Sunday, August 17, 2008

Articles Well Worth Reading

Where's The Kaboom?

The Dollar Has Been Allowed To Appreciate



Justin_n_IL said...

Another excellent article from Karl Denninger

The way it happens is really quite simple. First you overlever the consumer with hopeless levels of debt, telling him that his balance sheet is "strong" and his house is the center of his "wealth", when in fact you're lying to him relentlessly for your own personal profit (as a "money man" or "broker", whether of stocks or mortgages.) You run media campaigns trying to get people to "live Richly".

Then reality strikes - the Ponzi scheme runs out of suckers. A Ponzi scheme the bankers and government intentionally constructed and let build to knowing unsustainable levels. At the same time, the intentional "loose money" policies of the government and banking system, from The Fed to the "fog a mirror" mortgages, create tremendous froth in commodity prices.

When it all comes apart the consumer gets it in both holes, as his purchasing power is utterly destroyed at the same time his so-called "wealth" is proven to be a phantom - but the debt he was encouraged to take on is still there!

And see, The Consumer is 70% of the economy; as a consequence when the consumer's balance sheet gets lit on both ends of the page and burns towards the center the entire economy goes in the toilet all at once. Suddenly, credit cards (which of course the consumer was encouraged to "lever up" with too!) and car loans (125% of sticker price anyone?) implode.

The only company left that makes money is the guy selling plywood to board up the once-busy storefronts.

Why do we, as Americans, tolerate this sort of crap?

This was not an accident - it was an engineered scheme devised for the explicit purpose of goading you into spending money you didn't have on things you didn't actually need so the bankers and lobbyists could make BILLIONS while literally BANKRUPTING YOU, and you fell for it!

Oh, and they passed "bankruptcy reform" at the same time so if you have an "above-average income" you can't get out from under the debt either; you're stuck with wage garnishment, preventing those who gave you credit they knew you couldn't repay on the original terms from being forced to take the loss that resulted from their intentional scheme.

Randy said...

Thanks for the Article Justin