Posted on 11/20/2008 9:56:17 AM PST by Red in Blue PA
We are going to have this depression for one simple reason. ..and its the same reason that we had the first one.
Because the government has the people convinced that it alone can fix things, and is doing just that.
With the government in charge of recovery,(!??!) Its gonna get worse before it gets better.
Stop American politicians from participating in global government masquerading as G20 ‘summits’.
That’s all you need to do.
The citizens will then have their rightful authority back.
Without the derivatives market, we could fix the mortgage problem. However, the derivatives market makes this problem many times larger - we don’t even know how much larger. At least on the scale of 10 X larger.
Exactly. The ‘Rats WANT bad things to happen so that they can convince people that THEY have the only solution, except that the ‘Rats are the cause of the problems in the first place.
This def. is not over - the credit bubble has not popped yet either. Once that goes everything will topple like dominoes as well - because it’s a spider web. Bank A loans to Bank B - both Bank A loans to Company C - Company C loans to Company D - Company D gets another loan from Bank B - Well if Company C can’t make payments on their loans and goes into Default on their letter of credit then Bank A owes money to Company D - does it have that money? If Not then Company D will most likely topple and not be able to pay its loans - Bank B is out and Bank A needs to pay Bank B and so on and so forth!
Do you understand the concept of derivatives?
These have nothing at all to do with the Community Reinvestment Act.
The SEC tried to reign in the mess, B.Frank blocked it. When the Feds demand banks give out loans or face lititgation and allow Fannie Mae to buy up the junk that`s a green light to Wall St signaling anything goes.
When Mr. Carters administration managed to get the short term commercial loan rate up to 22% I decided to have a long talk with my banker. The outcome of that conversation was an agreement that if I got out of the banking business, He would not seek to offer services in my line of work.
We immediately switched over to a cash basis, and everything was fine right up until the day I closed the doors for good and retired.
Sure they are contracts that derive their value from underlying assets
These have nothing at all to do with the Community Reinvestment Act.
CRA mandated loans, packaged up, are the underlying assets.
Wow. I wonder if I should empty the old saving account and IRA and buy...gold?
Nah, I’ll look for some bargin rental property instead.
Real assest that can generate income have got to be better than sitting on cash when the inflation fairy comes to visit.
And she will be here before too long.
Check THIS out, with the caveat that it comes from Dick Morris.
Not quite,there could be no specific derivative market without the CRA subprime mess driving it.
Congress required that mortgage giants Fannie Mae and Freddie Mac direct 52% of their backing to the homes of low-income, higher-risk, mortgagees.So Wall St. knew there were no red lights, bundled them into CDOs and sold them,backed by credit default swaps and to top it all off, banks were permitted to borrow up to 30 times their asset bases, three times the leverage permitted to lending banks.
Remove the above government socialist experiment and there would be no financial crisis.
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........Paulson also wanted to exempt the bailout from any judicial, legislative, and regulatory review...the lying bas**rd .............
The late economist John Kenneth Galbraith blamed Goldman Sachs for policies causing the Great Depression of '29. In his book, The Great Crash, 1929, Galbraith, a key figure in JFK's admin, an entire chapter titled “In Goldman, Sachs, We Trust,” details the “large-scale corporate thimblerigging” that Goldman and other Wall Streeters practiced in the 1920s.
G/S frat boys at the highest levels of govt are now pulling the levers of power. Watching them operate, we know Goldman types promote their own interests relentlessly...........the rest of us be damned. Heaven help us.
NO SURPRISE---G/S SCREWED TAXPAYERS Secy Paulson and his buddies---the Goldman Sachs boys----helped themselves to the bailout billions. Typical Wall Street chicanery. Pavelson told Congress the billions would be used for one purpose then the foxy, wily Pavelson changes horses in midstream and decides to use the billions for something else without burdening himself with the force of US law. No wonder the economy is in turmoil.
US Sen. Jim Inhofe (R-Oklahoma) said that Congress was not told the truth about the $700 billion blank bailout check. "The American people don't know how much money Treasury Secretary Henry Paulson has given away to anyone. IT COULD BE TO HIS FRIENDS. We don't know. There is no way of knowing.''
KEEP IN MIND Henry Pavelson (former Goldman Sachs honcho) named his Goldman Sachs underling, Neel Kashkari, to oversee the $700B Wall Street bailout. G/S alumni are bailing out the very crooks who contributed to the economy's meltdown. Conflict of interest anybody?
GOLDMAN SACHS SCREWS US AGAIN Secy Pavelson told Congress bailout billions would be used for one purpose then the foxy, wily Pavelson changes horses in midstream and decides to use the billions for something else. Typical Wall Street chicanery.
The heck with Congress enacting the bailout law for one use. Pavelson personally decides he and the G/S guys will use it for "something else."
