Topic: Current state of affairs...

[Definitive Journey]

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Here's a link to an article of how we may have managed to get where we are:

http://www.globalresearch.ca/index.php?context=va&aid=10279

Listed below here are some comments from another discussion group on where we may be heading:

I have some bad news about the economy. The rescue plan that the Bush Administration is planning and that Congress is deliberating this weekend is not going to work. When the plan was announced, the market picked up and we had what can be called "irrational exuberance" by investors. The stock market soared and the week ended less than 100 points lower than it began.

The plan asks for $700 billion of bad mortgage loans to be purchased by the US government and held until the housing market stabilizes and the government can sell those mortgages for, hopefully, a profit. Sounds good, right? These banks that are being dragged down by these bad debts can unload them on the US government and then proceed with a healthier balance sheet. Taxpayers will need to pay for the funds to buy these bad loans from the banks, but when the homes are resold in 10-15 years at a profit, then that profit will be returned to the US taxpayer. So far, sounds good.

Here's the problem: which banks are going to get to unload their bad loans? Is the US Treasury going to allow ALL banks to unload their bad mortgages, or just those banks that are in trouble (i.e., banks like Washington Mutual). Is there going to be a limit on how much bad debt each individual bank can unload on the American taxpayer? Citibank, for example, has hundreds of billions of dollars in potentially bad debt -- can Citibank unload all of its hundreds of billions of dollars or just 50 billion, or 100 billion? If the limits are set too high, then only a few banks will be allowed to participate before the program runs out of money and the Treasury has to go back to Congress to ask for more money. Set it too low and banks won't be able to clear enough of their bad debts to change their balance sheets.

But there are two problems that are even more serious:

1. About 60% of the mortgages made during 2005-2007 in California were so-called option loans. This means that the buyer put no money down and paid a very low teaser rate. The buyer had the option of paying (a) a monthly payment composed of both principal and interest or (b) a monthly payment of interest only. Those option mortgages are set to reset in the next couple of months. Many of those homes are going to go into foreclosure. What is going to happen to the housing market when these new foreclosures hit? We'll be back in the same situation we are in now. The rescue plan does NOTHING to take care of foreclosures or appraisals or the housing market.

2. Credit default swaps. I think I may have given an explanation of credit default swaps earlier, but it's a bet (called a "hedge") that a certain institution will or will not fail. It's a bet. AIG was heavily involved in credit default swaps. Fannie Mae and Freddie Mac were heavily involved in credit default swaps. Once the US took over Fannie Mae, Freddie Mac and AIG, owners of those credit default swaps were put on notice that they had approximately 30 days to redeem that paper. The takeover of Freddie Mac and Fannie Mae occurred on September 7. That makes October 7 the 30th day anniversary when those credit default swaps will be required to be auctioned off. THE AMOUNT OF MONEY THAT THESE INVESTMENT BANKS HAVE INVESTED IN CREDIT DEFAULT SWAPS IS 3X WHAT THEY HAVE INVESTED IN "TOXIC" MORTGAGES. THREE TIMES! It is estimated that there are $3 trillion in credit default swaps that are going to have to be redeemed.

This is why we are not out of the woods yet. The Bush Administration rescue plan will give us some time to try to figure out what to do, but it's pretty clear that if the Bush Administration is going to bail out toxic mortgages, then they are going to bail out credit default swaps (which have no real collateral). That means the bailout plans could end up costing American taxpayers as much as $5 trillion. $5 trillion! This bailout plan requires the US debt to be raised to $11 trillion. The credit default swaps could add 40% more to the national debt. We are bankrupting our economy. Taxes on everyone will have to be raised. And none of this takes into account the rising number of baby boomers who will be retiring and getting Social Security and Medicare in the next 5 years. We won't have money for health care plans, for infrastructure projects, and we may not even have enough money for our national defense. Whether our economy collapses this year or in 2010-2012, it will collapse because there isn't any money to pay for these bailouts without increasing taxes on businesses and individuals by at least 40%. In other words, look at your paycheck, identify the amount of money withheld for Federal income taxes and multiply that by 4 -- that is how much will be withheld from your paycheck in 2 years, whether McCain or Obama is in the White House.

By the way, from what I've read, the reason this mother of all bailouts was needed is because CHINA refused to inject any more money in the US treasury on Wednesday night.

pipa.com/

z

 

[Michael]

It is a speculation on the unfolding catastrophe, but a speculation which is on the minds of many. The monetary bail-out of the dot.com is now seen as significantly responsible for the current crisis. When will the piper get paid?

