thetrumpet.com — The world?s financial system came precariously close to seizing up these past couple months. In fact, as far as some big banks and financial institutions were concerned, for a moment in time, the system was in a full-blown cardiac arrest. Liquidity, the flow of money the lifeblood of todays economic structure came uncomfortably close to clotting up
Oct 3, 2007 View in Crawl 4
galleryfrontOct 4, 2007
I didn't want to forget that I surfed to this article through digg so I'm coming back early to comment:The first few paragraphs are awesome. What a great analysis of what our economy and it's cardiac system have been doing.
logicajvOct 4, 2007
It isn't the credit crunch that will kill our economy. The economy isn't made just from money. Money is just some middle factor set up so we all don't have to compare apples to oranges or TV to sugar, value wise. If we had good jobs, and a lot of free capital from investors, we really don't need the bank's money. Credit didn't always exist in the past. So credit isn't fundamentally needed for an economy to function.Credit itself has created its own problem. Credit itself has driven our economy higher than what it should be. Credit has made our economy boom and without it, our economy must bust back down to where credit isn't so cheap and easy to get. The real problem is our economy was in a recession and should have been in a recession from 2001+. The credit bust will bring us back to where we should be, if we had not made credit cheap and easy."In essence, the increase of money in the system from fractional banking is going down right now. Instead of there being 9X as much money on loan as there are assets to back them, there is only 8X."This pretty much sums it up why this much credit is bad. You have 8 to 9 times more money chasing assets than you should have. That means the value of the dollar could be 8 to 9 times more valuable than what it is, if you only take in account loan money and not the other money in the world.
netantOct 4, 2007
But it sure takes a lot of cannon fodder willing to die.
netantOct 5, 2007
Hmmm, spoken by someone who names himself after a fossil...So, is there an adaptiveness index we can reference to see just how resilient the US is compared to other economies? Or do you just like throwing around groundless memes to help you sleep better at night? Or propound cow dung in order to sustain the neocon agenda?The reason why the US economy did well when there were economic squalls WAS because we had such a relatively strong economic wealth. It was also a PSYCHOLOGICAL value, not measureable in dollars. When there was world regional crisis, the place foreign money went to was the US, because it was so freaking rich, it could best assure return of value. The US was the oil currency, and just important, the most economically TRANSPARENT compared to most other countries (which can be quantified). But those days of psychological overvalue will soon end. And we are not rich, or in as good an economic position as the US was in the '50's.The crisis in sub-prime loans are not the magnitude of the deficits. They are a microscopic percentage of the entire loan industry. Even with companies shutting their doors every few days means nothing other than careless, reckless investors will screw themselves. NO, the PROBLEM is that those shaky sub-prime loans were repackaged as good loans and sold to investors who were subsequently defrauded by them. And its hit major financial institutions like Bear Sterns, Citibank, and UBS.The problem is all PSYCHOLOGICAL. But now the problem is how do you reassure the people you just BURNED? No foreign lending/investment, and America goes down the s**tter. (Why make "risky" plays in America, when you can do them in Brazil, Argentina, and Asia???) The other problem is WHY the Fed dawdled in reigning in interest rates. The artificial housing bubble was being used to prop up our GNP numbers. Low GNP=low productivity=low return on investment.I don't care if this news is coming from a bunch of evangelical retards, IF their facts check out, which they generally do. I am not rich. I have to depend on employment to stay fed, housed, and not have a cardboard box residence when I retire. The same supply-side retards that go and pontificate "the market will correct itself", no need to fear, NAFTA is "good" for the US middle class, are the same s**theads that said the Iraqis will greet us with flowers and chocolates when we invade, and the whole operation will be financed from Iraq's oil revenues. Only a stupid person lets themselves get burned twice with unwarranted optimism in the face of hard, negative facts.
richmomzOct 8, 2007
Sure, in the event of a 1929 style run on the banks the Fed can give you your money by just printing more. Unfortunately, due to the massive inflation that would result it would instantly become quite worthless. Gold standard currencies are nothing new, but neither are fiat-currency systems. And history is full of examples of fiat currencies self-destructing through hyperinflation, over and over again. There's a reason why the US founding fathers insisted upon a gold/silver backed currency system, and its unfortunate that so few people understand why.
lorematerdiggOct 8, 2007
Perhaps you should do some more research before you spout off about how something wasnt AAA rated by world recognized rating agencies such as Standard & Poors and Moody's.1. <a class="user" href="http://preciousmetalzone.blogspot.com/2007/09/unsafe-at-any-rating-cdo-speeds-to-ccc.html">http://preciousmetalzone.blogspot.com/2007/09/unsa ...</a>2. <a class="user" href="http://preciousmetalzone.blogspot.com/2007/09/chapman-gold-silver-economy-more_29.html">http://preciousmetalzone.blogspot.com/2007/09/chap ...</a>