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  1. #1
    Senior Member AirborneSapper7's Avatar
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    The Federal Reserve's rescue has failed

    The Federal Reserve's rescue has failed

    By Ambrose Evans-Pritchard, International Business Editor
    Last Updated: 12:39am GMT 04/03/2008

    The verdict is in. The Fed's emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed.

    Yields on two-year US Treasuries plummeted to 1.63pc on Friday in a flight to safety, foretelling financial winter.

    The debt markets are freezing ever deeper, a full eight months into the crunch. Contagion is spreading into the safest pockets of the US credit universe.

    It is hard to imagine a more plain-vanilla outfit than the Port Authority of New York and New Jersey, which manages bridges, bus terminals, and airports.

    The authority is a public body, backed by the two states. Yet it had to pay 20pc rates in February after the near closure of the $330bn (ÂŁ166m) "term-auction" market. It had originally expected to pay 4.3pc, but that was aeons ago in financial time.

    "I never thought I would see anything like this in my life," said James Steele, an HSBC economist in New York.

    No sane mortal needs to know what term-auction means, except that it too became a tool of the US credit alchemists. Banks briefly used the market as laboratory for conjuring long-term loans at Alan Greenspan's giveaway short-term rates. It has come unstuck. Next in line is the $45trillion derivatives market for credit default swaps (CDS).

    Last week, the spreads on high-yield US bonds vaulted to 718 basis points. The iTraxx Crossover index measuring corporate default risk in Europe smashed the 600 barrier. We are now far beyond the August spike.

    Sub-prime debt is plumbing new depths. A-rated securities issued in early 2007 fell to a record 12.72pc of face value on Friday. The BBB tier fetched 10.42pc. The "toxic" tranches are worthless.

    Why won't it end? Because US house prices are in free fall. The Case-Shiller index for the 20 biggest cities dropped 9.1pc year-on-year in December. The annualised rate of fall was 18pc in the fourth quarter, and gathering speed.

    As the graph shows below, US households are only halfway through the tsunami of rate resets - 300 basis points upwards - on teaser loans.
    graph: US households are only halfway through the tsunami of rate resets

    The UK hedge fund Peloton Partners misjudged this fresh leg of the crunch. After an 87pc profit last year betting against sub-prime, it switched sides to play the rebound. Last week it had to liquidate a $2bn fund.

    Like many, Peloton thought Fed rate cuts from 5.25pc to 3pc (with more to come) would end the panic. But this is not a normal downturn, subject to normal recovery. Leverage is too extreme. Bank capital is too eroded. Monetary traction eludes the Fed. An "Austrian" purge is under way.

    UBS says the cost of the credit debacle will reach $600bn. "Leveraged risk is a cancer in this market."

    Try $1trillion, says New York professor Nouriel Roubin. Contagion is moving up the ladder to prime mortgages, commercial property, home equity loans, car loans, credit cards and student loans. We have not even begun Wave Two: the British, Club Med, East European, and Antipodean house busts.

    As the once unthinkable unfolds, the leaders of global finance dither. The Europeans are frozen in the headlights: trembling before a false inflation; cowed by an atavistic Bundesbank; waiting passively for the Atlantic storm to hit.

    Half the eurozone is grinding to a halt. Italy is slipping into recession. Property prices are flat or falling in Ireland, Spain, France, southern Italy and now Germany. French consumer moral is the lowest in 20 years.

    The euro fetches $1.52 (from $0.82 in 2000), beyond the pain threshold for aircraft, cars, luxury goods and textiles. The manufacturing base of southern Europe is largely below water. As Le Figaro wrote last week, the survival of monetary union is in doubt. Yet still, the ECB waits; still the German-bloc governors breathe fire about inflation.

    The Fed is now singing from a different hymn book, warning of the "possibility of some very unfavourable outcomes". Inflation is not one of them.

    The Federal Reserve chairman Ben Bernanke
    The Federal Reserve chairman Ben Bernanke

    "There probably will be some bank failures," said Ben Bernanke. He knows perfectly well that the US price spike is a bogus scare, the tail-end of a food and fuel shock.

    "I expect inflation to come down. I don't think we're anywhere near the situation in the 1970s," he told Congress.

    Indeed not. Real wages are being squeezed. Oil and "Ags" are acting as a tax. December unemployment jumped at the fastest rate in a quarter century.

    The greater risk is slump, says Princetown Professor Paul Krugman. "The Fed is studying the Japanese experience with zero rates very closely. The problem is that if they want to cut rates as aggressively as they did in the early 1990s and 2001, they have to go below zero."
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    This means "quantitative easing" as it was called in Japan. As Ben Bernanke spelled out in November 2002, the Fed can inject money by purchasing great chunks of the bond market.

    Section 13 of the Federal Reserve Act allows the bank - in "exigent circumstances" - to lend money to anybody, and take upon itself the credit risk. It has not done so since the 1930s.

    Ultimately the big guns have the means to stop descent into an economic Ice Age. But will they act in time?

    "We are becoming increasingly concerned that the authorities in the world do not get it," said Bernard Connolly, global strategist at Banque AIG.

    "The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the 'shadow banking system' completely collapses," he said.

    For the first time since this Greek tragedy began, I am now really frightened.

    http://www.telegraph.co.uk/money/main.j ... iew103.xml
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  2. #2
    Senior Member AirborneSapper7's Avatar
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    Gee! Here's a couple of formulas for you Friedman worshippers:

    Lose my job, I can't pay mortgage.
    Lose my job, I can't pay taxes to fund endless Neo-liberal conquest.

    Bush knows what he's doing. He admittedly hates the lower classes and him and cronies genuinely love to watch working-class people suffer.

    Look at the smirk.
    Posted by Disenfranchised on March 3, 2008 7:09 PM
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    War breaking out in South America, an Israeli airstrike on Iran imminent, the middle east dropping the petro-dollar, massive US economic implosion... The stage is set, and don't plan on selling your home to cut yourself free, no one's going to buy. The media will do its best to keep up
    the illusion that everything's ok, but this is it folks.
    Posted by John Titor on March 3, 2008 7:05 PM
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    War is not an Option
    =====================

    If the kleptomaniac tribe that runs the financial system tries to launch another world war, to cover up their kleptomania, the world will respond with "wholeocaust".
    Posted by Tinfoil on March 3, 2008 7:04 PM
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    How can you say the rescue has failed? I have not received a check from the government, Mortgage rates have not changed from last year, and I don't know anyone who has been able to refinance their ARM for a reasonable rate.

    In other words the rescue has not happened yet.

    Joel
    Posted by Joel Frigon on March 3, 2008 7:03 PM
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    I forgot to reiterate the obvious...the excessive run up in housing prices were due to all the cheap money being crammed into the market. If you didn't have your calles blocked, you would get up to 10 (that's right 'ten') different lenders calling you each week to 'refi' or 'buy'. So that started a builder/investor frenzy (both promulgated by the banks) that drove prices (AND RENTS) out of sight.
    Posted by Andrew on March 3, 2008 7:00 PM
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    Again I am compelled to point out....the borrower keeps getting blamed for the sub prime mess. The market in which I live was one of the 'fast' appreciation' markets. Many people were getting priced out of their RENTALS due to the increase of landlord ownership. So it was in so many cases, a case of having to try to buy a house before your rent exceeded even a fully adjusted ARM mortgage would cost. I know because I get to talk to the borrowers all of the time.
    Prior to blaming the borrower, they were blaming the appraisers which was just as ludicrious.

