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maverick



Joined: 09 Aug 2006
Posts: 271

PostPosted: Mon Nov 03, 2008 11:14 pm    Post subject: Reply with quote

Someone smarter than me explain this to me.........

If these banks are going to start refinancing people who are behind with better rates and lowered principle..............

THEN SHOULD'NT I JUST QUIT MAKING PAYMENTS FOR AWHILE AND GET IN ON THIS DEAL!!!!


If this is gonna happen its going to decrease the value of my house anyway so I am getting screwed twice for being a promt paying citizen.......
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Fintan
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PostPosted: Tue Nov 04, 2008 7:19 pm    Post subject: Reply with quote

Quote:
THEN SHOULD'NT I JUST QUIT MAKING PAYMENTS
FOR AWHILE AND GET IN ON THIS DEAL!!!!

Not a bad idea, in the light of this latest development... Laughing

Quote:
NO MORE MORTGAGE PAYMENTS SOON
- Get Ready to Default!


November 4th, 2008 - Mr Mortgage

Oh my. Friends, get ready to default on your mortgage…on purpose.

The first chatter about the government sponsored loan modification
initiative has surfaced from Paul Jackson at Housing Wire and what a
disaster it is.

I have been telling you guys for months that a homeowner bailout is
coming. But this is unlike anything I expected - it actually encourages
every mortgage holder in America to default. Why not when you can get
a government loan at the FED FUNDS RATE!

The New Bailout- NO MORE MORTGAGE PAYMENTS!

The plan is to FULLY SUBSIDIZE millions of mortgage payments for three
years. The program is predicated upon the housing market improving
within the next 5-years. This is a really bad assumption to make but also
could shed some light on the Fed’s inflation expectations. This may help
borrowers de-leverage temporarily but will not help the broader housing
market. It just kicks the default can down the road several years.

“In five years’ time, participants would, in all likelihood, be able to sell
their homes or refinance their mortgages at amounts that would allow
them to repay the loan.”


However, when you think about it more closely it is ingenious. When you
give all those who are over-leveraged and are defaulting on their
mortgage no monthly payment for three-years, what will they do with the
money? Right - they will go spend every penny pumping the sectors of
the economy that were so hot during the housing bubble years. They may
also use some to pay down other debt, which of course helps the banks.

They are banking on homeowners not saving a penny, which also means
they will not be able to pay off the five-year balloon when it comes due.
But that little issue is for a different group of regulators to figure out. The
Fed’s know that the foreclosure crisis is so large and complicated that this
hail-Mary pass may be the only possible ways to ’save’ consumers and
revitalize the economy at the same time. Additionally, they are banking
on massive inflation to carry home prices higher so in five years the
borrowers can sell or refi making this all a gift. Now wouldn’t that be a
perfect world!

One thing is for sure. This plan will not directly revitalize the housing
market or ultimately save the home owner. This just keeps people
spending and in more debt. When it comes to mortgage modifications and
setting borrowers straight, unless a pre-emptive mortgage modification
initiative involves the re-underwriting of all borrowers with ‘at-risk’ loan
types and borrowers using strict full-doc guidelines with 28/36% debt to
income ratios and market-rate 30-year fixed mortgages, it does not solve
the problem. If you re-underwrite and reduce principal accordingly, the
borrower is instantly de-leveraged.....

http://mrmortgage.ml-implode.com/2008/11/04/no-more-mortgage-payments


Here's extracts from that Housing Wire
article which Mr. Morgage refers to:

Quote:
Feds May Be Considering Subsidy on Troubled Mortgages

By: Paul Jackson November 4, 2008

When it comes to the idea that Treasury’s TARP funds may be used to
manage a bailout of troubled mortgages, all options are still on the table,
and the only thing that most of us really know is that the plans under
consideration have been stuck in the negotiating room for some time.

One plan that may be garnering some consideration is the idea of a
federal subsidy for troubled borrowers, perhaps tied to an effort to modify
loans. A source near Democratic senator Robert Casey’s office in
Pennsylvania forwarded us a copy of a memo on Sunday evening, said
to have sparked some of the ongoing negotiations now taking place,
although HousingWire could not obtain further details. The memo outlines
a proposed bailout that would use three-year subsidies for some troubled
borrowers.

The subsidy plan represents the thoughts of Assured Guaranty Ltd CEO
and president Dominic Frederico, who had been asked by legislators to
provide his thoughts a few weeks earlier....

The proposal outlines the mechanics of a mortgage bailout that would
cost as much as $441 billion, relying primarily on a three-year borrower
subsidy that would be repaid in five years, with interest.


“Upon receipt of a notice of default on an owner-occupied primary
residence, a homeowner could apply to participate in a program under
which the government would fully subsidize three years’ mortgage
payments in exchange for a note, to be paid in a lump sum five years
from receipt of the first payment subsidy, equal to the payment subsidies
plus interest accrued at the federal funds rate,” reads the proposal, in
part.

“In five years’ time, participants would, in all likelihood, be able to sell
their homes or refinance their mortgages at amounts that would allow
them to repay the loan.”

Only one of many options

A few of HW’s sources on Capitol Hill suggested the general idea of a
borrower subsidy is only part of what is now being discussed among
Administration officials and legislators; key Democrats are said by our
sources to be pushing hard for such a measure as a way to push bailout
dollars directly to borrowers, after what they see as a handout to Wall
Street firms needing capital.

The plan is also just one of the options being tossed around by legislators,
we were told by a lobbyist on Capitol Hill with knowledge of ongoing
negotiations.

http://www.housingwire.com/2008/11/04/feds-may-be

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Hombre



Joined: 07 Jan 2008
Posts: 967

PostPosted: Thu Nov 06, 2008 7:32 am    Post subject: Reply with quote

Here are the more important things that are being kept from the average citizen of the world. This needs to be researched in full. I have a feeling that either this guy is a NWO STOOGE or he isn't as dumb as people want YOU TO BELIEVE.

