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Money as Debt. Roubini: $2 Trillion in Debt Losses. Black Swan's "Rules for Living".

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August 03, 2008 – Comments (18)

“Give me control over a nation's currency and I care not who makes its laws.”

Baron M.A. Rothchild

“Only the small secrets need to be protected. The big ones are kept secret by public incredulity.”

Marshall McCluhan

As the US and the UK witness their first bank runs in decades, I think it is extremely valuable to understand the US banking system. Whether you believe the US dollar will collapse or not, it is important to understand the lessons here. MOST AMERICANS DO NOT UNDERSTAND THE BANKING SYSTEM, you should.  Depressions, recessions, bank runs, government and state confiscation of bank assets, hyper inflation, currency collapse, have all happened in American history. You should invest in what you know, you should know/understand banking.

Money as Debt Part 1/5 (10 Minutes):

Money as Debt Part 2/5 (10 Minutes):

Money as Debt Part 3/5 (10 Minutes): 

Money as Debt Part 4/5 (10 Minutes): 

Money as Debt Part 5/5 (3 Minutes):

 

These videos were passed to me from another CAPS player. I am sorry, I cannot find the orginial post, to give credit to the CAPS player, who gave me this link.

The Big Picture has two outstanding posts this week.  Nouriel Roubini is one of the few people on TV worth listening to on corperate media. I have posted him several times. A write up and video worth your time here:

Roubini: $2 Trillion in Debt Losses

The video is here: Mr Doom and Gloom (4:40)

http://link.brightcove.com/services/link/bcpid86245679/bclid1137792066/bctid1705721308 

A book you should read is: Black Swan by Nassim Taleb. A blog that is worth reading is: The Big Picture

Taken from the Big Picture, which took it from Nassim Nicholas Taleb: the prophet of boom and doom
Bryan Appleyard
The Sunday Times, June 1, 2008
http://business.timesonline.co.uk/tol/business/economics/article4022091.ece

Rules for Living from Nassim Taleb

Taleb's top life tips

1. Scepticism is effortful and costly. It is better to be sceptical about matters of large consequences, and be imperfect, foolish and human in the small and the aesthetic.

2. Go to parties. You can’t even start to know what you may find on the envelope of serendipity. If you suffer from agoraphobia, send colleagues.

3. It’s not a good idea to take a forecast from someone wearing a tie. If possible, tease people who take themselves and their knowledge too seriously.

4. Wear your best for your execution and stand dignified. Your last recourse against randomness is how you act — if you can’t control outcomes, you can control the elegance of your behaviour. You will always have the last word.

5. Don’t disturb complicated systems that have been around for a very long time. We don’t understand their logic. Don’t pollute the planet. Leave it the way we found it, regardless of scientific ‘evidence’.

6. Learn to fail with pride — and do so fast and cleanly. Maximise trial and error — by mastering the error part.

7. Avoid losers. If you hear someone use the words ‘impossible’, ‘never’, ‘too difficult’ too often, drop him or her from your social network. Never take ‘no’ for an answer (conversely, take most ‘yeses’ as ‘most probably’).

8. Don’t read newspapers for the news (just for the gossip and, of course, profiles of authors). The best filter to know if the news matters is if you hear it in cafes, restaurants... or (again) parties.

9. Hard work will get you a professorship or a BMW. You need both work and luck for a Booker, a Nobel or a private jet.

10. Answer e-mails from junior people before more senior ones. Junior people have further to go and tend to remember who slighted them.

 

18 Comments – Post Your Own

#1) On August 03, 2008 at 9:13 PM, abitare (34.29) wrote:

FYI - Barrons features a Q&A with Nouriel Roubini, an individual who has consistently been ahead of the curve throughout the unfolding crisis (as I've noted many times at Financial Armageddon). Barron's Robin Goldwyn Blumenthal is the questioner in "Yes, That's $2 Trillion of Debt-Related Losses."

http://www.financialarmageddon.com/

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#2) On August 03, 2008 at 9:32 PM, jahbu (85.24) wrote:

I commend you for all your posts.  No one on Caps can say they were not warned. 