    Posted by Andrew on March 3, 2008 6:56 PM
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    Sub-prime & loans with "teaser rates" are still being let, the idea we've changed policies & stopped making risky loans to people with no credit or proof of income or down payment is rediculous, a sham, the federal government is lowering standards & expanding loan limits by more 50%, their actions fortel even more and bigger bad loans.
    Posted by Smitty on March 3, 2008 6:54 PM
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    Bwahahahahaha! Prepare to eat megatonnes of poo-poo, Earthlings! Would you like some Grey Poupon with that, Monsieurs et Mesdames?

    Jeez, and we as schoolkids thought the coupon clippers immortalized in F. Scott Fitzgerald and Aldous Huxley were daft mayflies eagerly seeking out candles in which to incinerate their delicate albeit fashionable wings.

    Perhaps Hilary ought to do a fashion show special on the latest offerings in sackcloth, black plastic bin bags, and 3M duct tape?
    Posted by Skull Torr the Oblong, TickerTape God of the Universe on March 3, 2008 6:49 PM
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    America has always recovered from her financial breakdowns in the past.

    But the past is not the present. The number of savers and manufacturers are WAY down. Where is the investment going to come from when the residents who live there have no money to invest, and foreigners have taken their money out?
    Posted by Geoff W on March 3, 2008 6:44 PM
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    Greenspan knew the 's_ _ t' was going to hit the fan. It was inevitable. The whole monetary system is based upon unjust weights and measures. Hmmm. Does this ring any bells?
    Posted by Wise up people on March 3, 2008 6:35 PM
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    There will be no collapse, children. The central banks have the power to "print" money at will, and will, thus, generate more and more and more money until our savings and investments have been inflated away to nothing. But there will be no collapse.
    Posted by Mike London on March 3, 2008 6:35 PM
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    Let's not forget who we are talking about here: Ambrose Evans Pritchard has predicted 500 of the last 5 recessions . . .
    Posted by moqui on March 3, 2008 6:33 PM
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    Loans were given on the basis of racial need, and not on the basis of credit history.

    And now the entire global financial system is in peril thanks to the need for powerful whites to stroke their racial guilt complex.
    Posted by greg on March 3, 2008 6:32 PM
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    There are several misleading points in this essay.

    USA unemployment increased by 0.3% in December, a 25 year record.

    True, but it rose only to 5.0% total, and declined to 4.9% in January. These numbers are actually below the 25 year USA average, and they are down right spectacular when compared to Europe.

    And, why does Ambrose believe rate cuts to zero, like Japan did, will help? After cutting rates, Japan had 12 years(!) of almost no growth.

    And, the huge price declines in USA housing were preceded by 5 years(!) of huge price increases.

    America built too many homes and extended too much easy home credit. The price declines are an inventory correction, nothing more, nothing less.

    I have only recently begun to read Ambrose. I can't challenge his knowledge on international finance. But, when it comes to USA politics he's hard Left. On USA finance, he's a perma-bear and sounds like a hysterical teenager with a 160 I.Q.
    Posted by Steve on March 3, 2008 6:31 PM
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    Maybe it's time to sell the Grand Canyon and Yellowstone.
    Posted by Jon - Florida on March 3, 2008 6:29 PM
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    false inflation ? prices are in exponential growth for all the commodities , central banks continue to inject massive amounts of newly printed money ... the plan is to save the banks by eroding the purchasing power of the people ... I say , if the banks are broken , lets nationalize them all , and lets put all the banksters in jail ... when you rob 100 dollars you are thieve , when you rob trillions...where is all the money gone ? it evaporated say the banksters ...come on
    Posted by mario on March 3, 2008 6:29 PM
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    Steve is right. The sky isn't falling.

    It doesn't really matter what the Fed does or doesn't do. What the pundits and financial analysts always fail to take into account is the tremendous resolve of the American people -- people who genuinely possess a tremendous work ethic.

    When things get tough, Americans get going. Half look at problems and say, "Hey, where's the opportunity here?"

    Americans aren't too proud to work 16-hour days, forgo vacation holidays for three years or take a second job. The average American doesn't really expect government to solve his problems. We all grew up in America believing that success was due to our own efforts, that ultimately we as individuals are in charge of winning or losing on the financial front.

    Europe we're not.

    When immigrants flock to the U.S. it is because they want work. If they go to Europe, it is for a free ride.

    That's the difference, folks.
    Posted by globalobserver on March 3, 2008 6:27 PM
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    To my American friends who take umbrage at Mr
    Pritchard's analysis I recommend they take a look
    at Warren Buffet's latest letter to shareholders.
    He has been warning about the derivatives " time
    bomb" for a number of years and stated some
    time ago that he wouldn't invest in a bank until
    he could understand clearly the size of the
    liabilities. America's problem is the world's
    problem so everyone has a right to comment -
    especially when " the world" has been bank-
    rolling the US to the tune of US$2 billion per day
    for quite some time. And anyone who thinks that
    the Fed than delay the day of reckoning is also
    wrong; the issue is lack of credit in the financial
    system - just look at the paragraph about the
    New York Port Authority...
    Posted by Julian Smith on March 3, 2008 6:22 PM
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    wow, you guys worry way too much! just vote for my wife, she'll strighten it all out...
    Posted by Bill Clinton on March 3, 2008 6:21 PM
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    "China is the new
    superpower, they are the future, and they have a
    planned economy.
    Posted by leftandproud on March 3, 2008 4:44 PM"

    Yes, it's called totalitarianism but what other kind of system would someone who monikers itself "leftandproud" advocate. All left wing governments tend towards and some arrive at totalitarianism. All right wing governments tend towards individual liberty. I'll take good old US capitalism - warts and all.

    Posted by Steve on March 3, 2008 6:17 PM
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    I have to agree with the Ron Paul comment.
    Posted by adam on March 3, 2008 6:15 PM
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    Nary a word in the article about the past few years of central banks' double-digit money supply growth rates, which is where all the loose credit and inflationary pressures come from in the first place. To discuss general economy-wide credit and inflation issues in any terms other than money supply is like trying to get all the toothpaste out of the tube by squeezing it in the middle.
    Posted by HD on March 3, 2008 6:12 PM
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    Oh, for God's sake!! It's this kind of doom-and-gloom garbage that makes people believe that things are far worse than they are. The U.S. isn't even in a recession. That requires two consecutive quarters of negative growth, which hasn't even happened. Unemployment is still below 5% (which is considered to be full employment). Inflation is still low. The stock market is volatile, but the DOW is still in the mid-12,000 range. Get a grip, people! The latest "crisis was caused by lending institutions being forced to give loans to people who were not credit-worthy. It will shake out.
    Posted by Brenda / Georgia, USA on March 3, 2008 6:10 PM
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    Come on folks..lay the blame where it belongs. That is the millions of people who overextended themselves to buy property that they could only barely afford at the flashy ARM rate of the day. Then when the day of reckoning came, they had to bail out of what in other circles would be called 'risky investments'. Had these millions who were NOT, might I add, 'duped by unscrupulous lenders', stayed within their means, the number of foreclosures would never have skyrocketed and we would be better off then we are now. As it stands, the dollar is in the crapper, and that is why energy costs are so "high". In all reality, the dollar is worth less, so commodities that are based on foreign purchases are naturally going to look more expensive. Don't blame the president, congress, the government...rather blame the idiots who could not seem to reign in their spending habits and stick with what they could afford. Interest never sleeps people, and all accounts at some point come due. The piper must be paid, and unfortunately, the country as a whole is suffering for the wholesale greed of the early part of this century.
    Posted by Blake on March 3, 2008 6:03 PM
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    The lower interest rates go the harder I will hold on to my dollars.
    Posted by Cathy on March 3, 2008 6:01 PM
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    Regarding:

