Economic Meltdown 2010

[georgephillip]

Are 25 hedge fund managers worth 658,000 teachers?

*Edges carefully out onto the limb*

You don't know what the hell the topic is about really, do you?


*Edges slowly back to the trunk*

Class War?

 

[georgephillip]

Are 25 hedge fund managers worth 658,000 teachers?

Nope.

But life ain't fair.

Is Chomsky being fair when he says...

"The war against working people should be understood to be a real war...Specifically in the US which happens to have a highly class-conscious business class...And they have long seen themselves as fighting a bitter class war, except they don't want anybody else to know about it."

II: The Rise of the Economic Elite

 

[georgephillip]

Is it accurate to say some of those million dollar assets have been resurrected by taxpayer bailouts?

Nope. Those 'million dollar assets' are now worth pennies on the dollar. Now if someone wishes to pay a million bucks for an asset that is worth only a plug nickel, they're overpaying and caveat emptor. There's often a very good reason why an asset loses value. Illusion and false perception can only inflate price for a limited period of time.

How many of those former million dollar assets were resurrected when the Fed soaked up $1.3 trillion worth of problematic securities for their good buds down on Wall Street?

Is the next step in this free market illusion to dump these "assets" on Fannie and Freddie?

Ron Paul to Helicopter Ben:

"Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system."

 

[editec]

Stocks are generally overpriced, I think.

The PE ratios are too damned high.

Not that I invest in the market, but I am still looking for a correction.

Something will freak out the market and then the slaughter will begin.

THEN, perhaps, it'd be a good time to get into the market.

Look for a PE of about 13.

 

[Neubarth]

Stocks are generally overpriced, I think.

The PE ratios are too damned high.

Not that I invest in the market, but I am still looking for a correction.

Something will freak out the market and then the slaughter will begin.

THEN, perhaps, it'd be a good time to get into the market.

Look for a PE of about 13.

I HAVE BEEN POSTING FOR YEARS THAT THE STOCK MARKET DOES NOT REFLECT REALITY. It reflects what Goldman Sachs wants it to reflect. Goldman has been taking derivative positions in the stock market and manipulating the market to where the derivatives pay off handsomely. Obama is totally owned by Goldman. That relationship needs to be severed. Obama should be impeached and Goldman needs to be broken up as all Big Banks should. They are all corrupt. Their officers need to be tried for treason against this country and all executed as a display of what should happen when the rich rape our country for their benefit and in the process impoverish the masses.

There is a lot of anger growing in this country. I see it every day. Obama is playing with the lives of millions so he can gain financially. That needs to be stopped and Obama needs to be removed from office. We need to do this peacefully before the riots start.

 

[Neubarth]

Is it accurate to say some of those million dollar assets have been resurrected by taxpayer bailouts?

Nope. Those 'million dollar assets' are now worth pennies on the dollar. Now if someone wishes to pay a million bucks for an asset that is worth only a plug nickel, they're overpaying and caveat emptor. There's often a very good reason why an asset loses value. Illusion and false perception can only inflate price for a limited period of time.

How many of those former million dollar assets were resurrected when the Fed soaked up $1.3 trillion worth of problematic securities for their good buds down on Wall Street?

Is the next step in this free market illusion to dump these "assets" on Fannie and Freddie?

Ron Paul to Helicopter Ben:

"Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system."

Ron Paul and his merry band of crooks needs to be tried for treason and immediately disposed of. Crooks like him should never be given a pulpit to speak from. He has deceived so many Americans and nearly brought about the destruction of this country. Damn him to hell where he belongs.

Shitheads like you who do not have the slightest idea what you are talking about should be put in a loonie bin or a prison island. The FED is trying to save this country by buying toxic assets. So far we are holding our own, but not improving conditions. There is no other way than for the FED to buy the toxic assets. Otherwise we have ALL of the banks nationwide failing. You are too damn stupid to understand why. You need to read up on the charter of the FED and stop making a total ass of yourself on this forum.

 

[Big Fitz]

Is it accurate to say some of those million dollar assets have been resurrected by taxpayer bailouts?

Nope. Those 'million dollar assets' are now worth pennies on the dollar. Now if someone wishes to pay a million bucks for an asset that is worth only a plug nickel, they're overpaying and caveat emptor. There's often a very good reason why an asset loses value. Illusion and false perception can only inflate price for a limited period of time.

How many of those former million dollar assets were resurrected when the Fed soaked up $1.3 trillion worth of problematic securities for their good buds down on Wall Street?

