Posted: Thu Apr 03, 2008 8:35 pm Post subject: Re: Housing & Economic Collapse - In Progress
Seeing as we're using disease analagies, how about the deterioration of the economy due to tapeworms?
Catherine Austin Fitts---The Tapeworm Economy
The American Tapeworm -- Debt Up, Equity Down & Out
The real deal in US government financial matters today is that there are two plans to finance the current government deficits.
The first plan is the “American Tapeworm” model. ( See links below.) Under the leadership of the Bush Administration (and before that, the Clinton Administration) and with the support of Congress and the Supreme Court, the American Tapeworm model is to simply finance the federal deficit through warfare, currency exports, Treasury and federal credit borrowing and cutbacks in domestic “discretionary” spending.
Posted: Thu Apr 03, 2008 8:49 pm Post subject: Re: Housing & Economic Collapse - In Progress
Iaato wrote:
Eli wrote:
... all the apparent money being created is not getting into the hands of the consumer. The money is being generated but it is disappearing into that black hole of debt that you were talking about.
But we will still see price inflation on food and fuel. The overall money supply will be shrinking and asset prices will still head south but price inflation will go to basic needs of life food, and energy.
People won't be able to pay off their homes with wheelbarrows full of cash because they will be spending it on bread. And realize that asset deflation will be drain excess cash from the system.
The interface where the fake derivatives become real money is when the banks receive treasuries for their "risky home loan packages." The banks then have real money instead of the previously useless "risky home loan packages" paper that they were trying to hide under the rug. Now instead, that money can be invested in places like the stock market, commodities, and more "creative finance." So the money certainly never makes it into J6P's hands, and even worse, the increase in the money supply that it causes erodes J6P's savings and paycheck and increases the costs of what he needs to buy, yes. So it is even worse than disappearing into a black hole. The money enriches wall street but creates further erosions in assets and savings for the little guy. The rich get richer . . . .
Eli, the money supply is inflating in this scenario, because the pretend FIRE economy of fake paper gets rescued/operationalized when the Fed bails out everybody at the top. Asset deflation doesn't drain cash from the system if it is worthless derivative casino bets, semi- worthless suburban housing, and the like. Especially if the asset deflation is offset by massive, massive money-printing. Believe your own eyes. Either we have inflation or not. All my friends are telling me that we have inflation
But yes, eventually Peak Oil dictates that contracting energy supplies cause a contracting economy which is ultimately deflationary. But Tommy Jefferson was right; "first by inflation, then by deflation." This has happened many times before in history.
I think the most salient point you make here, Iatto, is the effect of derivative toilet paper laundered through the fed, and then back into the hands of banksters. A LOT of it is going to end up driving the price of commodities even higher. A bushel of wheat will be approached as if it were Microsoft stock, circa 1990.
The uber wealthy vulture capitalists tempted to pour endless money flows into essential food commodities, like wheat etc... have to bear in mind that these are the kinds of actions that have the natives dusting off their guillotines.
Joined: Jun 18, 2005 Posts: 3766 Location: In a van down by the river
Posted: Thu Apr 03, 2008 9:19 pm Post subject: Re: Housing & Economic Collapse - In Progress
Well I am not so sure at all about his whole derivatives being made into real money. I don't think that is true at all right now.
In the Bear Stearns deal the Fed made whole mortgage back securities that no one once they have a value but it is just much less than any company wants to take on their books.
Here is an NPR piece that every one should listen to, it explains the massive unstoppable mess we are in quite plainly. These derivative markets are completely unregulated and they are a massive black hole right now, destroying real money.
NPR
CEO Jamie Dimon said Thursday that Bear Stearns, which Morgan has agreed to buy, has borrowed $25 billion from a new Federal Reserve facility established to loan money directly to investment banks with trouble financing their business. Dimon, along with Bear CEO Alan Schwartz, are testifying in front of a Senate Committee Thursday
They now have at least $55 billion of Fed money. What kind of silence are they buying? _________________ Civilization is a personal choice.
