America - The Newest Third World Nation
By the Earl of Stirling
August 26th, 2008
http://eldib.wordpress.com/2008/08/26/america-the-newest/
The American economy, and with it the global economy, is being deliberately set up to collapse. One can look to the traditional sources of war, economic crisis, and revolution to find the cause behind the demise of America. The global international banking families fingerprints are all over the programmed fall of America. While they had their hands in the War of 1812, and the Civil War, blackmailed Wilson to get the US into the First World War, placed their puppet FDR in the White House to control (to their designs) the Great Depression and then to bate the Japanese to attack us to get American in the Second World War, the deliberate high treason committed on 9/11 by senior Bush/Cheney administration officials was a new low. We have now experienced almost seven years of wars based on this false flag operation and we are being led into yet another war with Iran (a nation with advanced biological strategic weapons of mass destruction that can kill a third of the world). Additionally the satanic US Vice-President is in Georgia preparing to push the Russians into the coming Third World War; a world war that with current 21st Century weapons will kill most of us.
We are currently witnessing the main stream news media’s massive coverage of the Democratic National Convention, with the follow-on coverage of the Republican National Convention in a couple of weeks. This coverage is designed to convince the American public that "their vote does count", that the American political system is working for them. This BS/hype is falling on more and more ‘deaf ears’ as more people turn to the alternative internet news sources for the truth. Americans have not forgotten that two years ago they elected a Democratic Congress to end the war in Iraq but instead the Democratic controlled Congress actually increased the funding for the war and the troop levels.
Saturday, August 30, 2008
Friday, August 29, 2008
Opportunities & Threats from the Paper Money Regime
Opportunities & Threats from the "Paper Money" Regime
by DeepCaster LLC, deepcaster.com
August 1, 2008
http://www.financialsense.com/fsu/editorials/deepcaster/2008/0801.html
The banks have begun falling, first Bear Stearns, then IndyMac, and Heritage... The Climacteric we forecast has begun.
The Threat of Systemic Collapse about which Deepcaster (and, increasingly, others) has written is also increasing.
First, in order to stave off the day or month or year of Reckoning (which, we reiterate, is coming mainly as a consequence of their dramatic monetary inflation and “easy credit” policies), the Fed-led Central Bankers Cartel* has created, and for the past several years has operated, an extraordinary “financial regime” built on increasing trillions of dollars (nearly $600 trillion as of December, 2007 - - see www.bis.org (path: statistics>derivatives>Table 19 and ff.) of OTC Derivatives available for the manipulation of major markets ranging from Precious Metals to Crude Oil and Energy, to Equities and Strategic Commodities (see Deepcaster’s July, 2008 Letter).
Second, The Cartel has developed a nefarious “End Game” plan which we describe below.
A most compelling conclusion from the foregoing is that The Cartel expects (and likely are even pushing) the U.S. Dollar to go into further and further decline, over the medium term, and to continue their other policies, until there is a “No-Salvation, No-Return Systemic Crisis.” (Very short-term, Deepcaster has earlier forecast the U.S. Dollar to “bounce” in the 3rd quarter of 2008 - - but that does not affect the fact that the primary long-term trend for the U.S. Dollar is down.)
by DeepCaster LLC, deepcaster.com
August 1, 2008
http://www.financialsense.com/fsu/editorials/deepcaster/2008/0801.html
The banks have begun falling, first Bear Stearns, then IndyMac, and Heritage... The Climacteric we forecast has begun.
The Threat of Systemic Collapse about which Deepcaster (and, increasingly, others) has written is also increasing.
First, in order to stave off the day or month or year of Reckoning (which, we reiterate, is coming mainly as a consequence of their dramatic monetary inflation and “easy credit” policies), the Fed-led Central Bankers Cartel* has created, and for the past several years has operated, an extraordinary “financial regime” built on increasing trillions of dollars (nearly $600 trillion as of December, 2007 - - see www.bis.org (path: statistics>derivatives>Table 19 and ff.) of OTC Derivatives available for the manipulation of major markets ranging from Precious Metals to Crude Oil and Energy, to Equities and Strategic Commodities (see Deepcaster’s July, 2008 Letter).
Second, The Cartel has developed a nefarious “End Game” plan which we describe below.
