January 23, 2009
Get ready. The thermonuclear option is on the way. And it's gonna shock you.
We can keep doing the bank bailouts in dribs and drabs.
Or we can MOAB it.
I think we're getting closer to a big ka-boom.
The Tsar Bomba of Banking, if you will.
And the size of it will shock you. And the world.
Get ready.
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55 comments:
More details please! Would you expect it to be positive or negative for equities?
Thanks!
Bad bank.
And I have no freaking idea how it will impact stocks or the US dollar.
Get reading and try to game it out.
That's the purpose of this thread.
(and watch that video of the Tsar Bomba for inspiration)
rumor was it ..obama to make big bank news this weekend...
Keith is absolutely correct.
The entire Western World's financial system has collapsed due to the debt and derivatives Ponzi Pyramid of Death created by the fraud that is:
Fiat currency/fractional reserve lending/central banking/securitization/derivatives.
The total, NET, amount of debt/derivatives that have been created (and now destroyed) is approximately $50 trillion.
That's right, FIFTY-TRILLION DOLLARS!
So far, to try to stem the damage and re-ignite the credit/derivatives bubble, central banks and governments have pumped approximately $20 trillion into banks and financial institutions in the last year via monetizations, nationalizations, and other measures.
But their efforts have failed to revive the dead Ponzi scheme.
Now, as Keith so astutely points out, it is time for "The Mother of All Monetizations/Nationalizations".
Which translates to central banks and governments literally taking over the function of banking, including lending.
Probably as soon as this weekend. And if not, certainly by the end of this month.
Regarding what this means in terms of markets, at best we MIGHT get by without a "Bank Holiday" and market closures for a week or so.
At worst, we might see instant "capital controls", confiscation of 401(k)s/IRAs/mutual fund accounts, and definitely gold, silver, and any other wealth-protection that people have amassed to try to avoid this epic collapse.
Going forward, we are either facing "Great Depression II" (or perhaps even "Great Disintegration I"), or "Weimar Meets Zimbabwe I", followed in a year or so by "GDII".
This is not, I repeat NOT a normal "market trading event".
It is literally the end of the financial system as we know it.
Yawn.
They've got gold.
That's their thermonuclear option.
No need to confiscate as people don't have much.
Besides, in order to keep the bubble going, all you need to do is put "dollars" in the hands of the people when they sell their gold to the government. Sure, a few people who already have hundreds of millions will now be worth...well...who knows how much.
Every Rolex, wedding band, gold fillings etc will wind back up with the fed, people will then have money to pay their debts, some will go on consumption binges and help support the useless consumer economy.
It's all a numbers game.
Back on the gold standard for another 50 years and then off of it later as it becomes unstable again.
$10k/oz gold wouldn't be enough to save them if you do the math.
They'll (Governments, Central Banks, IMF, UN) ultimately decide what the price will be so that they have enough money to do what they want.
They wouldn't even need to have all the gold backing dollars so that they could print more as needed.
Housing will still go down. Business will return to usual within a year and will seem the same for all the masses. People will get to keep the BMW and think that they are saved. The newly minted trillionaires will buy cruise ships as yachts under 1000 ft. are just too small. They'll fly in personal pimped out jumbo jets, and idiot humans will still idolize them and their wealth as their lives will have become the latest reality show.
MTV's Pimp my Ship? Soros Style?
Just my crazy wild ass guess just like Butch's.
"see instant "capital controls", confiscation of 401(k)s/IRAs/mutual fund accounts, and definitely gold, silver"
Don't think so. Confiscating 401K/IRA accounts would send the stock market to zero 'cos nobody with an ounce of intelligence would leave any money in stocks, bonds, savings etc. If they can confiscate 401Ks, then they can confiscate anything, including savings accounts, your house, your dog, your car, I mean anything. Even the dollar might not be accepted for transactions any longer.
The last thing "they" want to create is a confidence panic which will lead to a bank panic. Still, I have most of my cash savings under the matress...ya never know what kind of crap they're trying to pull. Like the anti Robin Hood, steal from the poor to give to the rich. Time for the sheople wake up.
Yoski wrote:
"Don't think so. Confiscating 401K/IRA accounts would send the stock market to zero 'cos nobody with an ounce of intelligence would leave any money in stocks, bonds, savings etc."
