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This isn’t going to be a class war. That is not going to describe what it is that will happen as a result of all this. For every dollar that the US government puts in to “solve” these problems by bailing out these greedy short-sighted, profiteering companies, investment houses, insurance businesses and others, that dollar meant a sacrifice of something a family did without, an hour worked, a vacation not taken, a house going into foreclosure, a car payment not made so that those taxes could be paid. It wasn’t free money then and it damn sure isn’t free money now.
But our government gives hundreds of billions of dollars to these companies that gambled, played games with investor’s moneys, made poor and in some cases criminal choices, created confidence schemes for profit at the expense of everyone else, extended themselves without any reasonable level of resources to back up their “plays” and generally, have run our country, our economy and our government slap into the ground along with their companies’ profitability. What kind of USA is it that has allowed this to happen, has encouraged it, has failed to regulate it, has essentially allowed a counterfeit currency to be developed and spread throughout our financial system?
Alright, there are that articles explain it very clearly. The financial members of Wall Street were allowed to sell pieces of paper built on air, fantasy and lies for premiums of $2,000,000,000+ a year. They were regulated by people engaged in the same folly who chose not to regulate it at all because they were participating in it.
And now, the US government is going to take all these worthless pieces of paper that have no value but complete liability and pay these companies to get them. There is currently something over $60 trillion dollars of these in the market and much of it is due for payout on defaulted bonds, mortgages, commercial loans and others. So, now we are going to pay them and we going to buy these derivatives with our government moneys. And then what will they do? – Hold these liabilities and do nothing?
What sum gain that is worthwhile is being offered by these investment houses, banks and financial institutions besides being bigger and better at lies and stealing than the rest of us?
And, besides undermining the value of every retiree’s earned retirement funding, stealing their promised health care benefits through their companies, and closing plants, these same companies laid off people, refused to make wages commensurate with the real costs of living and the real value of talent and time, withheld raises, dropped benefits and made employees produce to cover four people’s manhours of work or more.
These jackasses were doing unusual things and using unsound practices for profiting on these derivatives, credit default swaps, unfunded debt instruments. They also were paying millions in premiums to have these corrupt financial “insurance” products available and reselling them to one another, knowing they were very likely worthless and are now going to rob the people of the United States and the international community to cover their liabilities and poor choices.
So, this means that while unsecured paper was being sold for millions and millions of dollars, the small business administration wouldn’t loan for a start up unless three banks had turned the applicant down and they had enough collateral and good credit to essentially not need the loan at all. But at the same time, real value – real money – was being given for literally no back up, no assets underwriting it and no possibility of ever paying out what it was securing.
September 20, 2008 Posted by cricketdiane
Money held in a Mason jar for two years won’t be worth its value when placed there. Money in the stock markets are simply feeding brokers a living.
Money put into companies that are allowed to make up their value by imagination rather than intelligent review of resources to liabilities will yield nothing or less than nothing.
Money placed into world currencies will be devalued over time as the dollar yield is the basis of their relative backstop valuing. And, the value of real properties are not based in reality which therefore will rob the owner rather than yield for the investment and time.
What this leaves is not worth considering. Second of all, there are people making these economic decisions from sources in the US that are more inclined to political and personal gain than in the overall impacts of their actions.
When they existed within the framework of private enterprise, these impacts were limited by the range of influence. Then, in the positions of power within the US government economic agencies, their ranges of influence became far-reaching but even less properly understood.
It is not possible to offset the reality that is occurring, no matter how it is “framed”, no matter what propaganda and spin is given to it, no matter how differing views are discredited. These won’t make any difference because it is not perception of reality that counts but rather that reality is what matters.
As people see that US dollars simply have no value, they will know it. Just as people discovered that the equity in their homes became a negative value rather than a positive one despite the years of paying payments honorably, they will also know as their money isn’t a usable way to take care of bills, food, gasoline, insurance, house payments and other needs.
As people realize that the interest on their credit cards are no longer a few percentage points, but rather a 22% – 26% rate, regardless of their timely payments on them, they will know that is real dollars unavailable to them for other things.
As the cost of getting to work and making errands becomes a choice between other needs or gasoline to put in the tank for continued employment, they will “get it” that the devaluation of the dollar makes a difference to them personally.
