Velshan

Fannie and Freddie Did Not Cause This Crisis

I notice many comments are totally out of touch with reallity.
The problem of Fannie was not that they lend to people who could not afford a mortgage.
The real problem is that Fannie borrowed very large sums of money on which it promised good returns but now cannot perform because Housing prices are collapsing.
Such borrowing was done by everyone in Mortgage business and all of them are in trouble now.
The most important question to ask is who arranged all this billion dollar funding. The answer is clearly the Federal Reserve, Treasury and its afflated Banks which continued to take in large Foreign money from various countries and the corrupted leaders of those countries.
It is very clear that the above instiutions needed to keep this money away from the respective Foreign Governments ($300 Billion from Russia, $1.5 Trillion from China, $600 Billion from Arab etc).
That Geo-political requirement needed America to have some place to invest in. But the growth in foreign economy was so fast that American Industries could not take on more investments. that was the reason for creating suddenly assistance for poor Americans to purchase Homes. Democratic fools were simply used by these American Financial elite. That is also the reason why they cannot afford to have people like the Maverick McCain become President and MAYBE default on Fannie or Freddie.
The most important question is, So why not let Fannie collapse and make all these foreign depositors go Bankrupt.
Why Paulson added word in the Bailout Bill to also guarantee foreign Banks who purchased Fannie's mortgages?
Why no media or political parties bring out this question?
The answer to these questions will show you the real reason for Fannie's problems.
But the answer will also expose America's economic tricks and strategies and also its weaknesses.
A HINT : That foreign money is actually equal to American "Investment" in all those countries. The American Financial wizards need China and Russia to release their currency to be floated on money markets. But they failed to achieve that. The American Financial crisis is the result.
GAME OVER.

What About 'All That Cash on the Sidelines'?

Very good idea. I fully support. But don't think that most are ready for such a big change. That revolution will one day come to America but not today

Russian Oil Is Worth the Risk

I know for a fact since that Russia is one of the most law abiding nation. Western media bias against Russia is wrong and will lead to nowhere. China is actually a much more dangerous place to invest with many failed investments. Yet western media keep promoting them as best market.

The world needs more resources and Russia has a good part of that. Companies such as Gazprom that control an important part of that resources will continue to perform very well and continue to provide good returns for their shareholders.

All I can conclude from this is that western funds (which also control the media) hopes to recover their investments in China by selling their shares to small time investors who follow media.

While they want to grab all the good opportunities in Russia quietly at good prices by reducing demand from small investors.

Because, I know that Georgian war regardless, the big investors are all still in Moscow.

Kurt Wulff is correct. Listen and gain or it is your lose.

Can Gold Be Suppressed Indefinitely?

The Gold was considered a safe commodity to keep as it lasts much longer. But that was when people used to own their own homes and land.

Today those who still have such luxury of own home and land such as common people in India still buy gold.

However almost all economies that are linked to American dollar based economy has higher number of people (such as Singapore) where majority of people only have mortgaged homes (on debt).

Their problem is to ensure their own ability to pay for their home mortgages. Keeping gold will not assist them in ensuring this ability. They thus have to invest in stocks or bonds that will provide them this ability (in interests or higher value). Gold being a commodity for stability (meaning stable price) is not an investment.

Thus I humbly warn anyone who wishes to "invest" in Gold, please ask yourself. Are you an investor such as that Indian who saves money in gold. Or an American in debt who needs an investment vehicle to earn more money?

Corporate Fraud + Government Intervention = Bailout Nation

You can blame the people who borrowed money and later found that they cannot pay due to loss of job or inflation or the non-arrival of expected pay rise.
Or you can blame the Banks who "borrowed" huge amount from Fed at very low interest and issued such loans without even proper vetting of clients (in sub prime loans - no details of employment and earning history were provided). Not because they hoped for repayment but simply to show "growth" to the stock market and shareholders. And of course can claim better salary package for the wonder kids of the Board of Directors.