Butch Reply:
Firstly, the stock markets are ALREADY heading to zero. Secondly, anyone who bought into the 401(k)/IRA lie didn't have intelligence anyway, so they will get what the deserve.
By the way, the excuse for confiscating the 401(k)s/IRAs will be to "shore up the Social Security system", whereby all formerly private retirement accounts are dumped into the system. Which, if you weren't aware, the Social Security system has ALREADY been looted via "intragovernmental holdings", which if government Orwellian double-speak for the feds having taken the funds contributed by taxpayers from Social Security, spending that money for daily general expenses of the government, and handing Social Security an "IOU".
For verification of this fact, go to:
http://www.treasurydirect.gov/NP/BPDLogin?application=np
There, you will see that $4 trillion dollars has been "borrowed" from Social Security and other, federal, pension funds.
And yet there will still be a federal reserve at the end of it all.
As long as it doesn't ensconce the current Establishment in power or reward vice I'm down with whatever.
But it will do both...
Guys, let's not get off-track here with wild scenarios of 401k confiscation or gold confiscation - these are not in the immediate future.
It is either, as keith says, the 'bad bank' or it's to nationalize the whole lot of them.
I'm really leaning towards this 'bad bank' or 'aggregator bank' idea primarily because it's the easiest to execute.
It completely screws the taxpayer, once again, and I'm totally against it. But it seems the most likely course of action.
For those unfamiliar with the concept, you should google 'bad bank' and read up. In summary though, the federal govt sets up an institution to buy up all the 'bad' or 'toxic' assets held by the banks. With all these bad assets off their books the banks are solvent again and much more likely to resume lending.
I hate the idea that it's the taxpayer that pays the gambling debts of the banks.
I'm already calling this plan "RTC Part Duh". Wikipedia "Resolution Trust Corporation" for context.
Soon, the currency exchange will be in 9mm, 12ga, .38, .45
I'm getting madder by the minute over all this fraud and corruption crap. How about you????
Nothing shcoks me, especially not the stupidity of gubbermint.
You know, even though what these bankers did may not have been illegal, I am sure if we devoted enough time and effort to it, we could find them doing something. My god they got Capone on mail fraud. I am certain that at bare minimum these guys buy coke or deal in kiddie porn or something. THere is no possible way they can be so morally derelict when it comes to spending money and completely clean everywhere else.
Actually I'd rather they get caught with a bunch of blow, at least then they'll get sent to federal pound me in the ass prison instead of the white collar country club with conjugal visits.
The thought of them being forced to lick jelly from ThunderDicks buttcrack makes me smile.
Just to let you know Obama and two Democrat senators have already proposed seizing the 401K's,seps, and IRA's citing that since the market has performed so poorly they should be seized and the investor guaranteed a 4% return per annum. Payments to be made upon the investor reaching the age of maturity ie 65 and paid out in the form of a social security check. The sheeple will swallow it up when they see their investments start the next leg down.
anyone else giddy imagining all the urbanites freaking out over having to eat canned non-organic meat and vegetables?
seriously, i volunteer at food pantries. meat, veggies, fruit, starch, it's all canned or processed. the milk is powder in a can. any cheese has to go out that morning.
we normally do a set delivery/pickup but we also do "curbsides" that are no-questions-asked. curbsides lately have been near riot conditions when the van pulls up. and this is a very wealthy and powerful (hint) city.
Did any one see american idol this week?the new judge is a total hottie.I dropped two viagras and played with my new doll.she is a real gem.
Lets just give the banks more money.They deserve it cause angelo is da man.
Keith,
I am furious with what I heard on NPR today. Some MIT professor BOZO of Economics claims the bad bank is a good idea! They hope if they can mop up the bad debt, banks will begin lending again. In the back of my mind I had HP highlights lingering.
The real kicker is this; "The US doesn't have that much debt to begin with..."
Monkeys I tell you... Monkeys
it will change nothing as it is simply a shell game.
we are drowning in debt (private and gov) and the government is trying to get us to borrow more.
it is like throwing a drowning person a bowling ball rather than a life vest.
Unfortunately BO is a president that will get things done but the problem is his policies are all the "old" political establishment policies. It would be better to have a jimmy carter type in the white house that simply talks about stuff but never gets much done. Inaction is preferable to lots of wrong actions.
