Destruction of the US Dollar II by SignyM

Quote:
Originally posted by SignyM:
Carried over from this thread. (It was getting too long)
http://www.fireflyfans.net/mthread.asp?b=18&t=34184
I specifically wanted to reply to this:
Quote:
Everyone seems to focus on blaming the banks and credit card companies for making bad loans and duping innocent people...bah! We teach our children not to take candy from strangers, but then these bad-credit adults go ahead and take the candy anyhow. I don't blame anyone who has lost a job and is having a tough time. It's personal responsibilty that has disappeared in America. There's a third-world mentality out there that drives people to attempt to attain the "American Dream"....The problem is they haven't earned it. They just feel they deserve it, there's a difference.

The Perfect Storm of a Global Recession: An Op-Ed for Project Syndicate
Quote:
NEW YORK – The probability is growing that the global economy – not just the United States – will experience a serious recession. Recent developments suggest that all G7 economies are already in recession or close to tipping into one. Other advanced economies or emerging markets (the rest of the euro zone; New Zealand, Iceland, Estonia, Latvia, and some Southeast European economies) are also nearing a

www.rgemonitor.com/blog/roubini/253415/the_perfect_storm_of_a_global_r
ecession_an_op-ed_for_project_syndicate

Don't Cry For Me Argentina (Save Your Tears For Yourself)
Quote:
Ambition has its price and the bill is now due and owing. The question is: how will the US pay what it owes? In Hyman Minsky’s Financial Instability Model, the US is close to “Ponzi status” if not already there since the US is having to roll its debt forward and borrow from others to pay the interest as it can no longer pay down the principle.

www.financialsense.com/fsu/editorials/schoon/2008/0825.html
---------------------------------

The innocent have been duped...

Folk will have to wake up from their American Dream , and begin to educate themselves...

The truths have been hidden for too long...The Banksters have robbed the True Wealth of this country for nearly a hundred years , and have been at their scheme for much longer than that...

How long can we continue to borrow 3 billion A DAY from the rest of the world to cover the interest on the Debt that the Banksters and CONgressmen have given Us ? Not much longer , really...

Good work finding Roubini's newsletter , SignyM...

Better still , the second link...Some awesome truths in that one !

Example :

" Fisher stated:

...'In the distance, I see a frightful storm brewing in the form of untethered government debt. I choose the words—“frightful storm”—deliberately to avoid hyperbole. Unless we take steps to deal with it, the long-term fiscal situation of the federal government will be unimaginably more devastating to our economic prosperity than the subprime debacle and the recent debauching of credit markets that we are now working so hard to correct.'

Fisher should know what the US owes and the danger that sum represents. As President and CEO of the Dallas Federal Reserve Bank, Fisher is a part of the Federal Reserve
System—the very system that has indebted America into perpetuity when its credit-based money forced out gold and silver based money in 1913.

But in his speech Fisher said nothing about the role the Federal Reserve has played in America’s fatal dance with debt, warning instead about the increasing costs of entitlements such as Social Security and Medicare.

Fisher is part of a larger effort to now blame America’s entitlements as the primary cause of our problems, assiduously avoiding the role his own Federal Reserve Bank has played in sinking our once wealthy nation into perpetual indebtedness.

In truth, the entitlement program that poses the greatest threat to America is—and always has been—the Federal Reserve System. "

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Friday, August 29, 2008 3:38 AM

PARTICIPANT

Good idea to start a new thread the other was WAAAAYY TOOO LOOONNG

Some good points raised

I don't think the US currency will be totally collapsing, Housing and Iraq and Medicare won't cost that much but the dollar will hurt
it will lose respect people will move out of the dollar and we will see something mixed between the Argentina currency panic and Japan's very long recession where Japanese corruption servilely damaged its status as the alternative economic superpower. The Argentina dream story was something to tell the world but it because a nightmare as the peso sunk, the powerful Japan companies still exist but the people have stagnated and poverty is no all over Japan

Much of the same game happened with Argentina the nation's debt mushroomed, corrupt lenders grew nervous, they owed the IMF and it was a house of cards waiting to fall. Banking failures in the US can scare people, some people old enough think it reminds them of the 1930s and next to be expected is riots will break out. I don't think it's that bad and I hope it never will be.
The difference between USA and them is we have a larger economy than Japan and Argentina combined and we owe the IMF nothing but we are not invincible. We are indebted to the Saudis and Chinese and even Peru has started funding US debt. There is a new credit crisis looming and the US wages and US pensions are actually going backwards. Insane people in Venezuela and Iran are becoming hostile to the US, some want to attack our currency pricing their Oil in Euros. It has been reported the euro, the new currency created only five years ago and used by most European nations and once looking so weak they thought it would only continue being monopoly money has supplanted the U.S. dollar as the most widely used form of cash internationally. There are now more Euros in circulation worldwide than dollars.

This is because Bush has no conservative values

He starts wars, wastes our military power leaving our Army and Marines half broke
and then he starts this wreckless spending stealing money from the next US President to come.

national debt exceeding is now 8 trillion and rising and like a space rocket, other people say watch out as the NYC debt clock will breakdown before the end of the Bush Presidency

To distract us from this economic issue we must fight
people will soon be dazed by a mirage of dumbo slogans like Homosexual marriage, Georgia and Stem-cells

With this kind of stupidity going on I think the Chinese are destined to become this next century's Superpower

We should watch out for Economic warfare from hostile nations like Iran, due to a global groundswell to denominate crude oil sales in Euros, and when that comes to pass, the US dollar will collapse much like the mexican and argentinian peso did.
Don't Cry For Me Argentina!!...
Some of the costs leading to the deficit is the tremendous cost of fighting 2 wars simultaneously including the massive senseless war in Iraq and the result of a failed economy caused by an incompetent President at the helm.
Alan Greenspan keeps warning Bush to get of his butt and do something say the U.S. economy is on the brink of a recession, but the fact is Greenspan also helped engineer these credit and banking bubbles
If we measure the NASDAQ the DOW or the GDP in terms of Gold or a currency like Aussie Dollars or British Pounds then we are in full blown recession , however the corrupt Bernanke has run the printing press to make more dollars out of thin air and create the illusion of growth...all this money BTW has been STOLEN from the next US President so McCain or Obama are going to inherit a pretty screwed up economy

Watch Oil prices go insane as another Hurricane season kicks in and watch some scumbag Islamic lunatic send our gas prices through the roof as they blow up another pipeline
Oil is is becoming a waste of time and energy
We need to move into Wind and Nuclear and this will also block the funding supply to terrorists who get their money from oil states.
Nobody in the U.S. will give our economy one iota of thought until it's on the brink of collapse again. Everything is made in China and NASA is soon outsourcing to India. Our manufacturing base is so eroded it's just sad.

But what is the big plan? Some of the truthers sites ask Is it an international banking conspiracy to destroy the dollar and once we are all on par then we could merge US-Canada-Mexico or NAFTA and abolished all borders and make USA a state of Mexico and dump the Dollar for an Amero or a one world currency.
Bush and Cheney plans have "gutted" military has been strengthened by outsourcing formerly military jobs to mercenaries paid 10x what our regular troops are making, some of these over paid mercs were dumb enough to get themselves killed in Georgia, killed after jabbing the Bear in the butt with a sharp stick to see if it would move.
Economically Beijing has us by the balls, China is said to have about trillions piled up in U.S. dollars you might hear about it soon in a movie called IOUSA. To a certain degree, the so-called sovereign wealth funds of foreign governments have no choice but to keep bankrolling the United States' runaway deficit spending, for even though some countries with big reserves of greenbacks certainly have thought about reducing their exposure to the U.S. dollar but these nations cannot just suddenly stampede over to euro- or yen-denominated securities as it could cause a GLOBAL ECONOMIC COLLAPSE. I'm not big into conspiracies but I know Bush is not conservative he never has been, he keeps trying to flush the constitution down the toilet and his spending patterns are insane. Defending Bush's fiscal responsibility is like defending Iran's human rights record

Poverty is on the increase, gas prices are insane and real wages for middle class Americans are lower today than they were 37 years ago

I don't really mind who gets elected next time but it has to be different to the Bush Cheney disaster

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Friday, August 29, 2008 3:56 AM

Friday, July 4, 2008
Something Big is Happening -

' I have, for the past 35 years, expressed my grave concern for the future of America. The course we have taken over the past century has threatened our liberties, security and prosperity. In spite of these long-held concerns, I have days—growing more frequent all the time—when I’m convinced the time is now upon us that some Big Events are about to occur. These fast-approaching events will not go unnoticed. They will affect all of us. They will not be limited to just some areas of our country. The world economy and political system will share in the chaos about to be unleashed.

Though the world has long suffered from the senselessness of wars that should have been avoided, my greatest fear is that the course on which we find ourselves will bring even greater conflict and economic suffering to the innocent people of the world—unless we quickly change our ways.

America, with her traditions of free markets and property rights, led the way toward great wealth and progress throughout the world as well as at home. Since we have lost our confidence in the principles of liberty, self reliance, hard work and frugality, and instead took on empire building, financed through inflation and debt, all this has changed. This is indeed frightening and an historic event.

The problem we face is not new in history. Authoritarianism has been around a long time. For centuries, inflation and debt have been used by tyrants to hold power, promote aggression, and provide “bread and circuses” for the people. The notion that a country can afford “guns and butter” with no significant penalty existed even before the 1960s when it became a popular slogan. It was then, though, we were told the Vietnam War and a massive expansion of the welfare state were not problems. The seventies proved that assumption wrong.

Today things are different from even ancient times or the 1970s. There is something to the argument that we are now a global economy. The world has more people and is more integrated due to modern technology, communications, and travel. If modern technology had been used to promote the ideas of liberty, free markets, sound money and trade, it would have ushered in a new golden age—a globalism we could accept.

Instead, the wealth and freedom we now enjoy are shrinking and rest upon a fragile philosophic infrastructure. It is not unlike the levies and bridges in our own country that our system of war and welfare has caused us to ignore.

I’m fearful that my concerns have been legitimate and may even be worse than I first thought. They are now at our doorstep. Time is short for making a course correction before this grand experiment in liberty goes into deep hibernation.

There are reasons to believe this coming crisis is different and bigger than the world has ever experienced. Instead of using globalism in a positive fashion, it’s been used to globalize all of the mistakes of the politicians, bureaucrats and central bankers.