Quote:
Venezuelan President Hugo Chavez's government will take over and nationalize La Cristinas, the biggest gold mine in the country owned by Canada's Crystallex, Mining Minister Rodolfo Sanz said Wednesday.

The move is part of leftist Chavez's socialist agenda that calls for nationalizing Venezuela's natural resources. Over the past year, he has taken over the electricity, oil, steelmaking, cement and telephone enterprises

"This mine will be seized and managed by a state administration," Sanz said in a statement.

The Cristinas mine, located in southeastern Bolivar state, is estimated to hold 16.9 million ounces of gold, in proven and potential reserves of the precious metal, according to Crystallex data.


http://www.breitbart.com/article.php?id=081105220533.9xxyupf3&show_article=1

How long will it be before Oil is $40.00 a barrel and Chavez will need to borrow capital to run the country and fund his playboy lifestyle. Wonder what he'll put up as collateral! Laughing Laughing Laughing

Talk about connecting DOTS!

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Fintan
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PostPosted: Thu Nov 06, 2008 8:49 am    Post subject: Reply with quote

The Paulson Mortgage Crisis

Full details of the smoking gun follow, in which Paulson and the Bush
Administration colluded in the deliberate creation of the housing bubble
--thus enriching Wall St and deliberately creating the circumstances
of a crash designed to justify a Globalist takeover bid on the world's
financial markets via the G20/World Bank/IMF.

Will they get away with it?

Quote:
...if you want to know why it happened - why the market did not step in
and stop it, which everyone involved wrings their hands and laments -
you need to look to only two decisions, and both of those decisions were
made not by Congress but by executive fiat in the Bush Administration.

These were:

The decision to file suit to overturn state regulation of mortgage issuers,
specifically targeting New York among other states, where state
regulations required that "ability to pay" (and other anti-abusive lending
provisions) be part of the underwriting decision. These suits barred
states from clamping down on lenders who made loans to people who
could not pay.

The decision by the SEC to lift broker/dealer leverage limits in 2004.

#2 is particularly outrageous because in 2000 Henry Paulson, then the
head of Goldman Sachs, asked the SEC to lift those limits and was told
"no" - The SEC at the time said that it believed that removing those limits
was unsafe.

In 2004 Henry Paulson (two years before he came to Treasury)
came back with the request a second time, and the request
was granted in what was the culmination of a furious lobbying crusade by
Wall Street firms.

Now look at this chart:



Note very carefully when the home price index went over 150.

Late 2003/2004.

Why is this important?

Because 150 is the maximum level that the home price index had
obtained during all of the previous "housing booms" since WWII.

Here is the simple, raw, unadulterated and ugly fact:

It is not possible to pump home prices beyond about the 150 level on that
index without intentionally increasing leverage and reducing supervision
of lending beyond safe levels.

The actions of every one of the government participants since the housing
bubble popped have been focused in one and only one place - obfuscating
this simple fact and trying desperately to avoid being held responsible for
both their actions and the outcome on the American economy.

Isn't the reason for this "need" obvious?

To admit the truth would mean that Henry Paulson would have to
immediately resign in disgrace, and George W. Bush would have had to
apologize to the American Public. In addition, it would only be reasonable
for Henry Paulson to disgorge his $500 million in personal wealth gained
from the bubble, since it was, effectively, "ill-gotten gains."

Both are simply not going to happen.

Not now, not ever.

http://market-ticker.denninger.net/archives/647-Boiled-Down-Credit-Bubble.html

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PostPosted: Thu Nov 06, 2008 10:03 am    Post subject: Reply with quote

This was spawned by the Clinton administration back in the 90's. Maybe Paulson just tweaked it a tad bit. Steven A Holmes wrote a piece on it back in 99 that predicted a possible housing crisis in the making. It was passed along recently via e-mail. Snopes checked it out and claims it's true Laughing Laughing certainly it's public knowledge and in the New York times archives.

Here's a bit:
Quote:
September 30, 1999
[ copyright New York Times, 1999 ]

By STEVEN A. HOLMES

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets — including the New York metropolitan region — will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from s to ck holders to maintain its phenomenal growth in profits.


LINK: http://newsroom-magazine.com/?tag=steven-holmes


One telling fact that should raise eyebrows is a simple one hidden within the ink. The mention of the following institution/CLUB!

Quote:
“From the perspective of many people, including me, this is another thrift industry growing up around us,” said Peter Wallison a resident fellow at the American Enterprise Institute. “If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.”


Saying this was a perfect storm from out of the blue is indeed a bold faced LIE!


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PostPosted: Fri Nov 07, 2008 12:06 am    Post subject: Reply with quote

Quote:
Tough Sledding Ahead,

Surviving A Coming USD Collapse


Christopher Laird

Now that the US election is over, we get to think about the Future. And, no matter how you look at it, the entire world, the West particularly, is in for tough sledding financially.

First, we will continue to battle an emerging economic slowdown. Then, later, we will be battling world currency instability – we already have signs of this now.

Even though gold and commodities have taken a big hit because of a general liquidation in everything, there is one thing none of us should lose sight of, and that is what happens when the USD finally lets go.

Why the USD is presently rallying

Just because the USD happens to be rallying now (with weekly fluctuations) does not mean that its fate is not bleak. There are many reasons the USD is rallying right now. They include flight to cash in general during market liquidations in all areas, but also cash hoarding because businesses cannot roll over the short term credit they use to do payrolls and ongoing operations. Then we have the usual end of year cash surge for businesses and financial institutions. Then of course there is flight to the USD for safety, and then finally, other countries currencies are adjusting to the slowing world economy, and the once hot foreign markets are cooling and there is lots of money moving out of the ‘emerging’ markets.

But, we are going to be facing two particular problems in 09 that none of us is really used to, that we really have never seen. The world is going to have a severe recession bordering on an economic depression. Essentially no one alive today knows what that is like. Only the oldest of us have lived through that experience.

