Kentucky. It's all there.
Posted on 10/05/2008 6:52:37 PM PDT by Lazamataz
We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars.
Investors will learn today whether the Paulson bail-out - fattened to $850bn (£480bn) by Congress - can begin to halt the death spiral in the credit system. So far, the response looks terrible.
Germany is now in the hot seat. The collapse of a rescue deal for Hypo Real Estate on Saturday threatens a €400bn (£311bn) bankruptcy that nearly matches the Lehman Brothers debacle for sheer scale.
Chancellor Angela Merkel has been forced to pull her head out of the sand, guaranteeing all German savings, a day after she rebuked Ireland for doing much the same thing. Reality intrudes.
During the past week, we have tipped over the edge, into the middle of the abyss. Systemic collapse is in full train. The Netherlands has just rushed through a second, more sweeping nationalisation of Fortis. Ireland and Greece have had to rescue all their banks. Iceland is facing an Argentine denouement.
The US commercial paper market is closed. It shrank $95bn last week, and has lost $208bn in three weeks. The interbank lending market has seized up. There are almost no bids. It is a ghost market. Healthy companies cannot roll over debt. Some will have to sack staff today to stave off default.
As the unflappable Warren Buffett puts it, the credit freeze is “sucking blood” out of the economy. “In my adult lifetime, I don’t think I’ve ever seen people as fearful,” he said. We are fast approaching the point of no return. The only way out of this calamitous descent is “shock and awe” on a global scale, .....
(Excerpt) Read more at telegraph.co.uk ...
You were saying — “There isn’t any money? Money exists as a fundamental indicator of wealth. If money needs to be backed by gold then so be it. But money needs to exist.”
Well, “money” is such an abstract principle, anyway. It’s not a “real thing” in any case. There is such a thing as perceived value to things and what they would be worth when one is trading one thing for another. “Money” is simply a mechanism to make this sort of “trading” more manageable and functional.
“Value” on the other hand, can change overnight — depending on the perception of the potential buyers. If your house is worth $100,000 today — the exact same house may only be worth $50,000 tomorrow, if the “perception” of the mass of buyers changes overnight. That would mean (technically, I suppose) that your house lost $50,000 in one day — by nothing you did and having nothing to do with what “money” is worth, in general — but it could happen that way. The “money” could be worth exactly the same, but because society’s perception of things (and a “crashing market” for that item happens) — your house is “worth” less — thereby causing you to “lose money” (as they say). But you really didn’t “lose money” — you lost “perceived value” of which the money represents.
What is going on here (in the global financial crisis) is a crisis of perception — having to do with what a lot of people “think” and “perceive” to be the “value” of the underlying instruments (of “money”) which supposedly “value” the price of other things and provide the “required minimums” for banks and other financial institutions to have in (so-called) “cash” to “support” other transactions that they do (which are “essential” transactions and necessary for society).
And then, what (further) you have, is valuations that create the conditions for “fire sales” of businesses and supposed bankruptcies for businesses and banks. Face it, selling something under duress and in one or two days never gets you the “value” that you would have from selling the same item with care and a longer period of time and with more buyers who are interested (and see “value” to the item).
I see that Wachovia was *forced* to sell to Citicorp (I hope I have the names right; I think I do...), but Wells Fargo comes out with a *hugely higher* bid and says that they will pay this money for Wachovia. AND, in this article, it is *claimed to be known* by all parties that the “value” for Wachovia is much much higher than the “fire sale” that was demanded by the government to be done by Citicorp — and even higher than the *hugely higher price* that Wells Fargo is paying. Citicorp (which is kind of on the ropes, too) is hoping to keep the “fire sale” going to them, so they can use Wachovia to “bale them out” of their financial troubles, while Wells Fargo is looking to “get a good buy” with their higher purchase price (with Wells Fargo *noting* that Wachovia is worth even more than they are paying).
Wachovia wouldn’t have to have this kind of fire sale price to either Citicorp or Wells Fargo, if the “perception” wasn’t “devalued” as it has been in recent weeks (because of many other conditions on the market).
When this kind of “perception” is multiplied *across the board* — then you have a *collapsing financial system* — and that’s why you need an *immediate and massive* (”bail-out” — if you will...) infusion of “money” into the system to stop the “perception” of decreased values across the board, in all markets.
AND, as a “spin off” of this “Wachovia problem” — it has spilled over to many higher educational systems, as their money is tied up in some financial instruments (which are “sound” in and of themselves), but are managed by Wachovia. As a result Wachovia froze the accounts of all these many higher educational systems (i.e., universities across the country), and that has caused these institutions to rush out and seek additional sources of money (i.e., for them to “borrow” money) to “cover” the money that they cannot touch now, since Wachovia froze all their accounts. There was nothing wrong with those accounts — other than being under the management of Wachovia.
So, that further complicates the problem.
And so, the reason why many in the financial industry and financial markets want a “quick solution” and a “massive solution” — is to restore “confidence” — more than anything else. It’s not so much about the “numbers” (which they can work out over a longer period of time) — but rather — it’s about “confidence” to allow people (and institutions) to keep doing the same things that they have been doing, without fear and without drawing out large amounts of cash and without worry about lending, for fear of not getting paid back (because of massive failures and disruption to the financial system and all the individuals involved).
It’s the “loss of confidence” that *actually changes the values* of products, rather than anything “fundamental” having been changed in the value of the product. It’s simply what people “perceive” they are will to pay or not pay. That’s all that has changed.
