The Next Major Financial Crisis 44 comments
-
Font Size:
-
Print
- TweetThis
SA editor's note: This article has been removed while we attempt to resolve a copyright dispute.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 44 comments:
OK... that's fine... let's start wringing those excesses out of Buffets’ portfolio and give it to me and the others hurt by this short inspired self introspection and "WRINGING"!
> jack
Unfortunately for America, the political and moneyed elites have decided to replace private hubris by much greater public hubris and false private credit by even more dishonest public credit. A large private excess has been replaced by a truly monumental public excess, which is presented as the "cure". Very sadly the cure is an even greater malignancy. In turn, this malignancy must and will be excised. The pain that will follow this inevitable major surgery will be excrutiating indeed and recovery will be long and slow.
The alternative to the needed surgery(ie, the alternative to great pain) is continued political denial and deceit leading to not a miracle cure but an unavoidable and agonizing systemic collapse.
Maybe all 3.....
Of course the inability of U. S. taxpayers to pay back the credit card handouts plus interest (presumably the pre-set default rate of 29 percent) will be the crisis after the credit card crisis.
For every percentage point that credit card companies raise interest rates there will also be a correlating rise in the number of defaults.
www.daily-protest.com
The government's chin deep in the markets via their two proxies who know where all the bodies are buried, because THEY buried them, and until that changes news, good, bad or ugly, won't matter a whit.
I'm very afraid that what will happen, is that a second, perhaps more aggressive stimulus plan will be implemented, and its effects will come into play at the same time as the lagging effects from the initial plan.....sort of an economic "crack the whip" effect.
There can be no economic recovery if the almost one trillion dollars in credit card debt is not paid down. Until consumer credit card debt is reduced in half, The closest we will see to a recovery is higher oil profits being invested in certain stocks to artificially pump them up and lure the unknowing in.
www.daily-protest.com
On Jun 28 10:15 AM swaps wrote:
> The looming credit card crisis can easily be papered over with more
> handouts from the Federal Reserve, which will charge U. S. taxpapers
> interest on said handouts.
> Of course the inability of U. S. taxpayers to pay back the credit
> card handouts plus interest (presumably the pre-set default rate
> of 29 percent) will be the crisis after the credit card crisis.
Everyone stop wringing their hands with worry. The United States won't fail, nor we will suffer through a 5-year plus recession...because our economic system is designed to systemically eliminate the garbage companies and financial instruments through "Creative Destruction"...and, even more importantly, because we cannot be allowed to fail.
This is not American Arrogance, it isn't a posting full of way too much swagger. It's a post by a Political Science and Economics major who is amazed how many of the top analysts and economists never put those two disciplines together. They have always operated with absolutely synchronicity....NEVER more so than today!
On Jun 28 01:09 PM CLH wrote:
> Crisis for some is opportunity for others. Capitalism corrects is
> own mistakes while the govt. makes them worse.
The loan sharks are beckoning- better get those Americans off the savings wagon and hitting the flat-screen TV granite countertop crack pipe again soon!
On Jun 28 08:58 PM Alessandro wrote:
> The looming credit card crisis can be earnestly papered over by waving
> all interest charges on all credit card debt that is over 3 years
> old. The credit card companies made plenty of money on interest
> charges during the first three years of the credit card debt, by
> waiving all interest charges on older debt, it enables literally
> tens of millions of americans the opportunity to PAY DOWN their credit
> card debt.
>
> There can be no economic recovery if the almost one trillion dollars
> in credit card debt is not paid down. Until consumer credit card
> debt is reduced in half, The closest we will see to a recovery is
> higher oil profits being invested in certain stocks to artificially
> pump them up and lure the unknowing in.
>
> www.daily-protest.com
But now that you know what the PRIMARY problem is, you need to ask yourself, WHERE WILL THE NEW JOBS COME FROM?
Not Financial services jobs at banks and brokerages.
Not manufacturing jobs, because we don't have any.
Not retail jobs.
Not auto mfg. and sales.
Not home construction.
We need approx. 175,000 per MONTH to stay even. Instead we are losing 600K+ each month.
We have 9,000,000 unemployed and probably many more hidden in unreported DOL numbers.
Our economic model of a services economy was a big fabrication by the crooks in finance and Wall sStreet and the curs in government that sold our interests down the river for a few campaign dollars.
WE ARE SCREWED. Our economy is headed to a permanent NEW NORMAL. It will not be a nice place for our children.