But then, on top of that, at some point later the USD will finally collapse. This is not something way way out there in the future. This issue is becoming a near term threat.

What has held the USD up and why that’s going to change

The primary reason the USD has held up so well in the last decades, in spite of ever worsening US trade and budget deficits that add to over $1 trillion a year combined, is that the US was an export economy’s dream customer. Because the US was such a good customer to the world, they bought our US Treasury bonds, and lent trillions in other ways to the US consumer. As long as the US consumer could carry that process out, our trade partners could make bank on the US and USD.

However, once the US consumer is tapped out, and cannot effectively make a return on investment of our trade partners, the rationale for the continuation of the USD goes away. All that remains after that is a budget busted US Federal government. At that point, why would our trade partners continue to buy all the US treasury bonds and such, and debase their currencies, if the US cannot be such a good customer anymore? At that point, the USD will rapidly fall into a devaluation crisis.

None of us in the US has ever dealt with the twin threats coming our way in the next few years. The first is a real economic depression. The second will be the demise of the US dollar, or at the very least, its severe devaluation like 70% or more (at first).

I would like to point out that in the last great depression in the US in the 1930’s, we did not have a combination of a currency crisis with the economic crisis. The USD, although it fell compared to gold, held up well. Deflation increased the value of anything called cash, including gold.

This time, the outcome will be different. This time, the US faces an economic depression AND a currency crisis soon after. How far off is this?

Well, first, we are already well into the beginning of the economic depression. The damage done to the world credit and financial markets has been stunning since August 07. Over $35 trillion of value has been lost in the world financial markets. That has spilled over into the real economy now, and we will start to see bigger and bigger layoff notices. Economic demand will decline and we won’t see any mere one year recession, like all the pundits say ‘we foresee 5 quarters of economic decline in the US…’

This time we are talking on the scale of 5 years of economic decline and unemployment getting over 20%. The Great Depression lasted ten years, and the US had well over 25% unemployment. US economic production was halved!

The China situation

The rest of the world fared worse. And, we hear that China has this great economic growth, still on the order of 8% a year, a number any nation would kill for. But, China needs to ADD 15 million jobs a year merely to keep up with population growth, having 1.3 billion people!


So, this 8% growth in China is mandatory, not merely a luxury since China still has 800 million peasants in the rural areas all clamoring to move to the cities for better pay. Even at the lowest levels, Chinese city pay is three times the basic rural income which is starvation wages.

And then consider that there are 130 million undocumented Chinese who flocked to the cities for work (not residents of the city) who have nowhere to go now that their export dependent economy is slowing rapidly. The recipe here is for a revolution in China if they cannot keep 800 plus million people working… and this is just beginning to happen. And this issue is widely known to scare the hell out of the Chinese government.

But, to avoid a revolution, they MUST have 8% economic growth indefinitely? That is not going to happen. The party is about over in China.

The point here of emphasizing China’s demographics is that, without big exports to the West, they cannot sustain stability economically or politically. They are the poster child to what happens when the export economies slow drastically when the US export markets slow significantly.

Not going to stop economic contraction this time

But, getting back to the issue of economic depression and the USD. The whole point here is that the world economic engine is grinding to a halt and there is no way to stop it. The US Fed and other central banks have found out they cannot reflate the world economies this time, like they did after 2001 and 911 and the Tech bubble. This time reflation efforts are failing. Things are slowing down too fast this time, and that is combined with the imploding credit markets in every nation of the world.

Without credit, the world economies contract badly. Everything is credit based. Businesses need it to merely do daily operations, and people need it for purchases. The only other way is to have cash and pay as you go. The world economy is not structured to operate that way (things don’t have to be credit based but our world economy is inextricably addicted to it, and credit collapse equates to a world economic depression if the credit does not come back right soon).

And the credit is NOT coming back. Sure, we hear that Libor rates (interbank borrowing rates that is the lifeblood of financial institutions for short term funding needs) have improved. But, these lenders are not lending it out, they are merely covering their own needs and hoarding cash, just like businesses are being forced to since the short term credit markets are still frozen, and there is little chance of that improving for a good while.

So what does all this mean for the USD?

Now, what all this means for the USD is that, as the world loses its economic engine and goes into an economic depression, the highly abused USD will lose its reason to stay strong.

At some point all the US trade partners of the world will find the US is abusing the currency too much. With all the bailouts now, that starts to become more certain. Then, as an economic depression makes its way, the US fiscal deficits, which are already $1 trillion a year, will cause flight from the USD. At some point, our trade partners will simply stop buying the US Treasury notes/bills. This is going to happen, friends.

Then, the USD goes to hell fast. Now when is this? Well, a few years ago I wrote several articles which stated that, when the US consumer reached a point of not being able to give our trade partners a return on their massive subsidies to the US government and buy our bonds, then the USD game is over.

The only reason the USD has managed to avoid a huge devaluation, and even a currency crisis, is because since 1945 after WW2 ended, every time the US economy contracted the US was able to grow out of it. Or, in many cases the US was able to lower interest rates (meaning borrow out of it) and stimulate the economy.

Now, that stimulation process is broken, to say the least. Lower interest rates are not working this time. This time, we are not going to stimulate out of an economic depression. This time we get a depression. Why?

Because, we have two irresolvable problems to avoid a depression this time. This time, we are in the same situation generally as what happened in 1929, and then the ensuing world deflation.

The Two insoluble problems that will lead to a
depression and ultimately the final USD collapse

- Deleveraging cannot be stopped, there is too much

- The USD is only supported by a healthy world economy and is subsidized


The world is deleveraging in totality and we have a breaking world finance bubble. I estimate that way over $1000 trillion of world financial markets alone are deleveraging. That number is calculated by adding up all the leverage out there, and the biggest one is the derivatives of all types that are really only big HUGE leveraged bets. They are nothing more than that. The BIS states that world derivatives alone are over $1 quadrillion worth – that’s 1000 trillion.