As US citizens line up at soup kitchens and sell apples on street corners, Pavelson, Kashkari, and the G/S frat boys should come clean about their holdings ..............(at least the ones not hidden in numbered offshore bank accounts, the ones not "parked" at Goldman Sachs and other Wall Street entities, or bailout billions not tied up in untraceable, untaxable casino chips).
I hate economic predictions with definite time tables (2011) and definite conclusions of exact affects of current conditions; but as to this list:
“America’s credit rating may soon be downgraded below AAA”
Already, the world is lining up in the opposite direction, with public and private bidders for U.S. treasury notes - seeking what is still the world’s financial safe haven - accepting less than 1% yeilds.
“Congress has no oversight of $700 billion, and Paulson’s Wall Street Trojan Horse, King Henry Paulson flip-flops on plan to buy toxic bank assets, confusing markets”
The Tarp “transparency” requirements will be revised in less than six months - long before 2011; so, alone or in tandem with other things, the fact that “Congress has no oversight of $700 billion” will not be a factor in 2011.
“Goldman, Morgan lost tens of billions, but planning over $13 billion in bonuses this year”
How this will cause a depression or how it is an indicator of one is, logically, missing.
“AIG bails big banks out of $150 billion in credit swaps, protects shareholders before taxpayers”
Again, how protecting “shareholders” is a crime, a sin or leads to economic conditions for a depression is not explained. If protecting shareholders helps keep private investment in AIG stable, then doing so will make paying back its loans from the Fed, in time, all the more likely, not less. Whereas simply paying back those loans immediately will more greatly reduce its capital, cause revenue to be used in ways that neither improve private capital growth or revenue growth, making it less likely it will not need another “bailout” on its road to recovery.
“American Express joins Goldman, Morgan as bank holding firms, looking for Fed money”
Ah, something to agree on; yes. The eligibility for the Tarp, as it was to apply to banks and bank holding companies should have grandfathered all existing such companies as of the date the law was passed and made all newcomers ineligible. The worst thing this open gate will do is diminish the effectiveness of the intended aid by cutting down on how much is available for the most needed situations as each person in Congress comes demanding a portion for every newly minted “banking” company in their district. Though, error that this is, I still see no direct link to the cause of a “2011 depression” - only a, possible, indirect one, on increased inefficiency of allocation of economic resources.
“Treasury sneaks corporate tax credits into bailout giveaway, shifts costs to states”
What “costs” are shifted to states, and how will the generation of those costs become depression inducing, by 2011.
“State revenues down, taxes and debt up; hiring, spending, borrowing add even more debt”
The fact that state revenues are down is true. “State” taxes continuing to go up is not yet a given; in fact, I expect to see some more “fiscal conservative” Dims in state government who start to admit state spending must go down, so that people have money left to spend on their own needs.
“State, municipal, corporate pensions lost hundreds of billions on derivative swaps”
Where; data please????
“Hedge funds: 610 in 1990, almost 10,000 now. Returns down 15%, liquidations up”
And which ones have gone “belly up”????
“Consumer debt way up, now at $2.5 trillion; next area for credit meltdowns”
Well, again, One more good one on the list (finally).
“Fed also plans to provide billions to $3.6 trillion money-market fund industry”
Already being done; but again, how will doing this be depression inducing, and how will this NOT have any positive financial affects against a depression??? Economic analysis please??
“Freddie Mac and Fannie Mae are bleeding cash, want to tap taxpayer dollars”
We own them. They can be stopped from their “bleeding”, if we had a Congress who told them to stop (they need to buy fewer mortgages today and sell, sell, sell “assets” to increase their capital (so they will be more attractive to private buyers in a few years). But, here, yes, if Pelosi-Reid-Obama have their way, Fannie and Freddie will continue to prop-up vastly over-valued home assets and keep private home markets “depressed”.
“Washington manipulating data: War not $600 billion but estimates actually $3 trillion”
Data please - not assumptions from The Nation???
“Hidden costs of $700 billion bailout are likely $5 trillion; plus $1 trillion Street write-offs”
What does “likely” mean - what % certainty is there in “likely” and what variables are so certain in that assumption; and again, data please (policies, plans, legislation and economic data regarding their affects).
“Commodities down, resource exporters and currencies dropping, triggering a global meltdown”
Yes. Something that is not speculative but true, as to these things “dropping” but “meltdown” is not there and what it requires most is not new data but psychology - like the psychology behind the authors scenario - to convince everyone to proceed to the doom; instead of combating it.
“Big three automakers near bankruptcy; unions, workers, retirees will suffer”
What is the meaning of “suffer” and has it no comparison to anything, or anyone else????
“Corporate bond market, both junk and top-rated, slumps more than 25%”
Recessionary, not depressionary.
