Daily Pill
Sigh... We're screwed
Well, here it is in a nutshell...
The economy is at a turning point. We've already headed 700 Billion dollars down the wrong road and the reality is that (unfortunately) I think we're headed even farther down the same road. It's scary as hell when the Fed can print it's own money and basically buy out private companies for pennies on the dollar with that "printed" money (really it's just a couple dozen keystrokes on a computer at this point), but it's Armageddon for the economy when we try to make something that has no value into an asset. Major investment firms and banks were caught with their pants down around their ankles and now we're seriously considering giving them the ability to clean house and scrub records so they can continue to make more money.
Is it in our best interests for us to borrow money from the Fed (the one that owns the printing presses) to bail out our banking system? We're basically giving our tax dollars directly to the private banks now whether you own a home or not. The debt we now owe to the Fed will be coming out of our paychecks in one form or another from this day forward. I for one don't like the idea of working and paying taxes to make the funny money they are currently printing for free turn into an asset for them.
Home mortgages are not the biggest issue here. The IOU's from the government are. The dollars that you and I carry in our wallets are about to become a lot less valuable. Unfortunately it's all about killing time and placating people so that those that already have plenty of money will have much much more... If the stock market rebounds, it will be just long enough for the backroom deals to happen and make things much worse. The number of CEOs that resigned in 2007 & 2008 and cashed out their stock options and severance packages is astounding to me. The take for these CEO's appears to be between 15-50 million dollars each. That money came from your invenstments.
Now we're talking about 700 billion more in bail outs to "stabilize the economy". The reality is that you can't borrow more money to solve a massive debt problem. It seems that basic concept is completely lost at this point. They're going to say that the american people will get this money back as the problem clears up and business returns to normal and that the bad debt will sometime down the road magically turn into profit. That is EXACTLY what got us into this mess in the first place - banks sold bad debt to investors as good debt. Debt is debt - it's not the same as profit because it doesn't exist as an asset yet... The profit doesn't arrive until the debt is fully paid - and then we're just back at zero, yet we bought and sold debt as if it were an asset already. Worse than that, the debt was created with printed money in the first place - the banks didn't have the money that they loaned out - they didn't even have a small percentage of the money they loaned out - they borrowed it through debt and called it an asset. So, we all finally realized that there is absolutely no real asset backing up all of this debt and we're seeing the results...
Why would anyone believe that buying up all of this bad debt with even more printed money would make the debt less toxic? How is printing more money backed by debt going to solve the debt problem? We don't have 700 billion dollars to bail out the financial institutions. We have to borrow that money from somewhere (or borrow against something of value). China, India and the other world investors are not all that keen on what is going on right now. We're printing money like there is no tomorrow (for the war, for the economy, etc.) and that money is not backed by anything, so it's just devaluing the already weakening dollar. Remember when the Canadian dollar PASSED the US Dollar in value? That was a crystal clear mile marker over a year ago that we were headed in the wrong direction.
When the value of the dollar goes down it is EXACTLY the same as someone reaching into your bank account, 401K, investment portfolio, wallet, cash box or coffee can (anywhere your dollars are) and removing a portion of your wealth. Your savings that you earned and paid taxes on is slowly being taken away from you a few pennies on the dollar at a time - to the tune of nearly 9% per year for the past 7 years. It's only because the rest of the world economy is also being watered down with funny money in the same fasion that we don't see the true speed with which our dollars are shrinking over time.
The economy is at a turning point. We've already headed 700 Billion dollars down the wrong road and the reality is that (unfortunately) I think we're headed even farther down the same road. It's scary as hell when the Fed can print it's own money and basically buy out private companies for pennies on the dollar with that "printed" money (really it's just a couple dozen keystrokes on a computer at this point), but it's Armageddon for the economy when we try to make something that has no value into an asset. Major investment firms and banks were caught with their pants down around their ankles and now we're seriously considering giving them the ability to clean house and scrub records so they can continue to make more money.
Is it in our best interests for us to borrow money from the Fed (the one that owns the printing presses) to bail out our banking system? We're basically giving our tax dollars directly to the private banks now whether you own a home or not. The debt we now owe to the Fed will be coming out of our paychecks in one form or another from this day forward. I for one don't like the idea of working and paying taxes to make the funny money they are currently printing for free turn into an asset for them.
Home mortgages are not the biggest issue here. The IOU's from the government are. The dollars that you and I carry in our wallets are about to become a lot less valuable. Unfortunately it's all about killing time and placating people so that those that already have plenty of money will have much much more... If the stock market rebounds, it will be just long enough for the backroom deals to happen and make things much worse. The number of CEOs that resigned in 2007 & 2008 and cashed out their stock options and severance packages is astounding to me. The take for these CEO's appears to be between 15-50 million dollars each. That money came from your invenstments.
Now we're talking about 700 billion more in bail outs to "stabilize the economy". The reality is that you can't borrow more money to solve a massive debt problem. It seems that basic concept is completely lost at this point. They're going to say that the american people will get this money back as the problem clears up and business returns to normal and that the bad debt will sometime down the road magically turn into profit. That is EXACTLY what got us into this mess in the first place - banks sold bad debt to investors as good debt. Debt is debt - it's not the same as profit because it doesn't exist as an asset yet... The profit doesn't arrive until the debt is fully paid - and then we're just back at zero, yet we bought and sold debt as if it were an asset already. Worse than that, the debt was created with printed money in the first place - the banks didn't have the money that they loaned out - they didn't even have a small percentage of the money they loaned out - they borrowed it through debt and called it an asset. So, we all finally realized that there is absolutely no real asset backing up all of this debt and we're seeing the results...
Why would anyone believe that buying up all of this bad debt with even more printed money would make the debt less toxic? How is printing more money backed by debt going to solve the debt problem? We don't have 700 billion dollars to bail out the financial institutions. We have to borrow that money from somewhere (or borrow against something of value). China, India and the other world investors are not all that keen on what is going on right now. We're printing money like there is no tomorrow (for the war, for the economy, etc.) and that money is not backed by anything, so it's just devaluing the already weakening dollar. Remember when the Canadian dollar PASSED the US Dollar in value? That was a crystal clear mile marker over a year ago that we were headed in the wrong direction.
When the value of the dollar goes down it is EXACTLY the same as someone reaching into your bank account, 401K, investment portfolio, wallet, cash box or coffee can (anywhere your dollars are) and removing a portion of your wealth. Your savings that you earned and paid taxes on is slowly being taken away from you a few pennies on the dollar at a time - to the tune of nearly 9% per year for the past 7 years. It's only because the rest of the world economy is also being watered down with funny money in the same fasion that we don't see the true speed with which our dollars are shrinking over time.
posted by VirP at
6:26 PM
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