Even if central banks move heaven and earth with their now $7 trillion of infusions to every market imaginable now, that’s a drop in the bucket compared to what’s out there. So, the deleveraging will continue relentlessly this time.

Why did that happen? Quite simply, the Western consumers got tapped out. They borrowed more than they can sustain a return on. So, for example, we see the housing bubble collapse and then all the mortgage bonds collapse, and then all the banks collapse – get the idea? Then all the credit disappears everywhere and we get an assured economic depression. And that will lead to 20% unemployment or worse in the entire world – mark my words.

The overall picture is that the world economic/credit bubble
since 1945 has just burst before our eyes since August 07.
That is one huge bubble.


And, as they say, for every Ying there is a corresponding Yang, or more simply, what goes up must come down. And it’s coming down hard. And… we haven’t seen nothing yet either. The down has a long way to go; we are merely in the first stages. And, boy is the world already suffering.

So then, follow along here, the next victim of this emerging depression will be the USD. As I said, the only thing keeping the USD afloat with the massive fiscal deficits has been an ever spending US consumer who bought trillions of dollars worth of exports. When they get tapped out there is no reason for our trade partners to keep that up is there? The USD subsidies (primarily our trade partners buying US bonds of all types) will end this time around (this economic cycle).

[color=Dark Red]How can we get out of this mess?[/color]

Well, first I have to say I don’t think we will avoid a long, possibly ten years, depression. But there are some ways it might be avoided.

First, if the US abrogated the $60 trillion of promises to Social Security and Medicare, maybe that would save the USD. But that won’t happen. Probably, what the US will do is just pay it all, but with worthless dollars.

The second thing that might get the world out of this impending economic depression and a collapse of the USD later would be to forgive all debts. Possibly that would wipe out the USD too anyway. But that would set the stage for a huge world economic recovery.

The trouble with debt forgiveness is it never seems to happen. Believe me, I am not talking hogwash about debt forgiveness. The Bible, for example, talks about how every 7 years and every 70 years there is to be total debt forgiveness. It’s called the Jubilee. The idea is a legitimate concept that can work and has worked.

You don’t think that’s viable? Well it can work because all that happens is that the lenders who offer credit have to factor in either payment in full or forgiveness over a 7 year period. This can be done and would actually result in the biggest sustained world economic boom ever imagined.

The thing that causes world economic depressions are debt and financial bubbles. The two go together.

But, getting back to the fate of the USD. The problem is, the lenders won’t forgive debt or make it amortize in a short time. They insist on ever bigger debts. They do things like making the bankruptcy laws far more stringent (recently done in the US). And thus, they guarantee that the world consumers ultimately will get tapped out (just a matter of time) and then a world bubble collapse and economic depression.

The interesting thing that happens is that there is ultimately dept repudiation in depressions anyway. Which leads us to the USD’s fate in coming years.

I don’t think we will have to wait for 30 years to see Social Security and Medicare to bankrupt the US. What will happen sooner is that, as the US enters economic depression this time, the return on investment for our trade partners will disappear. The US won’t keep our trade parnters’ hundreds of millions employed, and they will then stop buying US Treasury bonds. And then the USD devalues 70% in a year. Maybe going to zero soon after that. The US is then bankrupted.

When can this happen? Possibly mid way into the next US economic depression (not recession). And, since I think we are now entering the beginning of a US depression, then if it lasts ten years, that means we have about 4 years to go for the USD to finally give up the ghost.

Yes, I mean that. We have maybe 4 years left, maybe even only 2 years for the USD to remain anything at all.

http://www.gold-eagle.com/editorials_08/laird110608.html

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PostPosted: Fri Nov 07, 2008 12:11 am    Post subject: Reply with quote

Quote:
Tough Sledding Ahead,

Surviving A Coming USD Collapse


Christopher Laird

Now that the US election is over, we get to think about the Future. And, no matter how you look at it, the entire world, the West particularly, is in for tough sledding financially.

First, we will continue to battle an emerging economic slowdown. Then, later, we will be battling world currency instability – we already have signs of this now.

Even though gold and commodities have taken a big hit because of a general liquidation in everything, there is one thing none of us should lose sight of, and that is what happens when the USD finally lets go.

Why the USD is presently rallying

Just because the USD happens to be rallying now (with weekly fluctuations) does not mean that its fate is not bleak. There are many reasons the USD is rallying right now. They include flight to cash in general during market liquidations in all areas, but also cash hoarding because businesses cannot roll over the short term credit they use to do payrolls and ongoing operations. Then we have the usual end of year cash surge for businesses and financial institutions. Then of course there is flight to the USD for safety, and then finally, other countries currencies are adjusting to the slowing world economy, and the once hot foreign markets are cooling and there is lots of money moving out of the ‘emerging’ markets.

But, we are going to be facing two particular problems in 09 that none of us is really used to, that we really have never seen. The world is going to have a severe recession bordering on an economic depression. Essentially no one alive today knows what that is like. Only the oldest of us have lived through that experience.

But then, on top of that, at some point later the USD will finally collapse. This is not something way way out there in the future. This issue is becoming a near term threat.

What has held the USD up and why that’s going to change

The primary reason the USD has held up so well in the last decades, in spite of ever worsening US trade and budget deficits that add to over $1 trillion a year combined, is that the US was an export economy’s dream customer. Because the US was such a good customer to the world, they bought our US Treasury bonds, and lent trillions in other ways to the US consumer. As long as the US consumer could carry that process out, our trade partners could make bank on the US and USD.

However, once the US consumer is tapped out, and cannot effectively make a return on investment of our trade partners, the rationale for the continuation of the USD goes away. All that remains after that is a budget busted US Federal government. At that point, why would our trade partners continue to buy all the US treasury bonds and such, and debase their currencies, if the US cannot be such a good customer anymore? At that point, the USD will rapidly fall into a devaluation crisis.

