It could get much worse

It could get much worse

www.baltimoresun.com

The financial crisis thus far pales next to what will happen if the government's creditors take a walk

As bad as the situation is, we're in deeper trouble than most realize. The virus infecting banks - too much debt - is spreading to the federal government. If Washington falls victim, we could be headed for another Great Depression.

Understanding why too much "leverage" can kill a bank is crucial to understanding why the credit crisis is dropping major financials like flies, and why the federal government is vulnerable.

Under no scenario can Uncle Sam raise the trillions it needs to meet all these obligations. No tax rate is high enough, no discretionary spending cuts draconian enough. And there is no creditor of last resort for the U.S. Treasury

(visit the link for the full news article)



[edit on 9-21-08 by tsEnigma]

This Is Exactly Where We Are Headed

What Is Really Going On

www.baltimoresun.com
(visit the link for the full news article)

let the fed fail, and use their failure as a ladder to take down the treasury, and the IRS . In fact lets get rid of the federal government all together, so i say let them fail, we can take another depression if we all stick together in the face of their false promises. lets show the sleeping citizens their rights as Americans so they can finally wake up and help tumble the last pillars of this faulty government. ok i'll cut the sentimental crap, lets just not pay any more taxes, seriously. these damn investors and bankers were slacking off knowing the second things failed we would be there to dig them out of the mess. so lets just drop the shovels and walk away.

Thanks for posting this. It really is the end game that most of the lemmings cheering the gov't bailouts are missing. As stated there is no lender of last resort for the gov't. We're being taken out of the picture, probably because we have too many rights under the Constitution. A free and armed people would be unacceptable under any One World Government.

But this has all been known for at least two thousand years. At the end of the day, they (the Bankers) lose.

Thanks for the post! I am curious to see what Monday brings to Wall Street. I know that the bail out is suppose to help the banks and what not, but I have a feeling it could do just the opposite.

By nationalizing nearly 80% of AIG for $85 billion, the Fed is doing a lot more than simply flushing taxpayer money down the toilet. The greater wrong is allowing the agency that has the power to print money to take control of a private enterprise, especially without the approval of the company’s shareholders. The move represents the largest lurch toward socialism that this country has ever seen, and signals the end of the vibrancy of America’s once vaunted free market economy. Since there is no limit to the amount of money the Fed can create, there is no limit to the number of assets they can acquire.

The “line in the sand” that the Government seemed to draw by refusing to bail out Lehman Brothers was erased in just two days by the very next wave of financial panic.

While Fannie and Freddie were arguably quasi-government agencies that deserved special protection, no such status exists with AIG. Where does the Fed get the authority to use the money it prints to take over private companies? Congress never gave such authority and, even if it had, it would be unconstitutional, as Congress itself has no such authority to delegate. What about the shareholders? Why didn’t they get to vote on this acquisition? Whatever happened to private property rights?

Where does this stop? What other troubled companies will the Fed nationalize, and how much will it cost? Why stop at troubled companies? If the Fed can buy into a sick company, why not a healthy one? Now that we have allowed the Fed to take over any asset it wants, private property rights are meaningless. When oil prices get really high, why bother with a windfall profits tax when the Fed can simply nationalize Exxon-Mobil with a few cranks on its printing press. Who needs Bolsheviks when you have the Fed?

AIG is not a bank; it is not even an investment bank. The “lender of last resort” power was supposed to apply only to banks, to prevent runs. It was not meant to apply to any company that had been declared “too big to fail”.

I suppose the Fed is trying to get around some of the more obvious illegalities by having the new AIG shares issued on behalf of the Treasury. What happened to the concept of an independent Fed? Here you have the Fed seizing a private company and ceding control to the U.S. Treasury. Rather then acting independently, the Fed and the Government are merely partners in crime.

On the economic side, the Fed expects us to believe this is a smart investment. Does anyone really think that officials at the Fed and Treasury are suddenly private equity experts? These are the guys who missed both the tech and housing bubbles, and who assured us that subprime problems were contained. I would not trust them to run a lemonade stand, let alone one of the largest insurance companies in the world.

