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Big Government, Credit Default Swaps and a Global Currency

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posted on Mar, 24 2009 @ 04:40 PM
American had the perfect set up and that was blown to bits because of a couple of things.

1. Americans apathy when it came keeping these politicians in check and we complained about traditional jobs when we knew we were in a global economic structure.

This meant jobs would fall to cheap labor and you would get more entrepreneurs and people making money from things like real estate and the internet.

We would switch from a producer based economy to a consumer based economy. This meant other countries would hold our debt as we consume their goods and this was a win-win for everybody.

This is why unemployment still stayed low even though we were losing jobs to cheap labor. This also meant the American people could borrow and consume as far as the eye could see and all the government had to do was keep making trade deals and we could consume more goods and these countries would make money also.

2. The problem occured because of big government. The people can borrow and consume as far as the eye could see but the government couldn't borrow and spend us into oblivion llike they did.

You need a small and efficient government if your a consumer based economy and your debt can't began to reach your consumption or other countries will not want to hold our debt if we are not consuming their goods.

We have a 13 trillion dollar GDP with over 10 trillion in debt. This is crazy.

Sadly this started with Bush who should have controlled the scope and size of government when he had a republican house and senate, instead he borrowed and spent like crazy.

Bush dug the hole and Obama is burrying us.

This also stems from Government being in bed with business. They looked away and they were paid off as investment banks and mortgage lenders divised this ponzi scheme called credit default swaps.

This allowed these crooks to pool together mortgage backed securities and give out multiple loans based on these securities.

This is why you have these toxic assets. It's because nobody knows where these things originated from.

At the end of 2001 credit default swaps were billions of dollars outstandin by the end of 2007 they were over 60 trillion dollars outstanding.

This was insane and it had nothing to do with poor people defaulting on their loans. People have always defaulted because they bit off more than they can chew. The problem here is, this time these loans are all connected in a 60 trillion dollar ponzi scheme and I was just reading in Wired Magazine that statisticians tried to warn these people that a small group of defaults could start a domino effect and everything can come crashing down.

Here's some of the article about credit default swaps in Wired Magazine.

For five years, Li's formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

It went on to say:

The CDS and CDO markets grew together, feeding on each other. At the end of 2001, there was $920 billion in credit default swaps outstanding. By the end of 2007, that number had skyrocketed to more than $62 trillion. The CDO market, which stood at $275 billion in 2000, grew to $4.7 trillion by 2006.

So now there's calls for a new currency and sadly we blew it because we allowed our government to run wild.

[edit on 24-3-2009 by platosallegory]

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