Being an unchallenged sole superpower was never accepted by us with a sense of humility and respect. Our arrogance and aggressiveness have been used to promote a world empire backed by the most powerful army of history. This type of globalist intervention creates problems for all citizens of the world and fails to contribute to the well-being of the world’s populations. Just think how our personal liberties have been trashed here at home in the last decade.

The financial crisis, still in its early stages, is apparent to everyone: gasoline prices over $4 a gallon; skyrocketing education and medical-care costs; the collapse of the housing bubble; the bursting of the NASDAQ bubble; stockmarkets plunging; unemployment rising;, massive underemployment; excessive government debt; and unmanageable personal debt. Little doubt exists as to whether we’ll get stagflation. The question that will soon be asked is: When will the stagflation become an inflationary depression?

There are various reasons that the world economy has been globalized and the problems we face are worldwide. We cannot understand what we’re facing without understanding fiat money and the long-developing dollar bubble.

There were several stages. From the inception of the Federal Reserve System in 1913 to 1933, the Central Bank established itself as the official dollar manager. By 1933, Americans could no longer own gold, thus removing restraint on the Federal Reserve to inflate for war and welfare.

By 1945, further restraints were removed by creating the Bretton-Woods Monetary System making the dollar the reserve currency of the world. This system lasted up until 1971. During the period between 1945 and 1971, some restraints on the Fed remained in place. Foreigners, but not Americans, could convert dollars to gold at $35 an ounce. Due to the excessive dollars being created, that system came to an end in 1971.

It’s the post Bretton-Woods system that was responsible for globalizing inflation and markets and for generating a gigantic worldwide dollar bubble. That bubble is now bursting, and we’re seeing what it’s like to suffer the consequences of the many previous economic errors.

Ironically in these past 35 years, we have benefited from this very flawed system. Because the world accepted dollars as if they were gold, we only had to counterfeit more dollars, spend them overseas (indirectly encouraging our jobs to go overseas as well) and enjoy unearned prosperity. Those who took our dollars and gave us goods and services were only too anxious to loan those dollars back to us. This allowed us to export our inflation and delay the consequences we now are starting to see.

But it was never destined to last, and now we have to pay the piper. Our huge foreign debt must be paid or liquidated. Our entitlements are coming due just as the world has become more reluctant to hold dollars. The consequence of that decision is price inflation in this country—and that’s what we are witnessing today. Already price inflation overseas is even higher than here at home as a consequence of foreign central bank’s willingness to monetize our debt.

Printing dollars over long periods of time may not immediately push prices up–yet in time it always does. Now we’re seeing catch-up for past inflating of the monetary supply. As bad as it is today with $4 a gallon gasoline, this is just the beginning. It’s a gross distraction to hound away at “drill, drill, drill” as a solution to the dollar crisis and high gasoline prices. Its okay to let the market increase supplies and drill, but that issue is a gross distraction from the sins of deficits and Federal Reserve monetary shenanigans.

This bubble is different and bigger for another reason. The central banks of the world secretly collude to centrally plan the world economy. I’m convinced that agreements among central banks to “monetize” U.S. debt these past 15 years have existed, although secretly and out of the reach of any oversight of anyone—especially the U.S. Congress that doesn’t care, or just flat doesn’t understand. As this “gift” to us comes to an end, our problems worsen. The central banks and the various governments are very powerful, but eventually the markets overwhelm when the people who get stuck holding the bag (of bad dollars) catch on and spend the dollars into the economy with emotional zeal, thus igniting inflationary fever.

This time—since there are so many dollars and so many countries involved—the Fed has been able to “paper” over every approaching crisis for the past 15 years, especially with Alan Greenspan as Chairman of the Federal Reserve Board, which has allowed the bubble to become history’s greatest.

The mistakes made with excessive credit at artificially low rates are huge, and the market is demanding a correction. This involves excessive debt, misdirected investments, over-investments, and all the other problems caused by the government when spending the money they should never have had. Foreign militarism, welfare handouts and $80 trillion entitlement promises are all coming to an end. We don’t have the money or the wealth-creating capacity to catch up and care for all the needs that now exist because we rejected the market economy, sound money, self reliance and the principles of liberty.

Since the correction of all this misallocation of resources is necessary and must come, one can look for some good that may come as this “Big Even” unfolds.

There are two choices that people can make. The one choice that is unavailable to us is to limp along with the status quo and prop up the system with more debt, inflation and lies. That won’t happen.

One of the two choices, and the one chosen so often by government in the past is that of rejecting the principles of liberty and resorting to even bigger and more authoritarian government. Some argue that giving dictatorial powers to the President, just as we have allowed him to run the American empire, is what we should do. That’s the great danger, and in this post-911 atmosphere, too many Americans are seeking safety over freedom. We have already lost too many of our personal liberties already. Real fear of economic collapse could prompt central planners to act to such a degree that the New Deal of the 30’s might look like Jefferson’s Declaration of Independence.

The more the government is allowed to do in taking over and running the economy, the deeper the depression gets and the longer it lasts. That was the story of the 30ss and the early 40s, and the same mistakes are likely to be made again if we do not wake up.

But the good news is that it need not be so bad if we do the right thing. I saw “Something Big” happening in the past 18 months on the campaign trail. I was encouraged that we are capable of waking up and doing the right thing. I have literally met thousands of high school and college kids who are quite willing to accept the challenge and responsibility of a free society and reject the cradle-to-grave welfare that is promised them by so many do-good politicians.

If more hear the message of liberty, more will join in this effort. The failure of our foreign policy, welfare system, and monetary policies and virtually all government solutions are so readily apparent, it doesn’t take that much convincing. But the positive message of how freedom works and why it’s possible is what is urgently needed.

One of the best parts of accepting self reliance in a free society is that true personal satisfaction with one’s own life can be achieved. This doesn’t happen when the government assumes the role of guardian, parent or provider, because it eliminates a sense of pride. But the real problem is the government can’t provide the safety and economic security that it claims. The so-called good that government claims it can deliver is always achieved at the expense of someone else’s freedom. It’s a failed system and the young people know it.

Restoring a free society doesn’t eliminate the need to get our house in order and to pay for the extravagant spending. But the pain would not be long-lasting if we did the right things, and best of all the empire would have to end for financial reasons. Our wars would stop, the attack on civil liberties would cease, and prosperity would return. The choices are clear: it shouldn’t be difficult, but the big event now unfolding gives us a great opportunity to reverse the tide and resume the truly great American Revolution started in 1776. Opportunity knocks in spite of the urgency and the dangers we face.

Let’s make “Something Big is Happening” be the discovery that freedom works and is popular and the big economic and political event we’re witnessing is a blessing in disguise. '

--------------------------------------------------------------------------------------------------

3 Guesses--Who said it ?

There's a lot of truth , sanity , and real intelligence in this article...

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Friday, August 29, 2008 4:24 AM

US Incomes Dropping...

http://news.yahoo.com/s/ap/20080829/ap_on_bi_go_ec_fi/economy

Meanwhile , the Rich are getting Richer...

http://finance.yahoo.com/taxes/article/105638/The-Ranks-of-the-Ultrawe
althy-Grow

--------------------------------------------------------------------------------------------------

"There can be no legal tender in this country ... but gold and silver. This is a constitutional principle ...
...of the very highest importance."— Daniel Webster

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Friday, August 29, 2008 7:16 AM

two pix to consider

Dollar/Euro

from doctorhousingbubble

Quote:
The Euro is the currency of the Eurozone which includes 13 states. These include Germany, France, and Austria to name a few. The dollar was held by 70.9 percent as the official exchange reserve in 1999 by nations while the Euro was held by 17.9 percent. As of 2007, the US dollar is now held by 65.7 percent while the Euro has steadily gone up to 25.2 percent. Clearly the dollar still dominates the world reserve markets but the lead is slowly dwindling. The attractiveness recently of the Euro is that countries have to meet strict requirements to enter the “zone” and a small percentage is actually backed by physical commodities

the power of the dollar

from tehowe.blogspot

Quote:
Do you know how much your money is worth?...
..In order to understand the connection between the contemporary declines in living standards and the rising costs gripping families and North American markets alike, it’s necessary first to grasp the true purpose of the concept of ‘value’: what it is, how to measure it, and how some reliable means of measuring economic activity today is an absolute requirement to lighting the way out of the current credit market meltdown and attendant inflationary crisis. When inflation rises, your dollar buys less.

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Friday, August 29, 2008 1:18 PM

KWICKO

"We'll know our disinformation program is complete when everything the American public believes is false." -- William Casey, Reagan's presidential campaign manager & CIA Director (from first staff meeting in 1981)

Quote:

3 Guesses--Who said it ?

Ron Paul?

Mike

"I supported Bush in 2000 and 2004 and intellegence[sic] had very little to do with that decision." - Hero, Real World Event Discussions

I can't help the sinking feeling that my country is now being run by people who read "1984" not as a cautionary tale, but rather as an instruction manual. - Michael Mock

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Friday, August 29, 2008 1:27 PM

I believe in solving problems, not sharing them.

No, no no, Kwicko! You did it all wrong! You get THREE guesses, like THIS:

Ron Paul?
Ron Paul?
Ron Paul?

---------------------------------
Any idea, no matter how much you may agree with it, can be radicalized and employed as an excuse for violence. There is no such thing as a righteous or untouchable philosophy, and when you start thinking that there is, you have become an extremist.- Finn Mac Cumhal

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Friday, August 29, 2008 2:03 PM

KWICKO

Signy, you're killing me!

I was kind of hoping someone would go "Right - but you still have two more guesses."

:)

The real reason Ron Paul never had a chance was that no one could stomach the idea of the first lady being... Mrs. Paul. Frozen fish for EVERY state dinner? Fish sticks AGAIN? Come on!!

Mike

"I supported Bush in 2000 and 2004 and intellegence[sic] had very little to do with that decision." - Hero, Real World Event Discussions

I can't help the sinking feeling that my country is now being run by people who read "1984" not as a cautionary tale, but rather as an instruction manual. - Michael Mock

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Friday, August 29, 2008 11:58 PM

Quote:
Originally posted by Kwicko:
Quote:

3 Guesses--Who said it ?

Ron Paul?

Mike

I can't help the sinking feeling that my country is now being run by people who read "1984" not as a cautionary tale, but rather as an instruction manual. - Michael Mock

DingDingDing!!!