None of us in the US has ever dealt with the twin threats coming our way in the next few years. The first is a real economic depression. The second will be the demise of the US dollar, or at the very least, its severe devaluation like 70% or more (at first).

I would like to point out that in the last great depression in the US in the 1930’s, we did not have a combination of a currency crisis with the economic crisis. The USD, although it fell compared to gold, held up well. Deflation increased the value of anything called cash, including gold.

This time, the outcome will be different. This time, the US faces an economic depression AND a currency crisis soon after. How far off is this?

Well, first, we are already well into the beginning of the economic depression. The damage done to the world credit and financial markets has been stunning since August 07. Over $35 trillion of value has been lost in the world financial markets. That has spilled over into the real economy now, and we will start to see bigger and bigger layoff notices. Economic demand will decline and we won’t see any mere one year recession, like all the pundits say ‘we foresee 5 quarters of economic decline in the US…’

This time we are talking on the scale of 5 years of economic decline and unemployment getting over 20%. The Great Depression lasted ten years, and the US had well over 25% unemployment. US economic production was halved!

The China situation

The rest of the world fared worse. And, we hear that China has this great economic growth, still on the order of 8% a year, a number any nation would kill for. But, China needs to ADD 15 million jobs a year merely to keep up with population growth, having 1.3 billion people!

So, this 8% growth in China is mandatory, not merely a luxury since China still has 800 million peasants in the rural areas all clamoring to move to the cities for better pay. Even at the lowest levels, Chinese city pay is three times the basic rural income which is starvation wages.

And then consider that there are 130 million undocumented Chinese who flocked to the cities for work (not residents of the city) who have nowhere to go now that their export dependent economy is slowing rapidly. The recipe here is for a revolution in China if they cannot keep 800 plus million people working… and this is just beginning to happen. And this issue is widely known to scare the hell out of the Chinese government.

But, to avoid a revolution, they MUST have 8% economic growth indefinitely? That is not going to happen. The party is about over in China.

The point here of emphasizing China’s demographics is that, without big exports to the West, they cannot sustain stability economically or politically. They are the poster child to what happens when the export economies slow drastically when the US export markets slow significantly.

Not going to stop economic contraction this time

But, getting back to the issue of economic depression and the USD. The whole point here is that the world economic engine is grinding to a halt and there is no way to stop it. The US Fed and other central banks have found out they cannot reflate the world economies this time, like they did after 2001 and 911 and the Tech bubble. This time reflation efforts are failing. Things are slowing down too fast this time, and that is combined with the imploding credit markets in every nation of the world.

Without credit, the world economies contract badly. Everything is credit based. Businesses need it to merely do daily operations, and people need it for purchases. The only other way is to have cash and pay as you go. The world economy is not structured to operate that way (things don’t have to be credit based but our world economy is inextricably addicted to it, and credit collapse equates to a world economic depression if the credit does not come back right soon).

And the credit is NOT coming back. Sure, we hear that Libor rates (interbank borrowing rates that is the lifeblood of financial institutions for short term funding needs) have improved. But, these lenders are not lending it out, they are merely covering their own needs and hoarding cash, just like businesses are being forced to since the short term credit markets are still frozen, and there is little chance of that improving for a good while.

So what does all this mean for the USD?

Now, what all this means for the USD is that, as the world loses its economic engine and goes into an economic depression, the highly abused USD will lose its reason to stay strong.

At some point all the US trade partners of the world will find the US is abusing the currency too much. With all the bailouts now, that starts to become more certain. Then, as an economic depression makes its way, the US fiscal deficits, which are already $1 trillion a year, will cause flight from the USD. At some point, our trade partners will simply stop buying the US Treasury notes/bills. This is going to happen, friends.

Then, the USD goes to hell fast. Now when is this? Well, a few years ago I wrote several articles which stated that, when the US consumer reached a point of not being able to give our trade partners a return on their massive subsidies to the US government and buy our bonds, then the USD game is over.

The only reason the USD has managed to avoid a huge devaluation, and even a currency crisis, is because since 1945 after WW2 ended, every time the US economy contracted the US was able to grow out of it. Or, in many cases the US was able to lower interest rates (meaning borrow out of it) and stimulate the economy.

Now, that stimulation process is broken, to say the least. Lower interest rates are not working this time. This time, we are not going to stimulate out of an economic depression. This time we get a depression. Why?

Because, we have two irresolvable problems to avoid a depression this time. This time, we are in the same situation generally as what happened in 1929, and then the ensuing world deflation.

The Two insoluble problems that will lead to a
depression and ultimately the final USD collapse

- Deleveraging cannot be stopped, there is too much

- The USD is only supported by a healthy world economy and is subsidized


The world is deleveraging in totality and we have a breaking world finance bubble. I estimate that way over $1000 trillion of world financial markets alone are deleveraging. That number is calculated by adding up all the leverage out there, and the biggest one is the derivatives of all types that are really only big HUGE leveraged bets. They are nothing more than that. The BIS states that world derivatives alone are over $1 quadrillion worth – that’s 1000 trillion.

Even if central banks move heaven and earth with their now $7 trillion of infusions to every market imaginable now, that’s a drop in the bucket compared to what’s out there. So, the deleveraging will continue relentlessly this time.

Why did that happen? Quite simply, the Western consumers got tapped out. They borrowed more than they can sustain a return on. So, for example, we see the housing bubble collapse and then all the mortgage bonds collapse, and then all the banks collapse – get the idea? Then all the credit disappears everywhere and we get an assured economic depression. And that will lead to 20% unemployment or worse in the entire world – mark my words.

The overall picture is that the world economic/credit bubble
since 1945 has just burst before our eyes since August 07.
That is one huge bubble.


And, as they say, for every Ying there is a corresponding Yang, or more simply, what goes up must come down. And it’s coming down hard. And… we haven’t seen nothing yet either. The down has a long way to go; we are merely in the first stages. And, boy is the world already suffering.

