The Coming Financial Crash: “Where Everyone in the House is Crazy Only the Sane Seem Like Fools”
September 12th, 2007Via: European Tribune:
The unease, verging on panic, about sub-prime mortgages has given us a glimpse of what is ahead. But, let us be very clear, it has been only a glimpse. Sub-prime securitised mortgages are only a relatively tiny part of the huge credit and debt structure involved in what we may group under the generic name of derivatives. They include credit derivatives, hedge funds, private-equity deals, mutual funds, pension funds and the whole gamut of financial instruments that have flooded not only United States markets but markets around the world, especially in the last five to ten years.
Thanks, Kevin, for the link to that article. I was a math major in college, and tend to be analytical, but trying to get my ahead around credit derivatives and such still makes my head hurt. Maybe it’s because it shouldn’t make sense.
The numbers that he quoted as the value of all the funny paper out there, $450T-$600T, are staggering. And if I’m getting this, that means that there are, worldwide, real tangible assets worth only a fraction of that number?
He also spoke of banks being forced to consider securitised paper as being the equal of treasury bills. This seems like trying to put out a fire with gasoline.
@montysano,
At the very least it means the value of the funny paper is an order of magnitude greater than global GDP, estimated at $50T in the article. There is no hope, no hope at all, of every repaying the “debts” represented by this funny paper.
It seems to me the main point in this exercise has been to facilitate the continuing and accelerating transfer of wealth from the have nots to the haves. It will also help to eliminate many, if not all, of the smaller regional and national banks around the world leaving us with a simplified (oh really?) and far more concentrated banking system controlled by a small number (50?) of global banks.
At some point all of this debt will be repudiated. That means a whole lot of folk are going to be without a whole lot of anything. They’ll get restless and their governments will get ever more repressive and we’ll see a meltdown the like of which has only been imagined in the most pessimistic future shock scenarios. I personally am not looking forward to it, but then I never did care much for deprivation.
As for what can be done? Not a damn thing, in my opinion. What will happen is unstoppable, as every debt based fiat money system has shown throughout the ages. The best hope, IMO, is to be able to be at the end of the repudiation period rather than at the beginning. Eventually, even the police and the bailiffs will be in the same boat as everyone else and will give up being willing to turf out folk just like them. Then look out for the armies, as these guys won’t have to worry. They’ll have all their daily needs taken care of and won’t give a damn one way or the other. LA’s gangs will become a vast recruiting source for the newest and best inductees TPTB have ever had to do their dirty work.
Sounds like fun! But all the biz about everyone except a few doing without anything coupled with government repression and armies (private armies a la Blackwater mind you) needs to be followed to its conclusion: this means the oligarchs will own everything including people (willingly or not) EXCEPT the few, the remnant (there is ALWAYS a remnant, and I plan to be among them) who will live free or die…which means the oligarchs will, out of boredom if nothing else, start picking each other off (since it won’t be challenging enough for THEM to pick off the masses as they would an animal), which will make the job of the remnant so much easier. Bring it on! Ha ha
“Then look out for the armies, as these guys won’t have to worry. They’ll have all their daily needs taken care of and won’t give a damn one way or the other.”
This is why I am tempted daily to enlist — as when shit hits “I’d rather be a hammer than a nail,” as they say.
It’s scary when I catch myself thinking like that. Because though in reality I’m too self-conscious and/or squeamish to be a mercenary, many other men are not.
It is about time to declare Jubilee. All debts cancelled. If the rich are going to get bailed out, everyone gets bailed out. Whatever you are in possession of you own and are responsible for. You’ve probably paid for it more than once anyway. For those without a place, divide up all the public land and parcel it out according to it’s productivity. This will not be a federal program.