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Thread: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

  1. #41
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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by Fenton View Post
    Bernake has backed himself into a corner with QE.

    The monetizing of our short term securities is primarily to make our debt servicable.

    Just a 6% rise on Treasuries and we're adding another trillion to our yearly deficits.

    If he stops, investors are going to bail on bonds and eventually the massive amount of liquidity will have to be dealt with which means higher interest rates.

    This is what Liberals refuse to accept, that Bernakes actions and Obama's data manipulation is going to equal up to a lot of pain the next time a grown up is elected as President.

    Its a good way to stifle future economies.
    Naivety (to be kind).

    Something like 99% of all government debt is fixed (minus inflation protected securities, but they make up less than 1% of the total stock of federal government debt). So, how on earth can the effective debt service rate go to 6%? Currently, the effective interest rate on gross government debt (GGD) is a little north of 2%. If we assume that by the end of fiscal year 2012, we had $16,159,487,013,300.35 in GGD, debt service for fiscal year 2012 was $359,796,008,919.49 (the lowest since 2005) and a projected 2013 deficit of $1 trilion, interest rates would have to increase to 66.975% for the 2013 deficit.

    (((Debt₂₀₁₂∗EffectiveService₂₀₁₂)+(deficit₂₀₁₃∗x))/(Debt₂₀₁₃))=0.06

    ((((16159487013300.35∗0.022265)+(1000000000000∗x)) )/((16159487013300.35+1000000000000)))=0.06

    ((((3. 597910)+(1000000000000x)))/(1. 715910))=0.06 ; x=0.66975

    So while you are correct that 66.975% interest rates on the 2013 deficit would be catastrophic, the chance of it actually occurring is zilch!

    If borrowing rates in 2013 were to magically go to 6% (another unlikely scenario for reasons i will explain later), the effective cost of debt service goes to 2.4465% with a price tag of $419,806,849,780.39. This is an additional cost of $60 billion.

    Let's get something straight; interest rates cannot go higher unless there is sufficient economic growth to facilitate the sheer existence of higher interest rates. Meaning: if interest rates were to go to 6%, U.S. economic output would have to be greater than or equal to 6%. This is simply a matter of fact.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  2. #42
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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by Kushinator View Post
    Naivety (to be kind).

    Something like 99% of all government debt is fixed (minus inflation protected securities, but they make up less than 1% of the total stock of federal government debt). So, how on earth can the effective debt service rate go to 6%? Currently, the effective interest rate on gross government debt (GGD) is a little north of 2%. If we assume that by the end of fiscal year 2012, we had $16,159,487,013,300.35 in GGD, debt service for fiscal year 2012 was $359,796,008,919.49 (the lowest since 2005) and a projected 2013 deficit of $1 trilion, interest rates would have to increase to 66.975% for the 2013 deficit.

    (((Debt₂₀₁₂∗EffectiveService₂₀₁₂)+(deficit₂₀₁₃∗x))/(Debt₂₀₁₃))=0.06

    ((((16159487013300.35∗0.022265)+(1000000000000∗x)) )/((16159487013300.35+1000000000000)))=0.06

    ((((3. 597910)+(1000000000000x)))/(1. 715910))=0.06 ; x=0.66975

    So while you are correct that 66.975% interest rates on the 2013 deficit would be catastrophic, the chance of it actually occurring is zilch!

    If borrowing rates in 2013 were to magically go to 6% (another unlikely scenario for reasons i will explain later), the effective cost of debt service goes to 2.4465% with a price tag of $419,806,849,780.39. This is an additional cost of $60 billion.

    Let's get something straight; interest rates cannot go higher unless there is sufficient economic growth to facilitate the sheer existence of higher interest rates. Meaning: if interest rates were to go to 6%, U.S. economic output would have to be greater than or equal to 6%. This is simply a matter of fact.


    First off Kush, my "Naivete" is completely justified given the obvious indication of the Fed perpetual pumping. That Obama-nomics is a complete failure.

    Massive amounts of cheap currency is not equaling higher growth and sooner or later we're going to be reminded that the gimmicks and accounting tricks of this administration and the Fed are not immune from substantial market forces of the past.

    The Feds driving up of commodity prices exclusively hurts the middle class as does the Fed's perpetual lowering of interest rates as savings become worthless in terms of earning power. Plus the real concern over creating a asset bubble as investors keep a close watch on the Fed's pumping.

    The Debt Markets are shot so investors have moved into public equities, eventually when yields rise investors will sell off bonds and assets and it will take even higher yields to keep the bond market a viable option for investors.

    Not too mention the outstanding balance on derivatives world wide now sits at about 700 trillion. There's no bailing in bank out if the European Crisis and the US's economic stupidity continue worsen.

    We've got student loan defaults at record levels, total debt and unfunded liabilities continue to rise at record rates. Consumers are not responding to lower interest rates in any number that would add up to REAL GROWTH because of massive amounts of existing debt and a President who continues on with his plan to increase taxes through blatant and insidious methods.

    You keep mentioning growth but I guarantee there will no NO substantial growth for the next 5 years or more as the reality of Obama-Care hits the middle class family.
    The New Democratic Party Slogan :

    " Return to Power By Any Means Necessary "

  3. #43
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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by shrubnose View Post
    The far right losers in the GOP are dragging the GOP to the edge of the Taliban-like evangelical's Flat Earth.
    Show us the proof.

    If you do have proof, who on the "far right" is a "Taliban-like evangelical." show it.

    If you don't have proof, you're just running your mouth.

    The GOP will be mighty lucky if it isn't reduced to a minor, regional, party in the not-distant future by the massive demographic change that cost it the last election.

