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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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 Posted: Tue Sep 23, 2008 8:54 pm Post subject: |
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| I have yet to see any banker say he's going to give up his personal fortune to help bail out the banks. Yet, these greedy parasites want the personal wealth of people throughout America confiscated by the IRS and handed to them. That says it all right there. |
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mises
Joined: 05 Nov 2007
Location: retired
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Kuros
Joined: 27 Apr 2004
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| Posted: Wed Sep 24, 2008 2:41 pm Post subject: |
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| mises wrote: |
Anyways, I suppose you're being sarcastic Kuros. |
I'm not being sarcastic. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 25, 2008 5:37 am Post subject: |
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Two rather scary posts from Naked Capitalism:
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"Asia Needs Deal to Prevent Panic Selling of U.S. Debt"
It has been conventional wisdom that China, Japan, and other countries that run trade surpluses with the US, which means they fund our overconsumption by buying assets like US Treauries, would never restrict the flow of credit to us because it would lower their exports and hurt their growth. We've long been leery of the idea that unsustainable trends will have a life eternal, and Brad Setser has a simple reason why this process is self-limiting. Our foreign funding sources aren't just lending us money to buy their goods; they are also providing the funding for interest on the loans extended for past imports. At a certain point, the interest payments become so large relative to the value of the exports that the deal no longer makes sense.
The day of reckoning may be approaching well before Setser's tipping point. And the trigger is much simpler. We look like a lousy risk. The Freddie/Fannie conservatorship, the Lehman bankrutpcy, and the rescue of fallen Asian powerhouse AIG has, not surprisingly, lead to a reassessment of the US's creditworthiness.
Yu Yongding, who has advised China's central bank, urges Japan, China, and Korea to forge an agreement not to dump US bonds. Yu says in no uncertain terms that the Chinese are worried about their US holdings and see a US default as a real possibility.
We've said before that the US is in the same position as Indonesia and Thailand circa 1996, except we have the reserve currency and nukes. The precariousness of our position is now evident to all, save perhaps the average American citizen. |
I'd never thought about it before, but she is right. Asia is both funding the imports and the interest on previously consumed imports. From outside the US, it doesn't look very stable now.
Next:
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Democrats Say "Breakthrough" Enables Them to Pass Bailout Bill Tomorrow
As we said when the idea of this bill was first mooted, bye bye US AAA rating, bye bye dollar. Not overnight, but the die is cast.
We have also said that the eagerness to pass this measure is based on the faulty premise that this package will actually do something to solve the problem. It won't.
Trying to prop up assets at above market levels is DESTINED to fail, and worse, only digs us deeper in the debt hole in the process, making the ultimate resolution of our economic mess even more costly and painful
We are not alone in this view. Virtually no economist is in favor of the program (save Alan Blinder). University of Chicago even published an open letter with a long list of signatories against it. And commentary on econoblogs has been as close to unanimity as one sees in these parts against. it.
All it will do is provide a short-lived burst of confidence, then as market participants think through its operation and ramifications, the anxiety and stressed conditions will return. How long will the false euphoria last? Two weeks to six weeks, I'd hazard.
And worse, the existence of this program will block any other course of action being taken. It is so large and resource-intensive an approach that it precludes other remedies. |
http://www.nakedcapitalism.com/
The short lived rally of confidence will provide a good opportunity to sell off dollar assets, I suppose. |
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Joo Rip Gwa Rhhee
Joined: 25 May 2003
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| Posted: Thu Sep 25, 2008 5:50 am Post subject: |
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Right now the government can buy the mortgages low and sell them high later
Is the US population increasing or decreasing ?
In fact last month home inventories fell, they will fall again this month. Sometime within the next 4 years there will all of sudden be a housing shortage and then the government will then sell off most of these mortgages at a profit. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 25, 2008 5:56 am Post subject: |
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| Right now the government can buy the mortgages low and sell them high later |
This depends totally on the rates of default. I expect a further 30-50% drop in housing values clean across the country. LA, PHX, Vegas, Miami are not even close to done falling. NYC, Boston, DC, Seattle haven't really started their decline. We're just getting started.
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| Is the US population increasing or decreasing ? |
This was the kind of silly logic that estate agents would spit to me in 2004. People need to understand why prices are they way they are and strop trying this "supply + demand = value" nonsense. This is a credit-based asset bubble. The further credit is restricted, the further the bubble with deflate.
In addition to this, oil will at some point start a steep rise again. What of the suburbs then? Who will live in exurbs when oil is 7$ gallon? What will that do to the McMansions out in the exurbs? The whole thing is ass ass ass and this is not going to end well. |
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RJjr
Joined: 17 Aug 2006
Location: Turning on a Lamp
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| Posted: Thu Sep 25, 2008 9:03 am Post subject: |
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In a free market scenario, housing prices would have to fall tremendously for people to be able to afford them. Housing prices are just way, way out of line in relation to American incomes.
But since it looks like the bankers are going to be successful in their lobbying efforts to turn America into a socialist republic, housing prices will stay artificially inflated for a while because of bad loans, since there will be no reason for a bank not to loan money to probable deadbeats. After all, the bankers have the American people as their own personal garbage can to dump their bad loans on. That's all Americans are to the bankers: garbage cans. |
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desultude
Joined: 15 Jan 2003
Location: Dangling my toes in the Persian Gulf
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| Posted: Thu Sep 25, 2008 9:32 am Post subject: |
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| Joo Rip Gwa Rhhee wrote: |
Right now the government can buy the mortgages low and sell them high later
Is the US population increasing or decreasing ?
In fact last month home inventories fell, they will fall again this month. Sometime within the next 4 years there will all of sudden be a housing shortage and then the government will then sell off most of these mortgages at a profit. |
I have just dropped in on this thread. Interestingly, there seems to be some agreement on the nature and cause of the crisis in the US.
