Posted on 09/01/2011 9:01:59 PM PDT by blam
So, how are Canada and Switzerland doing?
US Preparing To Sue Banks For Billions Over Misrepresenting Safety Of Mortgage Securities
BMFL
I’m sure they are, blam. The New world Order cannot be implemented as long as the USA is strong and soverign.
bookmark
If we could just make it legal to merely hang ‘dead beats’ from the nearest lamp post the banks wouldn’t be in any trouble at all.
Only if we hang the politcians, banksters and loan agents who went along with Clinton’s and Rubin’s scheme to give unqualified people loans for quota “equality”, along with the dead beats.
If that were your goal, the first people to hang would be the bankers... and then the politicians.
.
Republicans and Democrats both. Then the bankers and lawyers.
First is the fact that Freddie and Fannie are not billions in debt, but trillions. They will be fine as long as they are allowed to dribble their problems out for a few years hoping the housing market will improve to the point the collateral will recover to the mortgage debt level. If we have another financial shock or sink into deeper recession, well, a few billion of tax dollars per quarter won't float the boat anymore. Oh yeah, the big banks are in similar shape. Just for instance, BAC has about $800 billion in deposits. If they go under because their debt is called, the FDIC will immediately, without a Congress vote,( I've heard some people say their won't be anymore bail outs, yeah right), have to cover about a $trillion in another broken bank. Does anyone believe BAC is the only one?
Second is the interest rate. We have fought valiantly to keep the 10 year low. The interest rate on the debt right now is around $250 billion-$500 billion a year, depending on how long they finance it for. They are about to move short term rates out to the 10 and 30 year level to keep the can kicked way down the road. No one, and I mean NO ONE, even mentions what happens when the interest rate goes up. For what ever reason, we somehow believe we can control the interest rate on the bonds forever. Just ask a person what sets the interest rate on a bond without hinting why you are asking and they will tell you the bond rate must be higher if you need to raise money in a competitive market. As the risk grows, so does the interest demanded by the buyers. As we see in Greece right now, you could get 60% on a bond if they ever paid it back. In the past, when interest reached above 25% or more, a default was most likely in the cards in the near future. It is an admission you are in trouble and REALLY need the money to pay those rates. Generally you print counterfeit money to pay your unpayable debts back with worthless money which generally pisses off the bond holder sometimes even leading to war.
No just imagine if we suddenly see interest rates rise in a non orderly fashion. The confidence is lost and the spiral begins and interest rates explode. If interest rates went to say, 6%-8%, or so, our debt would rise several trillion dollars over night. America would be over way before the 23% level we reached in the Carter years. We have a $14 trillion debt right now with a $1.6 trillion deficit. The deficit would rise to several trillion per year instead of 1.6 trillion overnight. Would you really believe we would ever pay that back? Would you even want to? Revolution time and a new currency would ensue.
We are balanced on a knife edge with a Keynesian throwing rocks at you and swinging a baseball bat at your head and we just go to work every day figuring the next election will fix everything. We may not have another 5 hours, let alone 5 days or 5 months. If the money people go on strike on American bonds, the the only thing left is Bernanke printing money to pay our debts...........
Oh yeah, he's already doing that.
Didn’t Bill Gross already lose his butt betting big that rates would rise?
Got gold?
I thought he bet just a few percent of his portfolio. I could be wrong, though. I am expecting a crash imminently, during which bonds will rise even more, but then selling bonds will be the “trade of the century”.
Yes, but what does that have to do with free capitalism? He actually bet against Bernanke and lost. At some point, the Fed will run out of ink and the market will set the rates. Bernanke can keep fiddling for awhile, but eventually, someone will stop him from completely destroying the dollar. In a market system, reality always wins in the end.
The point of my post was that at some point, bond buyers will dry up. ( as of 6 months ago, they basically already have. Bernanke has been the largest buyer with QE2). If Bernanke goes ahead with QE3, then the rates will still remain low for awhile longer. There will come a day, however, when you least expect it, that the old idiom "It's never been like this before" will finally be realized. At that point, interest rates will go parabolic. Gold will go parabolic. Stocks will fall off a cliff, no matter what the company's bottom line is.
Someone at some point is going to look at $14trillion in debt now and another $3 trillion was just added in the debt ceiling, and they will say "To hell with this", and just bail out. The market will act as a free market then. Bonds will be offered and there will be no buyers even with a 50% interest rate.
Yes, but what does that have to do with free capitalism? He actually bet against Bernanke and lost. At some point, the Fed will run out of ink and the market will set the rates. Bernanke can keep fiddling for awhile, but eventually, someone will stop him from completely destroying the dollar. In a market system, reality always wins in the end.
The point of my post was that at some point, bond buyers will dry up. ( as of 6 months ago, they basically already have. Bernanke has been the largest buyer with QE2). If Bernanke goes ahead with QE3, then the rates will still remain low for awhile longer. There will come a day, however, when you least expect it, that the old idiom "It's never been like this before" will finally be realized. At that point, interest rates will go parabolic. Gold will go parabolic. Stocks will fall off a cliff, no matter what the company's bottom line is.
Someone at some point is going to look at $14trillion in debt now and another $3 trillion was just added in the debt ceiling, and they will say "To hell with this", and just bail out. The market will act as a free market then. Bonds will be offered and there will be no buyers even with a 50% interest rate.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.