September 18, 2008 Posted by cricketdiane
US Economic Crisis – credit default swaps and derivative products – an opinion of solutions – Cricket Diane C Sparky Phillips
A valid opinion about the credit default swap products, credit default instruments and derivatives in the market collapse crisis – US and World Markets –
Don’t buy credit default and derivative instruments out of the game – undermine their premise and destroy the legal use of these credit default instruments. They are unregulated, unauthorized, unqualified and unsecured. Let everyone across the board lose on the “pretended” value of those and make it illegal to ever create them or trade in them again. They are not valid products in the marketplace because they weren’t secured in the first place.
Businesses cannot sell, create, nor trade an “insurance” product that is non-collateralized, unsecured and without any real asset value, no matter what premium is being paid for it. That is untenable. Make them all illegal across the board – not the bonds they insure, but the credit default instruments that have been created back-room, over-the-counter, hand to hand.
That one action would insure the solvency of around 90% of the companies and funds that have been dealing in them. The other 10% of these entities can be made solvent by other more traditional means.
Install industry-wide accounting standards and remove (illegalize) all asset classes which are not secured and backed by real, tangible assets. There should no longer be anything that is considered “off balance sheet” accounting practices. That it was considered standard operating policy is a lesson for the future that it may never be tolerated again because of its destructive components.
Have all ratings agencies rate on the same basis of factual evidence and remove the magnitude of power held by these agencies. The ability of ratings agencies to call the shots and manipulate the markets is too great. That much power to force re-collateralization and depletion of resources as companies shift assets to do so has no business sitting in the hands of these ratings agencies.
Force the re-capitalization of those companies and financial institutions that are under capitalized within a specific set of parameters and definitions with a limited time period, even if that is two years out. Define the acceptable legal ways and asset types that are the only ones to be tolerated. And, demand this be done immediately to insure solvency across the markets. The impacts of this one element would go farther to stabilize world economic growth and US economic stability as a whole than any one other thing.
Written by Cricket Diane C Phillips, 09-19-08, USA
September 19, 2008 Posted by cricketdiane
Credit default swaps and unfunded debt the US government wants to buy – Glossary of Terms –
Unfunded Liability – that means there is nothing but air and bullshit backing it up.
Credit Default Swap – I’ll cover a bond that will never go into default in trade for a premium of several million dollars a year just in case it does, but there are no assets to back it up if it defaults.
Illiquid Debts – pieces of paper known as “instruments” in the financial industry that aren’t worth the paper they are printed on, representing a promise to pay out billions of dollars if a bond defaults or some other financial “instrument” defaults but has no physical assets underwriting it.
Off Balance Sheet – means that anything detracting from the bottom line is kept on a separate record unless asked for in total available liquid assets in which case these items are added in the total to make it look better.
Distressed Debt – assets built on air, promised in value by delusional fantasy, collateralized by lies and very creative loose interpretations of reality that nobody wants to buy for any price but everyone is using as an asset class (for leverage) to get credit.
Leverage – opaque ways to hide the risk and get moneys available to you anyways as a business. In common usage, this means having $5.00 to buy $5,000,000,000 worth of stock, options, and/or properties, companies, bonds, physical assets. And borrowing the $5.00 used in the first place.
Government Regulators – a group of friends that you hire to work in the government run office that covers your industry that agree with your way of doing things and are normally appointed by the people whose campaigns and campaign shindigs you funded.
Government Regulations – something in the way of making the profits you think you deserve and serving no other useful purpose.
Derivatives – market products that are “made up” by the imaginations and machinations of those working with them – completely unregulated, high-risk, and profitable with no requirements on the part of those who create them.
Tax-base / US Treasury / Federal Reserve – private bank to cover any potential losses that might occur if and when things don’t do as planned.
Liability – something that financial institutions incur when their favored political party isn’t in power. Sometimes, it also means a column on the off balance sheet accounts that doesn’t count against any other financial influx. But, surprisingly enough can undermine the value of any and all real assets in the company.
Poker – a low risk game similar to golf with less margin of error than financing.
This glossary (above) written by Cricket Diane C Phillips, 09-19-08, USA