    I wish the government of the USA considered Iraq's oilfields the spoils of war, and we paid ourselves back with it in return for liberating that country. I can never understand those whose mantra is "No war for oil." Do you even begin to understand what would happen if we didn't have access to oil? What do you suppose would happen when you no longer have fuel for your car or heat for your home, just for starters? If Katrina showed us anything, it wouldn't be long before anarchy would ensue. We have to have oil, and I am grateful that at least some people understand that and are willing to do whatever it takes to ensure our access to it.
    Posted by Sandy on March 3, 2008 2:38 PM

    Ohhh Sandy, Sandy, Sandy.
    This idiot country (the USA) buys SUV's and 8 cylinder full sized cars as if oil were our God given right. if we increased the average fuel economy by law, as most civilized countries have done, we could reduce Middle East oil imports by 1/2. Add a bit here and there for mass transportation, and reduced household electricity consumption, and we could get that to zero without "complete collapse" as some are predicting.

    They're absolutely right: NO WAR FOR OIL. Lets get off our asses and fix the problems here, and stop importing oil from countries that have been in civil war for 1300 years.

    And, what does this have to do with the banking crisis?

    Posted by Michael London on March 3, 2008 5:56 PM
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    Reading these comments its interesting to note who is at fault: the republicans, the democrats, Bush, Clinton, Carter, several generation at the Fed (althought I didn't see Volker's name invoked), big banks, big oil & the war in Iraq. The only thing not mentioned is global warming.
    The reality is that investors worldwide purchased misprised risk in real estate investments, not just in the USA but the UK, Ireland, Spain and elsewhere, and will pay for their misadventure as the market forces correct prices. Its unfortunate that so many others will be affected by the resulting credit crunch and economic downturns in the US and UK/EU - which combined represents almost 70% of the world's GDP (a misnomer in this use).
    It is to early to evaluate if the central banks' actions are big enouh or fast enough, it will take months to answer that riddle; and by then a new administration in Washington will create a entire new set of variables. Enjoy the ride!


    Posted by D K in SoCal on March 3, 2008 5:54 PM
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    "Wester Banker Man" is responsible for the whole mess.

    Opening up China in 1972--mistake.
    Not diversifying out of oil--mistake.
    Over-lending in housing markets--mistake.
    Outsourcing--mistake.

    Don't worry though, "Western Banker" has war and tyranny in his arsenal to hide what a Fool he is.
    Posted by Winton on March 3, 2008 5:53 PM
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    Why anyone thinks that lowering rates in a credit gorged economy is of any use is a mystery. When the bubble has burst blowing more hot air into it is a romantic gesture of impotence. Rates now need raising to a) choke off inflation and further supply of credit and b) to encourage money inflow to backfill the credit holes and c) to expose those who have been swimming naked to restore interbank confidence as soon as possible.

    Posted by Paul J. Weighell on March 3, 2008 5:50 PM
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    I'm so glad I voted for Dr. Ron Paul in my state's primary. Here's to hoping others will see the light before it's too late.
    Posted by Homer Jay Simpson on March 3, 2008 5:46 PM
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    Pliny, you are ABSOLUTELY CORRECT, without question. Sadly, you are not the Chairman of the Federal Reserve, nor am I, nor are they going to dispense with this ludicrous fiat currency system which places such enormous power in the hands of people who don't know what they're doing.
    Posted by James Deppeler on March 3, 2008 5:43 PM
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    "Ultimately the big guns have the means to stop descent into an economic Ice Age. But will they act in time?"

    The Federal Government will not monetize debt, because that is not part of the West Coast Hotel v. Parrish (1937) scrutiny regime. Power goes to power, and when American society weakens, the Federal Government DECOUPLES from it. The powers in the country demand it. It's Mellon's "Liquidate liquidate liquidate" all over again.

    And yet you, you silly feeble Euro, are saying "Monetize monetize monetize." There is enough money on earth to monetize all the bad debt.

    We will simply go through a Depression and political revolution. Actually, what is happening is not an economic change: it is a Constitutional change. Just read G. Edward White's (University of Virginia Law School) online essay, "Historicizing Judicial Scrutiny."

    The United States changes Constitutional regimes about every seventy years. We are due for one now, and we are going to get one.

    We are moving from the scrutiny regime--which says that policy is legal as long as it is rationally related to a legitimate government purpose--to the maintenance regime. The maintenance regime doctrine is quite different. It says that policy is legal as long as it maintains important facts.

    Important facts are facts of human experience--such as housing--which do not change no matter the attempt to change them. It's simply that American public opinion has added to the list of important facts--which previously included only protected speech, exercises of religion and a few others--such facts as liberty, education, housing, medical care and maintenance.

    If you want a case study of the change which is going on in American public opinion, read my study THE EMINENT DOMAIN REVOLT (New York: Algora, 2006). It lays out the whole revolution for you.

    But in the meantime, there will be no monetization of debt. What will happen is that Washington will circle the wagons. The fundamental doctrine of Washington preservation of power, SURVIVED the imposition of the West Coast Hotel scrutiny regime.

    Surprise!


    Posted by John Ryskamp on March 3, 2008 5:41 PM
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    Pliny, you are right on target. So refreshing when people get it!
    Posted by brelena on March 3, 2008 5:37 PM
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    Hey Pafaery, ironic that you say "Some people are just 'Stuck on Stupid'" and yet your own comment was the epitomy of stupid (sorry, don't have a dictionary? it means perfect example). Climate CHANGE isn't just about warmth. It's about the climate getting f'd up. So the cold is a perfect symptom of this. Colder winters, warmer summers. Its all out of whack. GET IT?
    Posted by arby on March 3, 2008 5:36 PM
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    Wrong - the verdict is not yet in. Lower official rates always take time to work their way through, even more so this time as lenders are reluctant to pass lower rates on down the line. One thing is sure: without the lower rates the situation would be a whole lot worse. So it is wrong to give the impression that the Fed's rate cuts will have no effect whatsoever, given time. Further pain cannot be ruled out but an eventual working through towards recovery should not be ruled out.
    Posted by Robert Cookson on March 3, 2008 5:35 PM
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    There are a few folks on here who seem to get it: neoconned, john cummins, james, stephen cook, etc. A privately owned Federal Reserve who was given authority to create money out of thin air and lend it to our undisciplined government for interest has benefited from this fiat system for nearly a century. The name of the game is to artificially inflate assets, induce a tidal wave of paper debt, burst the bubble and swoop in to buy up REAL assets, pennies on the dollar. We've seen it happen on little American farms through the 30s that are now corporate behemoths, we've seen it happen with developing nations, and we're seeing it on a massive global level now. These big boys are international banking, military, corporate complex elites who are after global governance and control. The first phase was the European Union because sovereign nations are an untidy and cumbersome nuisance. We are now seeing the gear up for the next phase, the North American Union. By way of a solution to this mess of their creation, we'll be offered up a new regional government and a new fiat currency, all in the name of stability and security. Think I'm nuts? Revisit this in 5 years. Re: Iraq for oil---yes that was part of it, as was support and protection for Israel, but our military actions are by no means justified, and are not in the best interests of western or muslim people. Certainly the elite have benefited greatly from the military actions. When we hit peak production in the US in the 70s, that was time for market innovation of alternatives to be allowed to begin in earnest. Why didn't we? Because oil gives the biggest, cheapest BTU bang for the buck, AND the big boys, once again, didn't want the competition. Ken from Denver, please PLEASE do some research and realize that much mischief (to put it politely) is occurring in our name, the American citizens. I'm sure as heck not interested in shooting someone down the street because some day he MIGHT do me harm, which is in essence the ridiculous logic being used to talk us into this destructive and self defeating nonsense.
    Posted by brelena on March 3, 2008 5:34 PM
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    The sub-prime problem began when American politicians of all stripes began demanding loose lending standards to accommodate "minority and disadvantaged" access to credit.

