Some one has to start it, Americas default.

I went to one of there meetings to try and form some kinda coherent front. It was bedlam. Everyone had a different take on the situation and what should be done about it.

There were a few folks who seemed to know what they were talking about, mention of the banks fraudulently selling off toxic assets as low risk and being held accountable for it was actually pretty high on the list of complaints and demands being brought to the Governor ( coward that he is, ) I really liked Michael's mention of the grading agencies, I wasn't aware they had a hand in it, thought that the banks were the ones who Upgraded the mortgages. I need to read up a bit on that one.

Rally yesterday was pretty small, nothing really worth taking pictures of, about 500 folks maybe at its peak. Next Sat is another tho, should be a big one as it seems every weekend there are more and more people.

The Governors response of bringing in the riot squad was a big mistake. All the violence so far from what I've seen and heard is entirely on the part of overzealous riot police, hoping for a riot. When they move in everyone chants "we are peaceful"

Most of the people also believe they are part of a worldwide movement and not just milling around reliving some hippy thing out of the sixties.

 

So--the riot police are now in. According to Troy its just a little conflict and a ball game offers more violence.

Ive said it before you guys get different new than the rest of ther world.

Just like Libya and Syria ,-- Oh its nothing,--just a few kid gangs, its not the real people.

I think bos's report sounds right.

 

Boston- oops just saw your post.

This is a long thread and a lot of ground is being covered.
US dept, value of the Dollar, gold speculation, the ongoing recession- causes trajectory, EU dept/problems, any handy stick anyone can poke in my eye etc etc...

As initiated- the topic is the dept burden carried by the United States (Public and external) and its effects.

Honestly I don't find much interest in this topic.
Outside of the political football of how we got here, the problem though important is fairly straight forward.
Most fail even describe the problem in the correct terms in any case- we have a huge economy- the numbers are fairly meaningless. Parse the dept obligation against revenues.

The topic I find which holds real interest to me is the cause and trajectory of the current economic downturn. This is the feature in our landscape which brings to the fore all
the secondary faults which most discuss here.
Economies are under stress- what caused the stress, are the now apparent faults systemic or are they simply limits which are not crossed during periods of normal economic activity. Can
we as nations simply weather the storm as it were or are changes needed or even essential to recovery.

I further depart from the threads origins by not being willing to describe the woes/responsibility of any individual country as being totally separate from the global features which I
feel are defining this downturn.



I said earlier that "main street" is as more responsible than "wall street" for the current down turn and therefore should stop complaining...

and your rejoinder:

Etc etc.

This is a common response that details the failure in our economies as having its cause squarely set on the investment banks, the vehicles formed to trade mortgage dept, and the regulatory
failure to control the action of both of these entities.

I don't agree with this assessment and my logic is as follows:

Assets are a common or even required component of an economy. Be it a persons or that of a nation; assets serve as a vehicle to hold wealth which has accumulated over time. Assets take
many forms. They can be simple currency, property, or as it the case of businesses and countries the aggregate of advancements made in such disparate areas as infrastructure, resident
businesses, established universities and the level of economic potential of residents as defined by training and education.

All assets vary in value over time.
The nature of this change serves to define how assets are used in a economy and the secondary treatment of these stores of wealth as investment vehicles.

Of the varied classes of assets used as a store of wealth, some are structural components of the economies in which they are found. As such, the variation in value over time has the
potential to alter the structure of the economy. These changes can have beneficial or deleterious effect if the asset class is tied to the rate of economic activity.
Housing in the United States and many other regions is a traditional store of wealth which also serves as a strong structural component of our economy.

Simply put- the housing market experienced a asset bubble.
Housing as an asset changed from a store of wealth to a speculative asset.
This change in a asset which has such an important structural role in the US economy produced a economic boom which was based on an artificial change in value of the underlying asset.


Well a bubble it was- it extended far broader than the machinations in the US financial market; it was global in effect and is still unfolding.