Yup , it was 'Doctor No' who said it !

Now , they're getting the gang all together , for 'RonStock08' , and I hear they're even going to sacrifice A COW !

http://news.yahoo.com/s/ap/20080830/ap_on_el_pr/cvn_gop_ron_paul

If wishes were horses , we'd all be eatin' Mrs. Paul's fish sticks , NOPE ,...Steak !

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Sunday, September 7, 2008 8:19 AM

FALL is the Time for HARVEST...

This article is quite old by now , but it is only More True due to the time elapsed since it went to publication :

8500 US Banks : Many Will Die Soon

http://cryptogon.com/?p=2994

" How bad is this going to get?

Bear Stearns got bailed out ‘cause they were highly visible (read: failure would have exposed aforementioned funny money to the average Joe), Freddie Mac and Fannie Mae are Government Sponsored Entities who now have their sickly balance sheets backstopped by the U.S. Treasury (read you & me), but all the commercial banks have is the Federal Deposit Insurance Corporation.

Great! All accounts are insured to $100,000! We’re saved!

Way wrong. The FDIC is an insurance operation. They make an educated guess as to how many banks will fail and what the total exposure is, then they collect insurance premiums from them. They’ve got $51 billion … and Indymac alone sucked up 10% of that. If a big one lets go, like Washington Mutual or Wachovia, then the FDIC will look just like FEMA did facing down hurricane Katrina. Don’t go and look at the scoreboard on the Bank Implode-O-Meter unless you’ve got a very strong stomach. Oh, and do note that a good bit of those write downs are investment banks - the FDIC does not cover their activities.

OK, very scared now, so what do I do?

Run, don’t walk, to your bank and get the funds you have clear of this mess before it gets any worse. The safe deposit box … isn’t. There were rules during the Great Depression such that a treasury agent got to paw through any that were opened before the owner got to touch their stuff; gold, silver, and cash could easily be confiscated in an emergency. "

There's More bad news , besides the foregoing :

" This can not be stopped. The losses have already occurred. It isn’t an “if”, it’s a “when” and I was expecting it around 4/1/2008, but they held it off for another quarter. It looks for all the world like July is the lucky month with the Indymac stuff coming down right next to Fannie and Freddie’s corpses hitting the mighty U.S. Treasury Reanimator. Someone, somewhere is going to pull a joker out of this house of cards – some innocuous bond sale somewhere will fail, a monoline insurer will get pushed over the edge, and then the rout will begin.

The Ginormous Banking Enema has begun with the first little squirt from Indymac Bancorp’s failure. It won’t end until we’re all up to our nostrils in an alphabet soup of make-believe financial instruments and newly-created federal agencies conceived to clean up the mess. "

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Sunday, September 7, 2008 9:01 AM

This just came to my inbox , and it confirms what I've been saying in this thread , and the previous one :

" This is the greatest Silver and Gold buying opportunity of all time , or is it the end of a bull market?

The bull market is far from over. To say the precious metals bull market is over is as foolish as saying there was never a bull market in the first place. It's a documented fact, throughout history , all bull markets last 14-19 years. This bull market has been going since 2001. So we still have at least , another SEVEN years to go. Commentators , who believe that the commodity bubble in silver and gold has popped , don't understand what drives them in the first place.

Remember , if the fundamental reasons that drive a market don't change... The market direction has No reason to change.

The fundamentals have not changed! High energy prices , government over spending , the under-water banking system, the credit-mess , inflation and especially the mass production of the FIAT-based U.S. Dollar.

The key fundamental reason that drives Gold and Silver is the mass production of the U.S. Dollar.

Silver , especially Gold are not commodities ; they are money and nothing else.

Intelligent investors and main street people , whom have piled into gold and silver , have done so for protection.

They are not buying metals because they think that the demand for electrical conductors or jewelry is going to go through the roof. They are buying it for protection against the devaluation or outright devastation of the U.S. Dollar.

Ask yourself ; is the devastation of the U.S. Dollar over?

Not even close! Wall Street has always used the old smoke and mirror trick of currency index markets , where they trade one currency against the other.

Think of it like a wrestling match , they pin two equally bad FIAT-based currencies against each other to see who's worse off.

The recent rise in the dollar index does not mean inflation has slowed or stopped , nor does it mean the Federal Reserve stopped printing money. Bottom line , inflation is caused by a devaluating dollar. The devaluating dollar is caused by the mass production of paper currency.

The un-Federal Reserve can never stop printing money. More and more worthless paper money has to be pumped into the system in order to keep the " ponzi scheme " going. Like all schemes, they always come to a devastating end.

The real question is , how close are we to that end? You can do the math , since the 1913 inception of the Federal Reserve ; the U.S. Dollar has lost over 97% of its purchasing power. Every time the Federal Reserve bails out another bank and " adds liquidity " to the tune of Trillions of dollars; it creates money out of thin air , creating more inflation. In turn , the purchasing power of your money lessens , despite what the U.S. Dollar Index is saying.

Currency index markets are manipulated. Don't believe it?

Look at the Japanese Yen; everyone knows it's artificially suppressed by its internal government in order to make their goods more affordable for the rest of the world to buy. Japan is a net exporter... They need the income!

The recent drop in gold and silver, resulting in the rally of the U.S. Dollar , is nothing but a short term manipulation caused by the unwinding of hedge funds and central banks that are notably walking away from the U.S. dollar.

The U.S. Dollar is now seen across the world, as a liability , not an asset.

All markets swing like pendulums. Many times , they swing too far one way and then too far the other. Gold and Silver prices became overbought , they went up too high , too quick. The same market funds that were short dollars , betting the dollar down, were long silver and gold. Once major hedge funds started unwinding their short dollar positions , they also took profits in their net long metals positions.

This created a snow ball effect. Meaning, the drop in gold and silver were " technically- based ". Futures traders who leverage the market price of gold and silver , saw the volume and open interest swing from net long (higher forecast) to a net short (lower forecast). Plus , the charts and indicators , indicated sell signals which added to the sell-off.

What does it all mean?

The market pendulum has gone too low , too quick: gold and silver are now extremely oversold.

Look at the numbers: Silver, which is always more volatile , is down 37.4%. Gold, on August 15th , was down to $787.50 , that's a 21% correction , If you're in it , I know this can seem harsh and hard to stomach , but these numbers are not eccentric , they are quite normal. The dollar amounts may seem out of the ordinary however , the percentage moves are quite common.

In the world of technical trading and charting , all traders use one key technical indicator called the
" Fibonacci Retracement " which states that in any bull market there will always be a 38% retracement and up to a 50%retracement , before the market begins its next " leg-up ".

We are here!

Take a look at silver prices , from the recent high , down to November 2001 at $4.025 , a 50 percent correction would mean silver prices would be priced at $12.30 , which was practically seen on August 15th.

On the other hand , if gold and silver prices are correcting the 2006 to 2008 price gains , then gold hit its 50 percent correction level on Friday August 15th at $782.60 , and to give
you an idea of how oversold silver really is , silver now finished its 75% correction.

If that sounds absurd or just plain crazy?
Think about this....Five years into a bull market in 1987 the Dow plunged more than 30 percent in just four days. Some called it a crash and the end of a bull market.... those commentators were wrong!

Remember, all bull markets last 14 to 19 years , that's why the stock market rose more than 10 times in the following 12 years.

Meaning , the stock market is now in its 17-18 year run . Again, bull markets runs only last 14-19 years!

Bottom line: Gold and Silver remain in a powerful bull market with another seven or more years to run to the upside.

The bull market gods are handing you a gift: Buy!

We have probably seen the bottom. You can expect gold and silver markets to trade in a range , in the following days , up a couple of days and down a couple of days.....

That's a good sign. That means the market is holding its support levels (floor).

The last thing to consider is that the U.S. Dollar is suppose to go up in August , gold and silver are suppose to go down in August as well.

We have seen this pattern every year for the
past 34 years. You can also see for yourself , that same seasonal chart indicates , gold is about to make its largest move to the upside for the year.

In 34 years it's never been wrong!

Take a look: http://www.goldworthfinancial.com/html/seasonal.php

In closing, the fundamental reasons that have driven gold and silver prices to exponential highs for the past seven years have not changed , therefore the market trend/direction will not change.

Gold and Silver will continue going higher and the U.S. Dollar will continue to devalue.

The FDIC, expects a run on the banks, the question is not " are more banks going to fail " , the real questions are how many and
how bad is it going to get.

The " wild card " is our government's hidden or not so hidden agenda against Iran. If and when we take any action, the stock market will plunge and the U.S. Dollar will Crash.

For or against wars, no one can argue, we can't afford them !

In my professional and personal opinion things are going to get worse before they get any better.

If you agree, start protecting yourself.

Accumulate Gold and Silver, before prices go up again.

Respectfully,

Alex Panameno

Restore the Republic Metals Adviser
http://www.restoretherepublic.net/AlexP "

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Sunday, September 7, 2008 5:02 PM

" A centralised democracy may be as tyrannical as an absolute monarch ; and if the vigour of the nation is to continue unimpaired , each individual , each family , each district , must preserve as far as possible its independence, its self-completeness , its powers and its privilege to manage its own affairs and think its own thoughts. "

--James Anthony Froude
(1818-1894) Author and historian
Source: Short Studies on Great Subjects

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Sunday, September 7, 2008 6:11 PM

" Although economists have pontificated over the decades about this or that cause of the Great Depression, even the current Fed chairman Ben S. Bernanke, agrees with Friedman's assessment that the Fed caused the Great Depression.

At a Nov. 8, 2002, conference to honor Friedman's 90th birthday, Bernanke, then a Federal Reserve governor, gave a speech at Friedman's old home base, the University of Chicago. Here's a bit of what Bernanke, the man who now runs the Fed – and thus, one of the most powerful people in the world – had to say that day:

' I can think of no greater honor than being invited to speak on the occasion of Milton Friedman's ninetieth birthday. Among economic scholars, Friedman has no peer. …
Today I'd like to honor Milton Friedman by talking about one of his greatest contributions to economics, made in close collaboration with his distinguished coauthor, Anna J. Schwartz. This achievement is nothing less than to provide what has become the leading and most persuasive explanation of the worst economic disaster in American history, the onset of the Great Depression – or, as Friedman and Schwartz dubbed it, the Great Contraction of 1929-33.