    At the same time the regulators relaxed credit standards.

    Simultaneously global bankers and brokers were inventing new and poorly understood derivatives which had the effect of radically increasing leverage.

    Now the house of cards is tumbling.

    The Politicians "emergency" stimulus package has been nullified by the collapse of the Auction Rate Securities market alone. They are "pumping" $180 billion into the economy in tax rebates while the Auction Rate debacle has taken $330 in cash reserves out of circulation.

    Where does the next shoe fall?

    Posted by Whynot on March 3, 2008 5:32 PM
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    Easssssyyy.

    didn't anyone else notice that the chart showing ARM resets not only peaks this month...but dramatically drops after that?

    forclosures and so forth probably follow the resets by 3 months or so....but this suggests that aspect of this disaster is mostly behind us.
    Posted by Martin B on March 3, 2008 5:31 PM
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    James the poster below, is absolutely right. America is facing stagflation again just like the late 1970s and her government is hell bent on a deliberate inflation policy in a desperate attempt to prolong an artificially induced boom. The consequence will be the destruction of the American dollar and a decline in living standards. If you don't believe me just look at Zimbabwe. Ben Bernanke will be at home there.
    Posted by anthony on March 3, 2008 5:29 PM
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    Bush and his henchmen have driven the USA off a
    cliff. We're through as a nation, and the world will
    be better for it! It's time to embrace change, and
    that means ditching capitalism. China is the new
    superpower, they are the future, and they have a
    planned economy.
    Posted by leftandproud on March 3, 2008 4:44 PM

    Yeah, and it's called Communism you moron!

    Posted by Greg M on March 3, 2008 5:29 PM
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    china? a planned economy. Thank god for our right to bear arms. You try and force your planned economy on america and you will see why the second amendment was created
    Posted by An American who has actually read the Constitution on March 3, 2008 5:26 PM
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    The Federal Reserve knows exactly what their ill-advised policies have done to our economy; however, they will do their best to hide their responsibility through obfuscation and bad economic theory. As Ron Paul has stated so many times, this was absolutely predictable, it should not come as a surprise to anybody.

    The real concern now is what will they propose to do to "solve the problem" that they created? We should be very careful to not accept their "solution" because the only ones that will benefit from it are the central banks, not the people.

    The Federal Reserve exists for the benefit of the central bankers, not anyone else. Beware of letting them suggest any solution that only places the people under their control in even more diabolical ways.
    Posted by Don Iverson on March 3, 2008 5:24 PM
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    The sky is not falling. Only the first few stages of the Fed's "rescue" have failed (if they have at all - as one person commented, they haven't even mailed out the tax refund cheques!!

    There are far more tools at the Fed's disposal and they probably have been analyzing the Japan disaster to death for almost two decades now.

    We've all been through these before - the early 80s and 90s were far worse than this one and we got through those. This debt "cleansing" will send enough bad debt to money heaven to enable the cycle to start afresh. Ultimately, in the worst case scenario, the Fed can always print dollars, and all nations, companies and people will accept them, because this world is the American Empire. For your personal investments, get as much cash as you can, and be ready to buy "when blood is running in the streets." This could be an historic buying opportunity in real estate and stocks.

    However, just in case, I've had a bag of silver coins ready to go if there's a total collapse of the financial system - but it's not going to happen.
    Posted by Steve on March 3, 2008 5:16 PM
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    ARCY, we are complaining about the situation failing so that they can start the second wave of sitmulus checks to pay off our credit card debt. Next week we will complain so that they can send a third check to pay for new 60" screen TV and internet conection. I really could use a new SUV since it has been proven that Al Gore is wrong on this green house climate changing global warming situation since we have just recorded the coldest average temperatures in 100 years. Some people are just "Stuck on Stupid"
    Posted by Pafaery on March 3, 2008 5:15 PM
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    Except for a few, there is nothing but a bunch of idiotic comments here. Everybody knows everything about nothing.
    Posted by Mike on March 3, 2008 5:09 PM
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    Good heavens, the problem with the current credit crisis isn't capitalism, it is the way a very narrow band of cavalier debt salesmen made an industry out of handing out loans to people who as recently as five or ten years ago wouldn't have been trusted with a secret cookie recipe, let alone one or more six-figure US mortgages. Yet in this strange current America, emotionalism trumps reality, and the credit rules that served so well for a half-century were displaced with this sentimental, entitlement-based notion that everyone deserves a mortgage, regardless of their (in)ability to repay it. The debt-mongers don't care, because (until now) they've resold the debt at a marginal profit, so it wasn't their problem anymore.

    Who will pay for this disaster? Dedicedly NOT the poor - they're the ones who have been handed this scheme as the recipient of loans they had no hope of repaying. The losers in this pseudo-Ponzi scheme are normal, honest, faithful, reliable mortgage payers who properly managed their debt and finances, but are now stuck with some inevitable federal (code for "taxpayer funded") bailout..as always seems to be the case...not to mention the loss of buying power, and the loss of equity in their own homes as prices shrink. Bottom line: those who can pay their own debts are going to end up paying the debts of those who can't, in addition to their own.

    Inevitably, inexorably, just as the U.S. government did 30 years ago for Chrysler, it will somehow bail out the subprime mortgage industry. As Bernanke predicts, a few banks will fail, and the ride will be rough. Hopefully, we'll only entrust debt to those who have some reasonable expectation of repaying it.

    Posted by David W on March 3, 2008 5:09 PM
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    Does anyone expect that monetary policy enacted in January would have corrected the economy by the end of February? Who had this notion, except for malcontents? It doesn't work that way, people. I can't believe the idiocy of the premise expecting that this should have been a done deal by now....unbelievable.
    Posted by chris on March 3, 2008 5:09 PM
    Report this comment

    In Texas we have a maximum 10% increase in property tax values. With the market the way it is, I venture to say that the appraisal districts will still try to increase the values the full amount. What will be their justification for that? Has anyone seen a reduction in any tax other than what conservatives (BUSH and REAGAN) have ever done. Good for them but here come the democrats with many new taxes and fees.
    Posted by Richard C. Faery Sr. on March 3, 2008 5:07 PM
    Report this comment

    This is ALL by design folks! This has been
    carefully and methodically planned for many
    years, many authors have been writing about it
    long before the symptoms had begun to appear.
    The federal reserve and a group of international
    bankers and world elites are responsible. Bush's,
    Clintons, Mccain, Obama, they are all mere
    puppets of these banker elites and will loyally do
    their bidding. It IS going to get MUCH WORSE,
    the bad times have not yet even started. America
    WILL die before it's over. Ask yourself this, "how
    is it that most of the so called civilized world just
    happens to be having the same problems in the
    credit markets, housing markets, stock markets,
    etc. all at the same time!
    Posted by Maximus on March 3, 2008 5:02 PM
    Report this comment

    Your Dem leaders want to renegotiate free trade with Canada. I cannot wait. We have a conservative government here now and they will be tougher. We have as much oil in Alberta and Saskatchewan than they do in Iraq. We have more fresh water than anyone in the world. We have a fewer people than the state of California. We have the largest land mass of any country in the world, we are leaders in high tech, we are relatively peaceful.