A most compelling conclusion from the foregoing is that The Cartel expects (and likely are even pushing) the U.S. Dollar to go into further and further decline, over the medium term, and to continue their other policies, until there is a “No-Salvation, No-Return Systemic Crisis.” (Very short-term, Deepcaster has earlier forecast the U.S. Dollar to “bounce” in the 3rd quarter of 2008 - - but that does not affect the fact that the primary long-term trend for the U.S. Dollar is down.)
That the U.S. economy (about 25% of the international economy) is headed in the direction of Serious Stagflation (a Kondratieff Winter) is pretty clear from the very credible shadowstats.com statistics. According to shadowstats, Real Consumer Price Inflation is running at nearly 12% a year, U.S. Unemployment at 14% a year and, the Money Supply Growth (M3) is increasing at nearly 16% a year or a doubling time of nearly 5 years, as we commented above.
Thursday, August 28, 2008
How Much Will Government Bailouts Actually Cost The American Taxpayer?
How Much Will Government Bailouts Actually Cost The American Taxpayer?
Richard Benson
Benson's Economic & Market Trends
August 11, 2008
http://www.financialsense.com/editorials/benson/2008/0811.html
What is this economic disaster going to cost the taxpayer? Let's try to add it up.
The Federal Reserve: Let's say the Fed gets stiffed for $10 billion, a modest sum. That translates into $10 billion less in profits from the Fed to send the US Treasury, and $10 billion more for the taxpayer to pay.
Student Loans: We estimate that several hundred billion of student loans are outstanding, and the average debt per student is $20,000. Conservatively, put the cost down at $20 billion.
Pension Benefit Guarantee Corporation: This government agency insures $2.5 trillion in Defined Benefit obligations. The PBGC covers 30,000 business plans and 44 million workers. The PBGC charges an insurance fee and has $55 billion in assets. Let's put the cost to the taxpayer at a conservative $30 billion.
Federal Housing Administration: The FHA has given insured single-family mortgages to about five million people and 17 percent (or one in six) are delinquent. These catastrophic losses represent the worst of "cash for trash" lending that is crushing financial institutions in subprime. Conservative cost is $20 billion.
Small Business Administration: At the end on 2007, the balance of these SBA loans totaled $235 billion, with cumulative losses of about six percent. But don’t let history of only 6 percent losses fool you. As the economy turns down, many of the businesses with SBA loans will fail. For now, let's put this bill at a $20 billion loss.
Federal Home Loan Banks: The FHLB has over $1 trillion in assets, but what are these assets really worth? Well, a lot of mortgages that went into the collateral are Alt-A loans (interest only, no income verification, principal deferred). The real challenge, though, will be between the FHLB and FDIC as they fight to determine who gets stuck with the losses when the banks, thrifts, and credit unions fail. Either way, we’ll foot the bill. Let's put this one down for $50 billion, which is only five percent of the assets of the FHLB.
Federal Deposit Insurance Corporation: Even if a large portion of the bad single-family mortgage debt can be pushed back into the FHLB or over to Fannie Freddie, total losses on construction, commercial properties and consumer loans will easily cost the FDIC, and therefore the US taxpayer, $100 billion. If the government encourages people not to pay their mortgages and live rent free at our expense, we’ll need to increase the expected FDIC bill to the American taxpayer to $150 billion.
Fannie Mae and Freddie Mac: With a record number of homeowners considering whether to live free for 300 days by skipping their mortgage payments, imagine the cash gap that will open up between the cash that comes into Fannie & Freddie from mortgage payments, and the cash that must go out to cover the GSE security payments. For the government, it is more important to spread the losses into the future than to minimize them. Losses on defaulted mortgage loans at the GSEs will be horrible. Put the bailout cost at $300 billion.
Richard Benson
Benson's Economic & Market Trends
August 11, 2008
http://www.financialsense.com/editorials/benson/2008/0811.html
What is this economic disaster going to cost the taxpayer? Let's try to add it up.
The Federal Reserve: Let's say the Fed gets stiffed for $10 billion, a modest sum. That translates into $10 billion less in profits from the Fed to send the US Treasury, and $10 billion more for the taxpayer to pay.
Student Loans: We estimate that several hundred billion of student loans are outstanding, and the average debt per student is $20,000. Conservatively, put the cost down at $20 billion.
Pension Benefit Guarantee Corporation: This government agency insures $2.5 trillion in Defined Benefit obligations. The PBGC covers 30,000 business plans and 44 million workers. The PBGC charges an insurance fee and has $55 billion in assets. Let's put the cost to the taxpayer at a conservative $30 billion.
