is very important here: instead of thinking of money as a physical thing, if we view it through this prism of mythological magical entities, it gets easier to understand, emotionally, how things work.  For example, if we think we can cheat Libra by inflating the currency and expanding debt creation, Libra simply steps aside and allows the Goddess of Infinity to do Her thing which is to drive all numbers up to infinity.  Which is very, very easy to do.

 

Conversely, the Goddess of Zero is released from the Cave and She, too, is a destroyer.  If we make lending costs $0.00, or if interest rates are set at 0% and if bank reserves are also 0% and if the government sucks up all debts and parks them in a dark cave where they can’t interfere with the creation of new debts, everything will go to zero!  In other words, will vanish and die.

 

How magical this is!  When zero was invented and it is a human invention, the wise men,the thinkers in India were not contemplating money at all.  They were striving to join in Nirvana, the magical land of no stress, no lust, no greed, no desires.  The land of Nothingness.  In other words, the ultimate and utter, total death of the Wheel of Fate.  This is complete nihilism.  I should write more about how this nihilism developed during the stress period of the change from Aries to Pisces in the shift of the Zodiac.  

 

Nirvana – Wikipedia, the free encyclopedia

In sramanic thought, Nirvana (Sanskritनिर्वाणNirvāṇaPaliनिब्बानNibbānaPrakrit: णिव्वाण) is the state of being free from both suffering and the cycle of rebirth. It is an important concept in Buddhism and Jainism.

In other words, TERMINATING all previous systems.  The concept of ultimate and total termination is critical for the creation of the concept of ‘zero.’

“Nibbāna” is a Pāli word that means “blowing out” — that is, blowing out the fires of greed, hatred, and delusion….

Many religions call the ‘soul’ some form of ‘breathing’ or a wind.  In Japanese anime, when someone dies, others who are far off suddenly have a gust of wind pass by them and they feel sad and oppressed.

 

Nirvana is a compound of the prefix ni[r]- (ni, nis, nih) which means “out, away from, without”, and the root vâ[na] (Pali.vâti) which can be translated as “blowing” as in “blowing of the wind”, and also as “smelling, etc”.

In the West, blowing out the candles is how we express death and termination.

The Abhidharma-mahavibhāsa-sāstra, a Sarvastivādin commentary, gives the complete context of the possible meanings from its Sanskrit roots:

  • Vāna, implying the path of rebirth, + nir, meaning leaving off’ or “being away from the path of rebirth.”   Many, many myths and fairy tales feature straying from or having encounters with gods or others on a set path or trail.
  • Vāna, meaning ‘stench’, + nir, meaning “freedom”: “freedom from the stench of distressing karma.”  Freedom is a key element in our interactions with the Cave of Wealth and Death.
  • Vāna, meaning “dense forests”, + nir, meaning “to get rid of” = “to be permanently rid of the dense forest of the five aggregates” (panca skandha), or the “three roots of greed, hate and delusion” (ragadvesaavidya) or “three characteristics of existence” (impermanence, anitya; unsatisfactoriness, dukkha, soullessness, anàtman).  Many fairy tales and myths involve being lost in forests or encountering the more dire goddesses and gods deep in the woods.
  • Vāna, meaning “weaving”, + nir, meaning “knot” = “freedom from the knot of the distressful thread of karma.”  ALL myths and religions, when talking about fate, connect this with weaving and tying knots.

 

 

Right now, we are witnessing a planetary attempt at overwhelming the forces of the Cave of Wealth and Death by using the number zero and adding it with increasing fanaticism to numbers.  So we can wrest infinite wealth via infinite borrowing from the Outer Darkness of this terrible, frightful cave of the soul.  Of course, this will all fail, spectacularly, since we are basically driving ourselves towards the trap set by the Fates and the Furies.  Namely, all attempts to evade working in the real world for wealth will be terminated quite ruthlessly via the number zero, itself.

 

Lenders Struggle to Find Cash to Quench Growing Demand for Refinancing – washingtonpost.com

Mortgage bankers say the money they borrow to finance home loans — called warehouse lines of credit — has dried up and that borrowers may pay the price in artificially inflated interest rates and maddening delays in loan closings.