    Don't think so?
    No, I dont. The GOP holds the House, Holds a majority of governorships and state legislatures and (granted were it not for some suspect Senate candidates) would potentially have a slight majority in the US Senate. What they dont hold and what they have trouble gaining a majority of votes for is the presidency. Here there is no reason the GOP couldnt put together an argument to attract the growing Hispanic community and they should have been able, years ago, to put together a coherent argument to blacks exposing the failure of leftist policies to do anything to improve their lot in life.

  4. #44
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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by Fletch View Post
    Show us the proof.



    Take a look at the results of last November's election.

    In about thirty years non-Hispanic Whites will be a minority in the USA. Few in the new majority which will be composed of a number of minorities will be voting for the xenophobic, racist, misogynist, homophobes on the far right who hate, fear, and despise them.

    Don't think so? Wait and see.

    No one can stop time and/or change.

    "What goes around, comes around."

    Deal with it.

    And have a nice day.



    "Better days are coming." ~ But not for today's out of touch, running out of time, GOP.

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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by Fenton View Post
    Massive amounts of cheap currency is not equaling higher growth and sooner or later we're going to be reminded that the gimmicks and accounting tricks of this administration and the Fed are not immune from substantial market forces of the past.
    This is not a response to my post. It is simply partisan rhetoric lacking substance.

    The Feds driving up of commodity prices exclusively hurts the middle class as does the Fed's perpetual lowering of interest rates as savings become worthless in terms of earning power. Plus the real concern over creating a asset bubble as investors keep a close watch on the Fed's pumping.
    Again, this is not a response to my post. U.S. monetary policy does not dictate commodity prices.

    The Debt Markets are shot so investors have moved into public equities, eventually when yields rise investors will sell off bonds and assets and it will take even higher yields to keep the bond market a viable option for investors.
    This does not even make sense.

    Not too mention the outstanding balance on derivatives world wide now sits at about 700 trillion. There's no bailing in bank out if the European Crisis and the US's economic stupidity continue worsen.
    This is not a response to my post. If you do not have even a basic understanding of derivatives markets, why attempt to use a notional figure to make a political point? Because you don't know what you are talking about....

    We've got student loan defaults at record levels, total debt and unfunded liabilities continue to rise at record rates. Consumers are not responding to lower interest rates in any number that would add up to REAL GROWTH because of massive amounts of existing debt and a President who continues on with his plan to increase taxes through blatant and insidious methods.
    Again, this is not a response to my post.

    You keep mentioning growth but I guarantee there will no NO substantial growth for the next 5 years or more as the reality of Obama-Care hits the middle class family.
    Who cares what you guarantee. Interest rates going to 6% will not add trillions to our deficit. That was nonsense. If you can refute the post you were (only by name) responding to, why go off on a partisan tangent instead of actually addressing ANYTHING I HAVE STATED?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by shrubnose View Post
    Take a look at the results of last November's election.

    In about thirty years non-Hispanic Whites will be a minority in the USA. Few in the new majority which will be composed of a number of minorities will be voting for the xenophobic, racist, misogynist, homophobes on the far right who hate, fear, and despise them.

    Don't think so? Wait and see.

    No one can stop time and/or change.

    "What goes around, comes around."

    Deal with it.

    And have a nice day.



    "Better days are coming." ~ But not for today's out of touch, running out of time, GOP.
    Well, all I see from you is a bunch of name calling and wishful thinking; or as you put it, 'running your mouth.'

    Deal with that.

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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by Fletch View Post
    Deal with that.



    You do not know exactly what the future holds, nor do I.

    Neither of us has a time machine.

    I am just projecting current trends. (The exact same thing that GOP leaders are doing, BTW.)

    That's why I say "wait and see".

    Believe what you want to believe.

    When the future gets here, we'll know what happened.

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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Well, its official. Cyprus is going to steal 40% of savings accounts with more than 100,000 Euros.

    The revised accord spares bank accounts below the insured limit of 100,000 euros. It imposes losses that two EU officials said would be no more than 40 percent on uninsured depositors at Bank of Cyprus Plc, the largest bank, which will take over the viable assets of Cyprus Popular Bank Pcl (CPB), the second biggest.
    Cyprus Popular Bank, 84 percent owned by the government, will be wound down. Those who will be largely wiped out include uninsured depositors and bondholders, including senior creditors. Senior bondholders will also contribute to the recapitalization of Bank of Cyprus.

  9. #49
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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    Quote Originally Posted by Samhain View Post
    Well, its official. Cyprus is going to steal 40% of savings accounts with more than 100,000 Euros.
    This is a loud-and-clear warning of where we're headed eventually, given the entirely unsustainable policies and debt-ridden practices America is practicing every second of every day.

    We're still kicking the can down the road, and we're already in the cul-de-sac. So is most of Europe.

    Meanwhile, China and Russia sit and watch.

    Funny and telling, the CNN spin on this with their headline, "Cyprus saved from financial ruin". What a socialistic way of twisting this.
    Last edited by Erod; 03-25-13 at 11:08 AM.

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    Re: Forget Cyprus, Nobody Is Stealing from Depositors More than Bernanke

    http://www.telegraph.co.uk/finance/f...one-chief.html

    The euro fell on global markets after Jeroen Dijsselbloem, the Dutch chairman of the eurozone, announced that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe.
    "If there is a risk in a bank, our first question should be 'Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?'," he said.
    "If the bank can't do it, then we'll talk to the shareholders and the bondholders, we'll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders."
    Ditching a three-year-old policy of protecting senior bondholders and large depositors, over 100,000, in banks, Mr Dijsselbloem argued that the lack of market contagion surrounding Cyprus showed that private investors could now be hit to pay for bad banking debts.
    Now that they've done it in one bank, watch it expand to the rest.....

    Then they will expand it to 401k, 403b, and every other fund they can get their hands on.

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