Federal Housing Administration: The FHA has given insured single-family mortgages to about five million people and 17 percent (or one in six) are delinquent. These catastrophic losses represent the worst of "cash for trash" lending that is crushing financial institutions in subprime. Conservative cost is $20 billion.
Small Business Administration: At the end on 2007, the balance of these SBA loans totaled $235 billion, with cumulative losses of about six percent. But don’t let history of only 6 percent losses fool you. As the economy turns down, many of the businesses with SBA loans will fail. For now, let's put this bill at a $20 billion loss.
Federal Home Loan Banks: The FHLB has over $1 trillion in assets, but what are these assets really worth? Well, a lot of mortgages that went into the collateral are Alt-A loans (interest only, no income verification, principal deferred). The real challenge, though, will be between the FHLB and FDIC as they fight to determine who gets stuck with the losses when the banks, thrifts, and credit unions fail. Either way, we’ll foot the bill. Let's put this one down for $50 billion, which is only five percent of the assets of the FHLB.
Federal Deposit Insurance Corporation: Even if a large portion of the bad single-family mortgage debt can be pushed back into the FHLB or over to Fannie Freddie, total losses on construction, commercial properties and consumer loans will easily cost the FDIC, and therefore the US taxpayer, $100 billion. If the government encourages people not to pay their mortgages and live rent free at our expense, we’ll need to increase the expected FDIC bill to the American taxpayer to $150 billion.
Fannie Mae and Freddie Mac: With a record number of homeowners considering whether to live free for 300 days by skipping their mortgage payments, imagine the cash gap that will open up between the cash that comes into Fannie & Freddie from mortgage payments, and the cash that must go out to cover the GSE security payments. For the government, it is more important to spread the losses into the future than to minimize them. Losses on defaulted mortgage loans at the GSEs will be horrible. Put the bailout cost at $300 billion.
Wednesday, August 27, 2008
The new carry trade
‘Stead LBO, SWF: The new carry trade
Financial Times
Aug 21, 2008
http://ftalphaville.ft.com/blog/2008/08/21/15269/
stead-lbo-swf-the-new-carry-trade/
The oil-rich sovereign wealth funds have it good, if we didn’t already know that. Citigroup’s Robert Buckland reinforces the idea in his latest Global Equity Strategy note to clients, in which he claims a new carry trade - with SWFs poised to be prime beneficiaries:
Just as the equity market looked cheap to anybody who could source capital from the debt markets between 2003 and 2007, now it looks cheap to anybody who can source capital from the oil market. And just as markets missed the point about private equity - they could afford to pay higher prices for assets given their access to cheap debt capital - maybe they are now missing the point about oil-rich investors. Most financial assets looks cheap when your source of capital is oil at over $100 a barrel.
The re-rating of global equities against oil over the past year has been just as significant as the re-rating of debt against equity that kicked off the de-equitisation trade. A combination of rising oil and falling share prices means that a barrel of oil will now buy enough equities to deliver $8 of corporate earnings per year (we divide the oil price by the market PE to calculate this), way up from the $5 that it would have bought a year ago.
Financial Times
Aug 21, 2008
http://ftalphaville.ft.com/blog/2008/08/21/15269/
stead-lbo-swf-the-new-carry-trade/
The oil-rich sovereign wealth funds have it good, if we didn’t already know that. Citigroup’s Robert Buckland reinforces the idea in his latest Global Equity Strategy note to clients, in which he claims a new carry trade - with SWFs poised to be prime beneficiaries:
Just as the equity market looked cheap to anybody who could source capital from the debt markets between 2003 and 2007, now it looks cheap to anybody who can source capital from the oil market. And just as markets missed the point about private equity - they could afford to pay higher prices for assets given their access to cheap debt capital - maybe they are now missing the point about oil-rich investors. Most financial assets looks cheap when your source of capital is oil at over $100 a barrel.
The re-rating of global equities against oil over the past year has been just as significant as the re-rating of debt against equity that kicked off the de-equitisation trade. A combination of rising oil and falling share prices means that a barrel of oil will now buy enough equities to deliver $8 of corporate earnings per year (we divide the oil price by the market PE to calculate this), way up from the $5 that it would have bought a year ago.
