What's Coming Next, or Is Collapse Over, Nope!

I'm not an economist and the only real numbers I crunch are my personal expenses and when bidding construction jobs putting together those costs and percentages which in these latter years of my life, preferring more to do the work, I have done very little of, except while doing the work to bring a better quality for hopefully a bit cheaper cost in material and professional skill.

Watching what is now taking place in banking and the dream new capitalist economy that's been sold for a number of years isn't really a big surprise to this common man, many were forecasting exactly what would happen if we followed the sales pitch.

Following is a report from CBS that hits on the next shoe to drop or dropping already as we've seen with the collapse of a number of finance institutions but not yet talked about but part of what we the tax payers are already bailing out.

CBS News Investigates: Credit Derivatives Comprise $54.6 Trillion Of Risk Among Few Banks Left Standing

“This bill will, in my judgment, raise the likelihood of future massive taxpayer bailouts. …if you want to gamble, go to Las Vegas. If you want to trade in derivatives, God bless you.”

That was North Dakota Senator Byron Dorgan’s statement on the floor of the Senate - not this week or last, or even during the last six months as Wall Street collapsed - but back in 1999.

Four years later in a letter to shareholders, billionaire investor Warren Buffett followed with his own warning, calling derivatives “weapons of financial mass destruction” controlled by “madmen.”



Steve Kroft looks at some of the arcane Wall Street financial instruments that have magnified the economic crisis.



What worries financial insiders most is the $54.6 trillion of risky credit derivatives concentrated among the few banks left standing.


Today, the same commercial banking heavyweights thought to be the most safe, JPMorgan, Citigroup Inc. and Bank of America, hold 92 percent of all the disclosed credit derivative contracts, according to the Office of the Comptroller of the Currency {PDF}.


There's another huge storm on the horizon, we've already been experiencing for many years but ignoring the size of the detestation coming. we've been sold another bill of goods, mostly by one particular political party, the GOP, and that bill of goods has been the thought process that a Nation in Deficit is a strong financial situation, much of those deficits monies heading into the pockets of the private sector while we the tax payer pay the monies needed and the ever rising interest accumulated as we borrow from other nations. They sold it so well that many think it's perfectly fine to live their own lives in personal deficit, using free wealth, Plastic and Loans!

CONSUMER CREDIT OUTSTANDING

The Next Meltdown: Credit-Card Debt

Rising rates are accelerating credit-card defaults and soured debt could further undermine the financial system


There's a video at the Business Week site above as well, and instead of talking about what may be coming, as to consumer debt, they talk about which cards are better for you, still selling the hype!

Federal Reserve Statistical Release

Standard of living squeezes middle class

Credit card and other consumer debt, not counting the dramatic growth in mortgages, has soared 150% since 1994, more than four times faster than inflation, ...


Ron and Laurie Kopack are educated, hard-working suburban Detroit homeowners who, by American middle-class standards, should have earned comfortable family evenings, a little peace of mind and a few luxuries. Instead, they are struggling.
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Ron, an electrician, spent most of his summer living in a tent city while doing flood repairs in Iowa because he couldn't find work at home. Laurie, who just got a bachelor's degree but is paid only $15 per hour, faces $30,000 in student debt and a teenager coming of age with his dad often gone.

"The whole American dream, that's a snow job," Laurie says. "I mean, who tried to sell us that? Is that to keep us good consumers?"


The Credit Card Debt tsunami already breaking over us and how to fix it

Overall, Americans today carry $2.6 trillion in all kinds of consumer debt, up 24% from just 2003, according to the Federal Reserve.


We once had a Nation, not long ago, and never really worked completely right, but was on the road heading in what looked liked the right direction. We were envied around the world for our work force and products. Top executives made more money if their companies made better profits. Innovation came from employee's, long term, who through their hard work, dedication, and regular wage increases gave to their companies, second families, what was needed to enhance that companies reputation and customer satisfaction, building better profit margins. Investors were usually long term and as the companies grew saw their investments increase through regular dividends and reaped their gamble when selling usually when near or in retirement.

We shunned and condemned extreme profiteers and shady business practices geared for quick wealth of a few, we stopped doing business with companies that took short cuts in what they offered, products and services thus bringing them down and raising up further those that worked for their good reputations.