Or you can Blame Fed who issued this funds to Banks at such low interest rates and allowed the rapid uncontrolled bad loans to common people thru credit cards and other loan issues.

What is real problem is that there is something seriously wrong with America. Fed reacted to that problem, Banks reacted to that problem. And common people reacted to that problem. And SOLVED the problem by spending. Because that is what the Government kept saying. Don't worry, keep spending. All will be alright.

The truth is our Financial Giants borrowed much more then they lend to our common people. They invested in huge industry building in China and Vietnam and around the world. Now they find that they cannot recover the money from this investments. Worst the output from this investments cannot be sold in America because American earning power has been stagnant and actually in real terms has been reduced.

To allow for the continued sales of their good from China and other investments, they gave away cheap credit to American people to spend. BUt for how long? what is next?

The real problem is our back boneless corrupt politicians (except Ron Paul ie.)

Is This a Recession? Wrong Question.

By the new world economics definition. America is not in recession. If you can borrow to continue your economic activity then of course, you are not in recession.

It does not matter how much is your debt to Americans or foreign nations. Until the debtors find ways to take back the money, you got no worries. After all you have the biggest gun around.

But the debts taken by Investment Bankers is the real problems. They took all the extra cash from all around the world and promised good returns on that money. This Bankers could not find enough business to make profit as promised. So they kept borrowing from the Fed to pay the difference in profit made and profit promised to their clients (private investors who were also Foreign Government Funds). That accumulated debt is the real problem. The answer to the problem is simple. Let the Investment Banks all fall. It does not matter how big they are.

The biggest business created by this Investment Banks and that is crashing today was Housing. It was a good idea. But there was over investment which obviously will lead to oversupply and price collapse. It will take years to get back to normal growth. And the Investment Banks wants the people of America to save them. People with whom the Investment Banks never shared any profits.
American Government has already started to safe them by providing further credit and guarantees.

But this is dangerous. It allows the continued paying of large profits to holders of securities from this Investment Banks which to say the least is unfair.

This additional profits indirectly allows the Foreign Governments to buy oil at high prices which they subsidize for the citizens.
While Americans citizens are left with high fuel bills.

I say, kill all the Investment Banks

Why the U.S. Dollar Will Continue to Lose Value

DDW is right. The world is very much linked to America. But the world economy is also more complicated.

1. India has always suspected American Financial manipulation and never allowed more then about 30 Billion in US$ reserves. Something that they can manage.
2. Arab countries have 600 Billions in US$ funds. A loss in US$ value will not much affect them as it is quite out of their local economy and are managed by American & European Financial consultants.
3. Russia was manipulated to buy 150 Billion in US printed papers. They are very aware of their potential loss and has been quietly pushing to purchase electronics and food industries in Europe with that money. They are doing their best to get out of Dollars. They are also trading oil in many other currencies.
4. Japan which has huge amount of US$ has already reinvested them in third world countries in South east Asia and is managing fantastic profit making and very productive manufacturing empire.
A loss in value of US$ will affect this empire only if American imports decline. But Japan will not suffer much. Already plenty of textile related investments by Japan has stopped exporting and are supplying to local markets at much cheaper prices.
5. China has also taken Russian & Japanese approach and has reinvested US$ into Africa for control over Oil reserves.

So my friends. Please understand that world is quite safe. America has underestimated the rest of the world and will soon learn much more. The financial wizards are going to understand that God made all men equal.

Fannie & Freddie: Myth vs. Reality, Part 2

What is important to any normal person about Freddie or Fannie is what it implies and what will happen to us, due to the fiasco.

First lets understand that Whoever is at fault and Whoever is the mastermind of all this debacle, is not really important. Because they probably are too smart to be caught. Or if they are indeed stupid will be caught and yet cannot prevent any of the consequences.

