Housing and Economic Collapse - In Progress #3

Iaato

Telegraph-Ireland Banks are Rescued, to the tune of 200% of Irish GDP

Forney2008

It sure looks like Ireland's contribution of screwing around will f*ck the Euro currency up some.

cube · Fusion Joined: Mar 12, 2005 Posts: 3824

gnm

I wouldn't pay a dime for that roach motel. More like I'll take it _if_ the county pays me $1000 and nullifies any back taxes.

-G
_________________
I Have and will continue to vote against ANY politician who supports the various bailouts. Curse you for selling out our future for status quo now!

vtsnowedin · Intermediate Crude Joined: Jul 11, 2008 Posts: 633

I quess its a matter of point of view. if you were pushing around all your stuff in a shopping cart and sleeping in a cardboard box with a Michigan winter coming on that house or what there is left of it might be a big improvement. probably so full of restrictions that no one can use it. probable have to delead and de asbestos it before you could get a CoO for it. A real red neck would live in one room while he cut up and burned the rest of it to keep warm this winter and have a clean lot to start with next spring. Smile

Iaato

Ludi

gnm

Me as well. I live in a pretty small house myself but I was referring more to the likely repair and maintenance/recovery nightmare that place is going to be. Remodeling/deconstruction is a lot harder and more expensive than just starting from scratch.

-G
_________________
I Have and will continue to vote against ANY politician who supports the various bailouts. Curse you for selling out our future for status quo now!

ReverseEngineer · Light Sweet Crude Joined: Jul 16, 2008 Posts: 1741

eXpat · Light Sweet Crude Joined: Jun 08, 2006 Posts: 1082

Trouble in Italy: UniCredit Trading Halted

Daculling · Light Sweet Crude Joined: Apr 12, 2005 Posts: 1361

Check this comment from CR's blog. It's long but worth the read.

otishertz writes:
ALL YOUR STOCKS ARE BELONG TO U.S.

If US authorities keep nationalizing mortgages and businesses the next dollar could become seen as backed by the value of people. The mortgages, loans and stocks our government is buying in bulk are people's houses and jobs. The value quantified in their work, credit and houses is being scooped up at fire sale prices. Most reasonable people realize that any bailout just delays the inevitable. Why then, do governmental entities want to subsume and consume such huge parts of the economy?

Market observers have noticed stocks rally all Summer on worsening financial news. Some suspected that the Fed and/or the Treasury were in the market buying equities to massage perceptions similarly to how they intervene in currency markets (gold and silver also are currency markets). It is now widely known and advertised that the Federal Reserve is trading U.S. Treasuries for stocks and other soured bubble “investments” at face value. While meddling in currency markets is nothing new, they have been buying tens of billions of dollars a day of mortgage toxic waste all Summer, hiding bank losses in the process. These purchases are all being made with newly printed money. $1.8 trillion so far. Printed money used this way can delay the pain of falling stock prices but it cannot prevent it. This is because nothing has changed to make business better, the fundamentals are still worsening.

The shock doctrine is now being applied to Congress by Boogieman Bush and Comrade Hank to scare them into giving at least $700 billion dollars and absolute power to the same bankers who caused the current problems by over leveraging themselves into insolvency. This money will be used to buy more mortgages, stocks, and their secret derivatives. It will legitimize any horde of stocks that may have been bought surreptitiously by government entities during the irrational price jumps of the Summer. Since this money does not exist in any government account, it too will have to be fabricated. These efforts will inflate the prices of imports and necessities.

The huge scale of purchases by our government and the private corporation that prints our dollars (the Fed) will eventually lead people to see our money as collateralized by stocks and mortgages. This opens up some very interesting issues. The largest of which is the shift from a fiat (unbacked) currency to one that is arguably backed by the value of people's work since, again, stock prices and mortgage values are ultimately tied to the value of the human effort that sustains them. The value of this collateral would be increased by preventing or limiting the discharge of debt through bankruptcy.

Why in the world would U.S. Authorities want to own so many stocks and mortgages? Clearly they intend to buy as many as they can get. They wouldn't be buying them if they didn't want them. The U.S. Government recently nationalized half of all outstanding mortgages after purchasing Freddie and Fannie. The Fed seems intent on accumulating the other half. If they own the majority of people's mortgages (their houses) and a large portion of employer's equity (their jobs) one could say the dollar will be backed by the earning potential of the U.S. Citizen, the value of it's people. What would you call a government that owns half the mortgages and half the stocks?

Though the dollar is academically a fiat, or faith based, currency it has in actuality been on a de-facto oil standard. The quantity of dollars in the system has been highly correlated to gross oil sales since until recently oil only traded in dollars all across the Earth. Thus the more oil we and the world consumed the more dollars the Fed would print to facilitate the transactions. Iran and Venezuela have begun trading their oil for Euros. This growing trend reduces the demand for dollars which are used to settle oil transactions. It also resulted in oil newly having a .9 correlation to Euros up until the bizarro market movements that began in the Summer. The oil standard has kept the dollar way higher than US fundamentals would imply. The evolution of the dollar appears to be going like this: $ off gold standard, onto oil standard > $ off oil standard onto asset standard.