    China wants all we can sell them, our passports are far more welcomed around the world than any other.

    Our present free trade deal with the US states that you have first dibs on our massive natural gas and oil, even over Canada's needs.

    We are not flooding across the 49th to bring down the value of labor in the US.

    AND YOUR DEMS WANT TO TRASH THAT FOR A BETTER DEAL????

    You had better vote for McCaine and keep your fingers crossed.
    Posted by John Vossos on March 3, 2008 5:01 PM
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    The posters who talk about printing money as though it were some bogey man are well wide of the mark. Fiat money is bound to be a bad thing if it is created by the banks and lent into circulation against debt. If the banking system collapses money disappears from circulation and the real economy grinds to a halt.

    Bu the debts remain and have to be repaid. With money that no longer exists.

    Here's what Bernanke should do. Let the banks collapse as they will. Print as much money as it takes to compensate depositors for the money that is lost when a bank is wiped out. Take over the failed bank, bail out the depositors and cancel the debts.
    Posted by Michael Petek on March 3, 2008 4:54 PM
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    Its not the collapse of western civ although the lib socialist greens probably HOPE it is. They're probably thinking its going to be their chance to take over soon. I have to laugh. The USA has monetized the world economy and it follows the USA further down the road. The world is now pregnant with capitalism based democracy ( the only way democracy can be based) and we will use ever greater amounts of commodities to live better. In the short term you may have to throw an environmentalist on the fire to keep the house warm!
    Posted by Fred on March 3, 2008 4:53 PM
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    This is an enlightening article. Most the garbage media outlets in the states describe the problem in human terms and talk about the little old lady losing her home, but never give Americans a real education about the problems systemic to our economy.

    Here's the thing though, some Indian guy who studied in London or the US is going to come up with some even fancier derivative, that will kick the can down the road a few more years while the emerging economies are still investing abroad. In the end though, America will begin dying on the vine as sure as Europe has for the past 20 years.
    Posted by erica on March 3, 2008 4:50 PM
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    Stagflation-is a macroeconomics term used to describe a period of inflation combined with stagnation (that is, slow economic growth and rising unemployment, possibly including recession)-wikipedia

    The price of everything is skyrocketing: electricity, propane, natural gas, all food especially wheat and corn, gas, shipping for anything, everything it going way up in price, except WAGES. Wages are staying consistent especially around here (Northern Minnesota, USA) It not even worth working anymore when your only making $8/hr. Although wages have stayed relatively constant its actually like we are getting payed much less with the reduced buying power of the dollar. I am just glad I had a freezer full of deer and elk meat to get through the miserably cold and long winter we are having here.


    Posted by Fleahman on March 3, 2008 4:49 PM
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    The US Federal Reserve Bank is simply NOT up to the job!The New Chairman Bernanke is not well known or respected as Alan Greenspan his predecessor was.It
    has not taken an aggressive stand to try
    and help the most devasted banks in the
    US and I fear fear Europe will suffer just as much.
    Posted by raymonda on March 3, 2008 4:49 PM
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    This is the kind of commentary that comes at BOTTOMS. Look for higher stock prices a year from now.
    Posted by Norman Guyere on March 3, 2008 4:48 PM
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    I'll start worrying about the state of the U.S.A. when foreigners stop trying to immigrat here.

    This loan bust, deflationary spiral is the fault of Neo-Liberal Fascists. It is they who have demanded that illegal aliens, unemployed-underemployed, low paid workers, etc., be "given", no down payment - low interst loans to buy government sanctioned "affordable housing". Even at less than 5% unemployment the Liberal Fascist government leeches are still unsatisfied.

    Welcome to the New Socialist Obaminated Economy.
    Posted by Paul Clark on March 3, 2008 4:47 PM
    Report this comment

    Bush and his henchmen have driven the USA off a
    cliff. We're through as a nation, and the world will
    be better for it! It's time to embrace change, and
    that means ditching capitalism. China is the new
    superpower, they are the future, and they have a
    planned economy.
    Posted by leftandproud on March 3, 2008 4:44 PM
    Report this comment

    The problem has been created by the Fed and the other economic manipulaters. The author of this piece is wrong; inflation is the real enemy. The central banks have pumped massive amounts of cash into the market over the last several years. That money created malinvestments in housing, much of which has been newly constructed, and now that the people who unwisely made these loans cannot pay them back the housing market is in collapse from simple excessive supply. Having the fed engage in another round of massive lending with money that it creates out of thin air will just kick the can down the road on the housing market collapse and throw fuel on the raging inflation inferno.

    The fed needs, ultimately, to be abolished so that this kind of mismanagement cannot occur ever again. The free market should be the sole provider of capital and the determination for interest rates on that capital. In the short run, however, the best thing the Fed can do is shrink the money supply and let the economy shed the malinvestments as quickly as possible. Anything less threatens to turn a recession into another Great Depression (which ironically the Fed also caused).
    Posted by Pliny on March 3, 2008 4:43 PM
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    Thanks for nothing Federal Reserve. I save money and expect good return on my bank investments. That money is used by the bank to give out loans. When you cut interest rates you penalize ME. Where's the incentive to save money when you only care about the stock market investor thats trashing this country?
    Posted by Rick Cain on March 3, 2008 4:42 PM
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    The President should come out and ask that we cutback our driving by 15% immediately. All of those SUV's can be converted to Bullets for those Rebels world wide and create Bicycles for a every person in the U.S. So, get fit America, its time to fight for your right to remain free.


    Posted by perry angress on March 3, 2008 4:41 PM
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    those who think it is sensationalism may just be ignorant. Why

    because many of the IMO false optomistas believe this is a cyclical downturn.

    This beleif is the last straw to go before depression.

    Actually i'm glad people believe it.
    Posted by christian on March 3, 2008 4:41 PM
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    Who cares what this paper prints? Why don't you run a story on your own socialist economy instead of ranting about something you have no control over?
    Posted by Jeff on March 3, 2008 4:40 PM
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    The President should come out and ask that we cutback our driving by 15% immediately. All of those SUV's can be converted to Bullets for those Rebels world wide and create Bicycles for a every person in the U.S. So, get fit America, its time to fight for your right to remain free.


    Posted by perry angress on March 3, 2008 4:39 PM
    Report this comment

    Hey Ken, from Denver, U.S.A.. How did you know there was a "link from Drudge"? HAHA You're a closet Drudge reader. Just admit it punk.
    Posted by Arcy on March 3, 2008 4:39 PM
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    How can anyone say the plan is failed??? They stimulas checks haven't even been mailed out yet. Good grief folks!
    Posted by Arcy on March 3, 2008 4:35 PM
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    Well......I guess we had all better run for the hills with the little we have on our backs and find or build the nearest mud hut, since we are apparently on the way back to pre historic times.
    Correctomundo?