In the United States the prices doubled in 5 years. At its height, fully 40% of all homes purchased were not primary residences and were purchased on speculation.
IN one years time the assets drawn from the inflated equity increased by 500%
Property speculation become a valid pastime for nonprofessionals from every walk of life.

"There was the greatest bubble I've ever seen in my life...The entire American public eventually was caught up in a belief that housing prices could not fall dramatically."

The accelerating valuations forced the market into a building boom.
This building activity in addition to cash equity withdrawn and market confidence led the economy into a increased rate of growth.

The financial instruments you mention above are to my mind a secondary action which occur in every asset boom; as valuations increase, credit thresholds are lowered in response to a false security in a perceived
continued rate of growth.
I have posted research in this thread which supports this point of view.


You in fact summarize this position quite clearly in your own post:

I also do not believe that they of their own right serve in any meaningful way to accelerate the already fully accelerated boom conditions of a asset bubble.
The subprime debacle ran to the extent of 1.3 trillion dollars in the US against some 70 trillion of inflated value which was present in the worlds property bubble.

I do not favor an assessment that the threat to these instruments are the real cause of the financial downturn following the collapse of the property bubble. To my mind (perhaps the weak link ), the real cost to the economies of the world was from a slowing of the economic activity which has been artificial accelerated by the boom in a structural asset; property.

One of the ways to crack the code as it were would be to provide a careful comparative analysis of the economies which are under stress following the collapse in the property boon.
I would imagine that those countries who had lower rates of new construction would see less stress. I attribute this to a lower secondary effect on economic growth from the
ancillaries to this industry. That is the economic foundation of these countries would have seen less of a bubble matching the building growth and therefore be less vulnerable
to a collapse of that industry.

So to summarize- I blame the market more than the financial institutions or any government entity.
That market is comprised of the buyers and sellers of property and it occurred on 'Main Street'

Until I see some evidence to the contrary -I see no reason why the economies of the world should not see a recovery from this downturn with nothing more elaborate than the simple passage of time.

 

any thoughts on lending out funds to unqualified borrowers and then fraudulently upgrading the bad loans and selling them off to unsuspecting buyers.

seems like the economy was driven off a cliff by that slick little trick while getting a healthy push from globalization. The jobs market disintegrated nicely as well, helped along by a number of decisions that could only have been made specifically for the benefit of certain corporations regardless of the effect on the jobs market. NAFTA for instance. Which in my mind ( bring a flash light ) should be repealed.

Its a thought provoking response but I don't see where it absolves our elected leaders nor the corporations that elected them from being directly responsible for failing to act in the peoples better interests and maintaining a healthy jobs market right here at home. No jobs = no pay = cheaper buying practices = cheap shoty products made by people earning C50 a day overseas = no jobs. Then sell some phony securities fraudulently upgraded to your competitors and you've got the corporate economy we have today.

I'm not saying that the corporations can be expected to act in our better interests, but allowing them to buy up the electoral process through "campaign finance reform" and co-opt our elected officials that are, is racketeering in my book. Every congressman and senator who can be shown to have taken campaign money from a corporation and then shown to have acted in there better interests and in a way that subsequently harmed the US economy should be held criminally liable for fraud. Every board member of every bank that fraudulently sold phony rated securities packages to its competitors should be prosecuted for that fraud. Those two are the central issues of this movement. Most others are just offshoots.

 

Like I said earlier,
- The "Blame Game" - is a waste of effort and time...
- It puts people unnecessarily "offside" whereas without that aspect...
- Many would otherwise likely see the immensity of the debt mountain...
- An event that is going to confront society with a "god-almighty-negative-explosion"...
- A BANG, where not a whimper will be heard as assets and stuff that many good people worked so very hard to gather-in ... ... ... ... Will simply disappear!!!!!

Most posts seem to get many aspects of what is building, - - - but the size and impact seems to be missed... - - - - The number I keep on throwing up, US$700trillion, - or -
- - 14 years of TOTAL GLOBAL PRODUCTIVITY - or - at least 50 years of GDP in USA - That is the USA component...