Tuesday, August 26, 2008
Ten Financial Entities On The Brink
Ten Financial Entities On The Brink
Mike Shedlock
Mish's Global Economic Trend Analysis
August 22, 2008
http://globaleconomicanalysis.blogspot.com/
2008/08/ten-financial-entities-on-brink.html
Lehman (LEH)
Washington Mutual (WM)
Fannie Mae (FNM)
Freddie Mac (FRE)
Corus Bank (CORS)
BankUnited (BKUNA)
Downey Savings (DSL)
Wachovia (WB)
Regions Financial (RF)
MBIA (MBI)
Ambac (ABK)
On account of deflation, I had to throw in a bonus 11th. Everyone wants more for their money these days, even when things like this are free.
I am quite sure there are many more deserving candidates that should be on the list. An excellent case can be made for Ford (F) and GM. They are really not manufacturing companies but rather financial lending disasters.
The key here is there is virtually no chance the Fed can save them all, or even most of them. The list is simply Too Big To Bail.
Mike Shedlock
Mish's Global Economic Trend Analysis
August 22, 2008
http://globaleconomicanalysis.blogspot.com/
2008/08/ten-financial-entities-on-brink.html
Lehman (LEH)
Washington Mutual (WM)
Fannie Mae (FNM)
Freddie Mac (FRE)
Corus Bank (CORS)
BankUnited (BKUNA)
Downey Savings (DSL)
Wachovia (WB)
Regions Financial (RF)
MBIA (MBI)
Ambac (ABK)
On account of deflation, I had to throw in a bonus 11th. Everyone wants more for their money these days, even when things like this are free.
I am quite sure there are many more deserving candidates that should be on the list. An excellent case can be made for Ford (F) and GM. They are really not manufacturing companies but rather financial lending disasters.
The key here is there is virtually no chance the Fed can save them all, or even most of them. The list is simply Too Big To Bail.
Monday, August 25, 2008
Best Quotes of July 2008
Best Quotes of July 2008
by John Rubino
DollarCollapse.com
8/4/2008
http://www.dollarcollapse.com/iNP/view.asp?ID=71
Frank Barbera, Financial Sense
... An accident is at hand ...
U.S. Senator Jim Bunning, addressing Ben Bernanke and Hank Paulson
... Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk ...
Ted Butler, Investment Rarities
... the removal or resolution of the silver short position threatens the very existence of the silver market ...
Richard Daughty, the Mogambo Guru
... even now, the one-month lease rate for gold is zero, and is staying at zero! Borrow gold at an interest rate of zero!...
Ambrose Evans- Pritchard, Telegraph UK
... It feels like the summer of 1931 ... True "mean-reversion" would imply debt deflation on such a scale that would, if abrupt, threaten democracy ... China, India, East Europe and emerging Asia have all stolen growth from the future by condoning credit excess ...
Bill Fleckenstein, Fleckenstein Capital
... Behind the scenes, many parts of the credit/mortgage market were "offered only," with no buyers in sight for troubled loans ...
David Galland, Casey Research
... At this point, our bet remains that the Feds will go to default mode which means cranking up the printing presses into the red zone ...
Peter Grandich, Grandich Letter
... As unimaginable as it seems, we could be in just the first half of the worst stock market decline in all of history ...
Eric Janszen, iTulip
... In the Internet age the inflation meme will spread like wildfire driving precious metals hoarding behavior like nothing before ...
James Howard Kunstler
... These conditions will now get a lot worse, no matter whether the banks continue to conceal their problems. All of it leads to an inflection point that coincides with the November election ...
Doug Noland, Prudent Bear
... we expect the unfolding economic adjustment to be of such a magnitude as to be classified as an economic depression...
when one considers the scope of derivative strategies that incorporate "delta hedging" trading dynamics where the amount of selling/shorting increases as the market declines (systemic risk increases), one recognizes the possibility of a marketplace dislocation along the lines - but significantly more systemic - than the portfolio insurance fiasco that fueled the 1987 stock market crash...
Ron Paul, Texas Congressman
... Some argue that giving dictatorial powers to the President, just as we have allowed him to run the American empire, is what we should do. That’s the great danger, and in this post-911 atmosphere, too many Americans are seeking safety over freedom ...
Nouriel Roubini, RGE Monitor
... the time for such independent broker dealers is now gone as, given their wholesale overnight funding - they are subject to bank-like runs much more severe than for banks ... if we fiscalize all of these losses the U.S. may fast lose its AAA sovereign debt rating and eventually end up like an insolvent banana republic ...