Is the next step in this free market illusion to dump these "assets" on Fannie and Freddie?

Ron Paul to Helicopter Ben:

"Well, where did you get the money? You created this money. So you did monetize debt, and that went into the banking system."

More than ever should have been allowed. We've now had OUR wealth destroyed thanks to bad investments by the US government through Freddie and Fannie to deadbeats who should never have been given mortgages because they could do nothing BUT default.

The bailout was effectively a wealth transfer from the poor to the rich idiots and pals of the politically corrupt. Yes, corrupt. These now federally owned assets will never reach their inflated paid price. Well maybe but it'll most likely take decades if the properties have not deteriorated. The chances of getting back even half their value is extremely remote.

Paul is right too. Bernacke DID monetize the debt, but they're hiding it on the books right now, hence why we aren't having hyper inflation. It's a game that everyone's playing along with in hopes that as long as nobody says anything the illusion can be maintained. They're desperately hoping they can suck this extra capital used to pay off this disaster can be sucked back out of the system before it starts hitting he public. That's part of why banks aren't loaning. They don't dare because it will destroy the global economy. This is both the cause of the disaster, and the game the Fed is playing to 'save us' financially. They caused it by being allowed to exist and proves why if the Fed is even allowed to exist after this why we need to return to a commodities standard for cash. No that won't be fun, but it is becoming necessary as we discover the folly our predecessors began by taking us off commodities based currency.

People are getting very edgy though and the game's just about up.

 

[Neubarth]

Monetize the Debt. I keep on hearing the same mantra.

As I have posted hundreds of times, I have never studied economics. I avoid the formal study of same because the economists all seem to be retarded to me. I can not get any two of them to agree on what is happening to the economy. Economics is mostly theory and most of the theory does not make sense to this country boy who grew up in Mexico along with the campesinos and the horses and donkeys. Economists remind me of the donkeys and appear to be quite stupid and foolish when I hear the speak.

So, I will pose a question to you. Think about it long and hard and then tell me about this Monetize the Debt thing.

In 2006 -7 we had a tremendous amount of wealth in the value of our houses. Mine was worth close to a million dollars. Now, my house is at best worth half that.

That happened across the land. Would it be correct economic theory to say that we Demonitized that value of real estate nationally. IF so, how many trillions were Demonetized? If we now Monetize a fraction of that, are we still in the hole?

Quite frankly, I am prone to think so, but no economist that I have heard lately even approaches this issue. I guess the thought process is beyond them. If you do not bring up the topic of lost Trillions then you do not have to deal with it with economic theory. I believe we need to factor that in to the economy.

It looks to me that this depression is tied in with all of that lost money. I think we need to "monetize" more if we are going to return to status quo.

 

[Neubarth]

How can we have hyper inflation when we have just lost trillions of dollars of wealth in this country and banks are failing left and right? Economic theory does not seem to understand what is happening in plain sight of most Americans.

 

[Big Fitz]

Monetize the Debt. I keep on hearing the same mantra.

As I have posted hundreds of times, I have never studied economics. I avoid the formal study of same because the economists all seem to be retarded to me. I can not get any two of them to agree on what is happening to the economy. Economics is mostly theory and most of the theory does not make sense to this country boy who grew up in Mexico along with the campesinos and the horses and donkeys. Economists remind me of the donkeys and appear to be quite stupid and foolish when I hear the speak.

So, I will pose a question to you. Think about it long and hard and then tell me about this Monetize the Debt thing.

In 2006 -7 we had a tremendous amount of wealth in the value of our houses. Mine was worth close to a million dollars. Now, my house is at best worth half that.

That happened across the land. Would it be correct economic theory to say that we Demonitized that value of real estate nationally. IF so, how many trillions were Demonetized? If we now Monetize a fraction of that, are we still in the hole?

Quite frankly, I am prone to think so, but no economist that I have heard lately even approaches this issue. I guess the thought process is beyond them. If you do not bring up the topic of lost Trillions then you do not have to deal with it with economic theory. I believe we need to factor that in to the economy.

It looks to me that this depression is tied in with all of that lost money. I think we need to "monetize" more if we are going to return to status quo.

I'm not an economist but I have taken courses and listened intently to them on more than a few occasions.

In 2006 -7 we had a tremendous amount of wealth in the value of our houses. Mine was worth close to a million dollars. Now, my house is at best worth half that.