So then, follow along here, the next victim of this emerging depression will be the USD. As I said, the only thing keeping the USD afloat with the massive fiscal deficits has been an ever spending US consumer who bought trillions of dollars worth of exports. When they get tapped out there is no reason for our trade partners to keep that up is there? The USD subsidies (primarily our trade partners buying US bonds of all types) will end this time around (this economic cycle).

How can we get out of this mess?

Well, first I have to say I don’t think we will avoid a long, possibly ten years, depression. But there are some ways it might be avoided.

First, if the US abrogated the $60 trillion of promises to Social Security and Medicare, maybe that would save the USD. But that won’t happen. Probably, what the US will do is just pay it all, but with worthless dollars.

The second thing that might get the world out of this impending economic depression and a collapse of the USD later would be to forgive all debts. Possibly that would wipe out the USD too anyway. But that would set the stage for a huge world economic recovery.

The trouble with debt forgiveness is it never seems to happen. Believe me, I am not talking hogwash about debt forgiveness. The Bible, for example, talks about how every 7 years and every 70 years there is to be total debt forgiveness. It’s called the Jubilee. The idea is a legitimate concept that can work and has worked.

You don’t think that’s viable? Well it can work because all that happens is that the lenders who offer credit have to factor in either payment in full or forgiveness over a 7 year period. This can be done and would actually result in the biggest sustained world economic boom ever imagined.

The thing that causes world economic depressions are debt and financial bubbles. The two go together.

But, getting back to the fate of the USD. The problem is, the lenders won’t forgive debt or make it amortize in a short time. They insist on ever bigger debts. They do things like making the bankruptcy laws far more stringent (recently done in the US). And thus, they guarantee that the world consumers ultimately will get tapped out (just a matter of time) and then a world bubble collapse and economic depression.

The interesting thing that happens is that there is ultimately dept repudiation in depressions anyway. Which leads us to the USD’s fate in coming years.

I don’t think we will have to wait for 30 years to see Social Security and Medicare to bankrupt the US. What will happen sooner is that, as the US enters economic depression this time, the return on investment for our trade partners will disappear. The US won’t keep our trade parnters’ hundreds of millions employed, and they will then stop buying US Treasury bonds. And then the USD devalues 70% in a year. Maybe going to zero soon after that. The US is then bankrupted.

When can this happen? Possibly mid way into the next US economic depression (not recession). And, since I think we are now entering the beginning of a US depression, then if it lasts ten years, that means we have about 4 years to go for the USD to finally give up the ghost.

Yes, I mean that. We have maybe 4 years left, maybe even only 2 years for the USD to remain anything at all.

http://www.gold-eagle.com/editorials_08/laird110608.html


Here's an interesting slice of history:

Quote:
Extract from

J. K. Galbraith's 'The Great Crash 1929'. pp 132 - 133

"The Harvard Economic Society, it will be recalled, had come up to
the summer of the crash with a valuable reputation for pessimism. This
position it abandoned during the summer when the stock market kept on
rising and business seemed strong.

On November 2, after the crash, the Society concluded that 'the present recession, both for stocks and business, is not the precursor of business depression'.

On November 10 it made its notable estimate that 'a serious depression like that of 1920-21 is outside the range of probability'.

It repeated this judgement on November 23 and on December 21 gave its forecast for the next year: 'A depression seems improbable; [we expect] recovery of business next year, with further improvements in the fall.'

On January 18, 1930, the Society said, 'There are indications that the severest phase of the recession is over';

on March 1, that 'manufacturing activity is now - to judge from past periods of contraction - definitely on the road to recovery';

on March 22, 'The outlook continues favourable'; on March 29, that 'the outlook is favourable';

on April 19, that 'by May or June the spring recovery forecast in our letters of last November and December should be clearly apparent';

on May 17, that business 'will turn for the better this month or next, recover vigorously in the third quarter and end the year at levels substantially above normal';

on May 24 it was suggested that conditions 'continue to justify' the forecasts of May 17;

on June 21, that 'despite existing irregularities' there would soon be improvement; on June 28 it stated that 'irregular and conflicting movements of business should soon give way to sustained recovery';

on July 19 it pointed out that 'untoward elements have operated to delay recovery but the evidence nonetheless points to substantial improvement';

and on August 30, 1930, the Society stated that 'the present depression has about spent its force'.

Thereafter the Society became less hopeful.

On November 15, 1930, it said: 'We are now near the end of the declining phase of the depression'.

A year later, on October 31, 1931, it said: 'Stabilization at [present]
depression levels is clearly possible'.

Even these last forecasts were wildly optimistic.

Somewhat later, its reputation for infallibility rather dimmed, the Society
was dissolved
. Harvard professors ceased forecasting the future and
again donned their accustomed garb of humility.

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atm



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PostPosted: Fri Nov 07, 2008 8:21 am    Post subject: Reply with quote

"Under capitalism, man exploits man. Under communism, it's just the opposite."

J K Galbraith

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Hombre



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PostPosted: Fri Nov 07, 2008 8:22 am    Post subject: Reply with quote

Here is evidence of a coming Global change presented by the one and only : IMF

Quote:
By Keith Weir

LONDON, Nov 7 (Reuters) - European leaders will propose a new global financial framework on Friday after the International Monetary Fund (IMF) warned the world's richest economies face their first year of contraction since World War Two.

Ford Motor Co (F.N: Quote, Profile, Research, Stock Buzz) reported a loss in the third quarter and said it would cut personnel costs in North America by 10 percent as the credit crisis hurts its markets at home and abroad.

The IMF warned that developed economies in 2009 faced their first full-year contraction since the 1940s. [ID:nSP347695]

British Prime Minister Gordon Brown backed IMF calls for governments to try to stimulate growth to prevent the credit crisis from developing into a deep downturn.

"Coordinated action on interest rates should be complemented by action on fiscal policy," Brown told reporters on his way to a meeting with European Union leaders to prepare for next week's global summit in Washington on the financial crisis.