Steve Saville, Speculative Investor
... In fact, for a politician to be successful it is almost a prerequisite that he/she be prepared to make full use of the inflation tool to garner votes ...
Peter Schiff, EuroPacific Capital
... The grim reality is that trillions of dollars were borrowed and spent that will never be repaid. No government program can alter that fact. Someone is going to have to pay the piper for all those granite counter tops and plasma TVs ...
Darryl Robert Schoon, SurviveTheCrisis.com
... No economy, however, no matter how strong initially, can out run the constantly compounding debt of credit-based money, not even the United States ...
Mike Shedlock, Mish’s Global Economic Trend Analysis
... The credit crunch is not only pervasive, it has now reached critical mass where it will start feeding on itself. The Fed is powerless to stop it ...
James Turk, Freemarket Gold and Money Report
... I am therefore now prepared to say that gold will never again go back below $850. Gold is just too cheap and the dollar is being inflated away too rapidly for their exchange rate (what we call the "gold price") to ever again return to that level, regardless of the determined efforts of the gold cartel to cap gold’s price ...
Christopher Whalen, Institutional Risk Analyst
... The implosion of houses such as Bear, Stearns, LEH and, yes, eventually even Goldman Sachs suggests that this pure "agent" institutional dealer business model may be doomed ... Indeed, many of the systemic, market structure issues upon which we harp endlessly call into question entire business models in the financial sector ...
Jim Willie, Golden Jackass
... We are witnessing the destruction of the US financial foundation to its very core, with most of its appendages wrecked as well ...
by John Rubino
DollarCollapse.com
8/4/2008
http://www.dollarcollapse.com/iNP/view.asp?ID=71
Frank Barbera, Financial Sense
... An accident is at hand ...
U.S. Senator Jim Bunning, addressing Ben Bernanke and Hank Paulson
... Now the Fed wants to be the systemic risk regulator. But the Fed is the systemic risk ...
Ted Butler, Investment Rarities
... the removal or resolution of the silver short position threatens the very existence of the silver market ...
Richard Daughty, the Mogambo Guru
... even now, the one-month lease rate for gold is zero, and is staying at zero! Borrow gold at an interest rate of zero!...
Ambrose Evans- Pritchard, Telegraph UK
... It feels like the summer of 1931 ... True "mean-reversion" would imply debt deflation on such a scale that would, if abrupt, threaten democracy ... China, India, East Europe and emerging Asia have all stolen growth from the future by condoning credit excess ...
Bill Fleckenstein, Fleckenstein Capital
... Behind the scenes, many parts of the credit/mortgage market were "offered only," with no buyers in sight for troubled loans ...
David Galland, Casey Research
... At this point, our bet remains that the Feds will go to default mode which means cranking up the printing presses into the red zone ...
Peter Grandich, Grandich Letter
... As unimaginable as it seems, we could be in just the first half of the worst stock market decline in all of history ...
Eric Janszen, iTulip
... In the Internet age the inflation meme will spread like wildfire driving precious metals hoarding behavior like nothing before ...
James Howard Kunstler
... These conditions will now get a lot worse, no matter whether the banks continue to conceal their problems. All of it leads to an inflection point that coincides with the November election ...
Doug Noland, Prudent Bear
... we expect the unfolding economic adjustment to be of such a magnitude as to be classified as an economic depression...
when one considers the scope of derivative strategies that incorporate "delta hedging" trading dynamics where the amount of selling/shorting increases as the market declines (systemic risk increases), one recognizes the possibility of a marketplace dislocation along the lines - but significantly more systemic - than the portfolio insurance fiasco that fueled the 1987 stock market crash...
Ron Paul, Texas Congressman
... Some argue that giving dictatorial powers to the President, just as we have allowed him to run the American empire, is what we should do. That’s the great danger, and in this post-911 atmosphere, too many Americans are seeking safety over freedom ...
Nouriel Roubini, RGE Monitor
... the time for such independent broker dealers is now gone as, given their wholesale overnight funding - they are subject to bank-like runs much more severe than for banks ... if we fiscalize all of these losses the U.S. may fast lose its AAA sovereign debt rating and eventually end up like an insolvent banana republic ...
Steve Saville, Speculative Investor
... In fact, for a politician to be successful it is almost a prerequisite that he/she be prepared to make full use of the inflation tool to garner votes ...