… As everyone here knows, in their "Monetary History" Friedman and Schwartz made the case that the economic collapse of 1929-33 was the product of the nation's monetary mechanism gone wrong. Contradicting the received wisdom at the time that they wrote, which held that money was a passive player in the events of the 1930s, Friedman and Schwartz argued that "the contraction is in fact a tragic testimonial to the importance of monetary forces. " '

After citing how Friedman and Schwartz documented the Fed's continual contraction of the money supply during the Depression and its aftermath – and the subsequent abandonment of the gold standard by many nations in order to stop the devastating monetary contraction – Bernanke adds:

… ' Before the creation of the Federal Reserve, Friedman and Schwartz noted, bank panics were typically handled by banks themselves – for example, through urban consortiums of private banks called clearinghouses. If a run on one or more banks in a city began, the clearinghouse might declare a suspension of payments, meaning that, temporarily, deposits would not be convertible into cash. Larger, stronger banks would then take the lead, first, in determining that the banks under attack were in fact fundamentally solvent, and second, in lending cash to those banks that needed to meet withdrawals. Though not an entirely satisfactory solution – the suspension of payments for several weeks was a significant hardship for the public – the system of suspension of payments usually prevented local banking panics from spreading or persisting. Large, solvent banks had an incentive to participate in curing panics because they knew that an unchecked panic might ultimately threaten their own deposits.
It was in large part to improve the management of banking panics that the Federal Reserve was created in 1913. However, as Friedman and Schwartz discuss in some detail, in the early 1930s the Federal Reserve did not serve that function. The problem within the Fed was largely doctrinal : Fed officials appeared to subscribe to Treasury Secretary Andrew Mellon's infamous 'liquidationist' thesis, that weeding out "weak" banks was a harsh but necessary prerequisite to the recovery of the banking system. Moreover, most of the failing banks were small banks (as opposed to what we would now call money-center banks) and not members of the Federal Reserve System. Thus the Fed saw no particular need to try to stem the panics. At the same time, the large banks – which would have intervened before the founding of the Fed – felt that protecting their smaller brethren was no longer their responsibility. Indeed, since the large banks felt confident that the Fed would protect them if necessary, the weeding out of small competitors was a positive good, from their point of view.

In short, according to Friedman and Schwartz, because of institutional changes and misguided doctrines, the banking panics of the Great Contraction were much more severe and widespread than would have normally occurred during a downturn. …

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna : Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.' "

http://www.wnd.com/index.php?fa=PAGE.view&pageId=59405

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Tuesday, September 9, 2008 6:36 AM

Trillion Dollar Lie and End of U.S. Dollar as We Know It
http://www.numismaster.com/ta/numis/Article.jsp?ad=article&ArticleId=5
285

Quote:
On Sept. 7, U.S. Treasury Secretary Henry Paulson announced plans for the federal government to seize control of troubled mortgage lenders/buyers Fannie Mae and Freddie Mac.

The two companies will be placed in conservatorship under management of the Federal Housing Finance Agency. As part of the agreement, the federal government will receive some $1 billion of senior preferred stock in each company plus warrants for a right to a 79.9 percent stake in each company. In return, the federal government has agreed to provide as much equity capital as needed to cover all future losses from mortgage defaults.

The two companies together hold over $5 trillion in residential real estate mortgages, roughly half of the entire U.S. market. In the 12 months ended June 30, 2008, the two companies had reported a combined $14 billion in losses.

Fannie Mae and Freddie Mac have almost $200 billion in short-term debt that was maturing in the next four weeks. The prospects of rolling over this debt were so poor that government officials feared an imminent failure of the real estate mortgage market. By taking over the two companies, the federal government is able to prevent the immediate collapse of this market.

Government officials are promulgating the BIG LIE in trying to understate how much this takeover will cost the federal government (i.e., taxpayers). Almost every news report I have heard or read cites the Congressional Budget Office cost estimate of only $25 billion.

Conservatively, that is a TRILLION DOLLAR LIE!

As of June 30, 2008, according to the most recent survey from the Mortgage Bankers Association, 9.2% of all one-to-four family home mortgages were at least one month overdue or already in foreclosure. This is the highest delinquency rate in the 39-year history of this survey.

Even the highest quality debt can only be dumped right now for, at most, 80 percent of face value. This assumes that there is no major disgorging of mortgages from Fannie Mae, Freddie Mac, or anyone else. Any program of massive sales of mortgages would almost certainly increase the discount from face value of all debt.

With Fannie Mae and Freddie Mac holding $5 trillion in mortgages, and under orders to sharply trim their portfolios - each company is to have a maximum of $850 billion by the end of 2009, then keep whittling down until they only hold $250 billion in mortgage - the U.S. government has, in effect, just absorbed $1 trillion in immediate losses.

The federal government already has more than $9 trillion in acknowledged debt plus is on the hook for around $70 trillion in unfunded future liabilities (such as Social Security and Medicare). So where is the federal government going to come up with an extra trillion dollars (and possibly more) to bail out Fannie Mae and Freddie Mac?

Governments can only obtain resources from the private sector. It can confiscate it through higher taxes, borrow it by issuing more debt, or steal it through inflation by increasing the money supply. To cover the costs of the takeover, the federal government is going to have to take at least one of these steps.

Raising taxes will hurt the economy even further, so I don't expect the costs to be covered by that route. The U.S. government has ramped up its borrowing so much that it can only try to float more debt by raising the interest rate paid on all future debt. That leaves inflating the money supply as the politically easy means of financing the seizure of Fannie Mae and Freddie Mac.

Unfortunately for the federal government, an inflationary rise in the money supply will hurt the value of the U.S. dollar. The largest holders of U.S. government debt are foreign governments and central banks. So far, they have largely held together in not dumping large quantities of U.S. government debt.

I think it is inevitable that the takeover of Fannie Mae and Freddie Mac will be the final crack in the dam that causes one or more of the major holders of U.S. government debt to bail out. I expect a flood of foreign-held U.S. dollars and dollar-denominated debt to flow back to the U.S. This will accelerate the decline of the U.S. dollar, relative to other currencies and also in absolute terms. In order to persuade anyone to take U.S. debt, interest rates will have to soar and greater collateral will have to be pledged.

In my judgment, now that the U.S. government has taken control of these Fannie Mae and Freddie Mac, we are locked into the end of the U.S. dollar as we know it.

Even though the eventual result of this takeover is easy to comprehend, almost nobody seems to grasp the implications of what has happened. This is exactly what U.S. government officials want. That the takeover was going to happen someday was pretty much a foregone conclusion for at least the last month. However, the general public was mostly ignoring the situation, assuming that if there was a problem, the government would, of course, take care of it.

To lull the general public into thinking that this weekend's takeover was the right step to take and that it will somehow avert a crisis, the U.S. government has pulled out all the stops early this week. Even though the U.S. government is now more broke than it was last week, the markets have been manipulated so that the relative value of the U.S. dollar has increased, the U.S. stock markets have rallied, interest rates have been held in check, and gold and silver - alternative currencies to which holders of U.S. dollars might switch - have seen their prices fall to their lowest levels of 2008.

This market manipulation by the U.S. government and its trading partners may only last a few days or it may last a few months. It will end someday, perhaps very soon. Once the tide turns, I expect we will then see the largest ever percentage rise in the prices of gold and silver.

I also predict that at least one nation will come out with a gold-backed currency. If that happens, the U.S. dollar will be on the way out. Enjoy acquiring precious metals at today's bargain prices.

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Tuesday, September 9, 2008 8:09 AM

Another precise analysis , Jayneztown...

People , get ready !

" The mistakes made with excessive credit at artificially low rates are huge, and the market is demanding a correction. This involves excessive debt, misdirected investments, over-investments, and all the other problems caused by the government when spending the money they should never have had. Foreign militarism, welfare handouts and $80 trillion entitlement promises are all coming to an end. We don’t have the money or the wealth-creating capacity to catch up and care for all the needs that now exist because we rejected the market economy, sound money, self reliance and the principles of liberty. "

--Ron Paul , July 4th , 2008

" If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them (around the banks),
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered. "

--Thomas Jefferson

Give me control of a nation's money and I care not who makes her laws.
--Mayer Amschel Rothschild

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Tuesday, September 9, 2008 9:02 AM

Meanwhile :

http://news.yahoo.com/s/ap/20080909/ap_on_bi_ge/lehman_brothers_deal

" NEW YORK - Lehman Brothers Holdings Inc. shares plunged to their lowest level in more than a decade amid investor concerns Tuesday the battered investment bank is running out of options to raise capital.

Investors, anxious about the possibility of a bank failure after the near-collapse of Bear Stearns in March, punished the stock in early afternoon trading. The stock plunged $4.16, or 29.4 percent, to $9.99 — the lowest level Lehman's stock
has hit since the collapse of hedge fund Long-Term Capital Management in 1998.

The nation's fourth-largest securities firm has been seeking to boost liquidity after suffering $8.2 billion in write-downs
and credit losses since the financial crisis began last year. "

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Tuesday, September 9, 2008 9:37 AM

I believe in solving problems, not sharing them.

Perhaps someone can explain portions of the article to me. While I feel I have a grasp of the macro-economic big picture, some of the actual market mechanisms are beyond my grasp. I feel as if the articles are pitched for thsoe who arleady know. So, here goes.....

Quote:
Even the highest quality debt can only be dumped right now for, at most, 80 percent of face value.

Why? Fannie and Freddie hold mortgages that go back before the housing bubble. Not every mortgage is based on an overvalued home. Is there some sort of automatic devaluation that occurs when mortgages are sold? 'Cause if not, I think the point would be better made with an actual analysis of the quality of the mortgages, rather than painting every single mortage with the current crisis.

Quote:
This assumes that there is no major disgorging of mortgages from Fannie Mae, Freddie Mac, or anyone else. Any program of massive sales of mortgages would almost certainly increase the discount from face value of all debt.

True.

Quote:
With Fannie Mae and Freddie Mac holding $5 trillion in mortgages, and under orders to sharply trim their portfolios - each company is to have a maximum of $850 billion by the end of 2009, then keep whittling down until they only hold $250 billion in mortgage - the U.S. government has, in effect, just absorbed $1 trillion in immediate losses.