Absolutely everyone wants cheaper credit. Since credit has been artificially made very, very cheap, we will all rush to the bank window and demand our free funny money, now, so we can pay down older debts. This is a form of inflation: cheating on past deals so we can evade paying with more valuable money.

ALL DEEP IN DEBT SYSTEMS DEMAND FREE LENDING.  Japan, for example, is deepest in debt and thus, has been enforcing a 0% borrowing rate for well over a decade now.  Japanese savers were forced to play risky games with their money in order to get even a slight return.  So they sent it overseas [this is one of several elements that created the noxious ‘Japanese carry trade’ system].  Now, with everyone going ZIRP, this is no longer possible.

Interest rates are at record lows. The average on a 30-year, fixed-rate mortgage fell to 4.61 percent for the week ended March 27, according to a survey released yesterday by the Mortgage Bankers Association. But many capital-starved bankers said rates could be 0.25 to 0.75 percentage points lower if they had better access to warehouse lines.

See how utterly childish this is? The story mentions lending cuts are now at HISTORIC lows but simultaneously, banks can’t get CAPITAL. One can lend with $0 capital, of course. We have been doing this for quite a while as WHY THE US HAS NO RESERVES « Culture of Life News my story yesterday made totally clear.

How on earth can anyone miss the irony here? The US has refused to capitalize our systems for YEARS now and things get worse and worse and the return on our borrowings, the amount it makes our GDP grow, has finally reached the vanishing point of zero. So what do we do?

We redouble our debt creation!  While still having NO CAPITAL!!!

These credit lines provide bankers who are not licensed to take deposits with the money they need to close a mortgage. The bankers then pay down the credit line after the mortgage is sold to Fannie Mae, Freddie Mac or other investors.

This is where I grind my teeth with rage. These ‘bankers’ are actually funnels for the Japanese carry trade! The savers in Japan, facing a 0% return, ran off to these guys so they would lend at a much higher rate and both the Japanese savers and the offshore banking entities doing this, got a nice return.

THIS IS NOW DEAD.  There is no more money flowing out of Japan because the rate of return here has collapsed to Japanese levels.  So, the ‘bankers’ are now demanding the US Treasury and Federal Reserve PRINT MONEY and make it appear out of thin air, so they can then borrow it at 0% and then hand it over to us as cheap mortgages which are then SOLD BACK TO THE GOVERNMENT!!!!

THIS IS UTTERLY INSANE!!!!!!!!!!!!—-!!!!!!!  What the hell is this circular game?  Of course, it means profits for the guys using OUR tax futures to lend BACK to us so we pay THEM fees and then the GOVERNMENT has to collect interest from US for our own tax based future revenues from our capital: IE: our labor.  For the rest of our lives!  Double jeopardy.

But the amount of available credit has plummeted to about $25 billion from $200 billion a year ago, according to the mortgage bankers group. Many of the large financial institutions that extend credit to the bankers have left the business, imposed tough restrictions or capped existing lines as they try to shore up their own capital. In the past few weeks, National City Bank, J.P. Morgan Chase and Guaranty Bank have announced plans to end warehouse lending.

 

This crazy system has crashed and burned the world’s economy.  RESTARTING IT IS INSANITY.  It was bad, bad, bad in the first place.  Understanding this is vital. It is life and death.  Since there is no philosophy about all this, people simply try to restart the impossible because they can do this by using lots and lots of zeros.

 

Convertible Sales Show Bernanke Opens Cheap Credit (Update3) – Bloomberg.com

For the first time in six months the market for convertible bonds is open for business as companies whose credit was shut off turn to the securities to refinance debt.

‘Securities’ are Treasuries which are government debts.  Which are accumulating now at a mad rate as we add trillions in debt to our national IOU banking system.

Ten borrowers raised $3.39 billion this year with notes that can be exchanged for common shares as U.S. stocks rallied, according to data compiled by Bloomberg.Newell Rubbermaid Inc.Johnson Controls Inc. and Teradyne Inc., which hadn’t sold debt for a year or more, are using convertibles to pay back loans.

This desperate and suicidal action has restarted our stock market and our buy-up, buy-out business that savaged our industries, dumping immense amounts of debts on top of production.  Remember: capital is what remains AFTER debt.  Debt is NOT capital.  This very simple rule was understood by the earliest Victorian manufacturers.

