Use access key #2 to skip to page content.

alstry (35.42)

The WORST finanical CRISIS EVER!!!!!!

Recs

6

September 06, 2008 – Comments (7)

Let's get something clear, this is NOT you typical ordinary recession.  This is the Worst Fincanical Crisis since the great depression that is shutting our economy down.  We are now at the point where the revenues for our Auto Industry is insufficient to service its hundreds of billions of debt.  Almost 10% of ALL mortgages in America are delinquent.....never in our nations history have we even come close to contemplating these numbers.  It has become so bad that we are putting $5 Trillion dollar Fannie and Freddie into effectively bankruptcy.

Its funny, somepeople think that we are in a recession.  Truly the government and press has done a fantastic job dulling our minds into complacency.  Those that understand the problem understand the severity of the current situation. 

Volcker says finance system 'broken'

"This bright new system, this practice in the United States, this practice in the United Kingdom and elsewhere, has broken down," Volcker said Friday

"It is the most complicated financial crisis I have ever experienced, and I have experienced a few," Volcker said. Volcker ran the Fed from 1979 to 1987

http://www.startribune.com/business/27938914.html?elr=KArks:DCiU1OiP:DiiUiD3aPc:_Yyc:aUU

This statement should shock the hell out of you if you understand its implications.  You can sit there and analyze distressed homebuilders until the cows come home 25 hours a day, but in the end, as defaulting debt continues to absorb available cash, prices will continue to crash until money runs out chasing the falling knife.

FB is an excellent housing analyst.  He understands the nuances and business well.  But his forward vision is impaired by his reading glasses analyzing HBs all day and night long missing the forest for the trees.  Notice how he keeps revising his estimate on the index lower and lower.....expect him to be in single digits very very soon.

The crisis we are facing is unprecedented....my guess is by early next year.....people will understand the implications will be far more severe than The Great Depression.  This isn't about being an alarmist, it is simple accounting, back then, there wasn't much debt...our businesses were not very leveraged, our governments were not very leveraged, and for the most part, the people were not very leveraged.

Today, leverage makes up over 85% of the net worth of America.  Those that are not leveraged, their assets maintain value as a direct result of leverage.  (A million dollar house in a no money down low interest rate environment is a $200K house in a cash only world).  Leverage is defaulting at record rates and destorying real wealth in America at a faster rate than ever seen in history.

You have been warned by Volcker!!!!!!!!!!!!!!!!!!!!!!!!!!! Others such as Karl Denninger see the light.  Right now we only have money because the banking system tells us we can withdraw our money.  

But can we trust the system????

A few weeks ago, Paulson was saying there was little liklihood of bailing out the GSEs.  Fannie's CEO was saying it was well capitalized.  Today it is about to go bankrupt and he fired with a fat severance package.  When JP Morgan had a conference call in the Spring, the CEO said it didn't need any additonal capital, THAT AFTERNOON, JPM raised BILLIONS in a preferred offering.  There are numerous situations like the above involving statements of our bankers government officials and contrary behavior.

We have been systematically lied to as millions and millions of Americans are losing their homes and losing their jobs.  The rest of us sit back and watch as the wealth we have spent a lifetime accumulating evaporates day by day. 

At this point, no one really knows the truth nor what will happen.  We just have to trust .....just like our soldiers trusted and believed that Iraq had WMD even though our chief weapons inspector denied evidence of any such weapons.

The problem now is whether the people we are supposed to trust are the ones bending us over? 

You can believe your farm, or house, shopping center, or business is worth X, but when only a few have money....nothing is worth much.  By bailing out Fannie and Freddie, we are imposing Trillions of dollars of debt on many to guarantee payment to a few.....shouldn't it be the other way around....especially when the few knew the risks at the outset?

RIGHT NOW!!!!! 1 in 10 mortgages is delinquent.  If that number doubles.....there will be enough inventory on the market where no new home will need to be built in America for the next 10 years.  But don't worry, we will get through it....it will just be looked back on as a tough 10 year cycle.

You can claim all you want that we should have an election about The War, about national security, about health care or about energy independence.

None of this matters if our economy and government funding mechanisms are damaged or destroyed due to the irresponsible and outrageous bailing out of TWO GIANT HEDGE FUNDS that happen to be called "Fannie Mae" and "Freddie Mac", and THE PRESENT GOVERNMENT just took FIVE TRILLION DOLLARS onto its balance sheet!

http://market-ticker.denninger.net/archives/569-What-Is-The-Truth-FannieFreddie.html

If select financial instutions are being bailed out, then every single American individual and business should be bailed out and bankrupctcy avoided for all.  Otherwise, let the free markets distill the toxic debt out of the system and begin with a clean balance sheet for all....not just a select few.

7 Comments – Post Your Own

#1) On September 06, 2008 at 3:39 PM, alstry (35.42) wrote:

To see the practical side of the above....by bailing out only a few and lettting the many fail.....the entire country shuts down and the few get to take their money overseas.