First of all, WHY does the Federal government want Fannie and Freddie to trim their portfolios? It doesn't make sense. Somewhat like the monolines, Fannie and Freddie have "the good stuff" (like munibonds were for the monolines) and "the
bad stuff" (like toxic-mortgage-based bonds were for the monolines.) To trim your portfolio, you have to sell. But Fannie and Freddie won't be able to sell "the bad stuff" because nobody is in the market to buy crap... they've got enough crap of their own. So Fannie and Freddie will have to sell "the good stuff" in order to raise capital to shore up the bad stuff. It would be far better if the government actually managed its way out of the problem: renegotiate the salvagable, foreclose on the irredeemable, and make prudent loans in the future.

Secondly, have I got the math right behind the trillion-dollar loss? For simplicity, let's assume that the Feds own Fannie and Freddie outright, which collectively own $5 trillion in mortgages. If Fannie and Freddie are to sell off $4.5 trillion of their assets at 80% of face value, that represents a 20% loss on $4.5 which is about $0.9 trillion. Since the government own "only" about 80%, that is an actual $0.7 trillion. But since Fannie and Freddie will likely be selling off their "better" mortgages, they might get well more than 80%.

So, is $1 trillion realistic?

---------------------------------
Any idea, no matter how much you may agree with it, can be radicalized and employed as an excuse for violence. There is no such thing as a righteous or untouchable philosophy, and when you start thinking that there is, you have become an extremist.- Finn Mac Cumhal

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Tuesday, September 9, 2008 11:25 AM

Quote:
Originally posted by SignyM:

So, is $1 trillion realistic?

No , probably not at all...

Here's how it was explained to me , in part :

' Only a few short weeks ago Treasury Secretary Henry Paulson was sitting in front of Congress asking for unlimited authority (which in "Washington-ese" translates to money) to back Fannie Mae and Freddie Mac – the two largest mortgage guarantors in the country – possibly even the world. He justified this mind-boggling request by saying the more money they had access to, the less likely a bailout would be.

Well the Bush administration announced yesterday that the government would be taking over both Fannie Mae and Freddie Mac.

The capital reserves of these mortgage giants had fallen dangerously low – due to some creative accounting on their part as it turns out. And now the powers that be (that would be those that spend your tax dollars) have stepped in to restore order.

This move begs two important questions.

First, will they be able to restore order and confidence in such a mammoth market that has taken on so much water?

Second, and more importantly, what implications will this move have for you and your investments?

In answer to the first, while on the surface this move would appear to secure the nearly $5.5 trillion in outstanding mortgage debt, a deeper look suggests it might not.

That's because of the way these giant mortgage beasts operate.

Their main job was to pump money into the banking system that could be lent to prospective home buyers. They injected this capital into the system by buying mortgages that banks had already issued. They'd then securitize these debts and sell them to raise more capital.

BUT there's the catch. In a perfect world – or even a world that simply operates the way it's supposed to – the income from that securitized debt should come from borrowers repaying their loans. If those borrowers default on these loans, the terms of this takeover stipulate the government must guarantee them.

Now you can see the problem.

The reality of the situation will be that all this debt will actually end up being backed by the printing press of the U.S. Treasury. Further inflaming an inflationary, dollar-devaluing spiral that I promise will be attractive to NO ONE...Potentially undermining the very stabilizing effect that their action is supposed to have.

How bad will it end up being? How much all this will cost? Let's take a quick look at the math of the situation.

Those in position to guess precisely how much the bailout will cost us, the taxpayers, won't hazard one at the moment. No surprise there. They'll be wearing down the erasers on their pencils for some time to come.

Earlier estimates suggested as much as $25 billion. But, given the recently revealed accounting "legerdemain" by these government sponsored entities, that number is likely way off.

The media reported this weekend that the total cost is "unknown." They're rounding down to "tens of billions" of dollars. But it only takes a slightly deeper look to come up with a better, and more accurate guess...

Back when Hank was shaking his tin cup in front of Congress, begging for the rights to bail out these two behemoths, he argued a blank check would negate the need to actually use the money. But Congress covered their backsides and assumed, as usual, a bailout would be coming out of taxpayers pockets. In doing this they raised the U.S. debt ceiling – the amount of debt the government could pile up – by nearly a TRILLION DOLLARS.

THAT trillion dollars is theoretically what the government itself is expecting this bailout to cost.

So will it save the day? Will a government bailout create the illusion that these securities are safe to buy and sell? Will credit markets stabilize and go back to business as usual? Hard to say. But the answer to the second question – the impact on you – becomes infinitely more clear.

Aiming a fire hose of cash at this current crisis will wreak absolute havoc on the dollar. On it's purchasing power at home and the future value of ALL your investments.

And that means understanding currency markets today is absolutely vital for any serious investor. Because in a world of fiat dollars, cash that can be produced to cover any crisis like the one we're seeing right now, NOTHING backs the currencies you hold. There are no anchors to guarantee its value. Nothing except the "faith" of the government who issues it.

And what becomes even more important is the faith (or lack of it) that others have in those currencies...'

( Thanks , Erika , I hope this helps a few more understand the basic forces...)

There'll be more in the way of Details to consider , as we move forward...

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Tuesday, September 9, 2008 12:31 PM

Quote:
Originally posted by SignyM:
Perhaps someone can explain portions of the article to me.

Quote:
With Fannie Mae and Freddie Mac holding $5 trillion in mortgages, and under orders to sharply trim their portfolios - each company is to have a maximum of $850 billion by the end of 2009, then keep whittling down until they only hold $250 billion in mortgage - the U.S. government has, in effect, just absorbed $1 trillion in immediate losses.

But Fannie and Freddie won't be able to sell "the bad stuff" because nobody is in the market to buy crap... they've got enough crap of their own. So Fannie and Freddie will have to sell "the good stuff" in order to raise capital to shore up the bad stuff. It would be far better if the government actually managed its way out of the problem: renegotiate the salvagable, foreclose on the irredeemable, and make prudent loans in the future.

08/09/08 "CNBC" -- - The nationalization of Fannie Mae and Freddie Mac shows that the U.S. is "more communist than China right now" but its brand of socialism is meant only for the rich, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe on Monday.

"America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it's just bailing out financial institutions," Rogers said.

Stock markets jumped after the U.S. government's decision to launch what could be its biggest federal bailout ever, in a bid to support the housing market and ward off more global financial market turbulence.

But Rogers said in the long term the move spelled trouble.

"This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I'm not quite sure why I or anybody else should be paying for this," Rogers told "Squawk Box Europe."

"Bank stocks around the world are going through the roof, that's 'cause they've all been bailed out. You don't see the homeowners in Kansas going through the roof 'cause they're not being bailed out," he added.

"A Huge Mess"

However, despite the rally in Asian and European markets, the decision to take over Fannie and Freddie is likely to cause more volatility and needs careful consideration by investors, according to Rogers.

Rogers, who is short on U.S. bonds, said these are likely to fall while commodities may rally. The two government-sponsored enterprises don't have good loans on their books, because "everybody else took the good stuff and dumped the bad stuff onto Fannie and Freddie," he said.

From 2010, Fannie and Freddie will have to shrink their portfolios by 10 percent a year until they reach $250 billion, to reduce the risk to the taxpayer, according to the Treasury plan. But this may put additional pressure on the housing market, Rogers said.

"That's going to also ensure that house prices continue to go down. It's going to be harder and harder to get a mortgage."

Investors should not pin their hopes on this year's presidential election for a solution to the problems, as none of the candidates is likely to find one, Rogers said.

"This is a big huge mess and neither one of them has a clue what to do next year. It's going to be a mess."
...

VIDEO : http://www.informationclearinghouse.info/article20715.htm
--------------------------------------------------------------------------------------------------

This goes right back to the 'Socialization of DEBT , and Privatization of Wealth' , that I noted in our previous thread on this subject...

While none of Us want the 'crap' , as you put it , that's what we're all being forced to buy...And pay for , over and over...

" Comrades Bush, Paulson and Bernanke Welcome You to the USSRA
(United Socialist State Republic of America)"

--By Nouriel Roubini

' Socialism is indeed alive and well in America; but this is socialism for the rich, the well connected and Wall Street. A socialism where profits are privatized and losses are socialized with the US tax-payer being charged the bill
of $300 billion. '

http://www.informationclearinghouse.info/article20720.htm

http://www.globalresearch.ca/index.php?context=va&aid=10126

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Tuesday, September 9, 2008 1:14 PM

Quote:
Originally posted by SignyM:
Why? Fannie and Freddie hold mortgages that go back before the housing bubble. Not every mortgage is based on an overvalued home. Is there some sort of automatic devaluation that occurs when mortgages are sold? 'Cause if not, I think the point would be better made with an actual analysis of the quality of the mortgages, rather than painting every single mortage with the current crisis.

Because there's no way of knowing what is bad and what is good until you come to collect. All that is known is that some are bad and some are good, not which ones. What they've got is a stack of one hundred dollar bills, they can see the ones on top are ok, but there's no way of knowing that the ones in the middle are $100s, $10s $1s or just slips of blank paper. Mortgages are sold in groups as well, so it should be obvious that even just the possibility of one or more of those mortgages being bad devalues the whole lot.

You can't tell which ones are good, and which are bad until you collect, so buying any one entails greater risk, and so devalues the whole lot.

They've got a thousand $100 bills in a stack, but no guarantees that they're all $100 bills, and some of their bills have been shown to be less than $100. Would you spend $100,000 to buy that stack? It's all about trust, and they're portfolios are no longer trustworthy, so buying them is a greater risk. Risk goes up, worth goes down.

More insane ramblings by the people who brought you beeeer milkshakes!
No one can see their reflection in running water. It is only in still water that we can see.

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Tuesday, September 9, 2008 1:37 PM

“Those who do not learn from history are condemned to re-live it” - George Santayana

' As we now have it, globalization can be defined as an ideology that identifies the Sovereign Nation-State as its key enemy, basically because the State's main function is (or should be) to prioritize the interests of the Many - i.e., "the People" - over the interests of the Few. Accordingly, the forces of globalization seek to weaken, dissolve and eventually destroy the very foundations of the Nation-State as a basic social institution, in order to replace it with new supra-national worldwide social, political, economic, financial and military management structures. Such structures tie in with the political objectives and economic interests of a small number of highly concentrated and very powerful groups and organizations which today drive and steer the globalization process in a very specific direction.

These power groups consist of private interests which have succeeded in achieving something that is unprecedented in all of human history, and which we describe as the privatization of power on a global scale.