“Retailers bankrupt: Circuit City, Sharper Image, Mervyns; mall sales in free fall”
Gee, did we hit a “depression” with the bankruptcy of Kmart, or the huge downsizing of Sears? And “free fall” - meaning, and meaningful comparisons please.
“Unemployment heading toward 8% plus; more 1930’s photos of soup lines”
What do “1930s photos” have to do with today??? Other than showing such photos does rekindle the psychology they invoke???
“Government policy is dictated by 42,000 myopic, highly paid, greedy lobbyists”
“Dictated”??? I thought “lobbyists” (representatives of companies and individuals about to be skewered, or lifted up, by Congress) competed against each other and in that competition none could “dictate” anything; though greedy persons in Congress could.
“China’s sees GDP growth drop, crates $586 billion stimulus;”
Yes. U.S. and Europe imports are down and now China must continue to fund infrastructure development to help keep domestic wages and consumption from falling too low.
“deflation is now global, hitting even Dubai
Despite”
After decades of hidden, easy money, leveraged inflation, it’s about time.
“global recession”
Yes. And, recessions, even global ones, can be handled so as to prevent depressions - can be; so “depression” is not a given result of a recession, even a global one.
“U.S. trade deficit continues, now at $650 billion”
Yes. Dollar weighted values are growing with a rising dollar market value. How this indicates “depression”????
“The 800-pound gorillas: Social Security, Medicare with $60 trillion in unfunded liabilities”
The beginning of the fall of the Social Security gorilla starts in 2013, not 2011 and the extent of that fall, while massive in the following decades will be most troublesome beginning about 25 years out. The impact of the Medicare gorilla could be a sooner affect from, though not a cause of, a depression; as it’s deficit is growing fastest and will be hit deepest by revenue cuts from lower FICA taxes from very high unemployment, if unemployment exceeds 10% and stays that high or higher for too long.
“Now 46 million uninsured as medical, drug costs explode”
Who wrote this editorial “list”.
1. There are NOT 46 million “uninsured” (25% - of the 46 million- have incomes much higher than needed to pay for health insurance and choose not to have it; some % are students and get coverage on mom & dad’s policy’ some % are young, healthy and won’t pay even their share on an eligible employer provided plan’ some % “lost” coverage for as little as one day, while between jobs; and some % are illegally in the U.S. and working on stolen social security numbers. There are not “46 million uninsured”.
2. Drug costs, for those who need them most have not “exploded”; in fact Wal Mart sells $5 prescriptions to almost everyone.
“New-New Deal: U.S. planning billions for infrastructure, adding to unsustainable debt”
Wow, again, something true and useful!!!!!
“Outgoing leaders handicapping new administration with huge liabilities”
Who is “handicapping” who?????????
“The “antitaxes” message is a new bubble, a new version of the American dream offering a free lunch, no sacrifices, exposing us to more false promises”
No we KNOW what kind of people made this list; those who promoted a new savior.
“We are going to cut taxes for 95 percent of Americans.”
-Obama
You’re right for reminding us of this Obama promise....we can’t forget this and we have to keep hammering it home. This will provide us with the obvious ammunition when he does the exact opposite.
There is a way to cut almost any state agency or department in half in about three years, with the employees cooperating enthusiastically and willingly.
Most government agencies propose their own budget for their next fiscal year, and it is almost always larger than the current budget. Most agencies make sure that the current year's budget has been spent by the end of the fiscal year. They don't want to lose their current year's funding. There is no incentive for savings under this system.
There should be a new budgeting policy for each department. The new policy would take any unspent budgeted funds at the end of the fiscal year and split them with the people in the department. Then, the lower budget figure would be used for the next fiscal year, with, again, any unspent surplus being distributed to the employees who made the surplus possible. Personal interest would have every employee watching for any possible waste. Retiring employees would not be replaced, and the hiring of new personnel would be virtually eliminated.
No money would be saved the first year, but from then on every department would have continuously lowering budgets.
Human greed would ruin this plan. When the rewards became enough for employees to actively start saving money in order to receive larger bonuses they would begin to figure out ways to not do things that really needed to be done in order for things to work so they could share in that money too. That would be the end of it, things the departments are in charge of would deteriorate and work would not be done. Small example being they wouldn’t want to purchase paper or enough paper so they would not be able to print needed documents. That mindset would travel through government rapidly and things would come to a halt from so many trying to save money. Sounds like a good plan but human nature will allow it to work.
Anyone that has a job of any consequence with the government makes enough to owe taxes. They know “government” money comes from taxes and they know they pay taxes- yet many waste government money constantly because there is some sort of disconnect in their mind with the money they pay in taxes and the money they spend or waste at work. With this mindset I don’t know what will solve the problems.
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