Peter Schiff, EuroPacific Capital
... The grim reality is that trillions of dollars were borrowed and spent that will never be repaid. No government program can alter that fact. Someone is going to have to pay the piper for all those granite counter tops and plasma TVs ...
Darryl Robert Schoon, SurviveTheCrisis.com
... No economy, however, no matter how strong initially, can out run the constantly compounding debt of credit-based money, not even the United States ...
Mike Shedlock, Mish’s Global Economic Trend Analysis
... The credit crunch is not only pervasive, it has now reached critical mass where it will start feeding on itself. The Fed is powerless to stop it ...
James Turk, Freemarket Gold and Money Report
... I am therefore now prepared to say that gold will never again go back below $850. Gold is just too cheap and the dollar is being inflated away too rapidly for their exchange rate (what we call the "gold price") to ever again return to that level, regardless of the determined efforts of the gold cartel to cap gold’s price ...
Christopher Whalen, Institutional Risk Analyst
... The implosion of houses such as Bear, Stearns, LEH and, yes, eventually even Goldman Sachs suggests that this pure "agent" institutional dealer business model may be doomed ... Indeed, many of the systemic, market structure issues upon which we harp endlessly call into question entire business models in the financial sector ...
Jim Willie, Golden Jackass
... We are witnessing the destruction of the US financial foundation to its very core, with most of its appendages wrecked as well ...
Sunday, August 24, 2008
The Greatest Transfer of Wealth in History
The Greatest Transfer of Wealth in History
Bob Moriarty
321energy
August 10, 2008
http://321energy.com/editorials/moriarty/moriarty081008.html
I’ve made it clear for a year that I believe we have entered what will be the most serious depression in history. It also will involve the greatest transfer of wealth in history.
There are two basic classes of assets. There are paper assets and real assets. An ounce of gold is a real asset. A copper mine is a real asset. A house is a real asset. An oil field is a real asset.
Over the counter derivatives now total over $596 trillion dollars, (click here [pdf]) ten times the size of the world economy. Those are paper assets, their value is derived from some other asset. That derivative size is what is going to destroy the world’s financial system, it’s all fraud.
A mortgage is a paper asset. A T-Bill or T-Bond is a paper asset. A $100 bill is a paper asset. It’s pretty easy to see that a $500,000 mortgage on a house now worth $250,000 isn’t worth very much. Latest figures show 9.6 million homes in the US have negative equity. How many of those loans are going to be paid back?
According to an ex-Fed Director, both Fannie Mae and Freddie Mac are bankrupt. They were leveraged 65-1. For those comforted by the thought of the FDIC bailing you out should the banking system fail entirely, you need to realize the FDIC is leveraged at 130-1. We are told that the collapse of Washington Mutual alone could bankrupt the FDIC.
In a depression, no real assets appear or disappear. Paper assets, on the other hand, turn to vapor. But the ownership of real assets will change as the real assets move from weak hands into strong hands.
Bob Moriarty
321energy
August 10, 2008
http://321energy.com/editorials/moriarty/moriarty081008.html
I’ve made it clear for a year that I believe we have entered what will be the most serious depression in history. It also will involve the greatest transfer of wealth in history.
There are two basic classes of assets. There are paper assets and real assets. An ounce of gold is a real asset. A copper mine is a real asset. A house is a real asset. An oil field is a real asset.
Over the counter derivatives now total over $596 trillion dollars, (click here [pdf]) ten times the size of the world economy. Those are paper assets, their value is derived from some other asset. That derivative size is what is going to destroy the world’s financial system, it’s all fraud.
A mortgage is a paper asset. A T-Bill or T-Bond is a paper asset. A $100 bill is a paper asset. It’s pretty easy to see that a $500,000 mortgage on a house now worth $250,000 isn’t worth very much. Latest figures show 9.6 million homes in the US have negative equity. How many of those loans are going to be paid back?
According to an ex-Fed Director, both Fannie Mae and Freddie Mac are bankrupt. They were leveraged 65-1. For those comforted by the thought of the FDIC bailing you out should the banking system fail entirely, you need to realize the FDIC is leveraged at 130-1. We are told that the collapse of Washington Mutual alone could bankrupt the FDIC.
In a depression, no real assets appear or disappear. Paper assets, on the other hand, turn to vapor. But the ownership of real assets will change as the real assets move from weak hands into strong hands.
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