The sales are a sign the 19-month-long freeze in credit markets is subsiding after Federal Reserve Chairman Ben S. Bernanke cut interest rates to as low as zero and pledged to buy more than $1 trillion in U.S. Treasuries and agency mortgage bonds. While investment-grade companies sold $382.8 billion of debt this quarter, high-yield, high-risk borrowers have raised $12.5 billion, according to data compiled by Bloomberg.

“There’s a lot of pent-up financing demand in the U.S. market and people have been waiting for the window to open,” said Robert Aberman, the co-head of convertible origination at Jefferies & Co. in New York, in an interview. “If companies are able to sell securities and investors are clamoring to buy them, it’s definitely a sign that credit markets are healing.”

 

You bet, there is an army of gnomes out there, desperate for more funny money so they can weasel out some of it for themselves.  The closer to infinity the money is, the easier it is for them to grab, the happier they are.  They love a flood of funny money so long as a significant portion goes to them.  This is outright looting, of course.  Note that the US government is taking all the risks, funding everything with its future capital and in return, gets nearly nothing except the ILLUSION of business activity.

 

debt-trend-breakdown_2.jpg (image)

picture-10

This is an old graph.  If it were updated, the financials, corporate and household sections would be collapsed to near zero while the government and GSE parts [Fannie Mae, etc] mushroom so that the total is still the same.  During the Great Depression, US debt as % of GDP, rose to 300%.  But during the BOOM YEARS this time around, from Reagan to today, the debt-to-GDP ratio rose well above the dangerous Great Depression levels.

 

This is significant: we actually were running our economy as if we were in a Great Depression….while claiming, we were capitalizing things, not piling on debts.  As our richest people got tax cuts and the doors to easy lending were opened as interest rates began to drop from 18% to 0%, our financial condition grew worse and worse.  Our trade deficit shot up, as well.  This cannot be evaded: our financial house is too deep in debt already.

 

Buffett Penalized as Citigroup Borrows for Less (Update1) – Bloomberg.com

 Billionaire Warren Buffett’s Berkshire Hathaway Inc. is being penalized in the bond market, paying more to borrow than bailed-out companies including Citigroup Inc.

Buffett’s firm paid more for its latest debt offering than Fannie Mae and Freddie Mac, the mortgage lenders that lost a combined $108.8 billion last year. Bank of America Corp. is also paying lower interest on notes under a program in which the U.S. agrees to guarantee debt.

The difference in borrowing costs illustrates how government aid is giving an advantage to companies that needed multiple helpings of U.S. rescue funds. Each of the companies except for Berkshire were able to find buyers for notes paying 2.375 percent or less because of their government backing, while Berkshire will pay 4 percent to bondholders who bought $750 million of the firm’s AAA-rated debt last week.

 

The government, by interfering with the hand of the market place, has rewarded perfidy and recklessness while punishing prudence and intelligence.  This is very, very bad, of course.  There is no way this should be allowed.  This is ‘moral default’.  We must have morals when it comes to dealing with the dire creatures in the Cave of Wealth and Death!  This is our only defense. 

 

If we are greedy, self-centered, heartless and cruel, we can ignore the warnings from Libra, run into the Cave and seize all the goodies inside.  But this is destructive.  Only sober, careful, sane people can enter and exit the Cave without triggering its dire goddesses and various destructive beasts that lurk inside.  And this means, hewing to the concept of hard work, saving money, being careful, looking to the future, worrying about grandchildren, not one’s self, etc.  Sacrificing one’s own pleasure is the key to future wealth and happiness, after all.

 

Every single fairy tale and myths are united in this: if we give to the future, we prosper today.  If we abuse the future, we die.  Our societies die, our children die, we have a tragic end if we don’t do this.  Back to the WP article about the lack of money for lending:

 

Lenders Struggle to Find Cash to Quench Growing Demand for Refinancing – washingtonpost.com

Mortgage bankers say the supply of money available to them is shrinking just as demand for loans is taking off, blunting the Obama administration’s efforts to loosen consumer lending. Last week, loan applications were up 3 percent from the previous week and almost 69 percent compared with the previous year, the mortgage bankers’ survey found.