No longer, we've made a u-turn on that direction and now praise and hold up as successful those who we once shunned and condemned. They started using relatively simple schemes with little catch phrases and words to gain quick extreme wealth and stature in the society they were setting up, the workers became just bodies carrying out what was needed in the ever changing schemes, coming on quick enough so they weren't recognized as such.

We didn't stop what was happening, we readily joined in, many thinking that what was great for the few would somehow touch them as well raising them up to those lofty ranks, we even built lives around the coming rise, much of it on borrowed monies, living beyond the reality we really had.

What will rise out of the collapse of that which we built, or will anything rise!

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the bin Ladens of the World, have won, as the economies of the advanced Collapse!

Do We Need Change, You're Damn Right We Do, And The World Needs Us To Change, Now!!

"The wise man points to the stars and the fool sees only the finger - and discusses it 24/7 on cable."

I think we have to remember there are many types of terrorism that can be deployed against us. If we narrowly confine our awareness of the acts that inflict terror on us to the bin Ladens of the world, we are sure to suffer at the hands of those who have just as much power if not more to inflict it on us because of the overwhelming trust we have placed in them to manage our money and economy.

Write so much more, so could others, but the one thing is I've been watching that which our folks built just plain get thrown out and nobody seems to care!

Now as the Shit is hitting the fan, Big Time, everyones confused but not blaming themselves for allowing it to happen!

I haven't a clue where this is all headed but I don't think we can paint even a modest 'good picture'!

By the way, if the CBS Video isn't working, it's their code, you can view it over at the top link which is the report.

Do We Need Change, You're Damn Right We Do, And The World Needs Us To Change, Now!!

"The wise man points to the stars and the fool sees only the finger - and discusses it 24/7 on cable."

There is too much looking back to discover how we got into this mess and who and what is to blame. There will be time enough later.

We only have the mechanisms that are currently available to us to put right the current financial implosion. Trying to activate these whilst inexpertly attempting to plug the holes in the system and prevent future abuses plagued Congress in its discussion and stopped clear, timely action being taken in the States.

The net effect is that we are still being led by the crisis rather than getting ahead of it. This both delays the solutions being implemented, lengthens the financial meltdown and increases the cost of propping up the system. Worse, we are not able to get on and start implementing solutions to tackle the underlying problem of the overall economic recession.

This will please only anarchists who are prepared to see everyone suffer very painfully indeed to make some idealogical points.

We could lose another 20% on the stock markets tomorrow and there is every indication that the money required for bank recapitalisation will need to be increased.

Unfortunately, we here in the US do need to look back for the very simple reason that ideology drove us to this point.

Americans don't yet understand this. Until they do, ideology will continue to take us in the wrong direction. Hence, Paulson resisting "nationalizing" the banks preferring to call it "semi-privatization." Now this may seem like petty semantics for getting capital into still solvent institutions, but what passes for so called capitalists are absolutely incapable of embracing any action that does not maintain an iron grip on their cherished view of markets. Hence "nationalization" is bad, therefor, no capital.

Barry Ritholtz has a good post that rips apart an FT Op-Ed called, Putting the Dog Back in Dogma that I highly recommend. He calls ideology, "sheer intellectual dishonesty."

Excerpt:

Let's review the ideological underpinnings of the current crisis.

• Greenspan believe we could clean up a bubble, rather than prevent one. So he let one form in the 1990s. Went it popped, he tried to clean it up by taking rates way, way down. Consider that the Greenspan Fed maintained a 1.75% Fed fund for 33 months (December 2001 to September 2004), and eventually brought rates down to 1%, keeping them there for over a year.

• We also know that despite repeated warnings by fellow FOMC governors, Greenspan refused to supervise banks lending standards, as is the charge of the Federal Reserve. Hence, my accusation of nonfeasance.

• The exempting of CDOs from all regulatory scrutiny thanks to the passage of the Commodities Futures Modernization Act of 2000 was another triumph of not pragmatism but ideology.

