Thanks alot for that link. Very good explanation that a non-economist like me could understand. I thought I had a grip on it, but I must confess that it is much more insane than I could imagine. Thanks again.
Joined: Dec 02, 2005 Posts: 6284 Location: Oil-addicted Southern Californucopia
Posted: Fri Apr 04, 2008 9:26 am Post subject: Re: Housing & Economic Collapse - In Progress
Pholostan wrote:
Thanks a lot for that link.
Thank Eli. He posted it originally. It's a gem.
Obama should have Michael Greenberger as his economic advisor. _________________ "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 9:35 am Post subject: Re: Housing & Economic Collapse - In Progress
While "jingle mail" is enticing for underwater homeowners, "free rent" sounds even better. Almost 4% are 90-days late on their home payments, and many banks aren't in a hurry to evict. (emphasis mine below)
Quote:
April 4 (Bloomberg) -- Banks are so overwhelmed by the U.S. housing crisis they've started to look the other way when homeowners stop paying their mortgages.
The number of borrowers at least 90 days late on their home loans rose to 3.6 percent at the end of December, the highest in at least five years, according to the Mortgage Bankers Association in Washington. That figure, for the first time, is almost double the 2 percent who have been foreclosed on.
...
``Some of the banks just don't want the houses to be empty, especially if it's in an area where there's a lot of theft or there are five other houses empty on the street,'' said Kapsalis, who works at Added Value Realty LLC in Livonia, Michigan, another Detroit suburb. ``They'll lose toilets, plumbing, appliances, everything. Banks are getting wise and allowing people to live there longer.''
...
That doesn't take into account the woman he knows who hasn't made a mortgage payment in eight months and hasn't heard from her lender, Pannabecker said.
``Now she's afraid to mail in a payment for fear it'll come to somebody's attention,'' he said.
Bloomberg _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Posted: Fri Apr 04, 2008 10:22 am Post subject: Re: Housing & Economic Collapse - In Progress
DantesPeak said:
Quote:
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.
It is surprising that no one has added up the amount of loans going into default (money destruction) vs. new money being created to determine whether we have deflation or inflation. If one counts the Tier 3 assets still held on the banks’ books that are worthless, but have not yet been written off, it is probably deflation.
The real point seems to be, however, that what is being done to support our economy is destroying our monetary system. Our debt based fiat currency system (that I rave about all the time) worked “somewhat” when the market played a significant part in determining the money supply. When the economy grew, loan origination grew and so did the money supply. When loan growth fell in a slower economy, money creation fell.
The rampant creation of fiat currency to bail out the banks (and everyone else it seems) with no loan creation to support it, is creating a currency that can not be serviced. Creating a fiat currency without growth produces a currency that debases the bond market, and thus further binds up the credit markets. What the FED is doing is the epitome of shooting one-self in the foot.
Deflation will win in the end, regardless of what happens in the short term. The decline of Available Energy from fossil fuels with no substitutes coming on online or even being seriously considered, insures that we will see world economic activity decline by the same rate as fossil fuel energy contribution declines.
The only question to be answered, in the long term, will the end be a slide down the mountain side, or a long terrorizing fall off a cliff!
Quote:
Instability in financial markets does not appear to have impacted trade flows in the crude oil business to any noticeable extent, Nordic American Tanker Shipping said. Strong demand from Far Eastern and South America economies is balancing out challenges in the U.S. and elsewhere, the shipping firm said. Spot market tanker rates in January were $45,000 per day per vessel, compared to $27,000 per day per vessel in the fourth quarter. First-quarter earnings and dividends will be "appreciably" higher than the fourth quarter, with the dividend above $1 a share.
Joined: Mar 12, 2007 Posts: 890 Location: As close as I can get to the beginning of the pipe.
Posted: Fri Apr 04, 2008 11:00 am Post subject: Re: Housing & Economic Collapse - In Progress
shortonoil wrote:
It is surprising that no one has added up the amount of loans going into default (money destruction) vs. new money being created to determine whether we have deflation or inflation. If one counts the Tier 3 assets still held on the banks’ books that are worthless, but have not yet been written off, it is probably deflation.
The real point seems to be, however, that what is being done to support our economy is destroying our monetary system. Our debt based fiat currency system (that I rave about all the time) worked “somewhat” when the market played a significant part in determining the money supply. When the economy grew, loan origination grew and so did the money supply. When loan growth fell in a slower economy, money creation fell.
Good point, Short, on the big picture, which I think none of TPTB really has a grip on. I think there is a lot of smoke and mirrors being used to obscure the balance of money flows. My only complaint with Greenberger from Eli's NPR interview was that he didn't mention the scale of the problem. If you go back and listen, I think you'll find that he never mentioned one dollar amount. As I listened with my husband, I kept having to interject with the quantities involved; "But that's $13T in derivatives for Bear Stearns," for example. I think Greenberger was trying not to alarm the sheeple. But in this case, they need to hear the numbers, and know what the balance sheet is saying and why. I don't think anyone really knows the total picture right now, given the rapidity of change in bailouts and failures in derivative paper.
One issue though. You can't count your chickens with those tier 3 assets and call them deflation already. Who's to say what our wise leaders are going to do when the banks have to bring the tier 3 stuff back on the balance sheets (or not) because of legal requirements, bankruptcies, or whatever new game of the week they're playing. If it gets exchanged for taxpayer money, then it's not deflation. Yes, overall it does not matter, because this fiat currency and many of the financial structures representing it are done for. _________________ "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: Jun 18, 2005 Posts: 3766 Location: In a van down by the river
Posted: Fri Apr 04, 2008 11:53 am Post subject: Re: Housing & Economic Collapse - In Progress
I am glad everyone likes the NPR link, it is the best thing I have heard yet on this subject.