This debacle has happened due to actions by a very large group of people including the Politicians, Congressmen, Senators, Bankers, Ex-Bankers (or I should say, people who are still indebted with Banks but work in Government positions now), and a whole of financial consultants. (and of course the silent or biased media)

The importance of the above factors is that all this people are running our Government and I don't see they giving up their luxurious lifestyles because they made a mistake.

The mistake is
"Take available opportunity to create more money for yourselves". Is this a mistake? Not an easy answer right? Not important either.

What is the key development from this "mistake"?

The Building of so many Houses? For people who cannot afford it?
Not really. Because, if someone has already build a house for say, $100,000 dollars. He can keep the house for years until someone is ready to buy the house for a price above the cost.

But what if you have borrowed the money (say from China) with an interest that you can afford. No problem right. Just pay the interest and hope soon someone will buy your house for a price that now will include the interests that you have paid.

But what if you have not enough money to pay the interest and you still have not found the buyer? Then you go crying to the Government for help. And Government may keep you alive by giving you additional loans. Or buy all your houses at a fixed price.

This is the discussion that is going on. Instead of clarifying the actual value of the houses and interests that Freddie and Fannie are obligated to pay. The Government keep giving the "ALL is OK" speech.

While now, the owners of the Freddie & Fannie shares are beginning to wonder about actual situation and are selling of their shares at whatever prices that is possible.

This means, we all have to wait and see if American people can continue to earn enough money to keep paying the interest on money borrowed (yes that is from - China, Japan, Russia, among others).

And if American people will want to continue paying that money. If not then there will be serious problems between America and all those countries who provided that money.

The only solution is to simply let the company Freddie and Fannie fail. Then sell all the assets at very cheap prices to Americans at any affordable price and tell our lenders - "oops sorry. This is how Capitalism works".

But America as a super power and trusted Business and Trade partner will be gone. Dollar will be also gone. But Americans will not really lose anything. in fact get cheap houses.

It will wake up a lot of countries. But the World will be a better place.

Fantastic!...

[Note : I like the article posted by Questionable. His is right ]

Global Market Performance: Nowhere to Hide

Dear Gentlemen, when I see all this discussion about market, value, correction, bottom, peak, etc I am sad to see the most important word of all - that is "citeras paribus".

I was thought that the words mean - "everything else being equal".
I was told that all economic theories are based on "citeras paribus".

That got me to panic and travel all around the world to see any country where economy was run based on that principle.
Well guess what? Every country has hidden and sometimes not so hidden regulations to ensure that the economy is always "growing".

No country, including the USA has a free market.
Because of this manipulation of market, growth sometimes is artificially boosted. Look at the so called "Tiger" economies of South East Asia. These countries were artificially boosting their economy using borrowed money.

USA has done the same for the last decade by issuing Bank Securities as collateral. The scheme went too far including creating non-existing high priced housing market to attract foreign money into USA.

All this borrowing and artificially increased house value boosted the consumer economy.

Now the time is for all this to collapse as it has happened before in all other countries.

The bottom is yet to come. Because everyone who can afford is still holding on to their positions. The only way American Stock market can improve is to allow foreign takeover of American corporations.

But the US Government will not allow it.

This is exactly what happened in Korea with its Chaebols and Indonesian Conglomerates who refused to give up their ill gotten assets. Korea managed to destroy the power of Chaebols and recover its country. Indonesian could not.

Which model will play out in USA is yet to be seen. Till then don;t bet my friends.

And You Think Today's Gas Prices Are High?

The price of Oil in 1930s is relevant today. And the article points out an important factor.

In 1930s there were not many car owners. The price reflected the maximum price that Oil Producers can charge to those who can afford it. It was very high for normal people to afford.

Today, that oil is purchased by Governments of all countries. AT ANY PRICE to ensure their own economy which relies motorized transportation is sustained. It is subsidized for a long time all around the world. That allowed for the cheap oil to become the normal state of affairs.