This is called a bubble. When you have too many dollars in an economy, they start finding places to invest themselves. They seek the best value/return on investment they can. And thanks to freddie and Fannie, real estate became a booming place to make that money grow for those who had too much money. So it poured into the real estate market. And prices started to climb because those that had the cash to invest were having their risk covered by the government, and the bank wasn't compelled to be careful on the value of the properties purchased or even who purchased them. The buyers weren't that concerned because they had a lot of money to invest and therefore bidding wars began over properties that really shouldn't have in the first place. That's why the housing market skyrocketed.

Then... the emperor was discovered to have no clothes. Honest brokers, once money started tightening up even a little, and other investments started providing better gains because housing was saturated, started questioning the value. Those holding the investments at those points suddenly woke up like a drunk in the morning with a shaft of sunlight in one bloodshot eye, realized he had beergoggled one seriously coyote ugly investment and started to look a gnawing a limb off. The freefall was then on. Pop went the bubble, and everyone started to bail as the REAL values started coming in for the properties they had massively overspent for, expecting massive returns that never could materialize. The value was now too low for them to recoup their losses on investment and became stuck with properties they can't afford and headed towards default. This how money is destroyed.

This is your illusory nature of investment. Yes, a product's value is whatever a person will pay for it, but if you're buying to resell, and now can't get anyone to buy the product at the price you're asking, the price must fall.

The issue still remains that we have had too much money in the system since friggen Greenspan and his loose monetary policy of the 1990's. The excess first went into tech stocks, then the Euro, then housing, then into oil, then back INTO housing, hoping to get some bailout cash, and now into Gold and commodities again. And now, with the crash of the Euro all but a foregone conclusion, the value of Gold is REALLY gonna skyrocket because EVERYONE's going to want it. I expect to see bubbles in Silver, Copper, gems, platinum. Anything that has an intrinsic value unto itself that is not seasonal.

There currently is only one thing stopping the devaluing of the Dollar... well 2 things. One, everyone else's currencies are generally falling at the same rate and two the banks who got most of this printed funny money are not lending it out an holding it. The instant that starts walking out the door, MORE money enters the market creating inflation. What needs to be done is a siphoning of this cash back into the fed and ultimately it's 'destruction'.

And here's the rub on that: We can't deflate the loose currency without cutting government spending... massively. I'm talking a possible 50-70% cut in federal spending and at least 40% at state and local levels. That's just hipshot numbers, but the cutting will have to be drastic. Whole departments are probably going to have to end. The other catch is, you want to pay off debt with devalued dollars because it's cheaper. Revalued dollars make the debt we owe more expensive and also makes it harder for us to sell products abroad, and we DO sell a lot abroad. Just not to China. So beware saying we need to monetize the debt. You will be looking at a $50 loaf of bread.

Just as an aside. In the carter admin, we inflated the money supply about 13%. This brought about interest rates up to 21% when they monetized that excess supply. Currently since Obama took office we have inflated the monetary supply by 130%~! What do you suppose that is going to do. And that doesn't include all the damage W did with Greenspan and Bernake.

We are well and truly fooked if we don't start doing the obvious and cut government spending and encourage people to invest here as a safe haven for all their wealth.

 

[Neubarth]

....Bubble......
We are well and truly fooked if we don't start doing the obvious and cut government spending and encourage people to invest here as a safe haven for all their wealth.

,

Interesting comments. I knew about the Bubble in valuation. I even warned about it years ago and advised all of my adult children not to buy houses but to save up for when they came down to a rational price. One son bought a house anyway, and has seen a net loss of a hundred thousand dollars. He is not done losing money.

That aside, I still ask the question that you did not really answer. Are we net short monetized wealth or are we positive. I am prone to think that we are still short. Since the economists are not trained to consider that issue, they do not have an answer for it as best as I can tell. Our economy is still collapsing in spite of the fact that there are idiots on this form who think we are in a massive recovery.

Is this continuing collapse the product of demonetized wealth? The comments about implied that there were a whole lot of paper money dollars floating around. I have not seen them. Paper money in circulation is not the issue that I see. I see a shortage of wealth in the populace. Granted, the rich are richer, but the average American is poorer. All I see is a shortage of wealth for the masses. That is unhealthy.

There are a lot of people out there who are coming to the conclusion that the only solution is to kill all of the rich and take all their money. There should be another way. I favor the creation of jobs. Obama is not helping in that regard.