U.S. President-elect Barack Obama has proposed a stimulus package that some experts estimate could cost up to $190 billion. Germany has approved measures designed to give its economy a 50 billion euro ($64 billion) boost.


Looks like all the normal suspects are champing at the bit to climb aboard.

Quote:
"We need a global financial approach and we need some common principles and rules. It is important to make a reform of the international financial institutions, this is on the agenda now," said EU Commission President Jose Manuel Barroso.

"I really believe we are living through a historic moment."



WE NEED-WE NEED!

Quote:
TEAM OBAMA

Obama on Friday is due to hold his first news conference since winning the U.S presidency after a meeting with his economic team, as the world awaits signs of how he might tackle the economic crisis. [ID:nN06348433]

Markets are keen to learn who will become Obama's Treasury secretary, but it was not clear when he might announce his choice.

Among those seen as leading candidates for the job are Timothy Geithner, president of the Federal Reserve Bank of New York; former Treasury Secretary Lawrence Summers; and former Federal Reserve Board Chairman Paul Volcker.


I've always be amused at the same old tired worn out pennies all turning up at the same time for the same job Laughing Laughing AMAZING!


Last but not least THE EXPECTATIONS ABOUND!

Quote:
"We expect the rescue packages of governments for the banking system, global rate cuts by central banks and the latest recovery of share prices to have at least trimmed fears," said Ralph Solveen, an economist at Commerzbank in Frankfurt.



http://www.reuters.com/article/marketsNews/idINL765134820081107?rpc=44

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Hombre



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PostPosted: Fri Nov 07, 2008 8:53 am    Post subject: Reply with quote

A quick follow up to Hugo's grand plan of escape as OIL PLUNGES. Now before one thinks too deeply and misses the connection to this effort as it will eventually relate to the " VALUE OF GOLD "

Oh Hugo shall I take back what I said of your intellect, or wait until the 7th inning?

Quote:
By Brian Ellsworth

CARACAS, Nov 6 (Reuters) - Venezuela plans to build mines at its largest gold deposits with Russian help, the mining minister said on Thursday, apparently killing a years-long bid by two Canadian companies to develop the projects.

The decision reflects leftist President Hugo Chavez efforts to boost ties with Russia, increase state control over a key sector and speed up stalled mining development as tumbling crude prices threaten to crimp the OPEC nation's finances.

An accord will be signed on Friday with Russian-owned Rusoro <RML> to operate the Las Cristinas and Brisas projects with Venezuela, mining minister Rodolfo Sanz told a Russian government delegation during a presentation observed by Reuters. Rusoro's share price soared after the news.


More availability = " LOWER VALUES " Trust me. The major players will see to it with a little selling or flooding of the markets. They of course will blame it all on a failed ( in need of a re-tool " SYSTEM Laughing Laughing

Where oh where have I seen this movie before?

Quote:
"We have to rescind our relationship with a company that has been working in the zone," Sanz also said, apparently in reference to Crystallex. "We have a legal problem there."

Approached after the presentation by Reuters, Sanz said Rusoro's involvement in Las Cristinas had not yet been decided.

The statements came a day after Venezuela, which frequently warns against building reserves in U.S. dollars, said it wanted to recover control over its gold to boost its gold reserves as a shield from global financial crisis.


Now isn't that interesting! Into the abyss they tumble as will the precious metal they seek. The IMF-WORLD BANKS will guarantee that that happens in short order. ( JMHO )

http://www.alertnet.org/thenews/newsdesk/N06416298.htm


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Fintan
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PostPosted: Fri Nov 07, 2008 6:41 pm    Post subject: Reply with quote

Quote:
Three Myths of the Great Depression

By Burton Folsom, Jr.

The Great Depression of the 1930s was in many ways the defining
economic event of the 20th century. President Franklin Delano Roosevelt
used the atmosphere of crisis created by the Depression to implement a
series of government programs known as the New Deal, which caused
radical centralization of federal power.

For decades historians romanticized the New Deal, and only recently have
scholars begun to peel away the layers of mythology surrounding that
era. Three of those myths seem the most pervasive and damaging.

Myth Number One:
The New Deal helped get us out of the Great Depression.


In fact, the New Deal was an inevitable economic failure. Roosevelt’s
formula of substituting government programs for a normal business
recovery had no chance of relieving the high unemployment. FDR relied
on extracting tax dollars from individuals and corporations to fund
government programs, such as the Works Progress Administration (WPA),
which hired workers to pick up trash, cut down trees, and build roads,
bridges, and schools. The jobs Roosevelt thought he was creating were a
mirage. They merely transferred jobs from the productive private sector
to the inefficient public one.

Henry Hazlitt, a free-market writer and journalist, pointed out in his 1946
classic, Economics in One Lesson: “For every public job created by [a]
bridge project a private job has been destroyed somewhere else. We can
see the men employed on the bridge. We can watch them at work. . . .
But there are other things that we do not see, because, alas, they have
never been permitted to come into existence. They are the jobs
destroyed by the $10 million taken from the taxpayers.”

With the dramatic rise in government spending on public works, farm
subsidies, and various relief programs, the top income tax rate
skyrocketed from 24 percent in 1929 to 79 percent in 1935. In 1941 FDR
even proposed raising the top rate to 99.5 percent on all income over
$100,000 (but ended up settling for 90 percent). Not surprisingly,
entrepreneurs were stifled and refused to invest and have their capital
confiscated. Unemployment under the New Deal never dropped below 14
percent and averaged over 17 percent.

As the Great Depression persisted, even Treasury Secretary Henry
Morgenthau admitted that the New Deal had been a failure. On May 6,
1939, he confessed, “We are spending more than we have ever spent
before and it does not work. . . . We have never made good on our
promises. . . . I say after eight years of this Administration we have just
as much unemployment as when we started. . . . And an enormous debt
to boot!”

Myth Number Two:
The New Deal was a political success as well as an economic success.