Joined: Oct 23, 2004 Posts: 5509 Location: New Jersey
Posted: Thu Apr 03, 2008 9:45 pm Post subject: Re: Housing & Economic Collapse - In Progress
Iaato wrote:
Eli wrote:
... all the apparent money being created is not getting into the hands of the consumer. The money is being generated but it is disappearing into that black hole of debt that you were talking about.
But we will still see price inflation on food and fuel. The overall money supply will be shrinking and asset prices will still head south but price inflation will go to basic needs of life food, and energy.
People won't be able to pay off their homes with wheelbarrows full of cash because they will be spending it on bread. And realize that asset deflation will be drain excess cash from the system.
The interface where the fake derivatives become real money is when the banks receive treasuries for their "risky home loan packages." The banks then have real money instead of the previously useless "risky home loan packages" paper that they were trying to hide under the rug. Now instead, that money can be invested in places like the stock market, commodities, and more "creative finance." So the money certainly never makes it into J6P's hands, and even worse, the increase in the money supply that it causes erodes J6P's savings and paycheck and increases the costs of what he needs to buy, yes. So it is even worse than disappearing into a black hole. The money enriches wall street but creates further erosions in assets and savings for the little guy. The rich get richer . . . .
Eli, the money supply is inflating in this scenario, because the pretend FIRE economy of fake paper gets rescued/operationalized when the Fed bails out everybody at the top. Asset deflation doesn't drain cash from the system if it is worthless derivative casino bets, semi- worthless suburban housing, and the like. Especially if the asset deflation is offset by massive, massive money-printing. Believe your own eyes. Either we have inflation or not. All my friends are telling me that we have inflation
But yes, eventually Peak Oil dictates that contracting energy supplies cause a contracting economy which is ultimately deflationary. But Tommy Jefferson was right; "first by inflation, then by deflation." This has happened many times before in history.
I think this a good description. At the very least, the Fed has put $300 billion into banks/brokers.
Technically the Fed has not created new money in the traditional sense - that is the amount of paper dollars has not changed with these new programs. However a more subtle and insidious devaluation of the dollar is occuring on two fronts. First, the value of the dollar is undermined by backing it with dubiously valued derivavtives. Second, the $300 billion lent to the banking industry may have the same multiplier effect on the broad money supply as if the Fed had printed up the money and gave it (through repos) to the banks.
The ultimate result here should be hyperinflation. The fact that there is not hyperinflation yet may mean that there is a black hole opening in the financial system. But it takes some time for the multiplier effect to run through the system, and it may be premature to say that the financial structure is in the middle of a deflationary crash. Not that I doubt that's possible, but it may be too early to make that call.
Joined: Jun 18, 2005 Posts: 3766 Location: In a van down by the river
Posted: Thu Apr 03, 2008 9:54 pm Post subject: Re: Housing & Economic Collapse - In Progress
Listen to that link I posted on NPR.
There is a 45 trillion with a T black hole out there that banks have created. It was possible because Phil farking Graham passed a law written by Wall St. that totally deregulated credit derivatives.
These bets are held by banks in SIVs which are shell companies for the banks. You can bet that a small percentage of these bets have gone bad lets say 10%. Well 10% of 45 trillion is still a lot.
The Banks don't have to disclose what the bets are they don't have to even mark them on their books but they were all doing them. That is what is blowing up now, a 45 trillion dollar secret trading market.
There is more money invested in derivatives than there is in all the stock markets of the world.
Net on net money is being destroyed, these bank are borrowing money from the Fed on instruments that they once held as assets and could loan against.
That is they are going to the fed just to get the money they used to lend out.
Joined: Oct 23, 2004 Posts: 5509 Location: New Jersey
Posted: Thu Apr 03, 2008 10:10 pm Post subject: Re: Housing & Economic Collapse - In Progress
I think most here would agree that the collapse is in progress. The debate now has shifted as to how fast and when, much like the debate of whether we have hit PO or not now seems almost inconsequential to everyday life.
I do see constant acceleration in the rate of collapse. I'm only saying at this point the rate of creation of new money may still exceed the rate of destruction of old money.
Of course some may view this argument as playing poker on the Titanic in its last hours, instead of trying to find the last life boats.