"Globalization" is actually a hypocritical understatement or euphemism of what former US presidents Woodrow Wilson, Franklin D. Roosevelt, Harry S. Truman and George H.W. Bush - each at different times in modern history - described as the “New World Order”.

A New World Order! Clearly, when former president George Bush Sr. unabashedly used that term on 11th September 1991, the Establishment quickly moved to ensure that it should not be commonly used, and in its place coined the much more neutral and seemingly harmless sounding idea of “globalization” which, nevertheless, today still has one main meaning: US-UK-Israeli Imperialism on a planetary and all-encompassing scale. This, at least, is how a growing number of people in Argentina and in our region see things today.

Who are they? What do they want?

The process we have described is in no way anonymous - much less, secret - because the power groups promoting and driving the New World Order are doing so in full public view: i.e., multinational corporations (e.g., the Fortune Global 500s accounting for over 80% of US economic activity); the global financial infrastructure (which includes banks, investment funds, stock exchanges and commodity market operators); multimedia monopolies; major Ivy League universities; international multilateral organizations (such as the World Bank, the IMF/International Monetary Fund, the IADB/Inter-American Development Bank, the BIS/Bank of International Settlements, the UN/United Nations and the WTO/World Trade Organization) and, most important, key government posts in the United States, Israel, the United Kingdom and other industrialized nations. So, we definitely do not have something that can be explained away as a "conspiracy theory".'

MORE :

http://www.globalresearch.ca/index.php?context=viewArticle&code=SAL200
70114&articleId=4034

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Tuesday, September 9, 2008 1:40 PM

Quote:
As we now have it, globalization can be defined as an ideology that identifies the Sovereign Nation-State as its key enemy, basically because the State's main function is (or should be) to prioritize the interests of the Many - i.e., "the People" - over the interests of the Few. Accordingly, the forces of globalization seek to weaken, dissolve and eventually destroy the very foundations of the Nation-State as a basic social institution, in order to replace it with new supra-national worldwide social, political, economic, financial and military management structures. Such structures tie in with the political objectives and economic interests of a small number of highly concentrated and very powerful groups and organizations which today drive and steer the globalization process in a very specific direction.

This is one of those statements that leave you less intelligent after you've read it...

More insane ramblings by the people who brought you beeeer milkshakes!
No one can see their reflection in running water. It is only in still water that we can see.

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Tuesday, September 9, 2008 1:49 PM

Quote:
Originally posted by SignyM:

Perhaps someone can explain portions of the article to me. While I feel I have a grasp of the macro-economic big picture, some of the actual market mechanisms are beyond my grasp. I feel as if the articles are pitched for those who already know. So, here goes.....

Even the highest quality debt can only be dumped right now for, at most, 80 percent of face value.

Why? Fannie and Freddie hold mortgages that go back before the housing bubble. Not every mortgage is based on an overvalued home. Is there some sort of automatic devaluation that occurs when mortgages are sold? 'Cause if not, I think the point would be better made with an actual analysis of the quality of the mortgages, rather than painting every single mortage with the current crisis.

Fact is , 'every single mortgage' IS being painted with the broad brush of the 'current' crisis...

Assuming the massive 'new' Debt obligations , means that the 'Treasury' will print 'Federal Reserve' notes at
an ever-more-alarming rate...

...Which causes every 'dollar' to be worth less and less...As was noted by Mr. Rogers above , everyone will pay
for the past sins of the Bankster-Elites and the CON-gress , on and on...

The 'automatic devaluation' that you imagine is REAL...For the reasons that 'Cit' enumerated (risk),
plus 'inflation' of the currency , plus downward pressures on home prices due to a flood of unsalable foreclosures , etc.

Federal deficit soaring, but McCain, Obama offer no answers

http://news.yahoo.com/s/mcclatchy/20080909/pl_mcclatchy/3040652

' WASHINGTON — Just weeks before the government's fiscal year ends Sept. 30 , the nonpartisan Congressional Budget Office on Tuesday projected a near-record federal budget deficit of $407 billion , sharply higher than White House projections six weeks ago and more than double last year's figure...

...Mammoth federal-budget deficits feed inflation, make America dependent on foreign lenders, cost taxpayers hundreds of billions of dollars in interest payments on the growing national debt and drain capital savings from more productive investments...

...Yet John McCain and Barack Obama show few signs that they're ready to take tough steps to curb deficits, according to budget analysts.

"I don't think either candidate is treating the deficit, or the debt, seriously. And I don't see any proposals from either one that would make the situation any better," said Robert Bixby , the executive director of the Concord Coalition , a bipartisan budget-watchdog organization.

Maya MacGuineas , the president of the bipartisan Center for a Responsible Federal Budget , said in a statement
that both candidates "are promising hundreds of billions more in spending and tax cuts than they are paying for..."

White House Press Secretary Dana Perino said that one big reason the deficit went up was the
stimulus that President Bush signed into law in February. The CBO said that another large part of the deficit's unexpected growth came from rising unemployment-benefit payments and higher spending to cover insured deposits in insolvent financial institutions.

Another boost to the deficit came from Congress and Bush's appetite for discretionary spending, which is expected to rise by $85 billion , or 8.1 percent, in the current fiscal year, mostly because of higher defense costs...

To bridge the gap between spending and tax revenues, the federal government borrows, increasing the national debt.
It's grown from $5.7 trillion in 2000 to almost $9.7 trillion on Tuesday.

Analyst Bixby doubted that either presidential candidate's proposals would make a serious dent in the deficit and debt.

"Even if both of them can pay for their new initiatives and not make the situation any worse, the situation is unsustainable," he said. "Simply treading water is not good enough if you are headed over the falls." ' (italics added)

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Tuesday, September 9, 2008 4:39 PM

Quote:
Originally posted by citizen:
Quote:
As we now have it, globalization can be defined as an ideology that identifies the Sovereign Nation-State as its key enemy, basically because the State's main function is (or should be) to prioritize the interests of the Many - i.e., "the People" - over the interests of the Few. Accordingly, the forces of globalization seek to weaken, dissolve and eventually destroy the very foundations of the Nation-State as a basic social institution, in order to replace it with new supra-national worldwide social, political, economic, financial and military management structures. Such structures tie in with the political objectives and economic interests of a small number of highly concentrated and very powerful groups and organizations which today drive and steer the globalization process in a very specific direction.

This is one of those statements that leave you less intelligent after you've read it...

You should know...

So you've read a lot of 'em , eh ?

It only really works that way on folk that are 'less intelligent' to begin with...

Most folk seem able to 'do the math' , given enough time...

Englishmen , well , they're another matter...

Too much time in the noonday sun , ya know ?

Just keep readin' , little one...

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Tuesday, September 9, 2008 11:37 PM

Quote:
Originally posted by out2theblack:
You should know...

So you've read a lot of 'em , eh ?

It only really works that way on folk that are 'less intelligent' to begin with...

Most folk seem able to 'do the math' , given enough time...

Englishmen , well , they're another matter...

Too much time in the noonday sun , ya know ?

Just keep readin' , little one...

What a marvelous response, certainly showing the depth of your own IQ there, let me guess, product of the American public school system right. I tell you what, rather than 'doing the math' and working out the real reasons for the problems identified, how about you read some conspiracy theories about how it's all them thar foreigners trying to keep the working man down.

I've down the math, evidently you've read some tin foil hat theories about globalisation that have little evidential back up and lots of vitriolic hyperbole, just keep from thinking, grasshopper...

More insane ramblings by the people who brought you beeeer milkshakes!
No one can see their reflection in running water. It is only in still water that we can see.

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Wednesday, September 10, 2008 5:45 PM

Quote:
Originally posted by citizen:

What a marvelous response, certainly showing the depth of your own IQ there, let me guess, product of the American public school system right. I tell you what, rather than 'doing the math' and working out the real reasons for the problems identified, how about you read some conspiracy theories about how it's all them thar foreigners trying to keep the working man down.

I've down the math, evidently you've read some tin foil hat theories about globalisation that have little evidential back up and lots of vitriolic hyperbole, just keep from thinking, grasshopper...

More insane ramblings by the people who brought you beeeer milkshakes!
No one can see their reflection in running water. It is only in still water that we can see.

O-k , so you've 'down' the math...

Little 'evidential back-up' ? Only because you've not looked into the evidence , or you just choose to ignore it...

It's alright , though...You have a 'right' to remain ignorant...

That's why 'citizen' is only a subject...

Maybe you should learn to hold your water , or your beer milkshakes , as the case may be...

Because , only when your water is 'still' , will you be able to see...

In the meantime , you can just keep pissing yourself up...

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Wednesday, September 10, 2008 9:25 PM

Quote:
Originally posted by out2theblack:
O-k , so you've 'down' the math...

You're the one making the claim, didn't we all go through this already in another thread? I've not made a claim I need to back up you dumb shit. I made a joke about something I thought sounded pretty stupid, and you've gone ahead and thrown an immature tempertantrum across two threads. All you're doing is making yourself look like a petty ignorant childish prick. Are you four, or are you a troll, it's gotta be one of those two...

Quote:
Little 'evidential back-up' ? Only because you've not looked into the evidence , or you just choose to ignore it...

I've looked at the evidence, I've just not made it up like a far right red neck nutcase animal molester. Go back to reading Piratenews's posts for your next opinion chump troll

Bring me some specific claims (lies) from your prison planet website and I'll disprove them.

Quote:
It's alright , though...You have a 'right' to remain ignorant...

Are you PirateNews in drag? Seriously, cause you sound just like him, even down to throwing the massive tempertantrum if anyone doesn't think exactly like you...

Quote:
In the meantime , you can just keep pissing yourself up...

Have you tried insults that make sense?

More insane ramblings by the people who brought you beeeer milkshakes!
No one can see their reflection in running water. It is only in still water that we can see.

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Wednesday, January 7, 2009 7:28 PM

inflationary depression

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Thursday, January 8, 2009 9:07 AM

I believe in solving problems, not sharing them.

How's this?- Roller-coaster depression.

Inflation (been there done that), deflation (right now), followed by inflation in about a year.

In a major geekspike I was thinking about the money supply a few days ago (What? Doesn't everyone?) What the real estate bubble did was to expand the money supply by creating an altnerate currency. "Real money" (spendable money in the form of loans) was created on the basis of jacked-up real estate valuations and the money supply increased. During THAT time the dollar lost 30% in value compared to most world currencies, gold rose from about $500 to almost $1000, oil rose to $140 bbl, an most other commodities increased dramatically.