    Outstanding journalism from the
    "Mother" country.
    Posted by Ed Robinson on March 3, 2008 4:34 PM
    Report this comment

    Well to the rest of the world, we Americans have been considering presidential candidates for several months now. Only one candidate this election cycle has any clue of economics or the coming problems, his name is Ron Paul. For years Ron has been sounding the alarm from the rooftops. We arrogant Americans continue ignoring and marginalizing Ron Paul for president. We get what we deserve when the shit really hits the fan because we ignore the only realist in our presidential election Ron Paul. I just feel for the balance of the world that get caught up in our political arrogant attitudes that dismiss a real needed presidential candidate, and the resulting global economic problems we continue to create.


    Posted by tim, minnesota on March 3, 2008 4:27 PM
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    Hey America, lets not just blame either the Democrats or the Republicans for destroying our country. They both, together have screwed us for the last 80 years and our only hope is to escape the yolk of the current two party system and support a totally different party.
    Posted by DefendThyself on March 3, 2008 4:24 PM
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    We have people here in the US who think the Queen runs England, so I can overlook your idiots that believe what they read in the rags.
    Posted by WAYNE on March 3, 2008 4:22 PM
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    As they say, economists have predicted 10 out of the last 3 recessions with complete accuracy.

    I wonder what some editors opinion spin is worth compared to a trained economist?
    Posted by Jack Lee, USA beetch on March 3, 2008 4:18 PM
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    ---Let's get to the heart of the matter. Americans, as a whole, are poor money managers--

    LOL! Coming from a "have-not" I cannot take your comment seriously.
    Posted by Jack Lee, USA beetch on March 3, 2008 4:17 PM
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    As Mark Dodson, an analyst at Hays Advisory put it: What China exports, they deflate, and what they import, they inflate. As for the United States, its most potent export is the dollar, which less and less people seem to want.
    Posted by Mike M on March 3, 2008 4:12 PM
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    I read Mr. Pritchard for the first time in July 2007 when he predicted that portfolios would be "shredded" based on this unfolding (Bank of International Settlements was referenced). I was quite a bit skeptical about that July piece but now he has lots of credibility I am afraid to say. There is a lot of financial jargon in British vernacular that I need to study but I think it is worthwhile to pay attention now to Mr. Pritchard.
    Posted by John J. Adams on March 3, 2008 4:06 PM
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    Let's get nuclear NOW and stick our fingers up to OPEC and take that part of inflation out of the equation.
    Posted by david (Madrid) on March 3, 2008 4:03 PM
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    Fuel ethanol has to be stopped, it has increased food prices at least 50%. (and it's not green...)

    We have to drill our own oil. Mexico, China, and Cuba are all drilling in the Gulf, why not the US.

    Start domestic production of oil now, everywhere.

    This is the only way to save this economy.

    I'm not happy.......

    Posted by Anti-incumbant... on March 3, 2008 4:02 PM
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    All I know is Pritchard tells it like it is. According to Bloomberg.com the derivative market took a 21% hit last December to fall to $539 Trillion, down from over $650+ trillion. That was over a $100 trillion loss in the market in a few weeks. Sounds like deflation to me.
    Posted by seatco on March 3, 2008 4:01 PM
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    I do not agree with the economists cited that the Central Banks should cut and slash interest rates. That is a recipe for an even greater crash, along with new asset bubbles in commodities, and it will not reinflate and restimulate the economy. Moreover, accepting junk debt, as collateral, with money being loaned by the FED to all comers will create a horrific moral hazard going forward. The FED's radical thrashing of the dollar reminds me of Lenin's injunction that the best way to overthrow a regime is by debauching its currency. Who would ever thought that the FED would be following advice from Vladimir Lenin?
    Posted by Ted Harwood on March 3, 2008 3:54 PM
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    Let's get to the heart of the matter. Americans, as a whole, are poor money managers. We live in a time of excess and no one stops to think "Hey, I can't afford that". As long as credit was available they bought their heart's every desire. Not once did they consider how they were going to pay it all back. Now they want to cry "foul" and beg off their debts. Financial responsibility is the key to getting America back on its feet but I fear it is too late for this generation, which was born with credit card in hand.

    This, coupled with the rising cost of energy, which it seems we cannot control, will be our downfall regardless of what the Fed decides to do. It's staring us in the face and we all refuse to acknowledge it. At least we'll go down kicking and screaming the whole way...
    Posted by julie on March 3, 2008 3:49 PM
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    Posted by Mars on March 3, 2008 3:24 PM
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    You can tell who all the idiots are who followed the link from drudge.

    How's the life in the trailer?

    Hey Mars, how is life living in your subsidized housing and standing in line for your government hand out?

    By the way I live in a very nice house earned with hard working efforts.
    Posted by Ken, Denver, U.S.A. on March 3, 2008 3:48 PM
    Report this comment



    You know, a lake near me has come up for lease. I think I will take it and spend more time fishing and gardening while this runs its course.

    Cantillon
    Posted by cantillon on March 3, 2008 3:43 PM
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    > You can tell who all the idiots are
    > who followed the link from drudge.

    (I wonder how he knew drudge had a link?)
    Posted by Marco on March 3, 2008 3:41 PM
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    This paper is not anti-Bush, but anti-100 years
    plus of fiat money. A debt based economy will
    always collapse, the only question is when. The
    elitist financiers who convinced central
    governments to switch to fiat have played and hope
    to play the low debt cycles as well as the high. Still
    the end will even come for them for there remains a
    greater unassailable wealth.
    Posted by Jericho Run on March 3, 2008 3:37 PM
    Report this comment

    Nice piece of polemics, poorly written and argued, but short on the facts.

    I live in Fairfield County, Connecticut. Housing prices here are down 4-5%.

    Yes, there are poclets where it is worse.

    The repricing of risk currently underway is overdue and is healthy. This is the market at work. And there are BUYERS for selected tranches of the distressed paper whop are likely to make a lot of money in due course.

    Stop the polemics, the screeching and posturing and report the facts.

    Your readers deserve better.
    Posted by Leigh on March 3, 2008 3:36 PM
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    I'm wondering how superficial is the understanding of the American economic system of this so-called "business editor"? What qualifies him to claim that the Fed has failed after so little time has passed. There are more factors involved in our economic system than just the interest rates decreases correctly imposed by the Fed. Lowing interest rates is an excellent approach by the Fed that will enable business carry on successfully. The Fed chairman has an excellent understanding of the economics of business that will serve him and America well (a vast improvement over Greenspan). I would recommend highly that this "business editor" study economics in depth and, with an open mind, study the chairman's moves so as to improve his education which sadly lacking.
    Posted by James Bailey on March 3, 2008 3:35 PM
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    What kind of country can jail 1 out of every 100 citizens?
    One that prints money.

    What kind of country can fulfill all 10 planks of communism and still buy off the media enough to make it still look like a republic?
    One that prints money.

    What kind of country can maintain stupid little laws for every stupid little thing and enforce them with paramilitary units (SWAT)?
    One that prints money.

    What kind of country can maintain failed wars on victimless human activity (drug use, poverty, bad personal decision) and throw money at more prison for those engaged or more failed social(ist) programs?
    One that prints money.

    What kind of country can maintain troops in over 100 nations and engage in costly adventures in the Middle East?
    One that prints money.

    So no more dollar means no more tyranny. It's no mere coincidence that the eagle at the FED building looks like the Roman Eagle.