Joo, is there anything this government does that turns your stomach to the degree that you can't be an apologist for it? |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Thu Sep 25, 2008 10:14 am Post subject: |
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| Ya-ta Boy wrote: |
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| Homeowners who are NOT in default or behind on their payments are in no danger if their lender fails. |
You are ignoring the reality that when a recession happens, real people lose their jobs...and then can't make payments on cars and homes. |
But, I said:
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Homeowners who are NOT in default or behind on their payments are in no danger if their lender fails. They will just end up paying whoever ends up owning their loan.
Homewoners who ARE in default will still lose their homes if they can't make the payments whether or not their lender fails. |
I didn't ignore the fact that others would lose their homes as a recession worsens. I just pointed out the fact that the bailout will not help such victims, only the mortgage holders.
This explains why it serves no purpose to bail out the lenders. It doesn't help the current homeowners and it won't prevent the coming collapse, which I also explained.
Mises post above explains again why the fall of the US Government is starting to look possible to most economists. Many believe it is inevitable now.
Anyway, I will probaly have less time on Dave's for a while ... it's really time to start thinking about what things will be like and what to do when the collapse does come. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 25, 2008 10:20 am Post subject: |
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| RJjr wrote: |
In a free market scenario, housing prices would have to fall tremendously for people to be able to afford them. Housing prices are just way, way out of line in relation to American incomes.
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This will, and is happening. All over North America. There is nothing the government can do to stop it (well, they could make it illegal for prices to drop I guess). And anyways, government should not be in the business of propping out home values. That is a naked assault on the poor. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 25, 2008 10:25 am Post subject: |
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| ontheway wrote: |
Anyway, I will probaly have less time on Dave's for a while ... it's really time to start thinking about what things will be like and what to do when the collapse does come. |
I don't know anything about you, but this presents quite a wide variety of career possibilities and is hardly the end of the world. The financial sector is a parasite on the real economy and will collapse. The dollar will fall significantly against a trade weighted basket of currencies and the Bretton Woods 2 system is ending. But the lower dollar and decline of empire doesn't mean that commerce stops. I have very smart friends who are positioning themselves properly for the new reality. Manufacturing management, CFP, human resources, business intelligence etc. Lots of fields will benefit in the medium and long run. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Thu Sep 25, 2008 10:25 am Post subject: |
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| Joo Rip Gwa Rhhee wrote: |
Is the US population increasing or decreasing ? |
There will be plenty of bridges, old cars with no gasoline, old tents, packing crates, and other assorted camping options for the increased US population, thanks to the Federal Government's 70 trillion dollar deficit and the Federal Reserve's Fiat money fiasco. |
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ontheway
Joined: 24 Aug 2005
Location: Somewhere under the rainbow...
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| Posted: Thu Sep 25, 2008 10:30 am Post subject: |
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| mises wrote: |
| ontheway wrote: |
Anyway, I will probaly have less time on Dave's for a while ... it's really time to start thinking about what things will be like and what to do when the collapse does come. |
I don't know anything about you, but this presents quite a wide variety of career possibilities and is hardly the end of the world. The financial sector is a parasite on the real economy and will collapse. The dollar will fall significantly against a trade weighted basket of currencies and the Bretton Woods 2 system is ending. But the lower dollar and decline of empire doesn't mean that commerce stops. I have very smart friends who are positioning themselves properly for the new reality. Manufacturing management, CFP, human resources, business intelligence etc. Lots of fields will benefit in the medium and long run. |
Agreed.
But, it is time to think about these things. There will be plenty of opportunities, but plenty of losses, risk, change, and starting over. Where do you want to be, who do you want to be with, how do you want to finish out your life ... these become more important questions, with possibly different choices than one would have made before. It helps to be mentally prepared for what is coming, especially when so much is uncertain. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 25, 2008 10:41 am Post subject: |
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``It's the end of an era,'' said Shanghai-based Andy Xie, a independent analyst who was formerly Morgan Stanley's chief Asia economist. ``In 1989, when the Berlin Wall fell, socialism was discredited and the whole world turned right. Now financial capital has been discredited and the whole world, including the U.S., is turning left.''
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http://www.bloomberg.com/apps/news?pid=20601087&sid=aCl7bFUJzWRk&refer=home
Looks that way. |
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mises
Joined: 05 Nov 2007
Location: retired
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| Posted: Thu Sep 25, 2008 2:17 pm Post subject: |
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Speaking of the passing American moment:
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US �will lose financial superpower status�
By Bertrand Benoit in Berlin
Published: September 25 2008 11:55 | Last updated: September 25 2008 20:28
The US will lose its role as a global financial �superpower� in the wake of the financial crisis, Peer Steinbr�ck, German finance minister, forecast on Thursday in the most outspoken comments by a senior European government figure since Wall Street plunged into chaos two weeks ago.
Mr Steinbr�ck, a Social Democrat and long-time champion of tougher financial market rules, said the US government was to blame for the severity of the crisis because it had resisted European calls for stricter regulation until it was too late.
�The US will lose its status as the superpower of the world financial system� with the emergence of stronger, better-capitalised centres in Asia and Europe, he told the German parliament. �The world will never be the same again.�
His comments echo deep anger in Germany at the perceived recklessness of Anglo-Saxon financial engineering and a feeling that the US model of economic liberalism has failed while the more regulated, long-term oriented and industry-based German economy has proved more resilient.
�Ten years from now,� he later told journalists, �we will see 2008 as a fundamental rupture. I am not saying the dollar will lose its reserve currency status, but it will become relative.� |
http://www.ft.com/cms/s/0/1d6a4f3a-8aee-11dd-b634-0000779fd18c.html
I'm inclined to agree. |
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