When real-estate values dropped, the money supply dwindled. THAT was the deflationary part. Commodities, gold, and other currencies fell in relation to the dollar.

We will have inflation again, but only if that "lost" money is replaced by real, actual printed money or its equal in government deficit spending, or both. Since "trillions" were lost in the meltdown, Obama would have to replace that amount in the USA economy, and other governments in other nations would have to do likewise.

---------------------------------
Let's party like its 1929.

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Thursday, January 8, 2009 1:30 PM

DREAMTROVE

SignyM

I think it will be a euro-dollar co-devaluation, in which we can have periods of both, where it will seem that one is gaining, but ultimately, the buying power of both currencies will head towards zero.

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Friday, January 9, 2009 3:15 AM

PARTICIPANT

Quote:
Originally posted by dreamtrove:
SignyM

I think it will be a euro-dollar co-devaluation, in which we can have periods of both, where it will seem that one is gaining, but ultimately, the buying power of both currencies will head towards zero.

just in time for the....

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Friday, January 9, 2009 3:51 AM

DREAMTROVE

perhaps. at least she's a snappy dresser

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Saturday, January 10, 2009 10:58 PM

Bank Of England Policymaker Predicts Unprecedented Dollar Collapse

http://www.baltische-rundschau.eu/?p=3978

Quote:
Warns that within five years global dumping of dollar assets could be complete.

A former member of the Bank of England’s Monetary Policy Committee has predicted a massive collapse of the dollar within the next two to five years, warning that a government increase in spending under President elect Obama could be disastrous.

Willem Buiter, who served the BOE from June 1997 to May 2000, has stated that he expects to see the plug pulled from under the dollar as foreign investors turn away from the dollar and other US backed assets including government bonds.

Writing for the Financial Times, Buiter, now a Professor with the London School of Economics European Institute, comments: “There will, before long (my best guess is between two and five years from now) be a global dumping of US dollar assets, including US government assets. Old habits die hard. The US dollar and US Treasury bills and bonds are still viewed as a safe haven by many. But learning takes place.”

Buiter, who has previously advised the World Bank, the IMF and the European Commission, points out that the dollar has managed to stay afloat due to the misguided notion that the US can make more capital on overseas investments and interests than foreign investors can make on US assets - a hypothesis that economists have referred to as “American alpha”.

However, he believes the global financial crisis has exposed the fatal flaws in that assumption.

“The past eight years of imperial overstretch, hubris and domestic and international abuse of power on the part of the Bush administration has left the US materially weakened financially, economically, politically and morally,” Prof Buiter writes. “Even the most hard-nosed, Guantanamo Bay-indifferent potential foreign investor in the US must recognise that its financial system has collapsed.”

Buiter warns that a Keynesian-style increase in public spending, the economic stimulus plan mooted by President elect Obama, will not work in the long term because underlying the fundamentals of the US economy is what he describes as a “deep structural rot”.

“If the authorities go ahead with the short-run Keynesian stimulus without having convinced the global capital markets and domestic producers and consumers that there will be a timely reversal, the policies will not work.” Buiter states.

“If the government is believed to be fiscally continent (future taxes will be raised and/or future public spending will be cut by enough to safeguard the solvency of the state) but turns out not be so after all, the Keynesian fiscal policy will be effective in the short run (as long as the public believes in the fiscal virtue of the government) but will become highly contractionary once the truth dawns.” he continues.

Buiter also states that he expects Federal authorities to allow the dollar to depreciate under an inflationary monetary policy, rather than default on Federal debt.

“The US Federal government has taken on massive additional contingent liabilities through its bail out/underwriting of the US financial system (and possibly other bits of the US economic system that are too politically connected to fail).” Prof Buiter comments. “Together will the foreseeable increase in actual Federal government liabilities because of vastly increased future Federal deficits, this implies the need for a future private to public sector resource transfer that is most unlikely to be politically feasible without recourse to inflation. The only alternative is default on the Federal debt. There is little doubt, in my view, that the Federal authorities will choose the inflation and currency depreciation route over the default route.”

Buiter warns that this course of action on behalf of the Federal government is unsustainable and will ultimately lead to a massive dollar collapse.

“If I can figure this out, so can anyone in the US or abroad who follows recent economic developments. The dawning of the realisation will lead to the dumping of the assets.” he concludes.

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Sunday, January 11, 2009 12:29 AM

I believe in solving problems, not sharing them.

Hmmmm... interesting. Thanks for your insight.

---------------------------------
Let's party like its 1929.

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Sunday, January 11, 2009 4:23 AM

RIVERLOVE

Quote:
Originally posted by SignyM:
Hmmmm... interesting. Thanks for your insight.

Foul-mouthed Nazi idiot Sigy Heil has a soft side!

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Sunday, January 11, 2009 7:45 PM

Barack Obama answers questions about the economy on ABC

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Wednesday, January 14, 2009 7:32 AM

Willem Buiter warns of massive dollar collapse

http://flourishingincrisis.wordpress.com/2009/01/11/willem-buiter-warn
s-of-massive-dollar-collapse/

Quote:
The warning comes despite the dollar having strengthened significantly against other major currencies, including sterling and the euro, after hitting historic lows last year. It will reignite fears about the currency’s prospects, as well as sparking fears about the sustainability of President-Elect Barack Obama’s mooted plans for a Keynesian-style increase in public spending to pull the US out of recession.

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Tuesday, March 3, 2009 7:02 AM

$78.8 Trillion; United States Debt Obligations exceed world GDP

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Tuesday, March 3, 2009 7:35 AM

RUE

I have a vote and I'm not afraid to use it!

"$78.8 Trillion; United States Debt Obligations exceed world GDP"

Oh, but that economy sure was ROARING - eh Rap ?

***************************************************************

Silence is consent.

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Tuesday, March 3, 2009 8:53 AM

RUE

I have a vote and I'm not afraid to use it!

Anyway, a quick retrospective, and some perspective.

Remember Clinton ? Remember how the stock market went up year after year ? Did the US economy really generate that much real value ? Well, no.

Two things contributed to that -

One was there was a lot of concentration of capital globally. Basically, there was a lot of money looking for a place to make profit.

The other was there was a sound-dollar policy. Because of that, when the Asian and South American currencies collapsed people were looking for DOLLAR-denominated vehicles, and the US stock market was one of them. Sound GOVERNMENT finances were the basis of the sound dollar. With government running in the black, it was not borrowing money. The dollar supply didn't need to be artificially expanded to pay off government debts.

Bush's weak dollar was not by accident. The rePUBICans, in their quest to 'starve the beast' went on an orgy of spending and borrowing to collapse the federal government into insolvency. (That's what I meant when, years ago, I said the Iraq war was 'over determined'. Cheney was carving up Iraq within months of being installed WAAaayyy before 9/11, Georgie Porgy wanted to outdo daddy, the necons wanted the New American Century, and besides, you can waste a lot of money in war.)

Maybe they were too stupid to realize it would collapse the dollar. But Cheney at least, took all his investments out of dollar-denominated assets years ago. So at least some saw the future of the US dollar.

What they might not have realized is that it could collapse the global economy.

OOOPS.

***************************************************************

Silence is consent.

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Tuesday, March 3, 2009 1:23 PM

This is History being re-enacted...

http://www.globalresearch.ca/index.php?context=va&aid=12518

All of you have been Noticed about this , time and again...

"...After the 1929 October 24, 28 and 29 market crash, the weekly entertainment industry magazine Variety (on October 30) published its most famous ever headline: "Wall Street Lays an Egg." In October 2008, history repeated, and since the October 2007 peak, equity prices plunged over 50% after the Dow and S & P (in February) posted their second worst ever monthly percentage declines - topped only in 1933 during the depths of the Great Depression. So far, the current market drop matches its 1929 - 1932 pace, and like then, shows no signs of abating..."

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Tuesday, March 24, 2009 3:04 AM

AIG boss urges staff to return bonus pay
CEO says firm made mistakes

Facing mounting public ire and even death threats over multimillion-dollar bonuses, the head of troubled insurer American International Group Inc. backed down yesterday, urging his employees to give at least half the money back.

AIG chairman and chief executive Edward Liddy told a congressional subcommittee probing the government bailout of the New York-based insurance giant that he's heard the outrage of Americans, loud and clear.

"We've attempted to amend the situation," Mr. Liddy told agitated members of the House of Representatives who demanded to know why rich bonuses were paid to employees responsible for the risky transactions that toppled the company last September.

The furor comes amid a gathering political storm over the plight of AIG, which is 80 per cent owned by the U.S. government after an injection of more than $170-billion in taxpayers' cash. The insurer is still trying to unwind more than $1.6-trillion worth of risky investments, including currency and oil trades, and credit default swaps, a form of insurance against bond defaults.

AIG tells employees to give back at least half the money; Obama defends Geithner amid calls for his resignation over failure to block payouts

Ron Paul On Glenn Beck

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Tuesday, March 24, 2009 3:52 AM

I believe in solving problems, not sharing them.

It would be okay for the Federal government to spend like a drunken sailor IF the government were to

1) Reverse the structural weaknesses in our economy. The biggest weakness is the historic (1929-level) discrepancy between rich and poor. Everywhere you look, economies are collapsing because of lack of consumers. It is an inherent weakness of capitalism: in its quest to reduce labor costs capitalism winds up starving its own consumers. The entire world needs to adjust to the fact that the US can no longer be the world's consumer, and the US needs to re-balance its distribution of wealth so that demand is based on something OTHER THAN debt.

2) Invest in areas that would make us more productive. We've shipped our production overseas, thanks to capitalism. We need to bring it back: Invest in roads, education, health care, alternate energy. THAT kind of government spending creates jobs at home.

3) Support the same actions oversees. We can't be a wealthy, free-spending nation in a world of poverty for very long. We've run it for three decades already. The EU already has its plans in place. But South and Central America, Africa, large portions of the mideast are run by corrupt governments which create vast numbers living in dire poverty. Transparency and economic democracy are the antidote.

4) Take power back from capitalism running the government and running amok. Re-regulate. Nationalize, if need be. Put the economy back on a sustainable footing. The excesses of capitalism has taken the USA from first-world status and is moving us to third-world status: an exporter of raw materials, with a vast undereducated population of diminishing wealth and a weak currency.