BO will drive this sucker down to the bottom quickly.
what needs to be done is to reduce government spending and reduce government debt.
American consumer is tapped and has WAY too much debt. There is nothing left. What the Central banks and "Captain Lightbulb" are taking about cannot possibly work. Having the government buying all this bad debt or picking who is a good and bad bank and who survives will not resolve the basic problem which is, Joe 6pk has too much debt that cannot possibly be paid back.
Then everyone talks of the oncoming inflation that will pull us out of this mess. Again, won't work....
First of all the burden of Joes debt will only decrease under inflation if Joe can find a job that pays signifigantly higher than the one he just got laid off from. A step in the right direction would be for "Captain Lightbulb" to make it very hard on companies to ship Joe's job overseas and very benificial for them to keep it here for Joe. And by the way, if "Captain Lightbulb" is the savior and so different, why no talk of change to the global trade policies? How about some god damned tarrifs? How about, "you want to sell your Chinese crap in our country, put American workers out of work, ITS GOING TO COST YOU A TON OF MONEY TO DO SO!". Unfortunately, odds of that happening are slim to none. Again, he is more of the same.
Also, as many have mentioned here before, with "Captain Lightbulbs" job creation plan, once the streets are fixed, bridges are built, lightbulbs changed, then what?
And even if by some miracle the economy rapidly picks up, interest rates will rise. Interest on the national debt will soar. At some point "Captain Lightbulb" HAS to raise taxes on Joe in order to pay all this off. Which, of course, makes it even harder on Joe 6pk to do what actually needs to be done, REPAY ALL HIS DEBT.
Whats going to happen and whats going to be the final straw that breaks the proverbial camels back is, bankruptcies and "walking away" or "jingle mail" will become widely socially acceptable. Joe will be so burdened that it will be seen as a relief. Plus, "Obama didn't fix things, he broke his promise, so screw 'em". And yes, its happening in pockets of California, Arizona, Florida, etc. The bubbliest of the bubble states. I am talking NATIONWIDE. It (the debt) is not getting paid back no matter what they try.
The federal government will buy it all I suppose. All the Visa, MC, AMEX and Discover debt as well as finally buying up B of A, Wells, Citi and Chase too. They will own it all by printing money and borrowing from other countries who are just as fucked, or moreso, than we are. Sounds peachy, sign me up. Where do I get my bailout? When is "Captain Lightbulb" sending me a check? I want to get some rims for my new Hummer!
Off the rant now, but I read something a couple days ago that the dude who just bought the Miami Dolphins from Wayne H is some BIGTIME developer. Point being, he just wrote a check for a bazillion dollars for an NFL franchise and also just put his hand out to the fed for $200 bill in bailout funds. He needs a bailout but can buy the Dolphins?
Its all coming down man, the train has WAY TOO MUCH MOMENTUM and can't be stopped. Even if Obama and Bernanke drops the...
BMFMBESOCITHOTKU
(biggest mother fuckin money bomb ever seen or even contemplated in the history of the known universe!)
Digital Money is dead. Fiat money requires a secure bullet proof validation of creation to work. That has failed. There is no putting the jeanie back in the bottle. They thought they could resart the confidence game with TARP with the real-estate bubble narrative and nobody believed it. Now, they are going to try and convince you that all the "fake money" will be escorted to a "bad bank" to be "held" like it was prison for dollars gone bad. A financial GITMO.
The pain that Obama will ask and that leaders of the world will as is that people holding more than $250k in digital wealth (in an account) will see it evaporate. All loans and mortgages above $250k will be reset to $250k. It will be the history's largest haircutt or the mother of all devaluation depending on how you want to look at it but that will kill the contagion and we cam move on. Cash is king.
Don
You have to destroy the system before you can rebuild it.
I think you are wrong in the "Nuclear Option" comparision.
The Nuke option will be when you wake up and an official devaluation of the currency is announced.
Move the decimal point. Boom!
This all leads to nationalization of a few *select* banks - the rest will go out of business.
National Debt - Privatise Gains.
Watch for 2009 to be the year of "The Little Man Squeeze" as George Celente has termed it.
Trying to tax our way out of this growing mess only makes the problem worse since the average consumer on the street (who makes the economy run) will have less and less to spend.