From US point of view, the crisis is so big, that all cashed up nations will help out, but there are limitations.

What the optimists place against this is the enormous power and size of the US economy. I sense that this crisis is now in uncharted waters, and the financial amounts being speculated are orders of magnitude beyond anything previous. The worst thing about these waters are the icebergs - no one knows what will collapse next week.

They do know of a few teeterers, but everyone is braced for wails of death agony coming from any unsuspecting corner.

The issue is will it infect Main Street? Well it already has, so how much more is the question.

Over here in Aust, we have been amazed at how well we have weathered this storm, and we are putting it down to our own dirty secret - we sell dirt to Asia, for big bucks, and we have very little else going for us. But Asia has shown itself so far to be very resilient to the waves coming from US and EU. For how long? No one knows, because although their stock markets have fallen, it has only been the usual knee-jerk reaction that all stock markets do.

The two big questions are:
1. Is this the beginning of the perfect storm scenario - economic, social and environmental meltdowns with a rising political instability? Personally, I think that is still a few years off yet - tho not many.

2. Will they go beyond reintroduced financial regulations? Will people begin asking serious questions of the Capitalist model itself, now that Socialism is bailing out Capitalism?

[Definitive Journey]

~

We're drawing closer...

The bets were made.  The piper will be paid. 

Living in Las Vegas, I see this all the time.

M:  The two big questions are:
1. Is this the beginning of the perfect storm scenario - economic, social and environmental meltdowns with a rising political instability? Personally, I think that is still a few years off yet - tho not many.

Z:  Agreed.  Yet, the Awareness of most has risen, very quickly.  Perception Is reality; we will see how quickly this evolves.

M:
2. Will they go beyond reintroduced financial regulations? Will people begin asking serious questions of the Capitalist model itself, now that Socialism is bailing out Capitalism?

Z:  This Has occured.

Let's see what occurs...

z

[Definitive Journey]

~

Via Pipa.com again:

Tensions are so high in the world right now that something catastrophic is bound to happen just to release that pent-up tension. But there is another, more immediate and real danger that will occur in about a month from now: the absolute crash of the U.S. financial system. Here's why.

You all know now that the US government took over Fannie Mae and Freddie Mac (in what would be called "nationalization" in other cultures). They have found that these two "Government Sponsored Entities" ("GSEs") were cooking their books. Even though their stated reserves were low (which is what caused the Russians and the Chinese to blackmail the US into taking over the GSEs), what they found is that the reserves were much lower than they were supposed to be. (In an ordinary situation, this would be called criminal.) The US govt knew it was bad, but what they've found is that it was catastrophically bad.

That's the background. Here's where the 30-day deadline enters: One of the financial products that the GSE's devised were "credit default swaps." Don't even try to understand what these "derivatives" were -- you will never understand it. In fact, the easiest explanation is that it was a betting pool: banks and hedge funds "betting" on whether something will fail. It's that stupid. Anyway, the US govt is NOT guaranteeing these "credit default swaps" -- and they have to be disposed of -- which means that banks and hedge funds (and pension funds) that purchased these credit default swaps now have to come up with the money to pay for them. (I know, if they already purchased them why do they have to buy them now? And the answer is because they purchased them on paper but never transferred payment to the GSEs -- it was a paper transaction. Now that the GSEs have been taken over by the US govt., those paper transactions have to be completed with the transfer of real assets. The only way to do that is to put these credit default swaps on auction. It will take approximately 30 days for these credit default swap auctions to get going. That means that in approximately 30 days we are going to find that there is NO market for these credit default swaps and that the entire enterprise was a mirage. That's right, a mirage. These credit default swaps will be worth zero in real assets.

Now, why is this a problem? Because these credit default swaps are not worth zero on paper. The GSEs carry these credit default swaps as part of their income -- on paper that was fine; but now the GSEs have to collect that income and there isn't going to be any income to replace it. This will expose the GSE as completely bankrupt. 2. Banks all over the world purchased these credit default swaps; it's on their balance sheets as assets they own. These "paper assets" make up part of the reserves they are required to keep in place to meet FDIC rules. In 30 days, when these credit default swaps hit the market, then everyone will realize that these banks do not have the reserves they said they have, there will be runs on the banks, there will be banks collapsing, and the FDIC will be powerless to stop it because the FDIC does not have the money to handle the magnitude of the problem.

Now, how big a problem? It is estimated that there may be over $1 trillion in credit default swaps. OK, you tell me, in the space of two or three days, where in this economy, global or local, are we going to come up with $1 trillion? We won't. And that's when the entire economy will collapse, not just in the US but all around the world.