5) Eventually balance the budget.

It IS possible to work our way out of this mess, and spending is part of the plan. But spending, BY ITSELF, isn't going to fix the problem. The re-distribution of wealth that Reagan and GWBush engineered must be reversed, we need to revitalize production, and stop hemorrhaging money into the middle east and china.

---------------------------------
It's the end of the world as we know it, and I feel fine.

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Tuesday, March 24, 2009 5:58 AM

FREMDFIRMA

Quote:
Everywhere you look, economies are collapsing because of lack of consumers. It is an inherent weakness of capitalism: in its quest to reduce labor costs capitalism winds up starving its own consumers.

Ding Ding Ding!

We have a winner.

That's prettymuch it, in spades.

-F

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Tuesday, June 30, 2009 7:15 AM

China's central bank has reiterated its call for a new reserve currency to replace the US dollar.
The report from the People's Bank of China (PBOC) said a "super-sovereign" currency should take its place.

Central bank chief Zhou Xiaochuan has loudly led calls for the dollar to be replaced during the financial crisis.

The bank report called for more regulation of the countries that issue currencies that underpin the global financial system.

"An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis," the Chinese central bank said.

The dollar fell after the report was released. The US currency dropped 1% against the euro to $1.4088, and declined 0.8% versus the British pound to $1.6848.

Mr Zhou caused a stir earlier this year when he said the dollar could eventually be replaced as the world's main reserve currency by the Special Drawing Right (SDR), which was created as a unit of account by the IMF in 1969.

The PBOC said in the report that not only should the world adopt the SDR, but that the IMF should be entrusted with managing a portion of its member countries' foreign currency reserves.

"To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term," the PBOC report said.

It also issued some veiled criticism of the US policies, saying that one of the major issues was that it was difficult to balance the needs of domestic politics with the requirements of being the world's reserve currency.

"The economic development model of debt-based consumption is most difficult to sustain," the PBOC said.

Russian President Dmitry Medvedev recently joined Mr Zhou in saying it was time to consider an alternative benchmark currency for international debt.

But Russian finance minister Alexei Kudrin then said "it's too early to speak of an alternative".
http://news.bbc.co.uk/1/hi/business/8120835.stm

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Tuesday, June 30, 2009 1:30 PM

'...Happy-face media reporting of economic news is providing the usual upbeat spin on Friday’s debt-deflation statistics. The Commerce Department’s National Income and Product Accounts (NIPA) for May show that U.S. “savings” are now absorbing 6.9 percent of income.

I put the word “savings” in quotation marks because this 6.9% is not what most people think of as savings. It is not money in the bank to draw out on the “rainy day” when one is laid off as unemployment rates rise. The statistic means that 6.9% of national income is being earmarked to pay down debt – the highest saving rate in 15 years, up from actually negative rates (living on borrowed credit) just a few years ago. The only way in which these savings are “money in the bank” is that they are being paid by consumers to their banks and credit card companies.

Income paid to reduce debt is not available for spending on goods and services. It therefore shrinks the economy, aggravating the depression. So why is the jump in “saving” good news?

It certainly is a good idea for consumers to get out of debt. But the media are treating this diversion of income as if it were a sign of confidence that the recession may be ending and Mr. Obama’s “stimulus” plan working. The Wall Street Journal reported that Social Security recipients of one-time government payments “seem unwilling to spend right away," 1 while The New York Times wrote that “many people were putting that money away instead of spending it.”2 It is as if people can afford to save more.

The reality is that most consumers have little real choice but to pay. Unable to borrow more as banks cut back credit lines, their “choice” is either to pay their mortgage and credit card bill each month, or lose their homes and see their credit ratings slashed, pushing up penalty interest rates near 20%! To avoid this fate, families are shifting to cheaper (and less nutritious) foods, eating out less (or at fast food restaurants), and cutting back vacation spending. It therefore seems contradictory to applaud these “saving” (that is, debt-repayment) statistics as an indication that the economy may emerge from depression in the next few months. While unemployment approaches the 10% rate and new layoffs are being announced every week, isn’t the Obama administration taking a big risk in telling voters that its stimulus plan is working? What will people think this winter when markets continue to shrink? How thick is Mr. Obama’s Teflon?

We are living in the wreckage of the Greenspan bubble

As recently as two years ago consumers were buying so many goods on credit that the domestic savings rate was zero. (Financing the U.S. Government’s budget deficit with foreign central bank recycling of the dollar’s balance-of-payments deficit actually produced a negative 2% savings rate.) During these Bubble Years savings by the wealthiest 10% of the population found their counterpart in the debt that the bottom 90% were running up. In effect, the wealthy were lending their surplus revenue to an increasingly indebted economy at large.

Today, homeowners no longer can re-finance their mortgages and compensate for their wage squeeze by borrowing against rising prices for their homes. Payback time has arrived – paying back bank loans, whose volume has been augmented to include accrued interest charges and penalties. New bank lending has hit a wall as banks are limiting their activity to raking in amortization and interest on existing mortgages, credit cards and personal loans.

Many families are able to remain financially afloat by running down their savings and cutting back their spending to try and avoid bankruptcy. This diversion of income to pay creditors explains why retail sales figures, auto sales and other commercial statistics are plunging vertically downward in almost a straight line, while unemployment rates soar toward the 10% level. The ability of most people to spend at past rates has hit a wall. The same income cannot be used for two purposes. It cannot be used to pay down debt and also for spending on goods and services. Something must give. So more stores and shopping malls are becoming vacant each month. And unlike homeowners, absentee property investors have little compunction about walking away from negative equity situations – owing creditors more than the property is worth.

Over two-thirds of the U.S. population are homeowners, and real estate economists estimate that about a quarter of U.S. homes are now in a state of negative equity as market prices plunges below the mortgages attached to them. This is the condition in which Citigroup and AIG found themselves last year, along with many other Wall Street institutions. But whereas the government absorbed their losses “to get the economy moving again” (or at least to help Congress’s major campaign contributors to recover), personal debtors are in no such favored position. Their designated role is to help make the banks whole by paying off the debts they have been running up in an attempt to maintain living standards that their take-home pay no longer is supporting.

Banks for their part are slashing credit-card debt limits and jacking up interest and penalty charges. (I see little chance that Congress will approve the Consumer Financial Products Agency that Mr. Obama promoted as a flashy balloon for his recent bank giveaway program. The agency is to be dreamed about, not enacted.) The problem is that default rates are rising rapidly. This has prompted many banks to strike deals with their most overstretched customers to settle outstanding balances for as little as half the face amount (much of which is accrued interest and penalties, to be sure). Banks are now competing not to gain customers but to shed them. The plan is to offer steep enough payment discounts to prompt bad risks to settle by sticking rival banks with ultimate default when they finally give up their struggle to maintain solvency. (The idea is that strapped debtors will max out on one bank’s card to pay off another bank at half-price.)

The trillions of dollars that the Bush and Obama administration have given away to Wall Street would have been enough to buy a great bulk of the mortgages now in default – mortgages beyond the ability of many debtors to pay in the first place. The government could have enacted a Clean Slate for these debtors – financed by re-introducing progressive taxation, restoring the full capital gains tax to the same rate as that levied on earned income (wages and profits), and closing the tax loopholes that effectively free finance, insurance and real estate (FIRE) sector from income taxation. Instead, the government has made Wall Street virtually tax exempt, and swapped Treasury bonds for trillions of dollars of junk mortgages and bad debts. The “real” economy’s growth prospects are being sacrificed in an attempt to carry its financial overhead.

Banks and credit-card companies are girding for economic shrinkage. It was in anticipation of this state of affairs, after all, that they pushed so hard from 1998 onward to make what finally became the 2005 bankruptcy laws so pro-creditor, so cruel to debtors by making personal bankruptcy an economic and legal hell.

It is to avoid this hell that families are cutting their spending so as to keep current on their debts, against all odds that they can avoid default in today’s shrinking economy.'

http://www.globalresearch.ca/index.php?context=va&aid=14153

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Tuesday, June 30, 2009 3:41 PM

'...There are many serious and honest economists and analysts who are very astute at reading the circus of American politics and economics. Many of them, like Marc Faber, see very clearly that the so-called financial and economic “solutions” to the current credit crisis (really a dollar crisis) are made to fail. In fact the bailout “solutions” will move the system further toward collapse.

A thought here on psychological warfare: Since the American system poses as an “open society” with a “free press,” there is the pretension to allow open debate, but only on spurious issues. The effect is that as long as the issues are not real or are spurious they are welcomed and promoted as open debate and commentary. The people do not have a clue that all public commentary is spurious.

Shakespeare wrote in As You Like It, “All the world’s a stage.”

What then is the issue that even very savvy commentators fail to understand or even mention?

The problem is that all of them are trying to see and understand the American system as free enterprise when in fact it has been socialist for a hundred years.

“The world is governed by very different personages from what is imagined.” —Benjamin Disraeli.

This is a most sensational testimony of the power of naming government systems something that they are not and imposing it on the public mind and psyche by a long process of “public education” and highly sophisticated and organized propaganda on a world-wide basis. There has never been an equal and even at this moment it is more powerful than ever, deceiving more people than ever.

Socialism in America today is seen as a raving success because its hidden handlers call it by other names. Hitler indeed made an attempt to call Nazi Germany “the great democracy.” Through his effort to put a pretty face on an ugly system, he certainly must have understood the propaganda significance of the sensational power of people persuasion with names, fronts, and high-sounding human freedom terms.

Alas, for the record, you historians will not, I hope, see national socialism as any different from American democracy today or even at the time of World War II when the two (U.S. and Germany) were locked into mortal combat.

In fact, except for their different names bestowed upon each by their hidden elite masters, they are more identical than identical twins. The bad guys versus the good guys propaganda was meaningless and ridiculous but served well to drive millions to their deaths on all sides as well as motivated parents to sacrifice their young in total ignorance of reality.

All is a disgrace before God, as my mother used to say, that the human race will allow itself generation after generation to be twisted and perverted like animals to the slaughter and precious few ever question “why” about anything.

In fact the more learned and “educated,” the less capacity to think outside the prescribed system.'

http://www.personalliberty.com/personal-liberty-articles/modern-warfar
e-arrives/

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Tuesday, June 30, 2009 3:45 PM