Iaato I think you are right that he was trying not to be too inflammatory. But it is really the first time that many people will hear that we are facing a 45 trillion dollar problem. That is a number that if just one percent was lost it would cripple the Fed and the Gov.
If that does not make people very nervous nothing will.
Posted: Fri Apr 04, 2008 1:20 pm Post subject: Re: Housing & Economic Collapse - In Progress
Iaato wrote:
I think Greenberger was trying not to alarm the sheeple. But in this case, they need to hear the numbers, and know what the balance sheet is saying and why.
I can understand Joe Sixpack being pretty oblivious to all this. The thing I don't get is how Wall Street is managing to be oblivious. Those guys aren't dumb. Many of them must understand how big and how dangerous this all is. How in god's name can the market still be going up? Is there just a unanimous agreement of "Keep smiling and maybe we'll all get out of this alive."? _________________ "I was born in a deep forest
I wish I could live here all my life
I am made from stones and roots
My home, these woods and roads
All my life I loved this sound
Of the woods all around
Eagles fly where the winds blow free" -Korpiklaani
Joined: Mar 12, 2007 Posts: 890 Location: As close as I can get to the beginning of the pipe.
Posted: Fri Apr 04, 2008 1:21 pm Post subject: Re: Housing & Economic Collapse - In Progress
Somebody wake Clyde up. _________________ "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
Posted: Fri Apr 04, 2008 1:29 pm Post subject: Re: Housing & Economic Collapse - In Progress
smallpoxgirl wrote:
How in god's name can the market still be going up? Is there just a unanimous agreement of "Keep smiling and maybe we'll all get out of this alive."?
As someone pointed out over on Market Ticker, the Wall Street traders are merely reacting to the $2 TRILLION check that the US Treasury just allowed the FED to cash, via the Bear Stearns deal + the new "self-regulation" mechanisms. _________________ "It's called the American Dream because you'd have to be asleep to believe it."
Posted: Fri Apr 04, 2008 2:06 pm Post subject: Re: Housing & Economic Collapse - In Progress
emersonbiggins wrote:
smallpoxgirl wrote:
How in god's name can the market still be going up? Is there just a unanimous agreement of "Keep smiling and maybe we'll all get out of this alive."?
As someone pointed out over on Market Ticker, the Wall Street traders are merely reacting to the $2 TRILLION check that the US Treasury just allowed the FED to cash, via the Bear Stearns deal + the new "self-regulation" mechanisms.
What is going on Wall Street right now amounts to treason and is punishable by death. The entire US Treasury has been stolen out from under us. Kill them dead those Wall Street Bastards.
Posted: Fri Apr 04, 2008 2:07 pm Post subject: Re: Housing & Economic Collapse - In Progress
I have always been a big supporter of Ron Paul and his ideas about deregulation, but we can now see that this derivative crash was caused by deregulation. This proves that we need some sort of regulation to keep these investment banks and funds from hiding things and lying to investors. If all of these banks and funds were required to have complete disclosure at all times, we probably wouldn't be having the problem.
On the other hand, you can say that deregulation may allow us to learn hard lessons. If the Fed never made its billions of dollars in loans, then we would see many more banks and funds going bankrupt. It would force investors to learn more about their investments and how it works. Perhaps another depression is the wakeup call that we need to prevent this from happening again. Whether deregulation is the best thing is still highly debatable. _________________ "If humans don't control their numbers, nature will." -Pimentel
"There is not enough trash to go around for everyone," said Banrel, one of the participants in the cattle massacre.
"George W. Bush loves poor people. He keeps making more of them." -unkn
Posted: Fri Apr 04, 2008 2:14 pm Post subject: Re: Housing & Economic Collapse - In Progress
smallpoxgirl wrote:
Iaato wrote:
I think Greenberger was trying not to alarm the sheeple. But in this case, they need to hear the numbers, and know what the balance sheet is saying and why.
I can understand Joe Sixpack being pretty oblivious to all this. The thing I don't get is how Wall Street is managing to be oblivious. Those guys aren't dumb. Many of them must understand how big and how dangerous this all is. How in god's name can the market still be going up? Is there just a unanimous agreement of "Keep smiling and maybe we'll all get out of this alive."?
For a very temporary problem this approach could work.
So essentially bankrupt bank may survive if counterparties don't demand money during few critical days, when it is under a water.
Within few days new unaware investors may turn or/and new deposits come in and trouble will not be exposed, so everything will be fine.
Unfortunately we have rather long term issue this time.
Anyway, why not to lose money with a smile on your face?
Last edited by EnergyUnlimited on Fri Apr 04, 2008 2:16 pm; edited 1 time in total
Posted: Fri Apr 04, 2008 2:16 pm Post subject: Re: Housing & Economic Collapse - In Progress
Wouldn't a good first step of regulation be that EVERYTHING has to be kept on the balance sheet? If everything was on the balance sheet it would be easy to determine how much leverage a business has and a lot of other things the public would be interested in.
Personally, I am a Pro-Life Libertarian. I want the minimal amount of regualtion necessary to make the financial system work and no more. My ideal capitalist banking system would be one in which if you make big money that would be great, if you lose big money and maybe go broke, you have our symapthy but that is all you get from us.
Obviously, this would require some serious thought on how to keep the financial institutions from interconnecting to the point where one failing brings down the whole house (of cards).
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