In my opinion, what we have going on is a Mafia style takeover of a business.   We have all seen the Mafia movies where some business owner has a gambling problem and the Mafia sucks him in.   Once they do, they take over his well established business and suck it dry.  Run up its credit lines and use it's good name for all that it is worth. When the gig is up, they burn it to the ground and collect the insurance.

All that backs the US dollar is trust in ability to pay back debt.  Debt that soon the world will realize we do not have the means to pay back.  The folks that sucked us dry will be long gone and out of the US dollar by then.

Where we disagree is deflation/inflation. This all seems very inflationary to me.  $ buys less and less of the things we need. 

Jahbu 

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#3) On August 03, 2008 at 9:49 PM, abitare (34.29) wrote:

jahbu,

The recession will bring deflation. You are see that now in housing, commodities, stocks etc.... If the war expands to Iran, you will see inflation/hyper inflation.  

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#4) On August 03, 2008 at 10:17 PM, jahbu (85.24) wrote:

You dont need a house, you dont need stocks.  You need food, healthcare, and fuel. 

Yes our recession will bring deflation in the rest of the World, but inflation in the USA.

*tosses Ares a cold beer*

 

 

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#5) On August 03, 2008 at 10:41 PM, AnomaLee (28.60) wrote:

I tried showing this video to several friends heavily dependant on our financial system(business owners, investors, analysts, graduate economist) late last year but they mostly found it incredibly boring.

To compliment your quote:
"None are more hopelessly enslaved than those who falsely believe they are free." - Johann Wolfgang von Goethe

I'd argue against love & money and will state that our greatest quest in life is understanding its very purpose. It is overly popular to believe our function and purpose is to 'make money'  and many never understand the function and purpose of money itself.

Ironically, all of us participating are seeking ways to 'make money' in this FIRE economy without standard or concern.

I wish I could rec this post 10 times...

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#6) On August 03, 2008 at 11:04 PM, AnomaLee (28.60) wrote:

As of now, it will be extremely difficult to experience deflation as long as we maintain our scenario of twin deficit(twin deficit theory) and facilities from the Federal Reserve to maintain 'liquidity.' Eventually, we will see more monetizing of a lot of these junk securities.

I wouldn't be surprised to see the forgotten discussions of the SIV(structured investment vehicle) resurface within the next 6-12 months.

Speaking of the PPT...
I admire how the nations of the Carribean Banking Centers have increased their holdings of official debt equal to their combined GDP.

http://www.treas.gov/tic/mfh.txt 
Caribbean Banking Centers include Bahamas, Bermuda, Cayman Islands, Netherlands Antilles and Panama. Beginning with new series for June 2006, also includes British Virgin Islands. 

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#7) On August 03, 2008 at 11:14 PM, DemonDoug (71.43) wrote:

Eventually, we will see more monetizing of a lot of these junk securities.

We already have.  29b for BSC bailout. Fed is taking all these CDO papers and full value for t-bills.  FNM and FRE backstop is an assurance of monetization of their 5.4t mortgage portfolios.

BTW to whoever is talking about deflation, MBS's are not part of the money supply.  The fed giving companies money in return for MBS's is part of the money supply.  Bam, inflation.

BTW the 400trillion derivatives market is like 10x the size of the entire worlds gross domestic product.  Not a penny of the CDS's are considered "money" by any MZM or M0-M3 measure.  But when we bailout the next IB from a CDS default....

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#8) On August 04, 2008 at 12:12 AM, DemonDoug (71.43) wrote:

Eventually, we will see more monetizing of a lot of these junk securities.

We already have.  29b for BSC bailout. Fed is taking all these CDO papers and full value for t-bills.  FNM and FRE backstop is an assurance of monetization of their 5.4t mortgage portfolios.

BTW to whoever is talking about deflation, MBS's are not part of the money supply.  The fed giving companies money in return for MBS's is part of the money supply.  Bam, inflation.

