Long live the United States and its Economy, page 1

First, I hope you are not one of those people who flip out from a little criticism.

Next, I have to violently disagree with your assessment of the situation and would like to point out that criticism and attempts at educating readers on this forum is not necessarily indicative of support for the outcome predicted.

In other words, I don't wish for an economic collapse of the US nor of the US dollar. I fully understand the precarious position of Canada's economy vis-a-vis that of the US.

I know it may seem to you that people who point out day to day developments may be "excited" and "hopeful" and even wishing for the economic peril the US (nay the world) finds itself in but for me at least that is not true. I'm just a realist and simply trying to call attention to a very serious problem and educate others to the causes as I understand them. While I do have some economics education (University level courses) I am not a "professional" or "accredited" economist which, to me at least, means I am not shackled by any indoctrination to one school of thought (be it Keynesian, Austrian, Monetarist or the Milton Freedman/Chicago School).

I'm not normally one of those people who picks apart a post line by line to dissect it (and I hate posters who do nothing but that) but in this case certain things need to be specifically addressed, so please indulge me on this occasion.

Originally posted by traderonwallst
Sorry to break it to you, but we are not going anywhere and our currency will be here long after I die.

I would hope not, but understand that despite the fact that Germany still exists today as a very strong economy they still went through the Wiemar Republic. Argentina and Brazil still have their currencies but still underwent a recent crisis with people banging pots in the streets, remember? Zimbabwe still exists as a country and still has it's currency and is "not going anywhere" as you put it. Get the picture? I don't think anybody with a brain claims the US will disappear into the night never to be heard from again.

Your time as a sole economic superpower is at an end though, and the pain of that readjustment will be severe IMO.

... Not to gloat, but since June 2007 I have had some of my best trades, yes all on the short side. ...If you see things happen once before, you can profit greatly the next time you see it.

More power to you. I have placed what little I have where I believe I can protect it's value and perhaps make a little profit. It would be stupid not to and anybody claiming moral superiority over people who do so are idiots IMO.

What the FED did over the weekend and today, was nothing more than brilliant.

I was crafty wasn't it? Some well thought out planning and nice moves on their part.

I could care less about all the conspiracies out there that its illegal or the FED itself is illegal. Know what? The FED is here, so get used to it.

Now here we have a major disagreement and this statement speaks volumes about the person who made it. Know what? Whether you realize it or not, you just advocated that every oppressed person on this planet get used to their oppressor and lay down and accept it. I can't agree. If you say the FED is not oppressing anybody I would humbly respond that you understand very little about the situation.

They have not yet addressed the credit issue ... Liquidity is what Wall Street is all about. Without it, Wall Street does not work.

LTCM had so much money they did not know what to do, so they began investing in non-tradable assets. ... It spun out of control and they went bankrupt. Again....due to being highly leveraged and invested in assets that were not LIQUID.

Really? Hmmm....

I never forget the fact that LTCM was started by some Economics Nobel Prize winners to put their pet theory to work full time. The inventors of the Black-Sholes formulae wanted to show the world how it was done. They sure had no trouble raising money and leveraging it on the upside for some spectacular returns. Trouble is, Nobel geniuses that they were, they forgot that leverage works in reverse as well. No matter how liquid your assets are if you are over leveraged you will go bankrupt when the tide turns negative. Derivatives traders are about to learn that lesson all over again.

Then BAM...the credit crunch. All of a sudden liquidity dried up and the market place fr these assets disappeared.

Just like that eh? BAM out of nowhere?
Sorry, but I have to laugh at that one. I think I'm starting to understand your rant a little better now.

Thanks to the new FASB accounting rule all investment banks were forced to mark their investments to market and assign a value.

Uh... you mean the rules that they delayed implementing until next year? They haven't even gone into full effect yet.

(there's a news thread on ATS about it. [edit: actually you started this thread on the topic but it's partial delay is discussed here as well as at the Wall Street Journal ])

Markets create prices, thats how capitalism works.

Addressing this would require a PhD thesis.

Yes JPM is stealing a 85 year old company. Fine. Its done and the FED did what they had to.

Again, you seem to think it's OK for private banks to act like predatory sharks with respect to assets managed by "professionals" for the benefit of regular people.

The next step will be the FED buying up all the bad loans in order to "save" us. The end effect will be a good chunk of the nation's real estate wealth ending up in the hands of the cartel. Economic serfdom has such a nice ring to it doesn't it? I guess you are one of those people who feel that if doesn't affect them directly it's of no concern to them or that if you are poor it's somehow the entire fault of the lazy stupid pauper. I'm sorry if this is harsh but over the years I have come to expect this kind of lack of empathy from many Americans raised on a steady cultural diet of "rugged individualism". Ayn Rand would be so proud.

Now it is time to realize something.

Indeed.

NOW, Stop running around like chickens with your heads cut off screaming the sky is falling....Its not.

I'm sorry but... the sky is falling.

Not the individual people, we are to loaded up with debt already, but to business, and not the ones on wall street. The mom and pop shops. Have you tried to get a business loan lately? You can't. The US can not grow without the little guy getting their share.

Uhh... the economy is made up of the "individuals" not companies, not even "mom and pop" shops. Besides, what are you suggesting they do in the face of the wall marts of the word?

Can't get a business loan? Why do you suppose that is? Seriously. Why is that?

Hint. When the central bank cartel wants to cause (yes I said cause) a recession, they tighten credit. Refusing to lend to each other or to "mom and pop" shops has a clear consequence known to all. Whatever pathetic excuse they use to justify the contraction of lending activity, I submit "they" know full well what they are doing.

After we do that, we need to aggressively defend the US$. Foreign investors are short the dollar to such levels that if the FED attempted to buy the $ we could actually create a short squeeze in the currency. This would do a lot to stem inflation, lower the price of oil and pop the commodity bubble. (BUT let me get out of my agriculture stocks first) Bush should simultaneously open the petroleum reserves. Not flood the market with the oil, but put a scare into the Middle Eastern oil countries.

There is so much wrong in this paragraph I don't know where to start. If you still believe that the US can somehow control the price of oil I feel kinda sorry for you. Perhaps you should spend less time thinking about your stocks and try to understand the world we live in today not 35 years ago.

... we are not any smarter than you, we just are willing to play the game. The game is open to anyone who wants to play. It is a zero sum game. For every winner, there is a loser,

At least your humble about it.

Look, I hate to break it to you but the game is rigged. Whether or not you realize it you will get burned if you try and predict this thing to it's conclusion and outsmart the cartel. You can only follow.

The game is not open to every one, it's only open to those with some disposable income they are willing to gamble away, any other attitude is just so much hubris.

I also challenge your assertion that (at the moment at least) it is a zero sum game. In a fiat monetary system it is not a zero sum game when money (as much as you want/need) is created out of thin air.

In fact our entire economic paradigm is based on infinite growth potential.

Our infinite growth paradigm is running smack into the growth limits of a newly globalized world with limited energy and resources. That is what is beginning to be played out. The transition from the old paradigm to an as yet undefined new paradigm will not be pretty (to say the least).

It is also inevitable and unstoppable.

To believe otherwise is as shortsighted and naive as any brand of nationalistic patriotism you care to display.

.

[edit on 3/19/2008 by Gools]