Buh buh Microsoft and Bill, what happened? I thought that you had a shortage of workers, so why are you now laying off 5,000 employees just a few months after your whining in Congress? And what's up with all that aid to Africa if your own country, the one that made your fortune, is bankrupt? Why are you helping other countries and not ours?
MARCH 2008 -- Bill Gates to Congress: Let us hire more foreigners
WASHINGTON--For the second year in a row, Microsoft Chairman Bill Gates ventured to Capitol Hill and urged Congress to let more foreign-born engineers work in the United States and to direct larger numbers of tax dollars to research and education.
Just as he did around the same time last year before a U.S. Senate committee, Gates on Wednesday contended America's competitiveness in the global economy is "at risk." He said Congress, the administration, and the next president must commit to overhauling immigration policy and encouraging both public and private research investment.
"It makes no sense to educate people in our universities, often subsidized by U.S. taxpayers, and then insist they return home," he told the House of Representatives Science and Technology Committee during a two-hour hearing.
http://tinyurl.com/am8q9d
BOYCOTT ALL MICROSOFT PRODUCTS NOW!
Just to let you know Obama and two Democrat senators have already proposed seizing the 401K's,seps, and IRA's citing that since the market has performed so poorly they should be seized and the investor guaranteed a 4% return per annum.
--------------------------------
I am concerned about this too. I have been looking into setting up an investment entity that my self directed 401k and buy into. this is legal to do and is commonly done to buy investment grade (ie actually earns a cash flow) property like multi-unit apartments. Yes, even now true apartments can and do make money.
I am so concerned that as a last resort I will just take the money out and pay the 10% penalty and then taxes on it.
http://2.bp.blogspot.com/_9ZzZquaXrR8/SXjl9DUHgDI/AAAAAAAACv0/IEEddbWkhTA/s1600-h/2Calvin-Lemonade.jpg
The pain that Obama will ask and that leaders of the world will as is that people holding more than $250k in digital wealth (in an account) will see it evaporate. All loans and mortgages above $250k will be reset to $250k.
-----------------------------
to really pull that off they will need to confiscate gold.
all your gold are belong to us!
Anon wrote:
>Buh buh Microsoft and Bill, what >happened? I thought that you had a >shortage of workers, so why are you now >laying off 5,000 employees just a few >months after your whining in Congress?
Would you rather have Microsoft send the work offshore? Microsoft needs highly skilled software engineering personel, which there is a shortage, not manufacturing laborers.
FYI, Mr. Gates and his wife donate more in America then anyone. You may not see it because you're not poor.
Big Deal
I was at a biker BBQ once
Looked the same.
I think you meant, "The Samson Option", the all or nothing thing that can be googled. It's their power-lust that bothers me more than anything. If it was any-other way, it wouldn't be the mess it is now....
"They've got gold.
That's their thermonuclear option."
---------------------------------
"They" don't have your physical gold and will never be able to confiscate it. It is too daunting of a task. Name one person that owns physical gold that will allow this to happen.
What the government has, however, is the ablility to confiscate ETF gold. It is actually quite simple - a national emergency is declared, and government confiscation of all ETF gold ordered. It can happen and be handled within minutes.
Don’t fool yourself into thinking a paper representation of gold is a substitute for the real deal.
There is only one way to own gold and that is physical gold owned by you and kept it in your possession. End of story.
"...WAY too much debt...not getting paid back no matter what they try..."
That IS the crux of it, is it not?
Our entire system of parasitic wealth vastly overshot the foundation of production that pays for it.
It CANNOT be paid: the stark terror(and all the wonderfully-sophisticated schemes for delaying the inevitable) we see are the realization of this simple truth.
What about option 3: Do nothing.
Enjoy the continuing crash into Great Depression II. It's what people need. It's what the planet needs. It's not the end of the world.
It's history repeating itself in a funny way: The Soviet Union collapsed after a silent system failure which came at the heels of a resounding defeat in fghanistan.
The well-publicized failure of the US system is forcing the federal government to apply some Soviet-style remedies to salvage the economy from a total breakdown. What's worrisome, though, is that those steps are being taken in the wake of a more adventurous decision to throw more troops and military junk into the trap of the same Afghanistan where several empires had come to an end!