BTW the 400trillion derivatives market is like 10x the size of the entire worlds gross domestic product.  Not a penny of the CDS's are considered "money" by any MZM or M0-M3 measure.  But when we bailout the next IB from a CDS default....

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#9) On August 04, 2008 at 12:46 AM, pjani06 (29.08) wrote:

Thank you for that!  It is refreshing to see so many on these boards and even more concentrated, in this discussion, of individuals who really understand the driving forces behind our world and the state of our monetary system on a macro basis.  All of the above, thank you Ares, jahbu, Anoma, and Demon for everything you've brought to us here in the CAPs community!

 

I offer to anyone fortunate enough to read this:

A simple 10 minutes to understand our world today & whats happening:

www.fedupusa.org/

.....

there, do things make a bit more sense?

Here's a voice from Feb 2008 ( too bad i didnt get word then):

http://wallstreetexaminer.com/?p=2280

.......................

did you read it?

surprised?

Well... assets can go up forever or down forever and if you dont know if the faucet is on or off, then you'll be burned in the process (no matter the fundamentals or the "soundness" of the investment). Common sense will be ignored until we destroy the single faucet system & have competing backed-currency issuance & effective transparency over the nominal/credit expansion/contraction of our currency (for a change).

Wow, almost impossible to imagine as that would tackle major world issues AND restore prosperity to well deserved hard working citizens.  

.....

Talk, communicate, email these ideas with coworkers, friends, family, educate the young, spread the knowledge & power!!!!

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#10) On August 04, 2008 at 5:25 AM, abitare (34.29) wrote:

ALCON,

Thank you for the replies. I wish I could give credit to the Fool that passed me the videos. Tasty? or AnomaLee?

I do not have time to write much of a reply now. 

I expect: near term deflation as the commodity and real estate bubbles pop

But as the war continues and grows, I expect long term inflation or hyper-inflation.

I would rather be short or out of commodities in the near term as they may fall hard, up until the election. If the war grows long commodities short dollar will be the right call.

*Ares drinks cold beer and looks for another*

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#11) On August 04, 2008 at 8:53 AM, Gingerbreadman55 (27.91) wrote:

*Opens cooler and passes out Beers*

This is going to be a great show. I love the part where everyone is waiting in line to get their money, but can't. It's so moving...

*chug*

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#12) On August 04, 2008 at 12:02 PM, dexion10 (27.65) wrote:

great post - best video I've seen all year

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#13) On August 04, 2008 at 2:47 PM, camistocks (< 20) wrote:

I can't resist: The Fed, by the Fed!

 

And this one for fun and also for AnomaLee's friends:

Jake explaind the Fed!

 

enjoy! 

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#14) On August 04, 2008 at 7:11 PM, jester112358 (28.80) wrote:

Great video link-very educational.    This is why the Motley fool blogs and your posts in particular are such a service to the community.   Too bad more in the general public and students aren't exposed to material like this.   Unfortunately, even after understanding the problem of unlimited creation of money via debt, suggesting a solution is no easy task. 

It could really get you down-until you realize its all just a bunch of paper.  Unfortunately, we often paid for this paper with our hard work, skills and time.  Hence, the origin of revolutions.

 Really gives meaning to the notion of "wage slaves".

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#15) On August 04, 2008 at 7:14 PM, AnomaLee (28.60) wrote:

cami,

Good video... I'm glad no stuffed animals were harmed in the process.

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#16) On August 04, 2008 at 11:01 PM, Tastylunch (29.28) wrote:

ha thanks for the videos "Ares". Like the new name btw. it's appropriate for a financial bloodbath.

as for told you about the videos I'm guessing it was Anomalee as it certainly

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#17) On August 06, 2008 at 9:53 PM, abitare (34.29) wrote:

ALCON,

Thanks for the replies. I am out of town until Sunday. I have limited access to the internet until Sunday. Like the videos.  

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#18) On August 06, 2008 at 10:25 PM, lquadland10 (< 20) wrote:

So off topic and I am sorry.Is this our future?

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