Google "credit default swaps" and read lifeaftertheoilcrash.net. I didn't put it together at first until I realized that it would take 30 days from Sept. 7 (the day that the GSEs were taken over) for the first auctions to occur.

_________________________

This deadline will arive This Tuesday.

Who knows?

z

[Maiveeta]

This is a very timely subject that effects us all.  My son has already lost his job due to this mess.  Thankfully he has skills that are still needed and his unemployment didn't last long but has touched us nonetheless.  I dont easily give in to fear driven conspiracy theories, and hysterical end of the world scenarios, but damn...this is something I have never encountered.

I have chatted with my husband about different courses to take for the upcoming predicted events.  How to know what is just fearful hysteria and how to just be prepared for ourselves and our families?  Going off half informed is just ludicrous, being filled with fear is dangerous....so what to do? 

None of us knows what a depression will be like, that was our grand/ and for some great grandparents time...very few folks know how to survive something like that now.  So while its good to know that something is possible to happen, and it could be uncomfortable at best, what does the sane person do?

[Definitive Journey]

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Hi Maiv!

Nice to see you around these parts!

What to do?  Good question.

My answers are lacking....

z

[littlefeather]

... if we all just go on with our business, pay our bills as always, feed the cat and walk the dog, we have a better chance of not creating a fear-based economical collapse than if we sit glued to the tube, fearful and depressed.  The roses will still bloom.  The corn will still grow in Iowa.  And the sun will still rise tomorrow morning.

In the big picture, it's all just illusion anyway.  Money is just fancy paper, worth only what we AGREE it is worth.  Nothing.  Or Everything.  So... a a warrior, it seems to me that the best thing we can do is to each maintain our individual intent, and our individual course.  It's when we start following the herd that we find ourselves in the slaughterhouse.

Very nice Della!
 
I completely agree!  In fact I don't think I could agree more! heh
(nothing to add either  )

[Michael]

the only way out of fear, is to picture the worst scenario, and say okay - fine. I can handle that.

Then it has no more power over you than exactly what you need it to have for accurate response.

They discovered when an animal, including humans, drinks water, it always stop drinking exactly at the point when its hydration level balances. If you add flavour though, and a little intoxication, you can go on drinking way past the point of balance.

We survive by being as well prepared as possible. Not being afraid of massive changes is one of the finest preparations possible. Just slowly think about everything you own flying away from you, so you can become more who you really are.

But fear is not just coming, it is here. Fear is something to avoid at all costs at such times because it sweeps the land like a virus, and is so easy to fall into - disguised as patriotism, nationalism, religion, tribalism. Hatred.

[littlefeather]

Just slowly think about everything you own flying away from you, so you can become more who you really are.

Or get rid of some of your stuff right now.  We all have so much stuff we don't need, really.
There is a movement right now, (http://guynameddave.typepad.com/stuckinstuff/2007/07/100-thing-chall.html) that challenges people to get rid of all of their stuff.  I think they are allowed to keep 100 things.  Sounds silly, but I know when we moved here to Ontario,  We took only what would fit in the trunk of our car.  So for many months we lived with next to nothing,  4 cups, 4 bowls, 4 forks and spoons, a few blankets and we each had one pillow.   (you get the idea) My kids really learned to appreciate the little things in life that so many take for granted.  (So did I) And now, when something threatens us we say "heh remember when we moved here?  If we can handle that, we can handle anything".  Also when we find ourselves becoming needy, wanting more, we just remind ourselves of the time, not long ago, when we really had nothing.


More here:
http://www.time.com/time/magazine/article/0,9171,1812048,00.html

Also, I think this whole thing feels threatening to people who are attached to their things.  What about homelsss folks, people on welfare?  I doubt they are overly concerned with the potential crash.  Maybe we could learn something from them...

[Definitive Journey]

~

In all of this, I see one thing very clearly:  we create our own reality.  The current mess wasw created by short-sighted greed, BUT if an actual "depression" comes, it will be created by fear - and as you noted, fear is dangerous, so...

In the course of our business, I run into a lot of different  types of people, but the yada-yada on the social mind-hive is obviously related to the economy.  And yet... when I ask people, "How has this affected you so far?" MOST of them scratch their heads and say... "Well, gee, life goes on, I guess..."  So, as with 99.9% of all "crises" here in the US, I am beginning to suspect this one was created by greed and is being fed (and nurtured and breast-fed) by the media.  People are being told they SHOULD be afraid, and so they are falling right in line with the program.