Are we headed that way?
Butch said..."It is literally the end of the financial system as we know it."
Agree 100%
The parasitic bankster class has extraced so much for themselves that their "host" (western financial ponzi scheme) has been dealt a mortal blow.
Not to mention people's faith in banksters, wallstreet crooks, and the worst of all....THE FED.
I would be very surprised (and disappointed) if a few fat white maggots are not plucked out of their fancy offices and killed by raging crowds. People are starving for justice.
I just hope that the end result(pre-planned or not) is NOT a one world currency (Eartho?).
If that happens the next step would be one world government. The parasitic upper classes wet dream is CONTROL and CENTRALIZATION of power. We have to try and prevent it...that is the game. It is an "us vs them" situation....and there are MANY more of us.
I can see it now, the government will throw perhaps 5 to 10 trillion dollars to the banking system. But none of all those actions will address the structural issue; that Americans have lived way beyond their means and now they must live below their means. It seems to me that the government wants to continue this ponzi scheme. How about a more simple idea? That if you can't afford it, then don't buy it and don't even think of financing it!
Would you rather have Microsoft send the work offshore? Microsoft needs highly skilled software engineering personel, which there is a shortage, not manufacturing laborers.
Oh that makes a lot of sense. Let's layoff Americans, then replace them with Indians and Chinese code monkeys on H-1B visas, to work for 30% less. And MSFT is doing that to help Americans?
You must be one of those Indians or Chinese parasites that come here to inflate the housing market and steal American jobs. Or you're MSFT PR foot soldiers who browse all day to do damage control.
If you Asians are such a geniuses, why don't go back to fix your POS countries? Why this dependence on the US so much, if you're such a geniuses on anything? Stay in your country and fix the mess you helped to create. Oh and get rid of that pathetic cast system, while you're at it. Let's not forget the genius Raju from Satyam.
Funny, now we need to replace American jobs with foreigners who hate us, to avoid outsourcing our own American jobs? Whatta BS justification! Oh yeah, ding ding ding, we've gotten a genius here. We can see that by your immediate defensive response that you're totally biased, MSFT code monkey. I hope they fire your arse.
I think perhaps what is coming next is a one world currency. I kid you not. People from around the world are so scared shitless that they will just give in because their savior (Obama) will tell them it will be fine.
The world's elite have waited for a time and this is the perfect time. They would love to have a one world currency.
I lost faith in the USA when the boomer generation came to the collective conclusion that the height of patriotism was to engage in a drunken chant of USA! USA! USA! at any news slightly favorable about the country.
My father and his friends fought in WW II. Neither my father nor his friends talked about what they did. They certainly didn’t join in any patriotic chants. They didn't join veterans organizations. They refused to get veterans license plates. They refused to get handicapped car tags for their war disabilities. They hid their service medals in a dusty corner of a closet. They refused to watch John Wayne's war movies or any other war moves. They would only watch documentaries about their war and then intensely and silently, without explaining what they were thinking. And they thought the act of putting their hands over their hearts during the playing of the national anthem was enough of a show of their patriotism.
That generation is gone. Perhaps my father and his generation spoiled their boomer kids which lead to this crisis. Maybe the boomer generation was just full of bad seeds who took advantage of all which they were given. But if we had the work ethic, humility, and quiet courage of my father's generation, then maybe we wouldn't be where we are today.
get ready, the democrat spending orgy is about to start.
if you thought bridges to nowhere were bad then just wait.
the dems are about to make bush seem like a spend thrift.
One world currency is the mark of the beast!
Man, the Goldbugs are just licking their chops ... too bad the metals market is in a bubble right now too. Declining demand will eventually equal a price crash there, just as it did in oil (remember when the greasers were all predicting $300/bbl by Feb. '09? That sound likely to anyone these days?).
All you worrywarts, go dig yourselves a hole & wait for the Millennial Apocalypse you thought was coming due to the Y2K "crisis."
The rest of you - get a grip.
"Herald-Florida jobless rate passes 8% mark, highest in 16 years
Florida's unemployment rate hit 8.1 percent in December, the highest rate in 16 years, the state labor department announced Friday morning.
That's almost a full point above the national rate of 7.2 percent, as Florida's real estate bust continues to leave the state in worse shape than the nation as a whole."