The idea that this bailout was necessary given that the alternative would be worse should by now be fully discredited. All of today’s financial problems are the direct consequence of Fed policy that was designed to weaken the recession that followed the bursting of the tech bubble and the shock of September 11th. Of course, the tech bubble itself resulted from the Fed’s actions to sooth the pain following the collapse of LTCM, the Russian debt default, the Asian crisis, and Y2K.

I suppose the precedent for all of these actions was established back in 1979 when the government guaranteed Chrysler’s debt. It sure would have been a lot better and a whole lot cheaper if we had simply let Chrysler fail. The road to financial hell, or in this case socialism, is certainly paved with “good” intentions. Today's historic surge in the price of gold shows that at least a few investors are refusing to march in the parade.

The whole purpose of this process and it is one that has been running for a long time is the control of wealth and the removal of business and banking opposition to achive the object of the one system and one alone. When the perps have all the power and money we will dance to their tune.

What will get a lot worse is when the public learns that they have been duped! Imagine the chaos, and asking; "Why weren't we told?"

Of course the signs have been there, but who was listening?

Originally posted by HimWhoHathAnEar
It really is the end game that most of the lemmings cheering the gov't bailouts are missing. As stated there is no lender of last resort for the gov't. We're being taken out of the picture, probably because we have too many rights under the Constitution. A free and armed people would be unacceptable under any One World Government.

Originally posted by magicmushroom
The whole purpose of this process and it is one that has been running for a long time is the control of wealth and the removal of business and banking opposition to achive the object of the one system and one alone. When the perps have all the power and money we will dance to their tune.

I'm afraid both of you are All Too Correct

We are witnessing the end-game of our National Identity, Liberty and Freedom.

It gives me chills seeing it happen before my eyes.

What Is Really Going On

[edit on 9-21-08 by tsEnigma]

I'm not sure we risk "losing our creditors," The U.S. balance sheet is massive, so this article is pretty ignorant. The REAL risk lies in losing our AAA credit rating, which would force higher interest rates. That is the real risk, and something I fear, Japanese bonds had a 0% rate and people still bought them...the treasury obviously has buyers when you see the 3 month rate slip to almost 0%...so the idea of "losing our creditors" is pretty stupid.

reply to post by yellowcard

The numbers for the long term were $6.09 billion. The numbers if one includes the short term dated securities was a negative $74.79 billion. What makes this significant is that the trade deficit for the month of July was -$62.198 billion. No matter which way that one measures the flows, long term only or short term inclusive, flows were insufficient to fund the deficit. We will have to watch this to see if a pattern develops especially because the weak numbers were a result of widespread selling of US agency debt, corporate debt and equities. The agency debt chart will catch your attention in a large way as nearly $50 billion were dumped! How's that for a vote of confidence in Fannie and Freddie?

www.jsmineset.com...

Not at all. It is obvious that the printing presses are being fired up. The Treasury has already given the Fed another 40 Billion because it blew its 900 Billion balance of Treasuries. If the world perceives that their dollar holdings are being devalued, not only will they stop lending to us but they may attempt to rid themselves of those holdings which would start a run on the dollar.



[edit on 21-9-2008 by HimWhoHathAnEar]

I watched Faux News yesterday for sh*ts and giggles and Shepard Smith was on and he said in no uncertain terms, we are screwed. His words, "a trillion dollars, a FREAKING trillion dollars", then goes on to say how we don't have a trillion dollars and how it's us the taxpayers that are going to be SOL. I have only seen him that serious once before and that was when he was in NO for hurricane Katrina. I get worried when Faux news says we are screwed!

Originally posted by yellowcard
I'm not sure we risk "losing our creditors," The U.S. balance sheet is massive, so this article is pretty ignorant. The REAL risk lies in losing our AAA credit rating, which would force higher interest rates. That is the real risk, and something I fear, Japanese bonds had a 0% rate and people still bought them...the treasury obviously has buyers when you see the 3 month rate slip to almost 0%...so the idea of "losing our creditors" is pretty stupid.

And burying your head in the sand is smart?

Nothing to see here, move along....Is that the plan?

About the idea of everyone paying no taxes?

I know you are required by law to file a tax return.
Is there a way that everyone could legally put off actual payment?

What if everyone in the country staged a protest and filed, but also filed a request for an extension. It would overwhelm the system.

We could in theory bring the whole system to it's knees for an indefinate period of time.

