WHAT DOES "FED PUMPS $68 BILLION INTO BANKING SYSTEM" ACTUALLY MEAN?
PART 2 of 2
© 2007 - NewsWithViews.com
What's going to happen next year when the first wave of baby boomers begin to retire? At the sake of repeating myself, Comptroller General David Walker has been touring the U.S. trying to warn the American people what's going to happen and it isn't pretty: "What they don't talk about is a dirty little secret everyone in Washington knows, or at least should. The vast majority of economists and budget analysts agree: The ship of state is on a disastrous course, and will founder on the reefs of economic disaster if nothing is done to correct it." The only presidential candidate addressing the issue of the FED and our economy is Congressman Ron Paul, a man now hated by his own party (GOP) and marginalized by the MSM (mainstream media) and cable networks as if one of the great constitutionalists of our time is nothing more than a "maverick and semi-crank." (Look at this exquisite ad for Dr. Paul). The tax and spend Democrats (who replaced the tax and spend Republicans) have been in office eight months and what have they accomplished? Zippo, yet the one man who can do what has to be done (along with the right Secretary of Treasury, say Dr. Edwin Vieira) is being treated like a disease.
5. It isn't just the house that doesn't sell causing major financial problems, it's also the construction industry itself. Every house has a faucet, carpeting, light fixtures - but all industries suffer when houses aren't built or remodeling stops because of a recession or depression. That means major home improvement stores like Home Depot, lays off and the domino effect starts to rattle already jittery investor nerves. Investors don't like "lower than expected" earnings and anyone who has done enough research knows the feds have been cooking the books for decades thereby deceiving investors. Well, the chickens are coming home to roost. Local municipalities suffer because contractors are charged a percentage of the project for schools, parks and other revenue generating enterprises. Tax bases from a dozen sources dry up. Every related industry from mortgage loan brokers, realtors to escrow companies all begin to feel the noose. Tensions heat up as tribalism takes over as a matter of survival and crime increases in these massive, over crowded metropolitan cities. It's not a pretty picture when one sits down and lists all the ingredients for financial and societal melt down.
I wish everyone could subscribe to LeMetropolecafe.com. Their writers are exceptional. Their knowledge of this subject matter is easy to understand and not sanitized for votes, i.,e., this recent post by Neville Bennett on Credit contamination: "The sub-prime mortgages offered by U.S. institutions have been sliced, diced and repackaged to get them off U.S. bank balance sheets. They have contaminated global credit markets. Very strong metaphors are appropriate. To some extent, it is poison. It is also a virus, virulent and contagious. 49 European banks and financial institutions needed support last week.
"It could be more this week as uncertainty spreads. Banks can discount good news, they can discount bad news, but one report rightly says, "they cannot discount what they do not know." My take is that they do not know the present value of their assets. The packages of U.S. housing debt, sold under a variety of names, were syndicated and accepted because they had a credit rating and a good anticipated yield. However, there have been more sub prime defaults than anticipated and escalating defaults. It is increasingly difficult value these packages. Many large hedge funds are admitting a 25% fall in value. This is often wildly optimistic. The Street is predicting a 90% fall.
"Rather than discuss generalities, this article will explore the recent difficulties of BNP Paribas, France's largest bank. The Bank caused mayhem in Europe by suspending three investment funds worth 2 bn euros, saying it was impossible to value certain assets, because of the "complete evaporation "of liquidity in some markets. It said a valuation would be made "when liquidity returned to the market." The ECB responded to the crisis made $130 b of loans available. These were on the same scale as the intervention on 9/11. What impressed me was that 49 banks and financial institution grasped the ECB's lifeline. 49 banks needing support!
"Paribas's statement is very scary. It confirms that the two-way movement of bonds and derivatives associated with the U.S. housing market is seizing up. I have heard that $3 trillion of derivatives have been written in this market. There will be massive repercussions. The scariest aspect could be that the massive French bank declined to buy these investments from investors who want to sell. It suspended activity. It could have bought them at fair value, and have held the bonds until maturity. It did not. This suggests the bonds are toxic...Paribas apparently invested also in asset-backed securities (ABS) which are bundles of loans, (credit card loans, car loans etc) that were packaged together into bonds. These are now frozen. The mounting crisis is reflected in the soaring LIBOR (London interbank offered rate). The LIBOR is regarded a risk-free investment made on overnight loans. It is important to realize how fast the credit storm is developing."
How is the average Joe and Mary out in America trying to put food on the table and fill up their gas tank at $50 - $75 bux a pop going to understand all this, much less react to it? The media continues to gloss things over with carefully crafted word smithing while a gallon of milk climbs towards $4.00. Dr. Edwin Vieira began warning Americans a couple of years ago in his columns, i.e., Are Monetary and Banking Crises Inevitable in the Near Future?
As always, I highly recommend you get your assets protected by investing at least part of your portfolio into gold. I'm not a gold dealer, broker or retailer. However, it makes me sick to see my fellow Americans being led down the path of ruin. I have studied the history of our money, banking, the crash of '29 and I know what's coming. It's going to be a bumpy ride through the rest of this year. Next year is a presidential election and every effort will be made to see things don't blow up until after the inauguration in January 2009, and then as Edwin told me on the phone: all bets are off. 2009 is the same year the feds will try to push a National ID on everyone even though almost two dozen states have already said no; the North American Union is supposed to go on line with its first steps towards ending the United States of America; likely a massive push to shove an Amero form of currency down our throats and in between, we have to worry about the lunatic in the White House bombing Iran. If you would like to learn more about gold ownership and protecting your assets now, you might call my friend Harvey Gordin, El Dorado Gold, at 623.434.3343.
I also highly recommend you get Edwin Vieira's book, 'Constitutional Homeland Security: A Call for Americans to Revitalize the Militia of the Several States. Volume I, The Nation in Arms.' Reconstituting the state militias under the control of the state legislatures has got to become a top priority in this country. We all saw what happened after Katrina when law and order broke down. When the have nots go after the haves and the illegals go berserk, Americans had better be prepared because Marxist Hillary Clinton, slick, flim-flam man, Mitt Romney or the nitwit Speaker of the House, Nancy Pelosi, will not be there to save you or your family. You can money to the bank on that - if you have any left. For part 1 click below.
Click here for part -----> 1,
meltdown contagion - U.S. government continues to downplay the danger
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As always, I highly recommend you get your assets protected by investing at least part of your portfolio into gold. I'm not a gold dealer, broker or retailer. However, it makes me sick to see my fellow Americans being led down the path of ruin.