You can argue a very long time about what the “value” of something actually is — but it’s value comes down (at the last moment) to what someone is willing or able to pay for it — nothing more and nothing less. That’s all that matters in the end.
I’m afraid by not doing a massive bailout quickly and — indeed — of a more massive amount than what was done, the major component of “confidence” was not restored — and it’s *this one thing* which will bring down the entire global financial system — and bring down all the individuals (like you and me, who have nothing to do with “big finance”) when we lose jobs and/or significant amounts of income and have to have our own “fire sales” to get by.
No matter whether it’s the “principle” involved or not (in whether to “bail out” or not) — it still affects us all, just the same. If the lion’s share of “confidence” is not restored immediately — we’re all in for a massive change in how we do things (in the global financial system) which will result in a massive loss of “perceived value” to everything that we own, from houses to cars to — you-name-it.
As a side note, I believe that what is happening now is simply a precursor to that massive and controlling “one-world financial system” that will be put into place by a “world government” (which you could argue that we essentially have now, to a degree) — that the “antichrist” will take full advantage of, to wield his power and authority over all peoples on the earth. This appears to be anther “piece to the puzzle” that is being put into place.
While I agree with every word. I didn’t do the same because I didn’t want to be accused of starting the bank runs. I have always believed that keeping a few months worth of expenses in the safe at home was just the smart thing to do.
Those of you who haven’t already gotten some cash from your bank may find that you will not be able to get the amount you want without giving them previous notice. That is no reason to get shook up. Your account is insured to 250K.
Spain has one of the lowest birth rate in the world with 1.18 children per woman.
Yes. That’s why I say it was odd. But what happened was basically tulipmania.
Britons and Germans were buying up Spanish homes as fast as they could find them, driving up the prices.
Here’s a Wikipedia article about the phenomenon:
http://en.wikipedia.org/wiki/Spanish_property_bubble
It'll take mass insanity, but the Party of Evil and the Drive-Bys are pulling out all the stops for him.
Bookmark for later reading.
I don’t think it will happen.
But then, all of mu money is in WaMU, Wachovia, and real estate.
Aw, dang.
Problem: the U.S. Bullion Depository at Fort Knox only has about $135B in gold on hand. How could we back the trillions of circulating dollars with only that much gold?
>If your house is worth $100,000 today — the exact same house may only be worth $50,000 tomorrow, if the “perception” of the mass of buyers changes overnight.<
The last thing I’m going to worry about is the price of a house I am not wanting to sell. The same goes for my vehicles, firearms and ammo.
Two times last week I made withdrawals from the same bank, at different locations. In both cases they paid out in US$20 bills indicating they had nothing larger.
I note that a good friend was contacted by his depositor asking if they could trade up several small bars of gold he had for larger bars because they needed the smaller ones for pending distributions.
I note that the cost of insuring US$10M changed from US$7,000 to US$37,000 in less than one month.
I note that the CA, MA, and NY are indicating they may need short term loans from Treasury because the window is closed.
I note that a friend of mine on the west coast, when withdrawing 3k from BofA was quized if everything was OK prior to withdrawal and subsequently given the majority of his withdrawal in US$20 bills.
I note that Goldman Sachs is projecting 8% plus unemployment rate next year with fed rate of 1% including one or more quarters at 0%.
Given these and other real life indicators, it is safe to say... Houston... we have a problem.
“You” “use” “way” “too” “many” “double” quotes”.
IMO, if there was to be a financial crisis, you wouldn’t want $100 bills because the seller would be foolish to admit that he could make change. If you wanted that tank of gas then you would pay him the $100 and go on your way. I have everything from $5’s to $100s stashed away. Most of it is in $10’s and $20’s that are a couple of years old.
>I note that a good friend was contacted by his depositor asking if they could trade up several small bars of gold he had for larger bars because they needed the smaller ones for pending distributions.<
Did he charge the dealer a couple of points? I hope he did!
I thought he used too many *’s.
yes he did.
For what its worth... AIG has consumed 60+ billion of their loan. Monday markets will be a mess....
Kentucky. It's all there.
The LIBOR numbers all indicate that it’s heading downward.
For those who don’t care about what the “value” of the various things are (that they own), it wouldn’t make too much difference to them, directly.
If they are working at a job, it may make a difference as to whether that job is there anymore or not, however. A lot of jobs will be eliminated as a result of this massive financial dislocation.
It also may make a difference in how much “money” that people have to purchase other things that they may need, if the value of various things (which are considered assets to some degree) are negatively affected. It would mean those people who need the valuation on their assets (for whatever reason) will find that they simply do not have the “resources” any more (financially speaking) — that they thought they had.
I’m sure it’s going to affect a tremendous number of people with their retirement funds. They simply may not be “retiring” with the amount of money that they thought would be there (if at all...).
Of course, if one wants to farm their own food and raise their own beef, then it wouldn’t make too much difference (to some degree), I suppose. However, I don’t personally know too many people like that. So, I suspect this sort of financial dislocation would affect a massive number of people.
It will be quite an obvious fact — to a great number of people — that this kind of massive and world-wide financial dislocation in the financial industry will dramatically reduce their net-worth and what they thought they might be able to do (in the future) with that “money”.
What is heading downward? Libor rates for 3 month at 4.05 but that does not mean cash is available. That is what tank CA. No cash... no credit.... The pessimist would say credit cards and checks are in peril.
In every sense I am extremely lucky. Retired ten years ago, when I was 50 and have planned and prepared for the financial crash slowly over the past five years I am about as ready as a man can be.
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