posted on Apr, 3 2009 @ 05:57 AM
Let me just start by saying that this post is entirely my personal opinion and merely seeks to vocalise my slowly forming position on this issue. I
would be grateful for anyone's feedback - both for and against, particularly from anyone with a better grasp of economics and finance than I have.
I do not place the blame at the door of any specific group such as NWO, Masons, Illuminati or even Lizards but I think that in common with many
conspiracy theories the reality of the issue can sometimes be obscured by the more outlandish reasons as to 'why'.
I will start by outlining some of the issues - As I said before, please feel free to chime in and correct me.
Toxic Debt and the bubble that bursts
We hear that the root cause of the current situation is the buying and selling of collateralised debt between various banks and that once prudent
banking organisations all seemed to try and get a piece of this pie, due to what seemed like a never ending opportunity to make money. Where did this
money come from? From ordinary people who, by previous reckoning, wouldn't have been allowed a mortgage but were encouraged to get one from the
This has also been promoted in a socioeconomic way by the popular concept that we should all get property and we aren't really moving on in our lives
if we don't own a house. Where did this come from? Why can't a young couple countenance having a family without hitting the milestone of owning a
house first? How many of us were successfully brought up in rented accommodation without our parents feeling that they are spoiling our lives in some
Anyway, for some reason the banks decided that a risk that they would have avoided in the past was now palatable and not only that but a source of
significant income. If this was good business, why hadn't they done it before? There seems to have been a step change for some reason.
A function of any market is that it sets a value on 'things', generally linked to a number of factors such as supply and demand, its potential
future value and its intrinsic value - with intrinsic value being the most significant to this argument. Look at the 'dot com' bubble of recent
times; any chancer with an idea was suddenly floating business that had paper values of billions with intrinsic values actually very low (or even
negative) - Look at even successful ventures like Facebook - They have a paper value approaching $8 Billion at last reckoning but the company's only
means of real income is advertising (or similar issues such as selling your data).
Consider what you would get for $8 Billion in terms of a manufacturing business with real assets such as Intellectual Property Rights, plant, factory
buildings, stock etc - what would you have to 'shake a stick at' - much more than you would if you spent the same money on Facebook. If times get
tough with your manufacturing site - you could sell 'stuff' and liquidate your assets but the point is that you have 'stuff' to sell. What
happens to Facebook? The bubble bursts and what was 'worth' billions is now only worth a few servers and some rented office space. Who tells us
these things are worth billions? Bankers. What makes them worth billions? The driven up share price bought by institutional investors spending our
money from investment bonds, pensions and superannuation policies. This is real money that comes from your wages but where does it go when the bubble
bursts? Into the pockets of other bankers - it doesn't disappear like the inflated share price. A share that your 401K bought for $10 one day and is
worth 45 cents the next still cost you $10 - Has this money gone up in smoke? Like the law of physics that states that energy can't be created or
destroyed, it only changes state - has this money been 'created' and then 'destroyed' when you worked an hour for that $10.
This seems like a massive version of 'find the lady' to me - where we are the suckers.