Question by who WAS #1?: Your guess on when inflation hits 20%?
Appropriate now there are 23 diverse bailout programs and the Treasury/Federal Reserve complicated has committed $ 8.7 Trillion in loans and guarantees and give-aways. I’ve heard that generally there is $ 800 Billion in circulation though not certain about that. Correct now the banks are soaking up all that further funds, covering quick positions, and so on, but when it hits the streets I think Jimmy Carter will stop feeling so poor.
We treated the housing bubble by producing a funds bubble. It is going to bite us (U.S.), possibly late 2009. When do you feel that will take place? And what can the powers that be do about it? With the economy in shambles it’s going to do far more damage to hike up interest rates.
How do you believe this is going to play out? Do you consider they will forget about the North American Union and go straight for a worldwide resolution?
Greatest answer:
Answer by I , a happy Bolshevik
Any State intervention is completely inadequate to face the enormity of the difficulty created by the over-accumulation of fictitious capital (derivatives, etc)
The derivatives marketplace expanded from a $ 100 trillion in 2002 to $ 516 trillion in BIS’s estimation in 2007 or $ 585 trillion in other estimations! Comparatively all the real goods and services created by all economies in the globe annually, the worldwide annual gross domestic product is significantly less than $ 50 trillion, and the US annual GDP of approximately $ 13 trillion. It becomes crystal clear that no intervention by the State, by a central bank or by all of them in the world place collectively could ever handle the tempest of this ocean of derivatives.
Following the Lehman Brothers debacle, the Paulson $ 700 billion plan was urgently introduced to get “toxic assets» relieves the financial system from their destructive burden. It was finally voted in Congress without avoiding a political crisis- and without having convincing that the plan will be in the end efficient. Even from this sum, $ 250 billion had urgently to be re-directed to re-capitalize and partially nationalize the 9 strongest US banks. The Paulson Strategy attacks as the principal problem illiquidity even though the correct core problem is insolvency. Securitization dispersed globally the dangers and created bankruptcy dangers opaque, destroying thus any creditworthiness and freezing the credit lines. Lending by banks was more than-extended, often 60 occasions much more than their assets, generating them now candidates to file for bankruptcy. The Paulson Program offers some temporary relief to the Wall Street magnates although the taxpayer ‘Main Street’ has to pay the bill. It transfers another portion of the enormous private debt to the public debt of an currently over-indebted America.
Even though, with the development of US deficits, the require for foreign investors for financing it grows, US creditworthiness is quickly deteriorating. The ratio of total US debt to GDP from 163 % in 1980 became 240% in 1990 and jumped to 346% in 2007.It is enormously aggravated with the dramatic developments of 2007-2008, such as the addition to the public debt of $ 6 trillion liabilities of Fannie and Freddie and the $ 700 billion of the Paulson Program. America has been transformed into a super-Argentina in a non-declared default. The difficulty of US over-indebtedness is transferred to the subsequent Administration.
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