HAHAHA. Classic Cave of Wealth and Death! The government and the central bankers artificially lower the interest rate to 0% but instead of increasing the money available, it makes it VANISH! Imagine that. Oh, there is an army of desperate people who want free funny money, lining up to get this boon! And how will this be done? “When demand outstrips supply, lenders manage that by raising rates” or slowing the pace of lending, said John Courson, chief executive of the mortgage bankers group. “The end result is that borrowers are not enjoying the full benefit of these lower rates.”…

OMG!  What a shock!  If demand for cheap loans is much greater than the money available to lend, interest rates go up in normal markets!  DUH.  Since we are in a capital-starved system, the army of hungry, hungry borrowers can’t get enough lending and thus, can’t exploit cheap credit. 

Welcome to reality!  In Japan, ZIRP has not brought endless free loans to the poor or people in general, either.  They get wage cuts and unemployment.

The new mortgage securities backed by Fannie Mae, Freddie Mac and Ginnie Mae totaled $172 billion in March and could reach nearly $200 billion by June, he said. That’s more than the monthly high of $190 billion in 2003, suggesting that lending activity is robust, driven mostly by refinancing.

‘Refinancing’ is a very, very big part of the entire housing bubble in the first place.  People get loans to pay off credit card loans which are pure usury.  These loans are non-ending, they are eternal.  The only way most people can pay them off, is to refinance a house by loading more debt onto a house.  If an entire nation runs a 70% consumer society this way, it ends very badly as even the housing can no longer take on more debt.

 

Right now, the government is openly providing infinite funds to carry forward this heaving, nasty debt machine that will soar to over 500% of our GDP in the next 10 years.

 

Trichet Says ECB Can Still Cut Benchmark Rate Further (Update2) – Bloomberg.com

 European Central Bank President Jean-Claude Trichetsaid policy makers are ready to lower their benchmark interest rate further, while the deposit rate has probably reached its floor.

“I don’t exclude that we could in a very measured way go down from the present level” of 1.25 percent, Trichet said at a press conference in Frankfurt today. The deposit rate is at “an extremely low level at 0.25 percent, and I don’t expect that we’ll move in the period to come.”

The ECB is slowing the pace of rate cuts as council members try and find a consensus on what new measures to take next as rates approach zero. The ECB is already lagging counterparts such as the U.S. Federal Reserve, the Bank of England and the Bank of Japan, which are pumping money into their economies by buying government and company securities.

The ECB today lowered its key interest rate by 25 basis points, less than economists expected, even as the euro-region economy shows signs of slipping deeper into recession. Trichet said today that the bank will announce “full details” of possible further non-standard measures in May.

All systems are driving to zero.  A very bad sign.  Instead of elevating the capital available for supporting lending, this is driving OUT capital which has fled to other zones such as gold, just for one glaring example.  Once everyone arrives at the Zero Train Station, there will be nothing for the arbitrage trade to exploit.  This will cause all systems to die.  Nirvana!  Back, again, to the WP story:

 

Lenders Struggle to Find Cash to Quench Growing Demand for Refinancing – washingtonpost.com

The warehouse-lending coalition estimates that non-depository banks supply roughly 40 percent of loans and contends that the mortgage market would suffer if they went out of business.

THEY SHOULD NEVER HAVE EXISTED IN THE FIRST PLACE!!!!

Seriously, this was utterly ridiculous and during the growth of this dark banking system, I have howled like a dog on a moon-lit night.  This is bad and should end.  Besides, they can’t exist anymore in a ZIRP system!  Period.  This is done.  They are now demanding to channel government debt as if it were capital, seeking markets.  Fie on them all.

“Think about it: If all of a sudden there was a big demand for gasoline and 40 percent of the gas stations went out of business, you’d have chaos and disruption and higher prices. That’s the situation we’re drifting toward in the lending arena,” said Glen Corso, a principal at the Warehouse Lending Project.

 

HAHAHA!  Correct!  The business with gas was solved in 1976 by releasing gas price controls!  Before that, we had rationing!  Then, what happened?  The price of gas shot upwards!  INFLATION SHOT UPWARDS due to the fact that oil is the fundamental basis of modern society.  So if it goes up, all things have to go up, too, and to pay for this rise, the government hands out more money so it becomes a classic vicious cycle.  

 

With money supply problems like we have now, it is the opposite: the government runs things to zero in an attempt to inflate the system only it doesn’t inflate due to the lack of capital!  THERE HAS TO BE CAPITAL SOMEWHERE if any banking system is going to grow.  Running a $0 capital system is impossible.  It will create hyperinflation which will, again, show up rapidly in gold and oil.