To the contrary, the New Deal was a grand economic failure and only a
qualified political success.
This may surprise some because it seems
counterintuitive in two ways. First, since FDR was elected to four terms
and always with Democratic congresses, his economic programs seem to
have had wide support. Second, if the New Deal was as damaging to the
economy as I suggest, why did he achieve such clear political success
over a long period of time?

In 1936, Roosevelt was up for re-election and he carried all but two states
against his Republican challenger, Alf Landon. This amazing result is often
emphasized by historians. What is less well known is the fact that in early
1936 Roosevelt was behind in the Gallup polls and even trailed in his own
private polls. In February 1936, Emil Hurja, Roosevelt’s personal pollster,
concluded that if nominated Landon could beat Roosevelt were the
election held that month. High unemployment was plaguing the president
and the Supreme Court had recently struck down the Agricultural
Adjustment Act (AAA) and the National Recovery Administration (NRA),
two linchpins of the New Deal. Also, the Republicans had recently
captured two congressional seats in open elections in Rhode Island and
Michigan. In addition, the New York state legislature—where Roosevelt
began his political career—had just swung over to the Republicans. This
should not be surprising—the New Deal had not ended the Great
Depression and voters were responding accordingly.

However in 1936 the president developed a strategy that swamped the
Republicans. It can be described in three words: subsidies for votes. He
would spend record amounts of tax dollars on programs that would give
people a vested interest in voting for his re-election. Gary Dean Best, in
his excellent book Pride, Prejudice, and Politics, outlines Roosevelt’s tactic
of blitzing key election districts with federal funds. For example, he met
with Henry Wallace, the agriculture secretary, and gave the following
order, “Henry, through July, August, September, October and up to the
5th of November I want cotton to sell at 12 cents [a pound]. I do not care
how you do it. That is your problem. It can’t go below 12 cents.”

When the WPA had spent all its money, and was faced with throwing
people out of work on October 1, Roosevelt ordered Henry Morgenthau
not to let anyone be laid off. As Morgenthau recalled Roosevelt’s words,
“he doesn’t give a God damn where they get the money.” With a Gallup
poll showing relief workers going 5-1 for Roosevelt over Landon, the
president had strong incentives to transfer as much wealth as possible
from the private to the public sector.

Landon and fellow Republicans all over the country were perplexed over
how to combat the “subsidies for votes” strategy. If they attacked
Roosevelt’s programs, he would ask what they would do differently. If
they said, “End the programs,” then the many Americans who were
becoming addicted to the programs would protest and call the
Republicans heartless, uncaring, and selfish. If Landon said he would
continue the programs in different ways, then why should they switch
over to his side? With Roosevelt they had government jobs. Why take
chances with the Republicans? The subsidy-for-votes strategy helps
explain the paradox of how the New Deal could be such an economic
calamity for the nation and such a political triumph for Roosevelt.

Myth Number Three:
Roosevelt was widely respected.


This is partly true. Roosevelt received thousands of fan letters each week
and his picture was on the wall in perhaps millions of American homes. He
had widespread adulation, especially from those who received his federal
subsidies. But among reporters, policymakers, fellow politicians, and even
his own friends Roosevelt was widely disrespected. His popularity was
often superficial, and seemed to decline as people close to him came to
know him better.

One thing that bothered his friends was FDR’s ego. Hugh Johnson, the
head of the NRA, said of his boss, “He seeks complete subservience. He
thrives on adulation and submission.” Hiram Johnson, the Republican
Senator who bolted his party in 1932 and 1936 and publicly supported
Roosevelt, said of the president, “He is drunk with power.” Frances
Perkins, the secretary of labor, listened to her boss almost every week
and concluded, “Roosevelt never understood the point of view of the
business community.”

Many of Roosevelt’s friends seemed to fear reprisals if they told anyone
what they really thought of him, and confided their true feelings in private
diaries. Harold Ickes, the secretary of the interior, confided in his diary,
“It is distressing to hear from so many quarters expressions that the
President’s word cannot be relied upon. The number of people in the
country who believe this seems to be growing. Unfortunately, based on
my own experience, I regret to say that there are occasions when he
does seem to regard his word lightly. I regret to say this about my Chief,
the President of the United States, but unfortunately it is true.”

Roosevelt picked Raymond Moley, a Columbia professor, to be a Brain
Truster and to write speeches, which Moley did during the president’s first
term. After one lengthy discussion with FDR, Moley wrote in his diary how
Roosevelt had “launched into a denunciation of bankers and businessmen
and said that every time they made an attack on him, . . . he gained
votes and that the result of carrying on this sort of warfare was to bring
the people to his support. . . . I was impressed as never before by the
utter lack of logic of the man, the scantiness of his precise knowledge of
things that he was talking about, by the gross inaccuracies in his
statement, by the almost pathological lack of sequence in his
discussion. . . . In other words, the political habits of his mind were
working full steam with the added influence of a swollen ego. My
deliberate impression is that he is dangerous in the extreme. . . .”

Finally, Henry Morgenthau, perhaps FDR’s best friend, kept a diary in
which he recorded his regular visits and conversations with the president.
In many entries, Morgenthau expresses concern with the president’s ego
and his desire to centralize power in his own hands. After one such visit,
Morgenthau wrote, “He pictures himself as being called in as a consultant
of the various nations of the world. He said, ‘Maybe I can prescribe for
their ailments. . . . For example, I would tell England that she had too
many people and she should move out ten million of her population. I
would take a look at each country and, of course, when we made them
disarm we would have to find new work for the munition workers in each
country and that is where this international cartel would come in and your
job would be to handle the finances.’”

Only when we begin to strip away these three myths will we be able to see the New Deal and the rise of the imperial presidency as a dark period in American history. In fact during the 1930s, the American economy would have been far better off if there had not been the New Deal.

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James D



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PostPosted: Fri Nov 07, 2008 7:29 pm    Post subject: uieres Reply with quote

Hombre, dude , what the fuck is your truck with Hugo Chavez?

Do your issues with him deserve another thread?

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