One of our wholesale suppliers in Los Angeles came to this country from "Persia".  Her English is very broken (but far better than my Farsi), and when I was in her store last week, she was close to tears, saying, "I put my money in the bank but now I am afraid the bank won't be here tomorrow, so I take my money and buy a safe!"

It was that kind of fear that CAUSED the depression, when people pulled their money out of the banks and essentially collapsed the economy. Maybe I'm just a simpleton, but it seems to me that if we all just go on with our business, pay our bills as always, feed the cat and walk the dog, we have a better chance of not creating a fear-based economical collapse than if we sit glued to the tube, fearful and depressed.  The roses will still bloom.  The corn will still grow in Iowa.  And the sun will still rise tomorrow morning.


In the big picture, it's all just illusion anyway.  Money is just fancy paper, worth only what we AGREE it is worth.  Nothing.  Or Everything.  So... a a warrior, it seems to me that the best thing we can do is to each maintain our individual intent, and our individual course.  It's when we start following the herd that we find ourselves in the slaughterhouse.

Nothing is ever as bad as it seems.  (It's usually worse).  *LOL*

Very good points....yes, I agree.  We need to address our internal state of affairs and be as aware and impeccable as we can.

Just to add a bit more though...

Others actions and re-actions affect each one of Us.  This occurs on a global level, on your saving account level as well as on a personal level.

When the crisis hits the streets, which it is already doing, and lets say that we have rolling blackouts of electricity or issues with the public water system, even if we're in our right mind, it's going to affect us.  If we are in our right mind, good, yet if others re-act in some violet manner (purchasing guns, riots, etc., etc.,) we need to pay attention.  I may not be just fine, in my right mind without fear meditating in the lotus position on the illusion, and some knucklehead decides to shoot me dead and rape, pillage and plunder.  

This isn't a call to be re-actionary.  It's a call to raise awareness; not just of ourselves internally, but to the exterior circumstances going on around us.

z

[≈*≈]

We survive by being as well prepared as possible. Not being afraid of massive changes is one of the finest preparations possible. Just slowly think about everything you own flying away from you, so you can become more who you really are.

Yes, be prepared to lose every-thing and you'll find that you already have "everything" you Need.

I will welcome massive change ... it's time.

[≈*≈]

The "reality" ...

Tent Cities


<<edited to add this version>> ... check out the subliminal messages...

http://www.youtube.com/watch?v=P_C1ewdPTsI&NR=1

[≈*≈]

And we're on our way ...    http://news.yahoo.com/s/afp/20081006/bs_afp/stocksworld

Hope everyone is stocked up. (no pun intended)

[Definitive Journey]

~

If we did not agree to the crisis, there would be no crisis.  It is the belief that there is a crisis, and the subsequent re-action which CAUSES the crisis in the first place.  If we were to all turn off the tube, ignore the fear-mongering, and simply BE in the moment, the crisis would run its course in a matter of... oh... minutes.

The crisis is fear, created by fear and fed by fear. 

Without fear, the media has nothing to sell and the government has lost all control.

The only winning move is not to play.  (Tell your friends.)

 

Hi D!

I like your thinking!  I agree with you!  But what 'we' are you referring to?  The 'we' of the World?  The 'we' of the U.S.?  If 'we' in that aspect Would accomplish overcoming fear, Great!  No crisis and I can continue on playing with my marbles 

Unfortunately, if we (you and I and others) choose a 'no-crisis' state, we don't have the power of the masses to keep all the other idiots from their fear based state.  We only have control over ourselves.  Sad but true.

Here's an example.  You travel a great deal, correct?  The fear based state that cause the price of gas to increase was just that....based on speculation and fear.  Suppy and demand to some extent, but mostly Fear of, 'this or that happening,' etc., etc.  That did affect you, right?  I know it affected me.  Our current situation is affecting me. 

So yes, I agree with you.  Just curious if you're catching hold of what I'm saying, that's all.  Again, we need to raise our awareness and not be fearful, and yes, I'll tell my friends! 

I also agree not to play as well.  Unfortunately others have chosen to play and I can't control them....and it does affect us!

{{{Della}}}

Kris



   

[Red one]

Crisis...submitting to fear or not...continuation of our social order and present state of humanity...

We keep our society ticking - voracious consumption and destruction of the planet will continue with ever-increasing speed.

We submit to fear - there will be short slow-down (plus some agonizing in various minds), but then the economy will 'heal' and growth will resume with vengeance (like it does in China-India).

Maybe it is time to amplify the whole thing to bring it down as - with all due respect to the achievements of humanity - we are running toward the very physical wall?