 

Bank of China drops deal for stake in Rothschild

Bank of China said on Thursday it had dropped a planned 2.3 billion yuan ($336.6 million) investment for a 20 percent stake in French bank La Compagnie Financiere Edmond de Rothschild after a regulatory deadline passed without a deal. Bank of China spokesman Wang Zhaowen said the bank would not extend the deadline and the plan for an investment had lapsed. “We failed to obtain approval from relevant Chinese authorities for the deal,” Wang said by telephone. “However, we will continue to seek other forms of business cooperation with Rothschild.” China has stepped up scrutiny on overseas investments by domestic financial institutions after companies such as Ping An Insurance and China Investment Corp suffered high-profile losses investing abroad.

As I keep pointing out, the Communist Chinese are Libra: Hu sits at the portals to the Cave of Wealth and Death and gives permission to enter or refuses it.  In other words, he controls the Chinese systems.  The US systems are controlled by greedy gnomes who don’t care, if they kill their own host nation.  But Hu wants China to be stronger so he weighs this in his scales against the temptation for more money.  See?

 

The US doesn’t guard the entrance, we blast holes in the sides of this cave and run in like greedy little children. Notice that Hu won’t let China’s banking be taken over by the Rothschild dynasty!  HAHAHA.  Hu reads lots of books, by the way.

 

“The Marginal Productivity of Debt” by Antal E. Fekete. FSO Editorial 03/30/2009

The paper mill on the Potomac is furiously spewing up new money. According to the manager of the mill, as indeed according to the Quantity Theory of Money, this should stop prices from falling and the economy from contracting.

In this article I present an argument why this conclusion is not valid. On the contrary, I shall show that new money created on the strength of a flood of new debt, is tantamount to pouring gasoline on the fire, making prices fall and the economy contract even more. The Obama administration has missed its historic opportunity to stop the deflation and depression inherited from the Bush administration because it entrusted the same people with the task of damage-control who had caused the disaster in the first place: the Keynesian and Friedmanite money doctors in the Fed and the Treasury….

The watershed year of 2006

As long debt was constrained by the centripetal force of gold in the system, tenuous though this constraint may have been, deterioration in the quality of debt was relatively slow. Quality caved in, and quantity took a flight to the stratosphere, when the centripetal force was cut and gold, the only ultimate extinguisher of debt there is, was exiled from the monetary system. Still, it took 35 years before the capital of society was eroded and consumed through a steadily deteriorating marginal productivity of debt.

The year 2006 was the watershed. Late in that year the marginal productivity of debt dropped to zero and went negative for the first time ever, switching on the red alert sign to warn of an imminent economic catastrophe. Indeed, in February, 2007, the risk of debt default as measured by the skyrocketing cost of CDS (credit default swaps) exploded and, as the saying goes, the rest is history.

 

 

A very good editorial and important read.  I recommend it.

 

The G20 Meetings: The European Union is in Tatters

In Paris , demonstrators dumped a pile of sand outside the city’s stock market to mock the use of island tax havens. Whether or not the G20 leaders took note, the only real progress at the G20 was in fact a concerted attempt to address this practice, though the havens are resisting fiercely. The Swiss foreign minister called German Finance Minister Peer Steinbruck a “Nazi henchman”, and the Sunday Times revealed that Lord Myners, the minister in charge of the British government’s “assault” on tax havens, has 250,000 pound sterling in an offshore shelter in Jersey . Myners recently met Jersey officials who now say they have “nothing to fear” from any tax haven crackdown. Past attempts to take on the tax havens failed, and it is far from certain that this one will succeed.

As I keep saying, many of the representatives of democratic governments of the G7 are crooks, tax cheats and corrupt.  This is why NOTHING significant is fixed.  Allowing our debt systems to be run by pirates, hell hounds and gnomes is insane.  Note that China is taking measures to deal with this sort of thing.  Duh.  Someone has to do this!>

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One response to “ZERO INTEREST DOES NOT MEAN LOTS OF CHEAP LOANS

  1. Pingback: ZERO INTEREST DOES NOT MEAN LOTS OF CHEAP LOANS « Culture of Life News

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