On Jun 28 05:41 PM Unemployed wrote:
> Have anyone noticed that revised UI benefit applicant numbers are
> always higher than those initially reported one week ago, and new
> week's UI numbers are always lower than the revised one? Moreover,
> those who are receiving extended UI money after used up the first
> 26week's benefit are not included in the statistics. Can we call
> this am improving situation? It doesn't seem right. I expected the
> "Change" that Obama promised. Rather than playing with statistics,
> US government should get to the point; i.e., we are having a huge
> jobless problem, and we must solve this problem first.
Defaults will go up because consumers are tapped out and jobs and income are not rising. Shorting Financials now seems like a sound idea but as we all know, markets can stay irrational longer than one can stay solvent, even with winning bets.
If we can't take on the Financials because they can continue to re-write the rules, who is next? If credit card debt defaults are rising, those borrowers are probably not out spending. Is the Retail play the way to go here? They certainly cannot mask declining sales the way the Financials can mask non-performing debt...
That's one of them.
Already 15 states have emptied their unemployment insurance funds and have been compelled to borrow from the US Treasury in order to make monthly payments. By next year, it is anticipated that 30 states will have to borrow in the neighborhood of $17 billion to meet unemployment payments. The crisis is “setting the stage for big pressures for states to restrict eligibility and benefit levels,” warned Rick McHugh of the National Employment Law Project
State-level income tax collections plummeted 26 percent in the first quarter of 2009 from the same period last year, according to a recently released analysis by the Nelson A. Rockefeller Institute of Government. Another new study, by the National Governors Association, shows that sales tax revenue has fallen 3.2 percent over the previous year—the biggest decline on record—and corporate income tax has tumbled by 15.2 percent.
Many rules, moreover, make it impossible for workers to collect jobless benefits at all. In Michigan, for example, 34 percent of all jobless workers cannot collect benefits, because before losing their job they were part-time workers, self-employed, or working on commission, according to the Detroit Free Press.
Credit cards, commercial real estate, greater housing decline, lack of interest for Treasuries--you name it--there are several potential candidates for the next problem area.
S&P and others are predicting about a 15% default rate for junk bonds. That will be a shocker as well.
That said, if you don’t have the money to pay for your basic needs, you have to do what you have to do irrespective of the consequences. One of the great things about this county is that you don’t get thrown in jail for defaulting.
On Jun 29 01:44 AM WAKEUP wrote:
> Marc: These two statements, "The worst-case scenario is if credit-card
> losses rise to a point where banks are forced to repay bondholders
> early... " and "Credit-card defaults and unemployment are highly
> correlated" will turn out to be true insights. A great deal of credit
> card debt is unsecured, of course, and it will be these debts that
> unemployed people will simply stop paying. Once a cardholder's credit
> rating is zapped, Mr. Unemployed will say, "The hell with it; I'm
> not going to pay, now, because it won't do me any good, anyway."
> And he will have a point (albeit not an honorable one); it will take
> him years to rebuild his credit score, and hardscrabble efforts to
> send a couple of hundred bucks to the credit card company once in
> a while won't do anything appreciable to help Mr. Unemployed. With
> his back against the wall, he will buy groceries, and the credit
> card company can go fishing, for all he cares. Given his situation,
> it's hard to see a flaw in his reasoning, there. This situation is
> only months from full-blown maturity.
Judge: Is this your signature on this CC contract?
Debtor: yes
Judge: Are these charges yours?
Debtor: yes (you could lie here, but the CC company has copies off all those receipts you signed, so it is probably best not commit purgery here).
Judge: do you have records showing that you repaid this debt?
Debtor: no
About this time the gavel will come down with a ruling in favor of the CC company. All that’s left to talk about now is at what rate to garnish your wages.
On Jun 29 06:28 AM xpatriot wrote:
> If your credit card company won't cut your balance by at least 50%,
> just quit paying them. Unsecured debt is a gift.
It's time for everyone to get one plain and simple truth....wait for it....wait for it...
Here it is:
GOOD economics are BAD politics
All this is because his welfare to work is because they will work for a living because the free living is bankrupt.
It is on its way!!!
www.productequityvalue...
On Jun 28 09:21 AM texpat wrote:
> Buffett, like Soros, and Keynes before them, is a savant, a genius
> at investing but a moron at political economy.
The last one hasn't really started to work its magic yet because it was designed to get going in time for Congressional elections, not for us.
But, sure, let's have another stimulus (Make it a trillion dollars this time, since we are now used to trillions instead of billions). And let's load it up with more pork and make sure that it kicks in for the Presidential election in 2012, because that is what is important here.
And whatever Congress does with the new stimulus, it is absolutely imperative that nobody be allowed to read it prior to the vote. It's a hallowed tradition now.
I guess when you get in bed with the vipers, you will get bit sooner or later...Hmmmm.