Sunday, October 05, 2008
What's happening NOW
WHATS HAPPENING :
The VALUE of your ASSETS is FALLING
your HOME 20 % across the board
your VEHICLE 50 % in some cases
your INVESTMENTS this year to Sept 26
12 % (TSE) 17 % (NYSE)
Air Canada 54 % , Abitibi 75 %, General Electric 32 %
Bank America 11% ,Citigroup 32 %, RIM 37 %this week
The SIZE of your DEBTS is RISING
Mortgage monthly --------- Car payments ---------- Credit cards ----------
The grand ? TOTAL 2,587,427,300,000 U.S. Consumer Debt
This total is rising, moment by moment. Is yours ?
Have your favourite investments gone up ? This year ? Tim Hortons -13 %, Sears -31%, Yellow Pages -30% Canadian Tire -33%, Maple Leaf -40%,Imperial Oil -15%
Oh, you invested as you were told to ? MUTUAL FUNDS Heres a dozen examples down 24 to 31% (MERs of 2.5 % !) WHAT TO EXPECT
LIES and REASSURANCES
and , an ELECTION CIRCUS to ENTERTAIN and DISTRACT
*** DISTRACT OUR ATTENTION from what is Happening ***************************
THE REICHSTAG IS BURNING and THE BARBARIANS are STORMING the VAULT !!!!!
The Vault is the value of our money
The Barbarians are the BANKSTERS
Some NUMBERS : Do Not let your brain fog over !
In January of 2008, the European Central Bank (ECB) dumped
half a TRILLION into the global money system. Since then
the North American counterparts have done the same.
In the week just ended Oct 3rd, the FED ( US central bank privately
owned since 1913) provided a further half TRILLION.
The breakdown was as follows: to commercial banks $222.5 billion Investment firms 147.7 Money market funds 122.1 Am. Insurance. Genl. 61.3 --------- $ 453.6 billion
Oh, I didnt mention the $ 700 billion bailout of Wall Street by Main Street, OKd by Congress. As someone said : ya gotta dance with who brung you.
Can we visualize a TRILLION ? Lets try. We read that it consists of a unitary digit a 1, followed by 12 zeros. 1,000,000,000,000. A billion has 3 fewer zeros. And a million has only 6 zeros.
A friend who is competent with arithmetic tells me that a stack of $100 bills 4 ½ inches high would equal ONE million dollars. Then, a billion would be 1000 times that 4500 inches or 375 feet. Next, a TRILLION would be 1000 times that 375,000 feet. Since there are 5280 feet in a mile, thats 71 miles or 114 kilometres.
There we have it TRILLION dollars is a stack of 100s into the strato- sphere TEN times further than airliners fly.!!!,!!!,!!!,!!!,...,...,...,...
Why is it important to understand what this number means ? 1. Joseph Stiglitz , Nobel prize winning economist, has calculated the cost of the Iraq war to be THREE trillion dollars. 2. The value of the mortgages insured by Fanny Mae and Freddy Mac (half of all residential mortgages in the U.S.) is 5.3 trillion dollars. They own another 2 trillion. These private insurer obligations were taken over by the U.S. taxpayers last month. 3. Toxic debt obligations abound. These include Collateralized Debt (CDOs) backed by sub-prime mortgages, auto loans and credit card debt.
The latter amounts to just about $1 trillion the response to 8 billion solicitations from financial institutions annually. Other exotic- yet- toxic credit securities are SIVs (structured investment vehicles), CDS (credit default swaps) and derivatives galore. These debts amount to HUNDREDS of trillions of dollars. The bottom line (punch line really) is : No one knows what these debt items are really worth ! No market exists, and the bankers and banksters have quit trusting each others estimates of value.
These obligations will not ever be paid. The asset collateral consists of AIR very thin air. For example, the CDOs are slices of credit card debt, vehicle loans and residential mortgages infested with fraud and given phony credit ratings.
The hope and plan of the creators and holders of these kinds of obligations (banksters, bankers and investors) is that a greater fool will remove these from their balance sheets and that they will receive the face value of the obligation. What greater fool than the taxpaying public ? Indeed, this is exactly what has been arranged for. This is exactly what has just taken place in the USA. The gigantic shell game has been an attempt (largely successful) to obscure the real value of these credit instruments and fob them off on unsuspecting greater fools.
Note : The banking system of the world is largely un-regulated on behalf of the public interest. Self-regulation has translated into either none or regulation ONLY in the interest of the banking institutions themselves.
Exceptions : Where fraud (usually called mis-representation) is successfully prosecuted, the offenders are sometimes fined and sometimes forced to make whole the victims. The Attorney Generals of New York State have accomplished this recently. Spitzer levied $billion fines and Cuomo forced Citigroup, Merrill Lynch and UBS to return the $30 billion they had taken from 150,000 investors. Au contraire in Canada. Our central bank owned by all Canadians since 1935 has had their operating rules changed mightily, and by the present government in Ottawa. Instead of being required to lend only overnight to chartered banks with ideal collateral, the Bank of Canada can now lend for long periods by accepting questionable collateral. Presto ! The ABCP (Asset-Backed Commercial Paper) that has been stalled in the system since August of 2007 can be exchanged for new money, taking the creators and holders of this collateral off-the-hook. I believe there is about $33 billion of this frozen commercial paper.
What happens when a currency is trashed ? Simply put, the money newly created that does nothing to produce any goods or services deflates the value of all the money outstanding. Thus, the value of every unit of that currency FALLS.
This IS what is happening to the value of money GLOBALLY.
How best to prepare oneself for this ? The subject of a further post.
What ought to happen to correct these gigantic financial crimes ? The subject of a still further post.