    As the old disco song goes: burn baby burn.
    Posted by DJ on March 3, 2008 3:33 PM
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    Germany 1935
    Posted by Catbird on March 3, 2008 3:28 PM
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    Anything "can" happen, and in times like this without precedent suggesting that there will be a complete credit implosiion is not without merit. The debt derivatives of unverifiable value which plague that market could very well be a ticking time bomb. But the thing to worry about is the unemployment numbers. If the unemployment numbers continue to go through the roof, and this is a small real fluctuation, then we can look forward to some type of collapse of the monetary system. But it is far more likely that it will limp along, instead of there being wholesale changes.
    Posted by Mars on March 3, 2008 3:24 PM
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    You can tell who all the idiots are who followed the link from drudge.

    How's the life in the trailer?
    Posted by DrudgePacker on March 3, 2008 3:18 PM
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    If you want to know where the WMDs were,look no further than the Federal Reserve Board and the man who preceded Bernanke as chairman, Alan Greenspan. By keeping interest rates too low, too long Greenspan was/is the world's most dangerous weapon of mass destruction.
    Posted by Ed on March 3, 2008 3:10 PM
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    Uncontrolled earmarks, deficiet spendiong, a faltering economey, a Congressional majoirty wanting to raise taxes while doing nothing, corruption. It's time to vote the the Republicans out of the majority in Congress. Hmmmm
    Posted by J.Denver on March 3, 2008 3:09 PM
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    With the trillions having dried up from business and retail sources, some very charismatic and persuasive people are trying to panic and cajole the authorities into bunging them taxpayers' money to keep their unmerited lifestyles flying.
    Yes, it's a challenging outlook, but there's not much to be done other than tighten belts and look to the upsides, which could be very substantial for many people.
    Posted by SL on March 3, 2008 3:05 PM
    Report this comment


    The "collective" musings and rants of the economic intelligencia in these postings reminds me of a cartoon I saw decades ago.

    "When in trouble, when in doubt, run in circles, scream and shout".

    Let it all burn, let it all collapse, let someone else worry about it (there seems a legion for the latter on this site). If the economy is going to fail, then let's do all we can to make it fail fast.

    At least the Titantic had a band. We just have a bunch of contradictory "professionals" telling up the obvious..... the ship is sinking.

    I am going to eat breakfast and play golf.

    Posted by Daniel on March 3, 2008 3:04 PM
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    Just Like Dr. Ron Paul predicted.....oh wait, he's a loon.

    Sincerely,
    Pissed off in Middile America.

    Posted by Rick on March 3, 2008 3:04 PM
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    No one has mentioned the Jimmy Carter mess in which he just kept throwing money into the toilet.
    Posted by john smith on March 3, 2008 3:01 PM
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    Da roof,
    Da roof,
    Da roof is on fire...
    Posted by john stephen lewis on March 3, 2008 3:00 PM
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    Posted by Alex on March 3, 2008 9:52 AM
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    You know, I think Bush would be better off today in terms of American public sentiment had he only been honest, explaining what people in the U.K. always suspected: invading Iraq WAS about oil (it sits above the 2nd largest untapped oil reserves in the world).

    Alex, okay, you're damn right the Iraq war is about OIL. I don't know what you use to heat your home or drive your local economy but I bet its oil. Yes, we are in that part of the world to promote democracy (to the chagrin of terrorists) to maintain reasonable pricing of oil so your country and ours can operate it's infrastructure at an affordable price to the benefit of as many people as possible. Terrorism hates democracy and freedom and will continue to try and take out free trade. Think you are living miserably now wait until terrorists gain the upper hand. The U.S. simply doesn't want to wait to see that occur. It is absolutely about oil (and your freedom). And so what if oil companies are making big profits, what is your freedom worth? By the way how come nobody is complaining about "Big Water"? Did you know ounce for ounce bottled water cost more than oil. Are our priorities maybe mixed up?
    Posted by Ken, Denver, U.S.A. on March 3, 2008 2:57 PM
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    More propaganda. Economy is fine and most everyone is paying their mortgages. Pessimism is carrying the day due to sensational journalism and lack of hope and backbone among small investors.

    Hang in there and build. Invest now. The world is not going to "hell in a handbasket."
    Posted by Will on March 3, 2008 2:57 PM
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    A major contribution to the financial downfall of the world at this time is the illegal alien population taking over other countries and sucking their budgets dry. Not only are they ruining the fiancial status of countries like the United States and Britain but they are becoming an entirely different nation and culture and they are losing their foundations.
    Posted by Richard C. Faery Sr. on March 3, 2008 2:57 PM
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    Believe it or not, most of the problems that we are facing at this time came from congress, financial greed from the top down and the Clinton administration that really worked with "FUZZY MATH". The economy and the surplus budget at that time came from major miscalculations of what was happening and what would happen when we allowed interest rates to go over 18% on anything and when it was decided that lending money and credit to unworthy borrowers would be ok if we charged them and exorbinate amount of interest and allowed so many loopholes in the contracts that would trap the borrowers into bankruptcy never being able to pay off their debt.
    Posted by Richard C. Faery Sr on March 3, 2008 2:50 PM
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    Time will tell if this article is right, but I think everyone knows this paper is anti-Bush, and I wouldn't put it past them to publish a biased article in an attempt to smear him further.
    Posted by EdwardATeller on March 3, 2008 2:50 PM
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    The world still wishes they had the USA economy, and the Mexicans are still coming.

    "If you're 20 and not a liberal, you don't have a heart. If you're 30 and not a Conservative, you don't have a brain."
    Posted by Kevin67 on March 3, 2008 2:50 PM
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    Funny how everybody blames this on Americans, when the concerted effort to tank the dollar to "teach Bush a lesson" and raise the prestige and perceived value of the Euro, which is nothing more than paper, caused the purchasing power of the American consumer to plummet, causing inflation and weakening the global economy. At the same time, American mortgage and insurance companies and banks made stupid mistakes, lending to those who couldn't possibly repay, and illegal alien demand helped drive up a false bubble which artificially inflated perceived values for real estate, causing much of the credit market to be based upon another bubble.

    Of course, let's not forget the greedy oil exporting nations, especially Russia, Iran, Venezuela, and the rest which have been doing anything in their power to artificially drive up the cost of oil, resulting in a massive inflation hidden by the stupid Clintonian multiple-books accounting methods and other Enron/Global Crossing/Tyco-style accounting, which has masked true inflation, and now that the American consumer can take no more, the bubble has popped, and people are only now beginning to notice.

    Now we have a crazy ultra leftist duo ready to run into the White House, to tax & spend us into our graves, just like Jimmy Carter nearly did. We are indeed returning to the economic disasters of the 1930's and 1970's, and with Barack Hussein Obama and Hillary Rodham Clinton in power, you can be sure that things will only get worse. We may even see another New Deal poison pill further kick the American economy in the teeth when she's down, turning a deep recession into an economic depression, which will take the entire world with it.

    At least China and Russia are well-positioned, with massively-strengthened militaries, and Russian Oil & Natural Gas fueling their resurgence into a Superpower. China's navy will eclipse that of the United States by the end of THIS YEAR, just in time to take advantage of weakening economies and the coming food shortages to ensure western governments cannot spend what they would need to in support of their military to stop Chinese aggression, which is about to be realized.

    Finally, with China buying up mines, oil fields, and other natural resources over the last few years, they will be resource rich like they never have been in the past, with a navy to back up their "negotiations" for everything they will buy.