Devestments checklist of banking possibilities…
Will the dollar become worthless?
I don’t think so, worthless dollars compromise government power. Government is clearly power motivated so it is in their interest to keep the dollars that control all of us strong.
Additionally, government typically caters to the rich. The rich have power and control government, they wont hurt themselves.
Will I loose money due to bank failure?
Possible, but it is a renewable resource.
Is my safe deposit box safe?
No way. Look at the play book (past history). The government may seize your box.
Are my real estate assets safe?
Again, look at the play book. History dictates that government really has no regard for your assets beyond their scope in keeping you and me under their control. People have lost houses to economic turmoil since the beginning. The government has never stopped this loss in their history.
Is this a good time to be in debit?
NO WAY! History dictates that Government fixes typically elongate and exacerbate the problems they are designed to fix. I haven’t seen any real adjustment in pricing in some of the luxury segments of the economy. I think based on history and personal past experience that we are at the start of a long protracted decline in disposable income. This is the eve of consumer driven recession. People can only buy so much before they have all they want (to make payments on or otherwise).
What about free speech?
Anyone remember the ridiculous witch hunts for American Communists during the cold war?
I hate you Devestment!
Come to Hell...
I would like to put my credit card debt into the bad bank. Then I will be clean.
There are some very wild theories being thrown around on this thread. I urge people to give their heads a shake.
One world currency? Maybe someday and maybe there are some powerful people who would love to use one world currency to augment their power. But we are nowhere near that.
Confiscate gold? Another paranoia. Yes, I know they did it before but, seriously, nobody owns gold except an extremely small minority. And they don't even know who owns gold, it's not like you have to register it or something. And what would it get them?
Let's discuss thermonuclear options that stand a chance of happening under the present circumstances.
Nationalization of major financial institutions similar to what was done with Fannie and Freddie would be very messy but it is not outside the realm of possibility.
Less messy is the aggregator bank or 'bad bank' that nationalizes potentially all mortgage-backed securities, potentially all collateral default swaps and perhaps a lot of other asset backed securities (credit card debts, auto loans, etc). This is really just an extension of what the fed and treasury have already been doing with some of it's new facilities that accept commercial paper as security for loans. The fed was meant to only accept treasuries so it's already breaking it's own rules.
Now let's 'game it out', as keith likes to say - what would be the consequences? By all means we should oppose their misguided plans but we should also be prepared for them to do whatever they want with our tax dollars.
Me, I'm trying to secure my finances so I'm not left dependent on government bureaucrats for a home, a job, a retirement.
Personally, I bought some XLF on thursday (wish I bought it wednesday but glad I didn't buy it monday) just in case the government decides to take on all those toxic assets and let the banks get off scott free.
I understand that I could lose it all if the banks are nationalized but if they aren't nationalized then the government is going to have to do something to make them solvent again. And you can bet that bank stocks would be worth a hell of a lot more if the banks were actually solvent.
The part that I'm not sure about is if the government will do something to wipe out speculators like me who are reckless enough to gamble on the banks.
One more thing, if anyone else is thinking about doing what I've done, I recommend buying Goldman Sachs stock instead of XLF - in hindsight that's what I should have done. If any bank is left standing it will be GS.
But, Van Hollen, acknowledged: "How long that can go on before people are overtaken with frustration—the jury is still out on that."
Hahahaha Can you spell ICELAND... It's much fster to sink a SMALL economy...but it will eventually get the BIG ones
DOPES
CODE RED - Economy in Collapse
http://tinyurl.com/d4czer
Prisoner No. 6 said...
All you worrywarts, go dig yourselves a hole & wait for the Millennial Apocalypse you thought was coming due to the Y2K "crisis."
The Millennial Apocalypse has been rescheduled for December 21, 2012. Watch the History Channel for the details.
vanilla ice said...
What about option 3: Do nothing.
Enjoy the continuing crash into Great Depression II. It's what people need. It's what the planet needs. It's not the end of the world.
I agree with you. But, there are small things that you can do now, that you might be glad you did later.