 

[Big Fitz]

Interesting comments. I knew about the Bubble in valuation. I even warned about it years ago and advised all of my adult children not to buy houses but to save up for when they came down to a rational price. One son bought a house anyway, and has seen a net loss of a hundred thousand dollars. He is not done losing money.

Extremely good advice. You're right too. Once the bailouts stop as they must for they are unsustainable, the property value will plummet again to it's REAL value which may be as low as what they were in the late 1980's.

Are we net short monetized wealth or are we positive.

Monetizing is a tactic. It's sort of like saying we have 1 trillion dollars to pay off, but only have 500 billion to do it with. So, we print 500 billion more and pay it off. The issue is that the 500 billion is all our cash was worth, and by printing double the amount, we've halved the value of the money. So that apple you wanted to buy for 50 cents now costs a dollar. Only the amount of dollars have increased, the apples have remained the same. The reason we haven't seen this effect yet is because the banks aren't lending out the inflated money. They're pushing the piles back and forth between them and the fed, playing an intricate game of hide the decline, and slow the devaluation. As an aside; if you wanted to buy that same apple with gold, the price would have remained unchanged. But gold will have doubled in value versus the dollar. Look at the value of oil right now and historically versus gold and the dollar. You will be shocked at how cheap it is in gold.

The real fear is that the economy starts recovering, people start showing a chance for some good investments, and the banks stop playing with the fed and start loaning it out. Then the cash begins to devalue again, and usually faster than it can be controlled. Interest rates begin to skyrocket as it strains to keep ahead of the declining value of the dollar. Remember in the 1970's when groceries were repricing their products 2 or 3 times a week to keep up with inflation alone? Savings evaporated and fixed incomes were destroyed because you can't adjust those for inflation.

We currently are facing Stagflation on a factor of 10 right now. It's not started yet, but it will very very soon.

The comments about implied that there were a whole lot of paper money dollars floating around. I have not seen them. Paper money in circulation is not the issue that I see.

Worse, it's electronic. we just can't send them to the pulper. Most American paper currency is shipped out of country.

Our economy is still collapsing in spite of the fact that there are idiots on this form who think we are in a massive recovery.

The only positives I can see from Greece right now are:

1. It shows that EVERYONE'S falling at about the same rate more or less. Others are falling even faster.

2. It's destroying the philosophical foundation of socialism/maoism/fascism and other concepts of collectivist economies that create an army of dolists looking for handouts.

3. Countries willing to make the hard and painful cuts now will come out on top. Like Mr. Potter, they will have money to save themselves if they keep their head and make very prudent hard choices that will invoke some pain, but will avoid mass suffering and when this global crisis is over, they will become world leaders in very quick order.

The sad part is that the US is NOT one of them willing to do that yet... and may never be.

 

[georgephillip]

Big:

How does cutting the Federal government by 40%-50% affect unemployment numbers?

If you're talking about across the board cuts, who gets to go to Camp Pendleton and tell every other Marine to find a job?

State cuts of 40% would seemingly have to include some in police and fire protection? Why not cut Wall Street out of the bond markets by encouraging the states to follow North Dakota's example?

In Florida, a PhD Economist is running in the Democratic gubernatorial primary.
He's claiming that if the state of Florida started doing business as the State Bank of Florida, Floridians would save $billions/year on interest charges.

2% mortgages. 6% credit cards & CDs.

The state bank would earn additional $billions/year helping citizens save money that stays in Florida, creating jobs.

The candidate, Farid Khavari, is claiming over time the money a state bank would save Florida would first reduce and then eliminate the need for state and local taxes.

 

[Big Fitz]

How does cutting the Federal government by 40%-50% affect unemployment numbers?

Government is not a jobs program. Earn a living by doing something productive. Yes the market of the unemployed will be flooded for a period of time, and there will be no unemployment benefits and it will suck.

The thing is, you can do this VOLUNTARILY, and control the rate and direction of descent or just let it ALL crash when the dollar becomes worthless. You seem to think you have a choice whether or not this is going to happen. You don't. That has long since left. The question is one of the size of the crater.

On the positive, you can cut taxes, by 25% Encourage private sector investment and reabsorb most of those jobs.

Another option is to cut hours of service to save money, cut services offered, cut some staff, outsource, embrace technological improvement, close locations, cut the pay of staff to private sector levels LIKE IT SHOULD BE ANYWAY. Trust me, there are dozens of options where not a single person has to be fired, but they certainly won't get to keep the status quo. Honestly the biggest cuts will come by shutting down guaranteed pensioners who retired before age 70 or gamed the system to get far more benefits than they should.