Right now American auto companies soon to be insolvent....builders losing billions and shutting down, banks losing hundreds of billions, airlines in the same boat, now technology is slowing, so is healthcare......all on a crash course to shutting down of the entire nation if we continue to bail out a few and let the many fail.

All of the above slowing  has resulted in the loss of millions of jobs.  Millions more are likely to be lost as cities and states can't pay their bills.

Right now everyone is praying for a bailout.....but the only thing being bailed out is the banks/financials and they are hoarding the cash while lavishing their executives with huge bonuses.

The third quarter numbers will be horrible....expect HUGE layoffs to be announced in coming weeks. I am not sure how our government and banking system will let the  numbers come out without something to distract our attention.

Never in our nations history have so few businesses earned any money.  The trailing PE on the DOW is negative and deteriorating.  We as a nation are spending down our savings and running out of cash. 

We cheer when we shut down a union factory and destory a community for the sake of efficiency and profits.......HOWEVER.....with all our debt and entitlements, isn't America one big union nation that needs to be shut down and restructured or jobs moved overseas so profits can be generated?????

Do you think the bankers give a damm whether they continue to lose money in America and make money overseas? If you were losing money in America and profitable overseas....wouldn't you want to be bailed out and transfer your assets where you could make money????

Do you think either side of the political spectrum cares????

Why do you think so many homes are being foreclosed and Fannie and Freddie are making much harder to buy a home? Now 1 in 10 mortgages are delinquent and prices are crashing....  expect it to get much worse.

You say you don't like unions.... there is no bigger union in the world than the United States of America.  Its time to shut America down and move its assets where they can be profitable or force the entire nation into bankruptcy so it can be cost competitive.

Not so difficult to see once it is brought to your attention.  We are three hundred million people consuming 1/3 of the world's resources.  We were only able to do that recently because the banks lent us unlimited supplies of money to spend.  Now they are cutting us off and shutting us down and moving production overseas where profits can be made.

Don't worry, for those that are enterprising, there are lots of opportunities on the other side of the ocean.....you now know the rest of the story.

In the meantime keep fantazsizing the bottom is near as the bankers, politicans and media bombard you with BS as distress keeps growing week after week.

Report this comment
#2) On September 06, 2008 at 4:00 PM, alstry (35.42) wrote:

48 Hours From War?????  You get to pick which country......

Iran....we are now advertising on CNN

Pakistan:

BARA: In a major development, the federal government on Friday announced disconnection of supply lines to the allied forces stationed in Afghanistan through Pakistan in an apparent reaction to a ground attack on a border village in South Waziristan agency by the Nato forces.

Political authorities of the Khyber Agency claimed to have received verbal directives to immediately halt transportation of all kinds of goods meant for the US-led Nato forces in Afghanistan for an indefinite period.

http://www.thenews.com.pk/top_story_detail.asp?Id=17051

Russia:

MOSCOW (Reuters) - Russian President Dmitry Medvedev accused the United States on Saturday of provoking Moscow by using warships to deliver relief aid to its ally Georgia, with which Russia fought a brief war last month.

"I wonder how they would feel if we now dispatched humanitarian assistance to the Caribbean, suffering from a hurricane, using our navy," Medvedev said, adding that a whole U.S. fleet had been dispatched to deliver the aid.

Russia has also accused U.S. warships of rearming Tbilisi's defeated army, a charge dismissed as "ridiculous" by Washington.

http://www.reuters.com/article/newsOne/idUSL272497420080906

Wars are often started from perceptions....if you create the impression or if they perceive you are doing something....retaliation may occur regardless of the truth.

With our economy in shambles....is now the time to provoke???

Report this comment
#3) On September 06, 2008 at 4:01 PM, nuf2bdangrus (< 20) wrote:

Knowing what's true is one thing.  Understanding the market doesn't believe it keeps you from losing money, as I have lost.  Our mentality is ever that the bailout will come...fixing credit with more credit.  It's the only treatment they know.  Amazing how they have desroyed gold.  I have been burned shorting, and am short going into the weekend.....I'll probably be forced to cover...then again, I just may wait it out.

Report this comment
#4) On September 06, 2008 at 4:10 PM, alstry (35.42) wrote:

Gold is being destroyed because money is evaporating.  Gold can fall in value in dollar terms, but its buying power can increase.

Gold should be measured in ounces...not  dollars.

For example, an ounce of Gold today still buys more oil or corn then when they were all three at their peak.

Report this comment
#5) On September 06, 2008 at 4:47 PM, EScroogeJr (< 20) wrote:

"A million dollar house in a no money down low interest rate environment is a $200K house in a cash only world"

Exactly. That's why it should be illegal to buy houses with leverage. By shutting down every bank in the country we could stop this extortion of money from buyers. 

Report this comment
#6) On September 06, 2008 at 7:49 PM, 7iles (< 20) wrote:

So I take it you are not optimistic about the U.S. economy and capital markets?

 

Report this comment
#7) On September 06, 2008 at 7:49 PM, 7iles (< 20) wrote:

So I take it you are not optimistic about the U.S. economy and capital markets?

 

Report this comment

Featured Broker Partners


Advertisement