Posted on 01/18/2009 7:55:37 AM PST by TigerLikesRooster
Reviving the world's burst-bubble economy seems further away than ever
In the US and in Ireland, governments have been scrambling again to support their banks.
By Ian Campbell, breakingviews.com Last Updated: 6:25PM GMT 16 Jan 2009
For the economic prospects of these countries, and the world economy, that is troubling. Recession is only just beginning and yet many banks are holed.
Governments are being obliged to pour in more capital, adding to the huge liabilities they now face. This vicious circle augurs poorly for recovery.
/snip
It's not yet the time. But monetising bad debt and devaluing paper money may in the end be the only way of reviving the world's burst-bubble economy.
(Excerpt) Read more at telegraph.co.uk ...
Ping!
What else can they do? This whole bailout deal is peanuts compared to what they really owe. Inflation is the way out for them as last resort. Problem is the wages have to keep pace.
That is for sure. The consumer spending spree of last two decades or so is simply unprecedented in history. It will be a long time before we match such a level of consumption.
However we all know that governments are wealth eating and destroying institutions that are have large dependent minions, have unlimited powers and like it, and like Aztec Chiefs and Priest class believe more than the most fervent Islamist, that the sun doesn't rise, the crops don't grow, little children will not become adults without them.
Like the French Kings, the Sun Gods, all revolves around them and all bounty comes from them.
(So, we have that going for us, which is nice.)
Obama. Pharoah of America. The Sun God is come. Hail Obama. The USA has commited Omamacide.
Yeah but lets create real wealth, credit default swaps, not derivatives, sub prime mortgages and other similar garbage. That's just the illusion of wealth fostered by Wall Street. And that's the bubble that just burst. Lots of malls will close too because Americans really don't need to buy all that ridiculous "stuff"
Wait until the lack of educated, productive young people have the debt payments fall on their shoulders and eat up 80-90 percent of their income.
Why would anyone get off the couch to be tax slaves to elderly boomers?
With high taxes on income, and of course at the local level, property, who thinks all these homes are going to be bought out at existing prices? People are going to, other than a necessity, finance a decreasing price house, with high taxes?
We got debt and demographic trend lines that are ugly.
What made Detroit, a pit? Debt, taxes and fleeing demographics. Only young people are not fleeing a city, they don’t exist period.
People like stuff.
What once was a luxury, like meat, is now a staple.
We have political/ideological obstruction coupled with politically entrenched royalty of modern state bureaucracies that won’t get out of the way, because being in the way, have the royal say so is how they earn their living.
The usual method of solving an entrenched thief class is by mass violence.
It is too late for government to do anything useful other than to let the deleveraging work its way through the system while mitigating the worst of the damage. The best thing to be done, which won't be done because it is political suicide, is to let bad enough alone.
My thoughts too...crank up the printing presses.
With all the people who've been laid off and are going to be laid off, the effect of them not buying will take a while to be felt. I don't see how Steve Forbes (in another article) can predict the stock market to end up for the year, 2009.
Who's going to be buying stock when all the people laid off will be cashing in the remnants of their IRA's and 401k's just to keep bread on the table?
Some of your thief class is in gubbermint but the larger part is on Wall St. And please don’t call then capitalists. They are asset shufflers, as Marc Faber calls them
The capital problem at banks is purely a result of bad debts not being repaid in nominal terms. Add capital equal to the bad debts - not to the debts themselves, only to the amounts defaulted rather than repaid on schedule - and there is no capital problem.
The payments on all debts will cover the actual costs of all debts, and rate spreads will move until this is actually so. It is mathematically impossible for their not be a rate spread structure that successfully satisfies this. The difficulty is purely the intertemporal aspect, that bad debts are instantly capitalized (full present value hits the instant they are seen to be bad debts), while higher spreads are not (only gradually "earn" as spreads stay wider for some length of time).
Debtors pay all debts, as a class. Always. No one else ever can or could. All loan losses are added to debt costs of lenders and tacked on to the rates all debtors pay, or loans simply are not made, as uneconomic for the lender. A given lender can be surprised in the matter, fail to add enough insurance rate for unexpected losses, and so record a loss on a specific loan. But this simply and instantly forces rate spreads wider, for all lenders.
The above relationships occur regardless of the exchange value of money or any fluctuations in it over the course of contracted loans.
Which "hat" people are wearing when they repay the capital they borrowed, can change. It can be individual borrower as contracted, all borrowers as a class through higher rates, taxpayers through deposit insurance, end depositers as final claim lenders, any mix of them. But all true economic costs of capital are always paid in full.
I don't understand what you mean by this part.
Aren't baseless insults fun? So easy...
I just knew they would figure a way to destroy 401k plans and IRA. The sheeples will have to count on the Obamunists to ration out the last of the food supplies as the house of cards crumbles in the death spiral of socialism.
“The usual method of solving an entrenched thief class is by mass violence”
......You are right and it’s too late for term limits.
When the dust clears, term limits has to be a priority!
This is probably the same bunch that hooted at Peter Schiff's predictions back in 2006-2007. Check out this YouTube clip where he tangles with Arthur Laffer, Ben Stein et al who give some of the most astoundingly bad advice I have ever heard, even allowing for 20-20 hindsight. And check out the one snarky guy who is chuckling and laughing at Schiff. Ten priceless minutes of mostly B/S.
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