Joined: Jun 18, 2005 Posts: 3766 Location: In a van down by the river
Posted: Thu Apr 03, 2008 10:20 pm Post subject: Re: Housing & Economic Collapse - In Progress
Yeah I hear you Dantes
I think it is kind of a silly argument, we have two choices to make we can either go into the worst depression we have ever seen or we can have hyperinflation that results in starvation and ultimate destruction.
Lets pray we make the right choice.
Truth be known I think we are in monetary deflation but because of PO and too many people on the planet we are seeing price inflation in basic needs.
Joined: Feb 02, 2006 Posts: 286 Location: Denver, USA
Posted: Thu Apr 03, 2008 10:53 pm Post subject: Re: Housing & Economic Collapse - In Progress
Eli wrote:
Truth be known I think we are in monetary deflation but because of PO and too many people on the planet we are seeing price inflation in basic needs.
Well, that must be about the worst combination possible.
That NPR piece is an eye-opener. Christ, we've really screwed ourselves. Or, I should say, the lobby-controlled politicians have really screwed us. And now we're counting on the same people to get us out of this situation. I'm sure I'm not the only one thinking that this will end badly... _________________ "It is certain that free societies would have no easy time in a future dark age. The rapid return to universal penury will be accomplished by violence and cruelties of a kind now forgotten." - Roberto Vacca, The Coming Dark Age
Joined: Feb 02, 2006 Posts: 286 Location: Denver, USA
Posted: Thu Apr 03, 2008 11:11 pm Post subject: Re: Housing & Economic Collapse - In Progress
Yeah, that makes me pretty weary about voting for McCain. An adviser like that could really push things over the edge. Who's to say that the other candidates are any better, though.
Anyway, I'm sure this has been covered ad nauseum, but now that it's clear we're in trouble, what the hell can we do about it? Is a depression "necessary" to clean out the system? What can an individual do to soften the blow?
Getting out of debt is probably the best thing. _________________ "It is certain that free societies would have no easy time in a future dark age. The rapid return to universal penury will be accomplished by violence and cruelties of a kind now forgotten." - Roberto Vacca, The Coming Dark Age
Joined: Mar 12, 2007 Posts: 890 Location: As close as I can get to the beginning of the pipe.
Posted: Thu Apr 03, 2008 11:54 pm Post subject: Re: Housing & Economic Collapse - In Progress
Eli, that NPR segment with Gross and Greenberger was excellent, thanks. After we listened to it, I sent it to a friend who has suddenly (today) hit her tipping point regarding the economy and peak oil.
Greenberger is very knowledgeable, very clear, and is clearly angry. Unfortunately I heard nothing in his delivery to change my mind about where we're headed. _________________ "For my part, whatever anguish of spirit it may cost, I am willing to know the whole truth; to know the worst and provide for it." --Patrick Henry
Joined: Apr 13, 2005 Posts: 2900 Location: St.Louis, Mo
Posted: Thu Apr 03, 2008 11:57 pm Post subject: Re: Housing & Economic Collapse - In Progress
Iaato wrote:
Eli, that NPR segment with Gross and Greenberger was excellent, thanks. After we listened to it, I sent it to a friend who has suddenly (today) hit her tipping point regarding the economy and peak oil.
Greenberger is very knowledgeable, very clear, and is clearly angry. Unfortunately I heard nothing in his delivery to change my mind about where we're headed.
It's really good. I'm sending it to a lot of people. It deserves it's own thread in the Economics forum, and maybe the Open forum, too. Everybody needs to hear this.
Damn that Phil Graham. What a villain. _________________ "Thank you for attending the oil age. We're going to scrape what we can out of these tar pits in Alberta and then shut down the machines and turn out the lights. Goodnight." - seldom_seen
Posted: Fri Apr 04, 2008 4:41 am Post subject: Re: Housing & Economic Collapse - In Progress
Not really surprising: US late payment at 16-year high, with 2,65% of all loans being 30 days or more overdue. _________________ We should teach our children the 4-Rs: Reduce, Reuse, Recycle and Rejoice.
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