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alstry (36.32)

Margin Calls Everywhere

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March 14, 2008 – Comments (3)

Hedge Funds have to cover.  Those that are short must buy.  Those that are long must sell.  Banks getting squeezed.  Investers locked out of their muni funds.  Money money everywhere not a drop to spare.

Here is the insanity.  As a nation we became dependant on our fellow citizens borrowing money to keep this madness going.  People borrowed money to buy houses, make renovations, buy cars, take trips, and more recently to buy food, fuel and insurance.

No few can borrow and business are asking where are my customers?  Cities are asking where are my tax revenues?  States doing the same.  Hard working people are asking why am I getting fired?

For anyone with foresight, this was very obvious at least a couple years ago.  You cannot build an economy on debt.  Over the past seven years, we borrowed like we never borrowed bofore.  LIKE NEVER BEFORE.  The effects are now raining down upon us and the damage will grow week by week month by month.

Until our homebuilders restructure and wipe out the debt.  Our banks come clean with the true value of the balance sheets.  Our cities debt get restructed to levels that can be sustained.  Putting a band aid on an aterial bleed will accomplish little.

Mommy, why are the rain drops putting holes in our roof?

3 Comments – Post Your Own

#1) On March 14, 2008 at 10:05 AM, FleaBagger (28.14) wrote:

We borrowed sort of like this before. If you recall, it was 1929....

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#2) On March 14, 2008 at 10:08 AM, alstry (36.32) wrote:

In 1929, relatively few people had any money in the markets.  Bear Stearns was profitable.  Like I said, Like Never Before.

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#3) On March 14, 2008 at 4:09 PM, jester112358 (28.93) wrote:

You mean we can't borrow our way to prosperity-like Donald Trump?  Blasphemy!  Unfortunately, as the Japanese showed in the last two decades, you can't save your way to prosperity either.  As usual, its the middle way which is the hard way.

 There's just as much money as always, its just located in the middle east.  Which really means its under the control of  the West-ready to be "taxed" and/or frozen.  So, we can always raise a trillion or so to pay down debt in a crunch.  No wonder the Swiss franc is doing so well.  That's where all the currency assets (including a lot of my own) are currently flowing.

 Dont' know if you checked out the blog I wrote a few months ago,

"Hedge fund redemptions are a ticking time bomb" 

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