The price hike today is more like an Auction to find out the world Governments who can buy at the highest price. So far only a few poor countries have given up trying.
Major countries like China and India have even signed cooperation deals (despite their historical enmity) to form a purchase cartel. China is giving easy $2 Billion credit to African countries to secure their oil.

The price of American Oil was temporarily very low due to various factors. That is not sustainable.

The price of oil will and must become unaffordable to normal people again.

Solar Power or Wind Energy will not drive cars. They will be auxiliaries to Oil and will remain as such for a very long time.

The guys with money have all purchased the oil at very high prices. Oil that exist today and also Oil Futures that are yet to exist. This only means, the price will not go down for any time soon.

The only way this situation will end is the massive economic collapse around the world and reduction in oil usage. (NOT increase in Wind or Solar Power usage).

Another nightmare scenario is China, Russia, and many other countries will force US to pay for its debt (3 trillion and rising) so that they can pay for their high priced Oil. This will force a showdown that will be terrible for all world.

This article to me is most important reminder of reality.

Government Inflation Data at Odds with Reality

Please allow me to tell you a story.

The American Banks (with their European cousins) have been issuing Credit to the World debt market to sell American & European Goods and Services since World War II and created so much wealth all around the world.

But sneaking thru the economic growth was the Bogus Economist whose contribution to the World Economy was "Financial Games". Where money was created simply by issue of Bank "Papers" to loan money from Third World Countries which was then used by this "Financial Wizards" to exchange for Dollars by forcing a showdown. This showdown was executed soon after a money market is created in this economies to allow free flow of money and free exchange of currencies. This created the largest paper growth in World History. This caused the 1998 economic collapse in ASEAN and east Asian countries. Once the Balance of payment was settled it turned out that the Asian Miracle Tiger economies where just pussy cats with no real economy. Bogus Factories with overvalued manufacturing capacities were exposed. They are all dead now.

But the Bogus Economist tasted victory and got drunk.

China is today's ASEAN miracle. Much of American & European wealth has been poured into China. But the "Bogus Economist" are stuck. They got caught in their own games by Chinese Government who refused to play by the rules. It has refused till now to allow free flow of money or currency exchange which would allow the "Financial Games" to be played out to conclusion. China refused to exchange their Trillion Dollars at open market.

The unfinished China Game has forced the Bogus Economist to look for quick answers within their own Territory. The America. This Bogus Economist are from America and have strong influence from America.

They use the growing American Property market data to entice China to invest all their US Dollars into bogus Properties of inflated Prices that they created. China did. And today it holds property papers which are fast losing its value fast daily.

However China (& few other countries) woke up fairly quickly. And stopped suddenly the purchase of this overvalued propery papers. (This also caused for the property inflation to bust.) The Investment Banks who were holding the Property Papers ( to give the impression to China and other gullible Sovereign Funds that the papers actually has value ) were caught red-handed. But the whole matter was dismissed as Investment Banks making a mistake on complicated financial instruments.

This Bogus Economist are now desperate to cover their loses quickly. Thus they manipulated to enter into a territory that was long managed excellantly by good people. Thru the corrupted bush Government various monitoring authorities were switched off. And Today speculative money has entered into the Oil Exchanges.

Bank Instruments are being used to buy oil out of the real Oil Market and sold at much higher price Back into the same market. Though well known, this matter is also being investigated and exposed.

These corrupted Bogus Economist are not going to be easily caught or stopped. they can manipulate Governments as they have amply demonstrated by removing anything that stands in their way.

But their more and more desperate acts are slowly moving into the main real economy. It is not just paper game in Third World economy anymore. It is affecting real economy and hard working people are suffering.

This story is based on reality. I really hope people stop refering to themselves Democrats or Republicans whatever and start behaving like a true citizen of this earth. We breath the same polluted air you know and live and feel the same sun.

Start investigating my story. You will be surprised. And some of the economic wonder kids will start looking like Devils, including Alan Greenspan because all this cannot happen without his knowledge.