Does someone knowledgable on the subject know if this or some other variation is feasable?

Is there a way to "legally" do this without being a volunteer for a Federal prison camp?

reply to post by Cowgirlstraitup7


Yeah he was positively apoplectic on Friday, circles under his eyes and border-line hysterical.

What I don't want to happen is for the U.S. to be led down the road again into more chaos - Just like the Patriot Act being rammed through after 9/11 and the B.S. intelligence shoved down our throats in the lead up to the Iraq war.

What if we are bullied into this freaking bailout under pressure and duress from Paulson and the Bush administration but we slide into Global Economic Collapse anyway - only then the tax payers are in for one trillion on top of everything else. Oh, not to mention that we will have given up our right to appeal in any court of law.

Originally posted by bismarcksea

Originally posted by yellowcard
I'm not sure we risk "losing our creditors," The U.S. balance sheet is massive, so this article is pretty ignorant. The REAL risk lies in losing our AAA credit rating, which would force higher interest rates. That is the real risk, and something I fear, Japanese bonds had a 0% rate and people still bought them...the treasury obviously has buyers when you see the 3 month rate slip to almost 0%...so the idea of "losing our creditors" is pretty stupid.

And burying your head in the sand is smart?

Nothing to see here, move along....Is that the plan?

This doesn't even make sense, in reply to my post. Everyone here needs to take an advanced economics class (high school does not count) and realize that a total pause of buying treasuries is impossible, that's not how the market works. The interest rates will go up, and buyers will come in at that risk.

www.bloomberg.com...

The dollar will get killed in a few years, until then this is reflation from deflationary asset classes.

[edit on 21-9-2008 by yellowcard]

Originally posted by HimWhoHathAnEar
It really is the end game that most of the lemmings cheering the gov't bailouts are missing. As stated there is no lender of last resort for the gov't. We're being taken out of the picture, probably because we have too many rights under the Constitution. A free and armed people would be unacceptable under any One World Government.

Originally posted by magicmushroom
The whole purpose of this process and it is one that has been running for a long time is the control of wealth and the removal of business and banking opposition to achive the object of the one system and one alone. When the perps have all the power and money we will dance to their tune.

Humor is now ON ... maybe, maybe not.

May I present the Band.

reply to post by yellowcard

Everyone here needs to take an advanced economics class (high school does not count) and realize that a total pause of buying treasuries is impossible

It's this 'everyone here is less intelligent than me' crap that always reveals the immature. Do us all a favor and grow up. The purpose of a discussion board is to, guess what....Discuss things with others. Wow, what a concept!

Originally posted by HimWhoHathAnEar
reply to post by yellowcard

 

Everyone here needs to take an advanced economics class (high school does not count) and realize that a total pause of buying treasuries is impossible

It's this 'everyone here is less intelligent than me' crap that always reveals the immature. Do us all a favor and grow up. The purpose of a discussion board is to, guess what....Discuss things with others. Wow, what a concept!

I've been reading every single thread on ATS in regards to this matter, because I find it highly interesting.
Perhaps because it's a time where the actions of the NWO ( If it exists ) are more visible.

So I read away trying to piece things together myself. I wish I could contribute to the discussions but I don't really have anything worthwhile to contribute.

That being said yes, alot of members don't really have a firm grasp on economics and I hope we all realise this but we do our best.

It's been all very respectable so far, surprised there hasn't been much bickering and knowitalls yet. Keep it up and thankyou : )

I do have an opinion though.
We won't see any visible NWO until the people of the US ( And possibly the world, I have no idea how that would come about ) are homeless, hungry and ruined.

So I wouldn't expect any major changes soon. They don't work that way. It's always a step by step safe and calculated process.

Capital must protect itself in every possible manner by combination & legislation. Debts must be collected, bonds & mortgages must be foreclosed as rapidly as possible. When, through a process of law, the common people lose their homes they will become more docile & more easily governed through the influence of the strong arm of government, applied by a central power of wealth under control of leading financiers. This truth is well known among our principal men now engaged in forming an imperialism of Capital to govern the world. By dividing voters through the political party system, we get them to expend energies fighting over questions of no importance. Thus by discreet action we can secure for ourselves what has been so well planned & successfully accomplished. ~Aug. 25, 1924 USA Banker's Magazine