We bought a gas powered generator that we have converted to propane (easier to store). Deep freeze and lots of Food Saver plastic will get you far if (when?) food shortages begin. Solar panels on the roof are now half the price of two years ago. You can power your house in a sunny climate for about $15,000 now. Living off the grid may become really important. Grow a garden and learn to can and flash freeze your food. Keep a stash of cash hidden away for bank holidays.
It is not the end of the world, but life as we have become used to is over.
It is a good thing. Maybe the national conversation will improve instead of always being about how much stuff everyone has on borrowed money. Their Imaginary Wealth.
I am curious also about what I see at the ports. Miles and miles of stored new cars no one wants. Refrigerators, freezers, ovens, etc. Will these items continue to get cheaper or will there come a point that those items sitting and rusting at the ports will just be auctioned off to locals and the rest of us will find that we can't find a toaster or an electric skillet anywhere?
Maybe it is a good time to buy new appliances. Think I will go get a new fridge this year. The price has come down about 500 bucks since last year, but I am thinking by this fall they will really be cheap.
Deflation is wonderful if you still have an income, but there has to be a point coming when these items are going to become scarce?
Excellent point Tom Paine. I also remember my grandpa (WWII vet) telling me "Don't ever buy anything on time. If you can't pay cash for it, you don't need it."
Hmmmmmmm....seems we could learn a thing or two from that generation after all.
But now its too late, this trains got too much momentum to stop now. The house of cards is coming down. I got my guns and bulletts (many of them), I have family whom I am close to who live in rural areas, if it gets too hot in the city. I can hunt, fish, etc, survive without Safeway, if need be. Bring it on. And if you threaten my family or I, two in the chest without hesitation!
Well, my friends, the end game is coming into focus.
The bad bank starts buying up all bad securities to get the banks lending again, but it won't stop the financial system collapse. Bowing to political pressure, the government will be forced to extend guarantees to mortgage debt, mortgages, credit card debt, state/municipal debt, and on and on. The worse things get, the greater the committments will become.
The problem is that it would take tens of trillions to assume all of this existing debt. An no one wants to think about the 800 lb gorilla in the corner - the $120 trillion in derivatives floating around. The derivatives will start blowing up as corporations go bust, and the bad bank will be forced to pay up one way or another.
The federal government doesn't have anywhere near the money to cover this debt and can't credibly borrow that much. The only way out is for the Fed to print big time. They will be able to conceal it for a while, but not everyone is stupid. The currency inflation will become increasingly obvious and there will eventually be a run on the dollar.
The fact that the same thing is happening in other countries is no salvation. Britain is following the same game plan and the pound will fail first. Investors will become even more skittish and all other currencies will become seriously suspect. We will be looking at currency crises spreading across the globe.
How do we explain that the governments and central banks of the world are all buying into this insanity, and not one official has come out against it? It cannot be the case that every single one is an idiot. Even Merkel in Germany has changed her tune and is promising unlimited support for the banks.
There is really only one explanation. They hope they can calm the markets with a few trillion, put humpty dumpty back together again, and kick the can down the road. And they believe the consequences of doing nothing are so severe that they might as well give massive intervention a shot (debateable in my opinion).
So watch the formation of the bad bank carefully. If its charter and money are not limited at the outset, you know what's coming.
Ok, so the gov. sets up a bad bank to take in all bad assets.
What happens to all the malls that are going to close?
What happens to the thousands of houses in Florida that nobody lives in?
What happens to all the businesses closing?
How does reigniting a bad lending scheeme make things ultimately better?
Thats like giving a drunk another cocktail to help him recover.
Is this not like rewarding the criminals, and dumping the scheitt sandwiches on the law abiding masses?
With the bad bank set-up, the interest on the bonds (CDO's) get paid by the taxpayer, what good does that do for the economy?
This thing sounds like another hair brain stonewalling event designed to buy time.
I agree with butch here, time runneth short for the decision makers.
And folks thought Reagans supplyside voodoo economics, and keynesian theory was the answer? LOL, it will be fun navigating threw this one...A real barrel of monkies...
How do we explain that the governments and central banks of the world are all buying into this insanity, and not one official has come out against it? It cannot be the case that every single one is an idiot. Even Merkel in Germany has changed her tune and is promising unlimited support for the banks.
That just shows how much control they have to control all the cnetral banks and have them sing to the same tune. All this sloshing of funds by central banks is done behind the back of the common man and without his permission.
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