Could taking the dollar which was unbacked except for being in high demand for oil transactions and backing it with financial assets be an improvement for the dollar? That remains to be seen. If a crash occurs and government entities buy a large share of US assets for a fraction of their intrinsic value with free printed cash the scheme could show large paper profits resultant of inflation already in the pipeline plus inflation caused by the printing itself. Further, the settling of $60 plus trillion or more in derivatives is likely to result in a financial neutron bomb that would flatten asset values down to pennies on the dollar. This captured value could be the underpinning of the new dollar. So, on paper the scheme could work though old fashioned civil libertarians will surely swallow their barf and shudder.

If this is indeed the scheme, and what else are they planning to do with all these formerly private assets, then, in order to hold things together, they will most likely need to impose some kind of foreign exchange controls for the extended period of time encompassing the transition. This would mean individuals would be blocked from diversifying out of US dollars, or that they would only be able to do so with expensive limitations or onerous reporting requirements. These controls will make it prohibitively expensive for most US citizens to establish life in another country.

This is the same administration that wants to move your social security money into the stock market. Anyone who hasn't sold out yet may wish to consider it while the government is still an eager buyer. At some point they will realize that lower purchase prices are in their interest and pull their buying for a while. Who knows how low stocks could go when they stop propping. Large numbers of market participants are not participating in these markets because they look rigged. Speculators in particular are being chastised and chased out of the market. It is looking more and more like the only buyers who will be left in the market will be the government and the victims of the mass media.

This stock propping with shill buying has two effects; it covers up the real problems by preventing accurate investor opinions and forecasts from being expressed in asset prices and it floods the system with money at a time when money is vanishing rapidly as loans dry up and the money multiplying effects of debt are cut off. Without debt expansion there is no economic expansion. This is how a fractional reserve fiat system works. The debt implosion has left a big black hole that is being stuffed with cash through the purchase of financial assets, at first surreptitiously but now out in the open. This is not dropping money from helicopters. It is a way better deal for the money printers. They get control of real assets while re-inflating the system; all your stocks are belong to U.S.

With the government acting as buyer of last resort, every trade is now a trade on the next move of the government. The markets no longer freely exchange. Just look at the charts and see the same move at the same time every day, regardless of fundamentals. Only in major quakes does the market briefly point in the rational direction. Markets that make the same move at the same time of day counter to news and fundamentals are not random. In free markets, one expects to not see such daily repeating patterns. Look at S&P 500 futures charts over the past few months and see the spikes around 90 minutes before the NY open while the news was getting increasingly horrendous. Look at this Summer's gold charts that are nearly identical in shape, going the wrong way for entire days while the financial system melted down and Russia invaded our Iraq ally, Georgia.

If you get in this market you need to keep in mind that you are betting against a printing press. As such the best bets are those that are anti-dollar, at least until they are outlawed (as with short sales). Never thought I'd see the day but there is now big political risk to investors here in the Homeland. The safest bets will be in tangible assets not tied exclusively to US financial markets, which clearly are no longer free.

So, is the government going to come and get you? Probably not because you will “volunteer” to be part of the new system by taking on debt. Debt slavery is a form of voluntary servitude. Currencies backed by labor or indentured “debt servitude” are slave money. If this really comes to pass along these lines your personal worth will be your balance sheet and your caste will be your credit score. The data traces of your identity will yield economic access or deny entry. You will need to work harder and pay your mortgage on time so that the dollar doesn't fall. Bankruptcy would be treason, foreclosure a currency crime. The new currency may not even have a physical form but only be a record of the units of your contribution to society. These data traces could be attached to you, perhaps electronically or biometrically. We have the technology.

The dollar was going down anyway. This is the Federales scooping up all the houses and banks on the way out to be used as the underpinning value for a new currency. The dollar's remaining value is only in the inertia of the old system which was the largest in history. It will not stop at once. However, the slowdown will accelerate because what is occurring here is exponentially entropic. Derivatives that bet the world many times over ensure catastrophic failures.

Unlike all the other recent Orwellian events we thought were science fiction, this will probably never happen because it is crazy. It may appear that it has happened but it never really will ha
otishertz | Homepage | 10.01.08 - 5:13 pm | #
_________________
-Dac

Winners never quit and quiters never win, but those that never win and never quit are idiots.

EnergyUnlimited · Fusion Joined: May 15, 2006 Posts: 3397

Very interesting thoughts above in Dacculing's post.

So how well all those free of debt would do in that scenario?

Would they become to be a masters of of US as time goes?

Would those indebted ones end up gradually turning into slaves?

Or perhaps would those debt free folks end up in labor camps for being unpatriotic?

cube · Fusion Joined: Mar 12, 2005 Posts: 3824

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