If you're talking about across the board cuts, who gets to go to Camp Pendleton and tell every other Marine to find a job?

Better still. Shut down foreign bases and bring those troops home, decrease the size of the military by cutting the dead-weight at the top and adopt an isolationist policy instead of exporting America throughout the world. Combine with this ending military aid and co-defense treaties where we pay the bulk and the rest of these losers coast on our coattails. Fair share or we cut down to the bottom of the barrel.

tate cuts of 40% would seemingly have to include some in police and fire protection? Why not cut Wall Street out of the bond markets by encouraging the states to follow North Dakota's example?

Never heard of this. Got a link so I can research what you're talking about?

I
In Florida, a PhD Economist is running in the Democratic gubernatorial primary.
He's claiming that if the state of Florida started doing business as the State Bank of Florida, Floridians would save $billions/year on interest charges.

2% mortgages. 6% credit cards & CDs.

The state bank would earn additional $billions/year helping citizens save money that stays in Florida, creating jobs.

The candidate, Farid Khavari, is claiming over time the money a state bank would save Florida would first reduce and then eliminate the need for state and local taxes.

Interesting thought. May be a good idea. I don't know enough about it.

 

[georgephillip]

Neu:

When you say the Fed is trying to save this country by buying up toxic assets, why aren't they willing to tell us what they are buying and how much of our money are they paying?

 

[Big Fitz]

Neu:

When you say the Fed is trying to save this country by buying up toxic assets, why aren't they willing to tell us what they are buying and how much of our money are they paying?

Because the American Taxpayer will march to their offices with torches, pitchforks, tar feathers and a portable guillotine.

 

[georgephillip]

Big:

Regarding North Dakota, in 1919 some very conservative citizens of that state got fed up with Wall Street and the Railroads. They formed a political party called (I believe) the Non-Partisan League.

The Bank of North Dakota was part of their solution.
The state of North Dakota began doing business as the Bank of North Dakota.
"Technically that makes the (financial) capital of the state the capital of the bank."

Over the last century some of the rough populist edges have been filed away, but even today North Dakota is one of two states with a budget surplus and the only state adding jobs.

Ellen Brown's Web of Debt has some very good info on how to cut Wall Street Out of our recovery.

 

[Big Fitz]

Big:

Regarding North Dakota, in 1919 some very conservative citizens of that state got fed up with Wall Street and the Railroads. They formed a political party called (I believe) the Non-Partisan League.

The Bank of North Dakota was part of their solution.
The state of North Dakota began doing business as the Bank of North Dakota.
"Technically that makes the (financial) capital of the state the capital of the bank."

Over the last century some of the rough populist edges have been filed away, but even today North Dakota is one of two states with a budget surplus and the only state adding jobs.

Ellen Brown's Web of Debt has some very good info on how to cut Wall Street Out of our recovery.

I'm for anything that gets us balanced again. But I don't trust the feds. It very much be a great idea for the states to start doing just that.

 

[georgephillip]

Neu:

When you say the Fed is trying to save this country by buying up toxic assets, why aren't they willing to tell us what they are buying and how much of our money are they paying?

Because the American Taxpayer will march to their offices with torches, pitchforks, tar feathers and a portable guillotine.

That sounds like the "tag line" for a great action movie or a reality that will leave millions of living Americans envious of the dead.

If the Second American Revolution/Civil War begins with your Wall Street payback, do you think the rank and file of US police officers and military will follow orders or...?

 

[georgephillip]

Big:

Regarding North Dakota, in 1919 some very conservative citizens of that state got fed up with Wall Street and the Railroads. They formed a political party called (I believe) the Non-Partisan League.

The Bank of North Dakota was part of their solution.
The state of North Dakota began doing business as the Bank of North Dakota.
"Technically that makes the (financial) capital of the state the capital of the bank."

Over the last century some of the rough populist edges have been filed away, but even today North Dakota is one of two states with a budget surplus and the only state adding jobs.

Ellen Brown's Web of Debt has some very good info on how to cut Wall Street Out of our recovery.

I'm for anything that gets us balanced again. But I don't trust the feds. It very much be a great idea for the states to start doing just that.

Currently eight states have candidates pushing for state-owned banks.

Republican State Rep Allen Icet of Missouri:

"Missouri has bonds...indebtedness we have to pay... We, the state of Missouri could benefit by following the path of North Dakota by creating a state bank, thereby avoiding interest payments on bonded indebtedness..."