Welshman, I completely understand why you think it's a waste of time, and in part it is, but it's the rather miserable truth of politics in the US today. I'm not optimistic at all that the US can wriggle it's way out of the mess. The US, rather than acting as leader, will end up following in the wake of Europe - and by the time they do, it may well be too late.

..it is vital that we do.

I guess that my own focus right now is how we get out of the financial mess that we are in and I am seeing too many distractions that create hesitancy and uncertainty.

I am just displayimg my impatience that we are leaderless and I am watching politicians thrashing around like headless chickens. I am forced into admiring Gordon Brown for taking more firm and decisive action than most of those in the countries around us. Yet it is Gordon Brown who has been a cheer leader for what has been happening in our badly regulated financial systems for the last few years.

I'm trying to be pragmatic, whilst fully sharing the disgust at what has happened by everyone.

According to news articles, the assets are Norwegian.

I don't the in and outs of the histories of the banks of Iceland. The country has only had independence since 1944. Failed Bank Glitnir was older than the country itself. My understanding is a number of the banks are the result of mergers and acquisitions of other Scandinavia banks over the years, same as here in the US.

I'll watch the Icelandic news later today and see what I can learn. I doubt this was a surprise though. The Icelandic government ordered any overseas assets liquidated a few days ago.

that led us down this road is not the problem here. We do have the mechanisms but we know there is no guarantee those will be used or used correctly or used with the best intentions either. Those people need to know they are under a very critical eye right now.

Paulson and Bush made a huge blunder by asking for sweeping power that they did not need. Congress should have tamped down on the request for absolute power. And then Congress had their own conflict of interest that entered into the equation and prevented them from acting in a way that was beneficial to turning the corner with the crisis. They went from acting as a check on the executive branch to doing the business of a candidate who is looking more toward an election in 6 weeks. I don't accept that Congress was that forward looking to stop future abuses. The future they were looking at was the one where their base would be deciding the fate of individual members at the ballot box.

Pelosi and others want Congress back after the break to "work on a second economic relief plan".

talk about a big new stimulus plan on the talk shows this morning too. Unfortunately, a lot of it must still be viewed through a political lens for the upcoming elections. I wish the politicians could avoid discussing this too much but understand as a part of their nature it is impossible.

There will be time enough later.

We never look back, i.e. for one example Iraq, we just keep letting these things happen, that's one way we ended up having 'the great depression' and now this collapse.

Those that would like it that we forget, they than think they can do it better than those before, trouble is they compound the same mistakes, mistakes that can't be corrected because there are no correct ways to get a better outcome.

Do We Need Change, You're Damn Right We Do, And The World Needs Us To Change, Now!!

"The wise man points to the stars and the fool sees only the finger - and discusses it 24/7 on cable."

Knowing his stance on derivatives I have been surprised at his buying into Goldman Sachs and his endorsement of Henry Paulson which seemed to be also of the first--3-page bailout proposal--which was supposed to given dictatorial control of U.S. financial power for two years (unless he was succeeded by a new Treas. Sec'y appointed by the next president who would retain the power.)

carol

He took a $5 billion bet on Goldman Sachs that would succeed if Congress approved money being made available to support the main players in the financial system and remove the toxic elements that might threaten their existence. It was a gamble uncluttered by anything except the belief that the money would be made avilable if subsequently Goldman Sachs needs it.

He has won his bet. Smart b*st*rd.

If we come out of this economic crisis will all the ducks in line to go for the next round of the great financial swindle then I think we are all losers. And I swear to you I am not an anarchist.

carol

..and leave it at just "b*st*rd"! Buffet is a creation of the system. That is why he knows how to play it.

has been accumulating a mountain of cash knowing that there would come a day when he could capitalize from the downturn. This is how Buffett has greatly increased his fortune for years, profiting from the same conditions that generated a lot of misery for others.

I have respect for the man but I might actually admire him were he to use some of his wisdom to do more to prevent these conditions where he and a few others are able to profit so inequitably from the mistakes of others. I am not against capitalism but I have a good sense there were people who knew just how risky a road we had taken. Unfortunately, many who continued to have faith in what they were being told by almost everyone they believe had a duty to be honest, were not privy to the information Buffett can get with a few phone calls.

practice I guess. OTOH, Soros was invested in Lehman.