Think carefully - and that is just the toxic stuff that has been identified/suspected to have been created in USA...

GOD only knows what is hidden outside USA, as part of the contribution to the G.E.C of everyone else in the world - is it double, treble or even more ???....

THIS IS THE BIG ONE....

Please prepare yourselves for TOTAL SELF SUFFICIENCY as recovery could take a very long time... The main reason I say that is that the toxic debt must be totally expunged... before any rebuilding can take place - otherwise the poison will be hidden - only to resurface again later... REMOVE ALL THE CANCER or continue to see the recurrence of that insidious disease again and again and always more and more painfully for those you love and cherish...

 

Its very easy to be pessemistic, but I agree that the passage of time will repair it, it always has and will continue to do so.

The Europen Greek crisis should stop right now --kick greece out and stop this brothers in arms crap , they dont collect taxed adequately and retire at 55.

Kick em out and shore up the banks to stop contation instead of pouring it into Greece , this will act as a warning to other apathetic countries thinking they will be saved.

What good can this be --I dont even know where greece is and I might loose my savings acount because of them, --that is'nt right.

 

I'm thinking we have limited time anyway but thats a whole other issue. I'm also thinking that criminal acts of fraud should be prosecuted rather than rewarded. Time shouldn't be allowed to pass before that prosecution begins. Might also be nice if our representatives actually represented the votors rather than the corporations that are allowed under present campaign finance laws to buy there loyalties away from there legal obligations.

The Banks that were going to fail should have been allowed to do so. No taxpayer money should have been used to enrich private enterprise.

Can't wait till this coming Saturday, was a big crowd last weekend, up from the previous and up again from the weekend before that. The game is on, the people are starting to wake up and this just might be that revolution I've been waiting so long for.

cheers
B

 

There's a big difference between an asset's value changing over time, and an asset being rated AAA when it's obviously nothing of the sort.

And Standard and Poor's is still at it:

 

Why do people think that banks should be allowed to fail? I dont understand your logic. If people loose thier savings then they turn to the government for help -- no money so what happens then --we have a free for all confusion from hell.

Just be better to keep the banks going. Try playing Monopoly then shut the bank half way through the game --it all falls apart.
If the bank fails then so does the gas station down the road , the supermarket, the car wash the hospital, all bank,-- every one banks.

 

The poor investment choices of an organization should not be bailed out. They should fail if there incompetent. Once you start rewarding incompetence the spiral towards a much wider failure has begun.

No the people should not loose there savings, thats what the FDIC is all about, or is supposed to be.

 

Thats why there is talk of seperating the 2 different banking types, but the derivative boys walk over to ma and pop savings account section and borrow a few boxes of money to gamble with--that right there needs to stop.

Uk is coming up with something called ring fencing , thats keeping savings fenced and safe from the fly boys. Trouble is it wont be done till 2016 it needs doing now today. I dont understand the dealy to protect the very fundimentals of banking. Burying money in the garden maybe laughed at but perhaps not laughing so hard any more. So So So wrong to allow a savings account to be eaten by the fly boys of the bank and then distribute the winnings to themselves
Its theft fer fks sake.

This is what the riots, ---sorry demonstations are about.

 

I thought Frosty put it pretty well in his post. We don't normally let banks just fail and shut down anymore, because they're full of innocent people's money.

Instead the government usually takes them over, straightens out the mess, and sells them to someone else to recoup what it has spent.

 

This is why banking reform is required. Bankers must not be allowed to gamble with public guaranteed assets .

When I see these protesters on the street I scratch my head ? Instead of simply marching around shouting " THE SYSTEM IS BROKEN " they must refine the message and demand " BANK REFORM"

 

Michael, look in the thread Boston started about the protests. I wrote a post there that will help you understand why the protesters are saying the system is broken. For them, it is.

 

I also feel there is a big difference between the investor who buys property and the investor who's interest lies in trading the derivative.

The former is 'making the market' while the later trades it...
Moral hazard varies between the two I think.