    This is going to get ugly, and we may see another hundred million dead before it's all over, and once again, leftist governments (China, Russia, Iran, Venezuela, etc.) will be the ones to start the shooting war. Hopefully America and her allies will be up to the challenge of sacrificing another generation or two of young men to stop the red tide which is about to flood the earth once again, threatening the globe with the diseased leftism once known as communism, now without any proper name.

    The Democrats and RINOS (basically, everybody left of center in America) who have refused to secure our borders and to rein in spending, have also failed to fix the looming Social Security/Medicare tsunami threatening to drown our economy. They have finally caused enough damage to ensure war without end in sight. May God have mercy on Americans’ souls; can be sure nobody else will, what with the rabid anti-Americanism permeating every organ of the global leftist media.
    Posted by Prophet on March 3, 2008 2:48 PM
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    "No sane mortal needs to know what term-auction means, except that it too became a tool of the US credit alchemists."

    Perfect example of the accepted dumbing down of America. Mr. Evans-Pritchard, some people still like to learn new things!
    Posted by Chris Moore on March 3, 2008 2:46 PM
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    Well, it seems to me that big business is in a losing situation here and this may be the downfall of the democrats idea of taxing big busisness even more. Hillary and Obama want to take more money from the rich, but who are the rich going to be in the near future. Probably sports figures, politicians and of course the ACLU and racial minority groups. Illeagls in America will be heading back home before long.
    Posted by pafaery on March 3, 2008 2:41 PM
    Report this comment

    Funny how everybody blames this on Americans, when the concerted effort to tank the dollar to "teach Bush a lesson" and raise the prestige and perceived value of the Euro, which is nothing more than paper, caused the purchasing power of the American consumer to plummet, causing inflation and weakening the global economy. At the same time, American mortgage and insurance companies and banks made stupid mistakes, lending to those who couldn't possibly repay, and illegal alien demand helped drive up a false bubble which artificially inflated perceived values for real estate, causing much of the credit market to be based upon another bubble.

    Of course, let's not forget the greedy oil exporting nations, especially Russia, Iran, Venezuela, and the rest which have been doing anything in their power to artificially drive up the cost of oil, resulting in a massive inflation hidden by the stupid Clintonian multiple-books accounting methods and other Enron/Global Crossing/Tyco-style accounting, which has masked true inflation, and now that the American consumer can take no more, the bubble has popped, and people are only now beginning to notice.

    Now we have a crazy ultraleftist duo ready to run into the White House, to tax & spend us into our graves, just like Jimmy Carter nearly did. We are indeed returning to the economic disasters of the 1930's and 1970's, and with Barack Huessein Obama and Hillary Rodham Clinton in power, you can be sure that things will only get worse. We may even see another New Deal poison pill further kick the American economy in the teeth when she's down, turning a deep recession into an economic depression, which will take the entire world with it.

    At least China and Russia are well-positioned, with massively-strengthened militaries, and Russian Oil & Natural Gas fueling their resurgence into a Superpower. China's navy will eclipse that of the United States by the end of THIS YEAR, just in time to take advantage of weakening economies and the coming food shortages to ensure western governments cannot spend what they would need to in support of their military to stop Chinese aggression, which is about to be realized.

    Finally, with China buying up mines, oil fields, and other natural resources over the last few years, they will be resource rich like they never have been in the past, with a navy to back up their "negotiations" for everything they will buy.

    This is going to get ugly, and we may see another hundred million dead before it's all over, and once again, leftist governments (China, Russia, Iran, Venezuela, etc.) will be the ones to start the shooting war. Hopefully America and her allies will be up to the challenge of sacrificing another generation or two of young men to stop the red tide which is about to flood the earth once again, threatening the globe with the diseased lefism once known as communism, now without any proper name.
    Posted by Prophet on March 3, 2008 2:41 PM
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    I wish the government of the USA considered Iraq's oilfields the spoils of war, and we paid ourselves back with it in return for liberating that country. I can never understand those whose mantra is "No war for oil." Do you even begin to understand what would happen if we didn't have access to oil? What do you suppose would happen when you no longer have fuel for your car or heat for your home, just for starters? If Katrina showed us anything, it wouldn't be long before anarchy would ensue. We have to have oil, and I am grateful that at least some people understand that and are willing to do whatever it takes to ensure our access to it.
    Posted by Sandy on March 3, 2008 2:38 PM
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    Has anyone taken account in this debacle of the role played by the overt pessimism of senior banking figures and so-called business journalists. Both are continually talking down the markets for no apparent reason.

    In the UK we have an expression for people who are overstating things - they call a spade a bloody shovel.

    In this case they are digging us all in deeper with it!
    Posted by Peter Riches on March 3, 2008 2:37 PM
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    A New Economic Deal For Americans
    A spectre has been haunting the American economy for decades--- decades of growing enormous taxation, massive debt, worthless money-----and, an unbridled, out-of-control government, spending us into bankruptcy.
    Candidates are dodging these issues, their future impact, the ideologies behind them.
    To be informed in making decisions, we need them to be honest with us, tell us how they going to deal with all this enormous theft (taxation), the taking of your labor, savings, and property--- on course to leave you owning nothing, with nothing in your name; how they are going to deal with massive debt; how they are going to restore stability to our worthless money; how they are going to rein in unbridled, out-of-control, government spending.
    Instead, it's the same manipulative, emotional vote pandering, playing Robin Hood, the "Candy Man", treating us like children, with their "verbal warming " hot air, vacuous speeches and debates.
    It's time for logical, rational thinking and analyses.
    To begin, start with the absolutism of this proposition as the major premise: The capital formed during the latter 19th century, and early 20th century, is the capital that made the 20th century, the American Century, and rewarded Americans with the highest standard of living in the world..Gradually, that capital was squandered by the Marxism (so-called liberalism) of Democrats, and replaced by decades of enormous taxation, massive debt, worthless money.--- the excesses of government, spending us into bankruptcy---enough to frighten capital offshore to safer places---with the voice of Karl Marx, ringing loud and clear.in its ears.
    The Bush and Congress stimulus package----the same Keynesian-F.D.R -New Deal formula, concocted for the Depression, and called "priming the pump", didn't work then, won't work now---- and the Fed's lowering of interest rates, which reduces savings for sound investments, is like pouring gasoline on the fires of inflation.
    Savings translates into investment, sound investment translates into real economic gain, high living standards, jobs, personal freedom.
    Of course, if there are no savings, no capital, left at the bottom of this economic death trap, just growing massive debt, worthless money; and enormous theft of wages, capital, savings, property, by government, then there will be no savings, no capital for investment, no economic growth----only misery and passage to the Gulag.
    A "New Economic Deal for Americans" is what is needed in the 21st century--- Your labor, savings, property, belonging to you----not to Karl Marx and followers.

    Posted by Robert D. Geach Sr. on March 3, 2008 2:36 PM
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    The sky is falling! The sky is falling! - Chicken
    Little

    You fear mongers keep selling equities at low
    prices and I'll keep buying them. The crisis will
    pass in a year or two, the recession will pass,
    and I'll be wealthier. Those who jumped ship at
    the bottom and bought gold or whatever will be
    left holding the bag. History has proven this
    outcome time after time.
    Posted by Gary on March 3, 2008 2:35 PM
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    Hello Ambrose,

    Another excellent article, but I am not convinced that inflation
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  3. #3
    Senior Member crazybird's Avatar
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    Airborne....too much info for the regular folk.
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    Senior Member AirborneSapper7's Avatar
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    I don't know... I think people need to know how bad it is to prepare for the worst. This is not going to be a normal recession
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